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HomeMy WebLinkAbout2016 CAFRCityofSeward, Alaska Comprehensive Annual Financial Report For the Year Ended December 31, 2016 Prepared by City of Seward Finance Department The report accompanying these financial statements was issued by BDO USA, LLP, a Delaware limited liability partnership and the U.S. member of BDO International Limited, a UK company limited by guarantee. Comprehensive AnnualFinancial Report ofthe CityofSeward, Alaska FortheFiscalYearEnded December 31, 2016 Jean Bardarson MAYOR Jim Hunt CITYMANAGER Prepared bythe Finance Department Kristin M. Erchinger, CGFM, MPA FINANCE DIRECTOR City of Seward, Alaska Contents Exhibit Page INTRODUCTORY SECTION Table ofContents I-V Letter of Transmittal VI-XII Certificate ofAchievement forExcellence inFinancial Reporting XIII List of Principal Officials XIV Seward Citizens – Organizational Chart XV FINANCIAL SECTION Independent Auditor'sReport 1-4 Management’sDiscussion and Analysis 5-18 BasicFinancial Statements Government-wide Financial Statements: Statement of Net Position A-1 20 Statement of Activities A-2 21 Fund Financial Statements: Governmental Funds: Balance Sheet B-1 22 Reconciliation ofGovernmental Funds Balance Sheet toStatement ofNet Position B-223 Statement ofRevenues, Expenditures andChanges in Fund Balances B-3 24 Reconciliation oftheChanges inFund Balances of Governmental Funds toStatement ofActivities B-425 Statement ofRevenues, Expenditures andChange inFund Balance - Budget and Actual - General Fund B-526 Proprietary Funds: Statement of Net Position C-127 Statement ofRevenues, Expenses andChanges in Net Position C-2 28 Statement of Cash Flows C-329-30 Statement ofFiduciary Net Position D-131 Notes to Basic Financial Statements 32-62 Required Supplementary Information Public Employees Retirement System: Schedule ofthe City'sInformation ontheNet Pension Liability E-164 Schedule of City Contributions E-265 International Brotherhood ofElectrical Workers (IBEW) - E-366 Schedule of CityContributions Notes to Required Supplementary Information 67 I City of Seward, Alaska Contents Exhibit Page FINANCIAL SECTION, continued Supplementary Information Combining andIndividual Fund Financial Statements andSchedules: Nonmajor Governmental Funds: Combining Balance Sheet F-1 70 Combining Statement ofRevenues, Expenditures and Change in Fund Balances F-2 71 Nonmajor Enterprise Funds: Combining Statement of Net Position G-172 Combining Statement ofRevenues, Expenses and Change in Net Position G-2 73 Combining Statement of Cash Flows G-3 74-75 Internal Service Funds: Combining Statement of Net Position H-176 Combining Statement ofRevenues, Expenses and Change in Net Position H-2 77 Combining Statement ofCash Flows H-378 General Fund: Balance Sheet I-1 80-81 Schedule of Revenues, Expenditures and Change inFund Balance - Budget and Actual I-282-88 Nonmajor Special Revenue Funds: Combining Balance Sheet J-1 90 Combining Statement ofRevenues, Expenditures and Change in Fund Balances J-2 91 Nonmajor Capital Project Funds: Combining Balance Sheet K-1 94 Combining Statement ofRevenues, Expenditures and Change in Fund Balances K-2 95 Enterprise Funds: Electric: Statement ofNet Position L-198-99 Statement of Revenues, Expenses andChange inNetPosition L-2100 Statement of Cash Flows L-3101-102 Schedule of Operating Expenses L-4103 Schedule ofComposition ofNet Position L-5104 Schedule of Electric Capital Projects L-6105 II City of Seward, Alaska Contents Exhibit Page FINANCIAL SECTION, continued Supplementary Information, continued Combining andIndividual Fund Financial Statements andSchedules, continued: Enterprise Funds, continued: Water: Statement of Net Position L-7106 Statement of Revenues, Expenses andChange inNetPosition L-8107 Statement of Cash Flows L-9 108 Schedule of Composition ofNet Position L-10 109 Wastewater: Statement of Net Position L-11 110 Statement ofRevenues, Expenses and Change inNetPosition L-12111 Statement of Cash Flows L-13 112 Schedule of Composition ofNet Position L-14 113 Harbor: Statement of Net Position L-15 114-115 Statement ofRevenues, Expenses and Change inNetPosition L-16116 Statement of Cash Flows L-17 117-118 Schedule of Composition ofNet Position L-18 119 Schedule of Harbor Capital Projects L-19 120 Seward Marine Industrial Center: Statement of Net Position L-20 121 Statement ofRevenues, Expenses and Change inNetPosition L-21122 Statement of Cash Flows L-22 123 Schedule of Composition ofNet Position L-23 124 Schedule ofSeward Marine Industrial Center Capital Projects L-24125 Parking: Statement of Net Position L-25 126 Statement ofRevenues, Expenses and Change inNetPosition L-26127 Statement of Cash Flows L-27 128 Schedule of Composition ofNet Position L-28 129 Healthcare Facilities: Statement of Net Position L-29 130 Statement ofRevenues, Expenses and Change inNetPosition L-30131 Statement of Cash Flows L-31 132 Internal Service Funds: Motor Pool: Statement of Net Position M-1134 Statement ofRevenues, Expenses and Change inNet Position M-2135 Statement ofCash Flows M-3136 Schedule of Composition of Net Position M-4137 III City of Seward, Alaska Contents Exhibit Page FINANCIAL SECTION, continued Supplementary Information, continued Combining andIndividual Fund Financial Statements andSchedules, continued: Internal Service Funds, continued: Compensated Annual Leave: Statement of Net Position M-5138 Statement ofRevenues, Expenses and Change inNet Position M-6139 Statement ofCash Flows M-7140 TeenCouncil Agency Fund Statement ofChanges inAssets and Liabilities N-1141 Capital Assets: Schedule ofGovernmental Capital Assets O-1142 Schedule ofChanges inGovernmental Capital Assets O-2143 Schedule ofGovernmental Capital Assets byFunction and Activity O-3144 Schedule ofChanges inGovernmental Capital Assets byFunction and Activity O-4 145 Schedule ofExpendituresof Federal Awards P-1146 Schedule of State Financial Assistance P-2147 Notes toSchedule ofExpenditures ofFederal Awards and Schedule ofState Financial Assistance 148-149 IV City of Seward, Alaska Contents Exhibit Page STATISTICAL SECTION (Unaudited) Net Position by Component 1 152 Changes in Net Position 2 153-154 Fund Balances of Governmental Funds 3 155 Changes in Fund Balances ofGovernmental Funds 4156 General Fund Revenues by Source 5157 General Fund Tax Revenues by Source 6158 Property Tax Rates 7 159 Property Tax Levies and Collections 8160 Assessed and Estimated Actual Value ofTaxable Property 9161 Principal Property Taxpayers 10 162 Principal Taxable Sales by Line ofBusiness 11 163 Ratios of Outstanding Debt by Type 12164 Ratio ofGeneral Obligation Bonded Debt toAssessed Value and General Obligation Bonded Debt per Capita 13 165 Computation ofDirect and Overlapping Bonded Debt 14166 Legal Debt Margin 15 167 Revenue Bond Coverage – Electric Enterprise Fund 16 168 Revenue Bond Coverage – Harbor Enterprise Fund 17169 Demographic and Economic Statistics 18 170 Principal Employers 19 171 Full-Time Equivalent Employees by Fund 20172 Operating Indicators by Function 21 173 Capital Asset Statistics By Function 22 174 Property Value, Construction, and Bank Deposits 23 175 Miscellaneous Statistics 24 176 SINGLE AUDIT SECTION Single AuditReports Independent Auditor’sReport onInternal Control Over Financial Reporting andonCompliance andOther Matters Based onan Audit ofFinancial Statements Performed inAccordance with Government Auditing Standards 177-178 Independent Auditor’sReport onCompliance for EachMajor Federal Program andReportonInternal Control Over Compliance Required by the Uniform Guidance 179-180 Independent Auditor’sReport onCompliance for EachMajor StateProgram andReport onInternal Control Over Compliance Required by theStateofAlaska AuditGuide andCompliance Supplement forStateSingle Audits 181-182 Schedule ofFindings and Questioned Costs 183-184 V City of Seward, Alaska GFOA Certificate Presented to ForitsComprehensive Annual Financial Report for theFiscal YearEnded XIII City of Seward, Alaska ListofPrincipalOfficials Term Expires JeanBardarson Mayor 2017 Marianna Keil Vice Mayor 2018 David Squires Council Member 2017 Ristine Casagranda Council Member 2018 Sue McClure Council Member 2017 Erik Slater Council Member 2018 Deborah Altermatt Council Member 2017 ADMINISTRATION James Hunt City Manager Ron Long Assistant City Manager Kristin Erchinger Finance Director John Foutz Manager ofElectric Utility Doug Schoessler Public Works Director Norm Regis Harbormaster Tom Clemons Chief of Police Eddie Athey Fire Chief Karin Sturdy Parks & Recreation Director Valarie Kingsland Library Director CITYCLERK Johanna Kinney CityClerk ATTORNEY Will Earnhart City Attorney, Birch, Horton, Bittner TheCity ofSeward isahome-rulecitywith acouncil-manager form of government. Legislative powers oftheCity ofSeward arevested ina council consisting of amayor andsixcouncil members. Themayor and each council member areelected from thecityatlarge. Theterm ofoffice istwoyears. Theappointed officers ofthecity include thecitymanager, cityclerk, andthecityattorney. Thecitycouncil generally meets onthe second andfourth Mondays ofeach month intheCity Council Chambers located intheCityHallBuilding at410Adams Street inSeward, Alaska. XIV City of Seward, Alaska Organizational Chart XV Tel: 907-278-8878 3601CStreet, Suite600 Fax: 907-278-5779 Anchorage, AK99503 www.bdo.com Independent Auditor'sReport Honorable Mayor andCityCouncil CityofSeward, Alaska Report ontheFinancial Statements Wehave audited theaccompanying financial statements ofthegovernmental activities, the business-typeactivities, eachmajor fund, andtheaggregate remaining fund information of Cityof Seward, Alaska, asofandfortheyearended December 31, 2016, andtherelated notes tothe financial statements, whichcollectively comprise CityofSeward’sbasic financial statements as listed inthetable ofcontents. Management’sResponsibility for theFinancial Statements Management isresponsible forthepreparation andfairpresentation ofthese financial statements inaccordance withaccounting principles generally accepted intheUnited States ofAmerica; this includes thedesign, implementation, andmaintenance ofinternal control relevant tothe preparation andfairpresentation offinancial statements that arefreefrom material misstatement, whether duetofraud orerror. Auditor’sResponsibility Ourresponsibility istoexpress opinions onthesefinancial statements based onouraudit. Wedid notaudit the financial statements of theProvidence Seward Medical and Care Center (PSMCC) which represent 20% and99% respectively, of theassets andrevenues oftheHealthcare Facilities Enterprise Fund, and3% and36% respectively, of theassets, andrevenues ofthebusiness-type activities. Those statements were audited byother auditors whose report hasbeenfurnished to us, andouropinion, insofar asitrelates tothe amounts included forthe financial statements of theProvidence Seward Medical andCare Center, isbased solely onthereport oftheother auditors. Weconducted ouraudit inaccordance withauditing standards generally accepted inthe United States ofAmerica and thestandards applicable tofinancial audits contained in Government Auditing Standards, issued bytheComptroller General oftheUnited States. Those standards require thatweplan andperform theaudit toobtain reasonable assurance about whether thefinancial statements are freefrom material misstatement. Thefinancial statements ofthePSMCC werenot auditedinaccordance withGovernment Auditing Standards. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 1 Anaudit involves performing procedures toobtain audit evidence about theamounts and disclosures inthefinancial statements. Theprocedures selected depend ontheauditor’s judgment, including theassessment oftherisks ofmaterial misstatement ofthefinancial statements, whether duetofraud orerror. Inmaking those riskassessments, the auditor considers internal control relevant totheentity’spreparation andfairpresentation ofthe financial statements inorder todesign audit procedures that areappropriate inthe circumstances, butnotforthepurpose ofexpressing anopinion ontheeffectiveness ofthe entity’sinternal control. Accordingly, weexpress nosuchopinion. Anaudit alsoincludes evaluating theappropriateness ofaccounting policies used andthereasonableness ofsignificant accounting estimates made bymanagement, aswellasevaluating theoverall presentation ofthe financial statements. We believe thattheaudit evidence wehave obtained issufficient andappropriate toprovide a basis forouraudit opinions. Opinions Inouropinion, based onouraudit and thereport ofother auditors, thefinancial statements referred to abovepresent fairly, inallmaterial respects, therespective financial position ofthe governmental activities, thebusiness-type activities, each major fund, andtheaggregate remaining fundinformation ofCityofSeward, Alaska asofDecember 31, 2016, andtherespective changes infinancial position and, where applicable, cash flows thereof andtherespective budgetary comparison fortheGeneral Fund fortheyear then ended in accordance with accounting principles generally accepted intheUnited States ofAmerica. Other Matters Required Supplementary Information Accounting principles generally accepted intheUnited States ofAmerica require thatthe management’sdiscussion andanalysis onpages 5-18bepresented tosupplement thebasic financial statements. Such information, although notapartofthebasic financial statements, is required bytheGovernmental Accounting Standards Board whoconsiders ittobeanessential part offinancial reporting forplacing thebasic financial statements inanappropriate operational, economic, orhistorical context. We have applied certain limited procedures totherequired supplementary information inaccordance withauditing standards generally accepted intheUnited States ofAmerica, which consisted ofinquiries of management about themethods ofpreparing the information andcomparing theinformation forconsistency withmanagement’sresponses toour inquiries, thebasic financial statements, andother knowledge weobtained during ouraudit ofthe basicfinancial statements. Wedo notexpress anopinion orprovide anyassurance onthe information because thelimited procedures do notprovide uswithsufficient evidence toexpress anopinion orprovide anyassurance. 2 Supplementary andOther Information Ouraudit fortheyear ended December 31, 2016 wasconducted forthepurpose offorming opinions onthefinancial statements thatcollectively comprise CityofSeward’sbasic financial statements. Theaccompanying Schedule ofExpenditures ofFederal Awards, theSchedule ofState Financial Assistance, thecombining andindividual fund financial statements andschedules, and theintroductory andstatistical sections fortheyear ended December 31, 2016 arepresented for purposes ofadditional analysis andarenotarequired partofthebasicfinancial statements. The Schedule ofExpenditures of Federal Awards andtheSchedule of State Financial Assistance are required by Title 2U.S. Code ofFederal Regulations Part 200, Uniform Administrative Requirements, CostPrinciples, andAuditRequirements forFederal Awardsand theState of Alaska AuditGuideandCompliance Supplement forStateSingleAudits, respectively. The accompanying Schedule ofExpenditures ofFederal Awards, theSchedule ofState Financial Assistance andthecombining andindividual fund financial statements andschedules arethe responsibility ofmanagement andwere derived fromand relate directly tothe underlying accounting andotherrecords usedtoprepare thebasic financial statements. Such information has been subjected to theauditing procedures applied intheaudit ofthebasic financial statements for theyear ended December 31, 2016 andcertain additional procedures, including comparing and reconciling such information directly totheunderlying accounting andother records used to prepare thebasic financial statements ortothebasicfinancial statements themselves, andother additional procedures inaccordance with auditing standards generally accepted intheUnited StatesofAmerica. Inouropinion, theaccompanying supplementary information isfairly stated, in allmaterial respects, inrelation tothebasic financial statements asawhole fortheyear ended December 31, 2016. Wealsopreviously audited, inaccordance withauditing standards generally accepted intheUnited States ofAmerica, thebasic financial statements ofCityofSeward asofandfortheyear ended December 31, 2015 (notpresented herein) and have issuedour report thereon dated November 11, 2016, which contained unmodified opinions ontherespective financial statements ofthe governmental activities, thebusiness-type activities, each major fund, andtheaggregate remaining fund information. Theindividual fundfinancial statements andschedules forthe year ended December 31, 2015 arepresented forpurposes ofadditional analysis andarenotarequired partofthebasic financial statements. Such information istheresponsibility ofmanagement and wasderived from andrelates directly totheunderlying accounting andotherrecords used to prepare the2015 financial statements. Theindividual fund financial statements andschedules have been subjected totheauditing procedures applied intheaudit ofthe2015 basic financial statements andcertain additional procedures, including comparing andreconciling such information directly totheunderlying accounting andother records used toprepare those financial statements ortothose financial statements themselves, andother additional procedures in accordance with auditing standards generally accepted intheUnited States ofAmerica. In our opinion, the supplementary information isfairlystated inallmaterial respects inrelation tothe basic financial statements asawhole forthe yearended December 31, 2015. Theintroductory andstatistical sections have notbeen subjected totheauditing procedures applied intheaudit ofthebasic financial statements, andaccordingly, we donot express an opinion orprovide anyassurance onthem. 3 Other Reporting Required byGovernment Auditing Standards In accordance withGovernment Auditing Standards, wehave alsoissued ourreport datedAugust 28, 2017 onourconsideration ofCityofSeward’sinternal control overfinancial reporting andon ourtests ofitscompliance with certain provisions oflaws, regulations, contracts, andgrant agreements andother matters. Thepurpose ofthatreport istodescribe thescope ofourtesting ofinternal control overfinancial reporting andcompliance andtheresults ofthat testing, andnot to provide anopinion oninternal control overfinancial reporting oroncompliance. Thatreport is anintegral partofanaudit performed inaccordance with Government Auditing Standards in considering CityofSeward’sinternal control overfinancial reporting andcompliance. Anchorage, Alaska August28, 2017 4 unassigned fund balance) governmental activities business-type activities) Fund financial statements fund Governmental Fundsgovernmental activities governmental funds governmental activities combining statements required supplementary information unassigned fund balance nonspendablerestricted committed assigned unassigned nonspendable) restricted)committed assigned restricted committedunassigned unassigned fund balance Budgetary Actual BasicFinancialStatements - Overview These financial statements provide asummary overview ofthefinancial position andresults of operations ofallfunds oftheCity, aggregated at thegovernment-wideandthemajor fund level. Thefollowing statements areincluded inthissection: Statement ofNetPosition Statement ofActivities Governmental Funds - Balance Sheet Reconciliation ofGovernmental Funds Balance Sheet toStatement ofNetPosition Governmental Funds - Statement ofRevenues, Expenditures andChange inFund Balances Reconciliation oftheChanges inFund Balances ofGovernmental Funds toStatement of Activities General Fund - Statement ofRevenues, Expenditures andChange inFund Balance - Budget andActual Proprietary Funds - Statement ofNetPosition Proprietary Funds - Statement ofRevenues, Expenses andChange inNetPosition Proprietary Funds - Statement ofCash Flows Statement ofFiduciary NetPosition NotestoBasic Financial Statements 19 Exhibit A-1 City of Seward, Alaska Statement ofNet Position GovernmentalBusiness-type December 31, 2016 ActivitiesActivitiesTotal Assets Cash and investments$ 9,542,315$ 13,559,054 $ 23,101,369 Receivables, net of allowance for doubtful accounts: Taxes 574,285 - 574,285 Accounts 222,811 4,589,683 4,812,494 Grants, shared revenues, and loans 601,846 4,297,987 4,899,833 Accrued interest 40,157 - 40,157 Other 460,256 188,003 648,259 Prepaid items 628,195 - 628,195 Inventories - 1,085,690 1,085,690 Restricted cash and investments - 6,123,282 6,123,282 Other assets - 1,030,589 1,030,589 Internal balances 1,602,642 (1,602,642) - Capital assets not being depreciated 5,632,693 43,752,734 49,385,427 Capital assets being depreciated, net of depreciation 54,895,849 93,443,603 148,339,452 Total Assets 74,201,049 166,467,983 240,669,032 Deferred Outflows of Resources Pension related 1,409,823 602,519 2,012,342 Unamortized deferred loss on refunding - 2,327,914 2,327,914 Total Deferred Outflows of Resources 1,409,823 2,930,433 4,340,256 Total Assets and Deferred Outflows of Resources$ 75,610,872$ 169,398,416$ 245,009,288 Liabilities Accounts payable$ 464,343$ 993,799$ 1,458,142 Payable to Providence Health and Services - Washington - 6,612,000 6,612,000 Due to contractual agencies - 277,000 277,000 Accrued payroll and related liabilities 382,160 988,677 1,370,837 Accrued interest 48,933 470,957 519,890 Other accrued liabilities 40,250 - 40,250 Customer deposits 116,955 394,097 511,052 Unearned revenue 50,878 1,362,967 1,413,845 Noncurrent liabilities: Due within one year: Annual leave 103,010 49,582 152,592 Notes payable - 193,021 193,021 Bonds payable 100,000 1,540,000 1,640,000 Due in more than one year: Annual leave 383,760 95,184 478,944 Notes payable - 3,892,756 3,892,756 Bonds payable, including bond premium 3,315,719 29,241,880 32,557,599 Net pension liability 8,074,008 3,484,568 11,558,576 Total Liabilities 13,080,016 49,596,488 62,676,504 91,287 37,554 128,841DeferredInflowsofResources - pension related Net Position Net investment in capital assets 57,112,823 108,512,733 165,625,556 Restricted for commercial passenger vessel tax - 675,181 675,181 Unrestricted 5,326,746 10,576,460 15,903,206 Total Net Position 62,439,569 119,764,374 182,203,943 Total Liabilities, Deferred Inflows of Resources, and Net Position$ 75,610,872$ 169,398,416$ 245,009,288 See accompanying notes to basic financial statements. 20 Exhibit A-2 City of Seward, Alaska Statement of Activities Year Ended December 31, 2016 Net (Expense) Revenue and Program RevenuesChanges in Net Position Fees, Fines &OperatingCapitalBusiness- Charges forGrants &Grants &Governmentaltype Functions/ProgramExpenses ServicesContributionsContributionsActivitiesActivitiesTotal Governmental Activities General government$ 3,473,276$ 233,945$ 32,432$ - $ (3,206,899) $ -$ (3,206,899) Public safety 3,902,294 614,253 - 296,196 (2,991,845) - (2,991,845) Public works 2,421,447 27,985 72,001 500,000 (1,821,461) - (1,821,461) Parks and recreation 1,446,971 913,970 4,800 - (528,201) - (528,201) Library 806,047 25,200 15,888 - (764,959) - (764,959) Clinic 1,846,150 69,134 1,277,016 - (500,000) - (500,000) Sea Life Center 1,355,558 - - 482,801 (872,757) - (872,757) Interest expense 149,966 - - - (149,966) - (149,966) Total Governmental Activities 15,401,709 1,884,487 1,402,137 1,278,997 (10,836,088) - (10,836,088) Business-type Activities Electric 11,023,942 11,550,772 37,268 2,036,006 - 2,600,104 2,600,104 Water 1,189,786 1,292,890 8,972 147,469 - 259,545 259,545 Wastewater 1,211,625 1,151,763 6,861 - - (53,001) (53,001) Harbor 4,353,766 3,302,689 24,279 297,274 - (729,524) (729,524) SMIC 1,342,506 608,810 - 9,346,791 - 8,613,095 8,613,095 Healthcare Facilities 19,329,722 17,729,000 14,000 193,468 - (1,393,254) (1,393,254) Parking 231,666 328,347 - 38,654 - 135,335 135,335 Total Business-type Activities 38,683,013 35,964,271 91,380 12,059,662 - 9,432,300 9,432,300 Total Primary Government$ 54,084,722 $ 37,848,758$ 1,493,517 $ 13,338,659 (10,836,088) 9,432,300 (1,403,788) General Revenues Taxes: Sales taxes 5,004,992 - 5,004,992 Property taxes 1,152,116 - 1,152,116 Other taxes 505,845 - 505,845 Payment in lieu of taxes 90,382 - 90,382 Grants and entitlements not restricted to aspecific purpose 608,651 917,500 1,526,151 Investment income 51,306 89,578 140,884 Transfers 1,393,673 (1,393,673) - Total General Revenues and Transfers 8,806,965 (386,595) 8,420,370 Change in Net Position (2,029,123) 9,045,705 7,016,582 Net Position, beginnnig 64,468,692 110,718,669 175,187,361 Net Position, ending$ 62,439,569$ 119,764,374$ 182,203,943 See accompanying notes to basic financial statements. 21 ExhibitB-1 City of Seward, Alaska Governmental Funds Balance Sheet Major FundTotal NonmajorGovernmental December31, 2016 GeneralFundsFunds Assets Cashandinvestments$ 5,143,982$ 2,512,916$ 7,656,898 Receivables, netofallowancefordoubtfulaccounts: Taxes 574,285 - 574,285 Accounts 222,811 - 222,811 Grantsandsharedrevenues - 601,846 601,846 Accruedinterest 676 - 676 Other - 460,256 460,256 Prepaiditems 622,337 5,858 628,195 Duefromotherfunds 2,408,229 - 2,408,229 TotalAssets$ 8,972,320$ 3,580,876$ 12,553,196 Liabilities Accountspayable$ 444,156$ 12,497 $ 456,653 Accruedpayrollandrelatedliabilities 362,094 20,066 382,160 Accruedliabilities 40,250 - 40,250 Deposits 116,955 - 116,955 Duetootherfunds - 727,753 727,753 Unearnedrevenue 33,310 17,568 50,878 TotalLiabilities 996,765 777,884 1,774,649 DeferredInflowsofResources Delinquentpropertytaxes 18,057 - 18,057 TotalLiabilitiesandDeferredInflowsofResources 1,014,822 777,884 1,792,706 FundBalances Nonspendable: Prepaid items 622,337 5,858 628,195 Committed: Workingcapital 1,500,000 - 1,500,000 Insurance 126,418 - 126,418 Hospitallineofcredit 500,000 - 500,000 Assigned: Parksandrecreation - 2,498 2,498 Publicworks - 6,409 6,409 General government - 141,541 141,541 Clinic - 106,356 106,356 Capitalprojects - 2,540,330 2,540,330 Insurance 235,280 - 235,280 Otherassignments 100,000 - 100,000 Unassigned 4,873,463 - 4,873,463 TotalFundBalances 7,957,498 2,802,992 10,760,490 TotalLiabilities, DeferredInflowsofResources, andFundBalances$ 8,972,320$ 3,580,876$ 12,553,196 Seeaccompanyingnotestobasicfinancialstatements. 22 Exhibit B-2 City of Seward, Alaska ReconciliationofGovernmentalFundsBalanceSheet to Statementof NetPosition December 31, 2016 Total fund balances forgovernmental funds$ 10,760,490 Total netposition reported forgovernmental activities inthe Statement ofNet Position isdifferent because: Capital assets used ingovernmental activities are not financial resources and therefore arenotreported inthe funds. These assets, net ofaccumulated Internal depreciation consist of:GovernmentalService Land$ 5,509,589 $ - Construction inprogress 123,104 - Buildings 71,339,751 - Improvements other than buildings 22,616,125 - Machinery and equipment 9,299,532 6,937,053 Accumulated depreciation (50,458,273) (4,838,339) Total capital assets$ 58,429,828$ 2,098,714 60,528,542 Other long-term assets arenotavailable topay forcurrent period expenditures andtherefore aredeferred inthefunds. 18,057 Aninternal service fund isused bytheCityto charge thecost ofvehicles and heavy equipment toindividual funds. The netposition oftheinternal service fundattributable to governmental activities isincluded inthegovernmental column ontheStatement of Net Position. Net position related to governmental activities$ 3,451,318 Less amount reported with capital assets (2,098,714) Plusamount reported with long-term liabilities 486,770 1,839,374 Long-term liabilities, including bonds payable, therelated accrued interest and accrued leave arenot due and payable inthecurrent period and aretherefore not Internal reported asfund liabilities. These liabilities consist of:GovernmentalService General obligation bonds payable $ (3,210,000)$ - Accrued interest onbonds (48,933) - Accrued leave - (486,770) Unamortized bond premium (205,719) - Net pension liability (8,074,008) - Total long-term liabilities$ (11,538,660) $ (486,770) (12,025,430) Certain changes connected withthenetpension liability are deferred rather than recognized immediately. These items are amortized over time: Deferred outflows ofresources related topensions$ 1,409,823 Deferred inflows ofresources related topensions (91,287) Total deferred pension items 1,318,536 Total NetPosition of Governmental Activities$ 62,439,569 See accompanying notes tobasic financial statements. 23 ExhibitB-3 City of Seward, Alaska Governmental Funds Statement ofRevenues, Expenditures andChanges inFundBalances Total MajorFundGovern- Nonmajormental YearEndedDecember31, 2016 GeneralFundsFunds Revenues Taxes$ 6,755,941$ -$ 6,755,941 Licensesandpermits 158,174 - 158,174 Intergovernmental 1,092,998 2,095,213 3,188,211 Chargesforservices 2,912,722 - 2,912,722 Finesandbails 18,365 - 18,365 Investmentincome 10,354 - 10,354 Other 90,735 156,366 247,101 TotalRevenues 11,039,289 2,251,579 13,290,868 Expenditures Current: Generalgovernment 3,164,350 268,824 3,433,174 Publicsafety 3,358,883 14,250 3,373,133 Publicworks 1,367,216 679,851 2,047,067 Parksandrecreation 1,286,626 14,688 1,301,314 Library 543,123 - 543,123 Clinic - 1,846,150 1,846,150 Debtservice: Principalpayments 95,000 - 95,000 Retirementbenefits 591,859 - 591,859 Interestandothercosts 151,550 - 151,550 Capitaloutlay: Generalgovernment - 422,212 422,212 Publicsafety - 334,286 334,286 TotalExpenditures 10,558,607 3,580,261 14,138,868 ExcessofRevenuesOver Under) Expenditures 480,682 (1,328,682) (848,000) OtherFinancingSources (Uses) Transfersin 1,978,698 1,614,917 3,593,615 Transfersout (2,271,590) (660) (2,272,250) NetOtherFinancingSources (Uses) (292,892) 1,614,257 1,321,365 NetChangeinFundBalances 187,790 285,575 473,365 FundBalances, beginning 7,769,708 2,517,417 10,287,125 FundBalances, ending$ 7,957,498$ 2,802,992$ 10,760,490 Seeaccompanyingnotestobasicfinancialstatements. 24 Exhibit B-4 City of Seward, Alaska Reconciliation oftheChange inFund Balances ofGovernmental Funds toStatement ofActivities Year Ended December 31, 2016 Net change in fund balances - total governmental funds$ 473,365 The change in net position reported for governmental activities in the Statement of Activities is different because: Governmental funds report capital outlays as expenditures. However on the Statement of Activities, depreciation expense is recognized to allocate the cost of these items over their estimated useful lives. This is the amount by which depreciation of $2,403,145 exceeded capital outlays of $1,239,299. (1,163,846) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. This is the increase in other long-term assets. (2,606) Issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of the long-term debt consumes financial resources in governmental funds. In addition, interest on long-term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. This adjustment combines the net change in these balances: Accrued interest payable$ 1,584 Amortization of bond premium 10,827 Principal payments on long-term debt 95,000 107,411 Certain changes connected with the net pension liability are deferred and amortized over time. This is the overall change in the net pension liability and related deferred outflows of resources and deferred inflows of resources. (1,556,707) An internal service fund is used by the City to charge the cost of vehicles and heavy equipment to individual funds. A portion of the net revenue of these activities is reported with governmental activities. 113,260 Change in Net Position of Governmental Activities$ (2,029,123) See accompanying notes to basic financial statements. 25 Exhibit B-5 City of Seward, Alaska General Fund Statement ofRevenues, Expenditures andChange inFund Balance - Budget andActual OriginalFinal Year Ended December 31, 2016 BudgetBudgetActualVariance Revenues Taxes$ 6,100,000$ 6,483,673$ 6,755,941$ 272,268 Licenses and permits 173,550 173,556 158,174 (15,382) Intergovernmental 1,086,145 1,293,288 1,092,998 (200,290) Charges for services 2,798,355 2,779,764 2,912,722 132,958 Fines and bails 8,000 8,004 18,365 10,361 Investment income 25,500 25,500 10,354 (15,146) Other 15,200 33,792 90,735 56,943 Total Revenues 10,206,750 10,797,577 11,039,289 241,712 Expenditures Current: General government 3,137,850 3,371,340 3,164,350 206,990 Public safety 3,430,492 3,590,986 3,358,883 232,103 Public works 1,398,490 1,444,839 1,367,216 77,623 Parks and recreation 1,269,382 1,306,856 1,286,626 20,230 Library 596,772 640,395 543,123 97,272 Debt service: Principal payments 95,000 95,004 95,000 4 Retirement benefits 729,863 591,859 591,859 - Interest and other costs 151,550 151,548 151,550 (2) Total Expenditures 10,809,399 11,192,827 10,558,607 634,220 Excess of Revenues Over Under) Expenditures (602,649) (395,250) 480,682 875,932 Other Financing Sources (Uses) Transfers in 1,989,678 1,990,338 1,978,698 (11,640) Transfers out (1,387,029) (2,271,590) (2,271,590) - Net Other Financing Sources (Uses) 602,649 (281,252) (292,892) (11,640) Net Change in Fund Balance$ - $ (676,502) 187,790$ 864,292 Fund Balance, beginning 7,769,708 Fund Balance, ending$ 7,957,498 See accompanying notes to basic financial statements. 26 Exhibit C-1 City of Seward, Alaska Proprietary Funds Statement ofNet Position Enterprise Funds Major Funds TotalInternal HealthcareNonmajorEnterpriseService December 31, 2016 ElectricHarborSMICFacilitiesFundsFundsFunds Assets Current Assets Cash and investments$ 5,750,967$ - $ - $ 2,927,676$ 4,880,411 $ 13,559,054$ 1,885,417 Receivables: - Accounts 918,178 169,993 56,321 4,286,000 296,782 5,727,274 - Accrued interest - - - - - - 39,481 Interfund loans - - - - - - 157,104 Grants and loans 1,713,760 917,500 1,666,727 - - 4,297,987 - Other receivables 61,253 - - 126,000 750 188,003 - Less allowance for doubtful accounts (41,318) (38,918) - (1,044,000) (13,355) (1,137,591) - Inventory 993,588 - - - 92,102 1,085,690 - Other assets - - - 303,589 - 303,589 - Total Current Assets 9,396,428 1,048,575 1,723,048 6,599,265 5,256,690 24,024,006 2,082,002 Noncurrent Assets Restricted cash and investments 349,739 4,158,537 - 1,615,006 - 6,123,282 - Other assets - - - 727,000 - 727,000 - Interfund loans, net of current portion - - - - - - 1,378,987 Property, plant and equipment: Total capital assets not being depreciated 230,951 18,195,223 25,115,129 - 211,431 43,752,734 - Total capital assets being depreciated 66,351,643 40,187,362 42,577,981 36,907,834 30,487,244 216,512,064 6,937,053 Less accumulated depreciation (40,322,838) (18,202,577) (30,177,787) (20,045,451) (14,319,808) (123,068,461) (4,838,339) Total Noncurrent Assets 26,609,495 44,338,545 37,515,323 19,204,389 16,378,867 144,046,619 3,477,701 Total Assets 36,005,923 45,387,120 39,238,371 25,803,654 21,635,557 168,070,625 5,559,703 Deferred Outflows of Resources Related to pensions 284,626 190,630 - - 127,263 602,519 - Unamortized deferred loss on refunding 459,875 198,715 - 1,669,324 - 2,327,914 - Total Deferred Outflows of Resources 744,501 389,345 - 1,669,324 127,263 2,930,433 - Total Assets and Deferred Outflows of Resources$ 36,750,424 $ 45,776,465 $39,238,371 $ 27,472,978$ 21,762,820$ 171,001,058$ 5,559,703 Liabilities Current Liabilities Accounts payable$ 527,038$ 74,275$ 201,456$ 95,000$ 96,030$ 993,799 $ 7,690 Payable to Providence Health and Services - Washington - - - 6,612,000 - 6,612,000 Due to contractual agencies - - - 277,000 - 277,000 - Accrued payroll and related liabilities 30,732 19,973 2,799 923,000 12,173 988,677 - Accrued interest 76,974 41,908 - 328,405 23,670 470,957 - Current portion: Accrued annual leave 20,999 17,955 - - 10,628 49,582 103,010 Bonds payable 150,000 480,000 - 910,000 - 1,540,000 - Notes payable - - - - 193,021 193,021 - Interfund loans - - 98,009 59,095 - 157,104 - Deposits 265,898 45,777 13,600 68,822 - 394,097 - Unearned revenue - 584,361 43,606 735,000 - 1,362,967 - Due to other funds - - 1,680,476 - - 1,680,476 - Total Current Liabilities 1,071,641 1,264,249 2,039,946 10,008,322 335,522 14,719,680 110,700 Noncurrent Liabilities, net of current portion Accrued annual leave 28,390 45,459 - - 21,335 95,184 383,760 Bonds payable, including unamortized premium 5,364,355 4,422,142 - 19,455,383 - 29,241,880 - Notes payable - 1,201,196 - - 2,691,560 3,892,756 - Net pension liability 1,649,763 1,101,434 - - 733,371 3,484,568 - Interfund loans - - 686,058 692,929 - 1,378,987 - Total Noncurrent Liabilities 7,042,508 6,770,231 686,058 20,148,312 3,446,266 38,093,375 383,760 Total Liabilities 8,114,149 8,034,480 2,726,004 30,156,634 3,781,788 52,813,055 494,460 Deferred Inflows of Resources - related to pensions 17,583 11,927 - - 8,044 37,554 Net Position Net investment in capital assets 21,555,015 36,166,779 37,515,323 (218,670) 13,494,286 108,512,733 2,098,714 Restricted for commercial passenger vessel tax - 675,181 - - - 675,181 Unrestricted (deficit) 7,063,677 888,098 (1,002,956) (2,464,986) 4,478,702 8,962,535 2,966,529 Total Net Position 28,618,692 37,730,058 36,512,367 (2,683,656) 17,972,988 118,150,449 5,065,243 Total Liabilities, Deferred Inflows of Resources and Net Position$ 36,750,424 $ 45,776,465 $39,238,371 $ 27,472,978$ 21,762,820$ 5,559,703 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,613,925 Net Position of Business-type Activities$ 119,764,374 See accompanying notes to basic financial statements. 27 Exhibit C-2 City of Seward, Alaska ProprietaryFunds StatementofRevenues, ExpensesandChangeinNetPosition Enterprise Funds Major Funds TotalInternal HealthcareNonmajorEnterpriseService Year Ended December 31, 2016 ElectricHarborSMICFacilitiesFundsFundsFunds Operating Revenues Charges for services$ 11,346,661$ 3,302,689$ 608,810$ 17,729,000$ 2,773,000$ 35,760,160$ - Vehicle rental and interfund charges - - - - - - 780,634 Total Operating Revenues 11,346,661 3,302,689 608,810 17,729,000 2,773,000 35,760,160 780,634 Operating Expenses Salaries and employee benefits 1,913,698 1,297,954 101,549 12,304,000 896,590 16,513,791 489,034 Services and supplies 6,331,413 710,641 282,259 3,330,573 696,537 11,351,423 8,517 Administration 888,835 258,985 203,232 1,127,985 417,609 2,896,646 - Depreciation 1,446,720 1,853,141 755,466 1,987,371 592,343 6,635,041 450,049 Total Operating Expenses 10,580,666 4,120,721 1,342,506 18,749,929 2,603,079 37,396,901 947,600 Earnings (Loss) from Operations 765,995 (818,032) (733,696) (1,020,929) 169,921 (1,636,741) (166,966) Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 37,268 24,279 - - 15,833 77,380 - Investment income (loss) 56,659 20,651 - 1,658 10,610 89,578 40,952 Salary credits - work orders 121,632 - - - - 121,632 - Supply credits - work orders 82,479 - - - - 82,479 - Insurance recovery - - - - - - 2,598 Gain on sale of capital assets 200 - - - - 200 9,000 Bond issue costs (73,457) (50,594) - (101,775) - (225,826) - Interest expense (185,626) (182,451) - (478,018) (29,998) (876,093) - Commercial passenger vessel tax - 917,500 - - - 917,500 - Nonoperating grant revenue - - - 14,000 - 14,000 - Other revenue (expenses) (28,825) - - - - (28,825) - Net Nonoperating Revenues (Expenses) 10,330 729,385 - (564,135) (3,555) 172,025 52,550 Earnings (Loss) Before Contributions and Transfers 776,325 (88,647) (733,696) (1,585,064) 166,366 (1,464,716) (114,416) Capital contributions 2,035,806 297,274 9,346,791 193,468 186,123 12,059,462 - Transfers in 8,400 - 165,750 1,239,672 12,000 1,425,822 72,308 Transfers out (1,243,180) (645,127) (124,919) (500,000) (306,269) (2,819,495) - Change in Net Position 1,577,351 (436,500) 8,653,926 (651,924) 58,220 9,201,073 (42,108) Net Position, beginning 27,041,341 38,166,558 27,858,441 (2,031,732) 17,914,768 5,107,351 Net Position, ending$ 28,618,692$ 37,730,058$ 36,512,367$ (2,683,656)$ 17,972,988$ 5,065,243 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (155,368) Change in Net Position of Business-type Activities$ 9,045,705 See accompanying notes to basic financial statements. 28 Exhibit C-3 City of Seward, Alaska Proprietary Funds Statement of Cash Flows Enterprise Funds Major Funds TotalInternal HealthcareNonmajorEnterpriseService Year Ended December 31, 2016 ElectricHarborSMICFacilitiesFundsFundsFunds Cash Flows from (for) Operating Activities Receipts from customers and users$ 11,384,928$ 3,397,195$ 589,940$ 16,136,000$ 2,747,826$ 34,255,889$ - Payments to suppliers (6,230,257) (1,070,979) (287,487) (2,063,751) (608,607) (10,261,081) (827) Payments to employees (1,401,753) (1,038,570) (99,843) (12,144,000) (759,619) (15,443,785) (507,618) Payments for interfund services used (888,835) (258,985) (203,232) (1,127,985) (417,609) (2,896,646) - Receipts from vehicle rentals and interfund charges - - - - - - 780,634 Net cash flows from for operating activities 2,864,083 1,028,661 (622) 800,264 961,991 5,654,377 272,189 Cash Flows from (for) Noncapital Financing Activities Transfers in 8,400 - 165,750 1,239,672 12,000 1,425,822 72,308 Transfers out (1,243,180) (645,127) (124,919) (500,000) (306,269) (2,819,495) - Net cash flows from (for) noncapital financing activities (1,234,780) (645,127) 40,831 739,672 (294,269) (1,393,673) 72,308 Cash Flows from (for) Capital and Related Financing Activities Principal payments on long-term debt (240,000) (470,000) - (1,090,000) (190,168) (1,990,168) - Interest payments on long-term debt (311,217) (148,754) - (859,654) (25,662) (1,345,287) - Acquisition of property, plant and equipment (3,296,505) (3,308,590) (10,263,507) (57,799) (1,107,691) (18,034,092) (430,498) Capital contributions received 1,359,256 2,912,225 8,826,598 207,468 2,774,396 16,079,943 - Proceeds from issuance of refunding bonds 5,045,000 1,055,000 - 17,135,000 - 23,235,000 - Payment to refunding bond escrow agent (4,913,457) (1,125,595) - (20,631,775) - (26,670,827) - Insurance recovery - - - - - - 2,598 Gain on dispoal of fixed assets 200 - - - - 200 9,000 Increase (decrease) in due to other funds - - 1,494,708 - (62,221) 1,432,487 - Interfund loan payments - (27,698) (98,008) (352,343) - (478,049) - Commercial passenger vessel tax receipts - 894,340 - - - 894,340 - Increase in due to contractual agencies - - - 250,000 - 250,000 - Net cash flows from (for) capital and related financing activities (2,356,723) (219,072) (40,209) (5,399,103) 1,388,654 (6,626,453) (418,900) Cash Flows from (for) Investing Activities Investment income (loss) 72,209 20,651 - 1,658 10,610 105,128 45,423 Interfund loan receipts 296,195 - - - - 296,195 181,853 Net cash flows from (for) investing activities 368,404 20,651 - 1,658 10,610 401,323 227,276 Net Increase (Decrease) in Cash and Investments (359,016) 185,113 - (3,857,509) 2,066,986 (1,964,426) 152,873 Cash and Investments, beginning 6,459,722 3,973,424 - 8,400,191 2,813,425 21,646,762 1,732,544 Cash and Investments, ending$ 6,100,706$ 4,158,537$ - $ 4,542,682$ 4,880,411$ 19,682,336$ 1,885,417 Reconciliation of Cash and Investments to Statement of Net Position Current assets$ 5,750,967$ -$ - $ 2,927,676$ 4,880,411$ 13,559,054$ 1,885,417 Restricted assets 349,739 4,158,537 - 1,615,006 - 6,123,282 - Total Cash and Investments$ 6,100,706$ 4,158,537$ - $ 4,542,682$ 4,880,411$ 19,682,336$ 1,885,417 See accompanying notes to basic financial statements. 29 Exhibit C-3, continued City of Seward, Alaska ProprietaryFunds StatementofCashFlows, continued Enterprise Funds Major Funds TotalInternal HealthcareNonmajorEnterpriseService Year Ended December 31, 2016ElectricHarborSMICFacilitiesFundsFundsFunds Reconciliation ofEarnings (Loss) from Operations toNetCash from (for) Operating Activities Earnings (loss) from operations765,995$$(818,032)$(733,696)$(1,020,929)$ (1,636,741)169,921$ (166,966)$ Adjustments toreconcile earnings (loss) from operations tonet cash flows from (for) operating activities: Depreciation1,446,7201,853,141755,4661,987,371592,3436,635,041450,049 Other nonoperating revenues (expenses)(28,825)--- (28,825)- - Other nonoperating revenues - workorder reimbursements: Salaries121,632--- 121,632-- Supplies82,479--- 82,479- - Noncash expense - PERS on-behalf37,26824,279- 15,833-77,380 - Increase inallowance for doubtful accounts(3,686)5,483 (710,000)-1,201(707,002) - Increase) decrease inassets and deferred outflows ofresources: Receivables30,29456,198(776)(33,000)(26,375)26,341 - Prepaid expenses3,600--- 3,600- - Inventory(14,962)-- 2,189-(12,773) - Other assets-- (241,000)- (241,000)- - Deferred outflows ofresources related topensions(39,622)(25,813)- (16,833)-(82,268) - Increase (decrease) inliabilities and deferred outflows ofresources: Accounts payable58,864(360,338)(5,228)(155,000)85,741(375,961)7,690 Other payables-- 1,662,822- 1,662,822-- Accrued payroll and related liabilities9,3706,5131,706160,0001,710179,299(18,584) Accrued annual leave(6,659)356- (29,404)-(35,707) - Customer deposits11,6593,0241,400- 16,083- - Unearned revenue 29,801-(19,494)(850,000) (839,693)- - Net pension liability394,595257,071- 167,636-819,302- Deferred inflows ofresources related topensions(4,639)(3,022)- (1,971)-(9,632) - Net Cash from (for) Operating Activities 2,864,083$1,028,661$(622)$800,264$ 5,654,377961,991$$272,189 Noncash Capital and Related Financing Activities Purchase ofcapital assets included in accounts payable$2,653$ 197,767-$$ 2,171-$$202,591$- Capital Contributions$1,713,760$ 1,666,727-$$-$ 3,380,487-$$- Seeaccompanying notes tobasic financial statements. 30 Exhibit D-1 City of Seward, Alaska Fiduciary Fund Statement ofFiduciary NetPosition Teen Council December 31, 2016 Agency Fund Assets Cash and investments$ 49,696 Other assets 150 Total Assets$ 49,846 Liabilities Accounts payable$ 1,599 Other accrued liabilities 16,116 Due to Teen Council 32,131 Total Liabilities$ 49,846 See accompanying notes to basic financial statements. 31 City of Seward, Alaska Notes toBasic Financial Statements December 31, 2016 1. SummaryofSignificant Accounting Policies Reporting Entity TheCityofSeward, Alaska (theCity) was incorporated June1, 1912 asahome-rulecityandoperates underaCouncil-Manager form ofgovernment. TheCityprovides thefullrange ofmunicipal services asprovided forbyAlaska Statute. This includes police andfireprotection, electric, water and wastewater services, library, parks andrecreation, public improvements, planning andzoning, port andharbor, hospital andlong-term care, andgeneral administrative services. Theaccompanying financial statements present the CityofSeward. In 2011the City adopted the provisions ofGASB Statement number 61, The Financial Reporting Entity: Ombnibus. Inconnection therewith, the City reviewed itslegal andcontractual arrangements with theProvidence Seward Medical Center which waspreviously reported asadiscreetly presented component unit, and determined that, forfinancial reporting purposes inaccordance withgenerally accepted accounting principles, thisactivity isappropriately recorded asanenterprise fund oftheCity. In2013, theCity entered intoacontractual agreement with anon-profit organization asco-signees toafederally funded health clinic program. The non-profit organization islegally separate anddoes notmeet the criteriaunder GASB 61forinclusion asacomponent unit. However, many activities associated with theclinic arereported in theSCHC Special Revenue Fund astheCityisthenamed grantee onthe primary operating grant. Thehospital andlong-term carefacilities (thePSMCC) areowned bytheCity ofSeward. The facilities aremanaged byProvidence Health & Services – Washington, anonprofit corporation (the Corporation), underamanagement andoperating agreement. Underthe operating agreement, the Corporation isresponsible fordaytodaymanagement ofthehospital andlong-termcarefacilities in exchange foramanagement fee. Allfinancial risks andrewards from theoperations ofthehospital andlong-term care facilities accrue to theCity. TheCity isresponsible fordebt obligations, including payment of revenue bonds through revenues generated atthePSMCC. TheCity pays forall capital costs of thehealthcare facilities andislegallyobligated tofinance potential deficits. Government-WideandFundFinancial Statements Theaccounting policies of theCityconform toaccounting principles generally accepted intheUnited StatesofAmerica asapplicable togovernments. Thefollowing isasummary ofthemore significant policies: Thegovernment-wide financial statements (i.e., the statement ofnet position andthestatement of activities) reportinformation onallofthenonfiduciary activities oftheprimary government. In general, theeffect ofinterfund activity hasbeen removed from these statements tominimize the double-counting of internal activities. Governmental activities, which normally are supported by taxes andintergovernmental revenues, arereported separately from business-typeactivities, which rely primarily onfeesandcharges toexternal parties. The statement ofactivities demonstrates thedegree towhich thedirect expenses ofagiven function or segment are offset byprogram revenues. Direct expenses arethose thatare clearly identifiable with aspecific function orsegment. Program revenues include 1) fees, fines andcharges to customers or applicants whopurchase, use, ordirectly benefit from goods, services, or privileges provided byagiven function orsegment and 2) grants andcontributions thatarerestricted to meeting theoperational orcapital requirements ofaparticular function orsegment. Taxes, investment income andother items notproperly included among program revenues arereported insteadas generalrevenues. 32 City of Seward, Alaska Notes toBasic Financial Statements Separate financial statements are provided forgovernmental funds, proprietary funds, andfiduciary funds, even though thelatterareexcluded from thegovernment-wide financial statements. Major individual governmental funds andmajor individual enterprise funds arereported asseparate columns inthefundfinancial statements. Measurement Focus, BasisofAccounting andFinancial Statement Presentation Thegovernment-wide andproprietary fund financial statements are reported using theeconomic resources measurement focusandtheaccrual basisofaccounting. Revenues arerecorded when earned and expenses arerecorded when aliability isincurred, regardless ofthe timing oftherelated cash flows. Property taxes arerecognized asrevenues intheyearforwhich theyare levied. Grants andsimilar items arerecognized asrevenue assoon as alleligibility requirements imposed bythe provider have beenmet. The Fiduciary Fund alsousestheaccrual basis ofaccounting. Governmental fund financial statements arereported using the current financial resources measurement focus andthemodified accrualbasisofaccounting. Revenues arerecognized assoon astheyarebothmeasurable andavailable. Revenues areconsidered tobe availablewhen they are collectible within thecurrent period orsoon enough thereafter topayliabilities ofthecurrent period. Forthispurpose, the Cityconsiders allrevenues, except reimbursement grants, to be available iftheyare collected within 60days after yearend. Reimbursement grants areconsidered available iftheyarecollected within one yearofthe endofthe current fiscal period. Expenditures generally arerecorded when aliability isincurred, as under accrual accounting. However, debt service expenditures, aswell asexpenditures related tocompensated absences arerecorded onlyto theextent theyhave matured. Property taxes, sales taxes, charges forservices, andinterest associated with thecurrent fiscal period areallconsidered tobesusceptible toaccrual andsohave beenrecognized asrevenues ofthe current fiscal period. Only theportion ofspecial assessments receivable duewithin thecurrent fiscal period isconsidered tobe susceptible to accrual asrevenue inthecurrent period. Most other revenue items areconsidered tobemeasurable andavailable only whenreceived by thegovernment. TheCityreports thefollowing major funds based onthe required quantitative criteria: Major Governmental Funds: TheGeneral Fundisthegovernment’sprimary operating fund. Itaccounts forall financial resources ofthegeneral government, except thoserequired tobereported inanother fund. Major Proprietary Funds: TheElectric Enterprise Fund accounts forallactivities related totheoperation oftheCity’s electric utility. TheHarbor Enterprise Fundaccounts forthemarine-related activities of theCity’sharbor. TheSeward Marine Industrial Center (SMIC) Enterprise Fund accounts formarine-related services ontheeast sideof Resurrection Bay. TheHealthcare Facilities Enterprise Fundaccounts forthehealthcare facilities, local hospital andlong-term care facilities. 33 City of Seward, Alaska Notes toBasic Financial Statements TheCityalsoreports twoInternal Service Funds which account fortheactivities relating totheCity’s motorpoolactivities andcompensated absences ofthegovernmental funds. TheMotor PoolInternal Service Fund reports revenues charged totheother funds based onrental feesandcapital lease payments designed tocover thecost ofthelease payments andtofund depreciation. The Compensated Annual Leave Internal Service Fund accounts fortheaccrual andpayment of compensated absences ofthegovernmental activities. Inaddition, theCitymaintains and reports onasinglefiduciary fund. Thisfundrecords cashheldina fiduciary capacity onbehalfofthelocal teencouncil. Asageneral ruletheeffect of interfund activity hasbeen eliminated from thegovernment-wide financial statements. Exceptions to thisgeneral rule areallocated administration feesandcharges between theenterprise funds andthevarious otherfunds anddepartments. Elimination ofthese charges would distort the direct costs andprogram revenues reported for thevarious functions concerned. Amounts reported asprogram revenues include 1) charges to customers orapplicants forgoods, services, orprivileges provided, 2) operating grants andcontributions, and3) capital grants and contributions, including special assessments. Internally dedicated resources arereported asgeneral revenues rather than as program revenues. Inaddition, general revenues include alltaxes, investment income, andState ofAlaska entitlement revenues. Proprietary funds distinguish operating revenues andexpenses from nonoperating items. Operating revenues andexpenses generally result from providing services andproducing anddelivering goodsin connection with aproprietary fund’sprincipal ongoing operations. Operating expenses forthe proprietary funds include thecosts ofsales and services, administrative expenses anddepreciation on capital assets. Allrevenues andexpenses notmeeting thisdefinition arereported asnonoperating revenues andexpenses. PriorYears Amounts Incertain schedules, prior year amounts have been presented forcomparison purposes. Some amounts reported fortheprior yearhave been reclassified toconform tothecurrent year presentation. Central Treasury Acentral treasury isused toaccount forthe City’scash andinvestments tomaximize investment income. Investments arestated atfairvalue. Investment income isallocated among the funds based ontheir respective cash balances. CashandCashEquivalents Forpurposes ofthestatement ofcash flows, theproprietary fundsconsider allcash and investments tobecash andcash equivalents. Thecentral treasury, which holds cash and investments, isused essentially asacash management pool byeach fund. Inventory Inventories arevalued at costingovernmental funds andatthelower ofcostormarket in the proprietary funds. Cost isdetermined bythefirst-in, first-outmethod. Thecost isrecorded asan expenditure orexpense at thetime individual inventory itemsare consumed (consumption method). 34 City of Seward, Alaska Notes toBasic Financial Statements Prepaid Items Certain payments tovendors reflect costs applicable tofuture accounting periods andare recorded as prepaid items inboth government-wide andfundfinancial statements. Cost isrecorded asan expenditure or expense astheprepayment isapplied (consumption method). Receivables andPayables Activity between funds thatarerepresentative oflending/borrowing arrangements outstanding atthe endoftheyeararereferred toaseither “dueto / from other funds” (i.e., thecurrent portion of interfund loans) or “advances to / from other funds” (i.e., thenoncurrent portion ofinterfund loans). Allother outstanding balances between fundsare reported as “dueto / from other funds.” Any residual balances outstanding between thegovernmental activities andbusiness-typeactivities are reported inthegovernment-wide financial statements as “internal balances.” Capital Assets Capital assets, which include property, plant, equipment andinfrastructure assets (e.g. roads and similar items), arereported intheapplicable governmental or business-typeactivities columns inthe government-widefinancial statements. Capital assets are defined bytheCity asassets with an initial, individual costofmore than $2,500andanestimated useful lifeinexcess ofoneyear. Such assets are recorded athistorical costorestimated historical cost ifpurchased orconstructed. Donated capital assets arerecorded at estimated fairmarket valueat thedateofdonation. Inthe case ofthe initial capitalization ofinfrastructure assets, theCity chose toinclude all such items, regardless oftheir acquisition date. Thecosts ofnormal maintenance and repairs thatdonotaddtothevalue of theasset or materially extend theuseful lifeoftheassetarenotcapitalized. Major outlays forcapital assets and improvements arecapitalized asprojects areconstructed. Interest incurred during theconstruction phase ofcapital assets ofbusiness-typeactivities isincluded as partofthecapitalized value oftheassets constructed. Property, plant, andequipment oftheCity isdepreciated using thestraight-linemethod overthe following estimated useful lives: Assets Years Buildings and improvements 20-40 years Infrastructure 10-50years System infrastructure 20-50 years Machinery and equipment 3-8 years Improvements other than buildings 3-40 years Accrued AnnualLeave TheCityallows employees to accumulate earned butunused vacation andsick leavebenefits. All accrued leave isaccrued when incurred inthegovernment-wide, proprietary fund, andgovernmental fund financial statements. Accrued leave thatisearned inthegovernmental funds isaccounted for intheCompensated Annual Leave Internal Service Fund. 35 City of Seward, Alaska Notes toBasic Financial Statements Long-termDebt Inthegovernment-wide andtheproprietary fundfinancial statements, long-term debt andother long-term obligations arereported asliabilities intheapplicable governmental activities, business- typeactivities, orproprietary fund typestatement ofnetposition. Bond premiums anddiscounts, aredeferred and amortized overthe lifeofthe bondsusing thestraight-linemethod. FundBalances Inthefund financial statements, governmental funds report aggregate amounts forfive classifications offund balances based on theconstraints imposed ontheuseofthese resources. Thenonspendable fund balance classification includes amounts thatcannot bespent because they areeither (a) not inspendable form—prepaid items or inventories; or (b) legally orcontractually required tobemaintained intact. Thespendable portion ofthefund balances comprises theremaining four classifications: restricted, committed, assigned, andunassigned. Restricted fund balance – This classification reflects theconstraints imposed onresources either a) externally bycreditors, grantors, contributors, orlaws orregulations ofother governments; or b) imposed bylawthrough constitutional provisions orenabling legislation. Committed fund balance – These amounts canonly beused forspecific purposes pursuant to constraints imposed byformal resolutions oftheCityCouncil—thegovernment’shighest level of decision making authority. Thosecommitted amounts cannot beused foranyother purpose unless theCityCouncil removes thespecified use, also through resolution. This classification also includes contractual obligations tothe extent thatexisting resources inthefund have been specifically committed forusein satisfying those contractual requirements. Assigned fundbalance – This classification reflects theamounts constrained bytheCity’s “intent” tobe usedforspecific purposes, butareneither restricted norcommitted. City Resolution 2009- 131delegates authority toassign fund balance totheCity Manager andtheFinance Director. Assigned fundbalances, bydefault, include allremaining amounts (exceptnegative balances) that arereported ingovernmental funds, other than theGeneral Fund, that arenotclassified as nonspendable andareneither restricted norcommitted. Unassigned fundbalance – This fund balance istheresidual classification fortheGeneral Fund. It isalsoused toreport negative fund balances inother governmental funds. When both restricted andunrestricted resources are available foruse, itistheCity’spolicy touse externally restricted resources first, then unrestricted resources—committed, assigned, and unassigned—inorder asneeded. Encumbrances Encumbrance accounting, under which purchase orders, contracts andother commitments for expenditures arerecorded inorder toreserve that portion oftheapplicable appropriation, is employed asan extension of formal budgetary integration intheGeneral Fund during theyear. However, itistheCity’spolicy tostop issuing purchase orders inearly December. Asaresult, there arenooutstanding encumbrances atDecember 31, 2016. Outstanding purchase orders, ifany, at December 31, arecancelled andnewones areissued inthesubsequent year. 36 City of Seward, Alaska Notes toBasic Financial Statements Unearned Grant Revenue Amounts received from grantor agencies, which are restricted astouseandhave notbeen expended forthe intended use, areshown asunearned revenue. Grant andOther Intergovernmental Revenues In applying themeasurable andavailable concepts togrants andintergovernmental revenues, the legalandcontractual requirements ofthenumerous individual programs are usedasguidance. There are, however, essentially two types oftheserevenues. Inone, monies must be expended onthe specific purpose orproject before anyamounts areconsidered “earned”; therefore, revenues are recognized based upon expenditures recorded. Intheother, monies arevirtually unrestricted asto purpose of expenditure andareusually revocable only forfailure tocomply with prescribed compliance requirements. These resources arereflected asrevenues atthetimeofreceipt orearlier ifthemeasurable andavailable criteria aremet. Pension Plan With theexception ofcertainElectric Fund employees, substantially allother employees oftheCity participate inthePublic Employees' Retirement System (PERS) administered bytheState ofAlaska. Certain electric employees participate inthe International Brotherhood ofElectric Workers (IBEW) Plan. Property Taxes Property taxesare liensonthe assessed value of taxable property as ofJanuary 1. Pursuant toAlaska Statutes, theCityestablishes themillrateandtaxlevy onorbefore June 15. TheCity islocated within theKenai Peninsula Borough, which actsastheCity’sagent inthebillingandcollection of property taxes. Taxbillsfor one-halfofthetaxes aremailedprior toJuly 1andarepayable on August 15; tax billsforthesecond-halfofthetaxes are mailed byOctober 1and arepayable on November 15. City property taxrevenues are recognized in thefiscal yearinwhich they are collectible andavailable (collected withinsixty days after year-end) to finance expenditures ofthe fiscal year. AtDecember 31, thedelinquent realandpersonal property taxes notcurrently available are reflected asdeferred inflows ofthe General Fund. 2. Stewardship, Compliance, andAccountability Budgetary Information Anoperating budget isadopted eachfiscal year fortheGeneral Fundonthesame modified accrual basis used toreflect actual revenues andexpenditures. Appropriations forthisfund lapse at year-end tothe extentthat theyhave notbeen expended. Budgetary control isexercised atthe department level. TheCity Manager isauthorized totransfer budget amounts between departments within afund orbetween lineitemswithin departments, butCityCouncil approval is required totransfer budget amounts between funds. 37 City of Seward, Alaska Notes toBasic Financial Statements Allocation ofSalesTax Revenues When theCitytransferred theoperations oftheHospital toProvidence Seward Medical andCare Center onJuly 1, 1996, theCity agreed toallocate 1% ofthesales taxforthebenefit ofthe Hospital. During construction, theallocated salestax wasusedtooffset losses andtransition costs. Subsequent tocompletion oftheconstruction, theallocated sales tax hasbeen usedto fund thedebtservice ontheHospital general obligation bonds. Upon maturity ofhospital bonds, sales taxrevenues willbeused tofund healthcare capital andoperating costs, and debtservice on long-term care facility bonds, ifnecessary. Allsales taxrevenue isrecorded intheGeneral Fund. Theallocated portion isthen transferred totheHealthcare Facilities Enterprise Fund fordebt service. 3. Cash andInvestments TheCityofSeward maintains acentral treasury thatisavailable for usebyall funds. Each fund’s portion ofthecentral treasury isdisplayed onthebalance sheet as “cash andinvestments” orin thecaseof “negative cash,” isincluded in “duetoother funds.” Investments City statutes authorize theCity toinvest inobligations oftheU.S. Treasury and U.S. agencies, bankers’ acceptances, repurchase agreements, commercial paper issuedbycorporations or businesses andhaving thehighest rating ofanationally-recognized rating service andmaturing within ninemonths, certificates ofdeposit insured byfederal depository insurance orsecured by eligible collateral heldbyathird party inthe City’sname, andinvestments through theAlaska Municipal League Investment Pool (AMLIP). TheCity’sinvestment policy doesnotspecify a maximum investment maturity, buttheCitygenerally invests funds forlessthanthree years from thedate ofpurchase. TheCityhascomplied withitsinvestment policy throughout theyear. The City’sinvestments arerecorded atfairvalue. TheAMLIP isanexternal investment poolwhichisrated AAAm forcredit riskpurposes. Alaska Statute 37.23establishes regulatory oversight ofthePool. The lawsets forth numerous requirements regarding authorized investments andreporting. Onamonthly basis the investments inthePool arereviewed forfair value byanindependent pricing service. Thevalues ofinvestments intheAML Pool areapproximately equal to fairvalue. Reconciliation ofDeposit andInvestment Balances The following isareconciliation oftheCity’sdeposit andinvestment balances tothefinancial statements asofDecember 31, 2016: Fiduciary Fund Government-Wide Statement of Statement ofNetFiduciary PositionNet PositionTotals Cash and investments $23,101,369$49,696$23,151,065 Restricted cash and investments 6,123,282 -6,123,282 TotalCashandInvestments $29,224,651$49,696$29,274,347 38 City of Seward, Alaska Notes toBasic Financial Statements Restricted Cashand Investments TheCity maintains bond redemption andreserve accounts asrequired by bond covenants. The balances atDecember 31, 2016 areasfollows: Harbor Enterprise Fund $1,891,394 Healthcare Enterprise Facilities Fund 1,615,006 Electric Enterprise Fund 349,739 TotalRestricted forBondRetirement $3,856,139 TheCityalsoincludes inrestricted cash andinvestments amounts thathavebeen designated for capital projects. The total amount of restricted cash andinvestments thathasbeen designated forcapital projects follows: Harbor Enterprise Fund $2,267,143 TotalRestricted forCapital Projects $2,267,143 Custodial Risk ThefairvalueoftheCity’sinvestments at year-endisshown below. GASB Statement 3, as amended byGASB Statement 40, establishes categories asanindication of thelevel of custodial riskinvolved intheinvestments. All oftheCity’sremaining investments areinthecategory of least riskandinclude investments thatareinsured orregistered intheCity’sname, or securities thatareheldbytheCity or itsagent intheCity’sname. Allof theUnited States treasury bills, treasury notes, and United States agency securities areheldincustodial accounts inthe U.S. Bank andBank ofNewYork Trust Departments andarerecorded intheCity’sname, inaccordance with safekeeping agreements. U.S. Bank andBank of New York arenotcounter parties tosecurity transactions. Interest RateRisk Thefair value oftheCity’sfixed-income investments fluctuate inresponse tochanges inmarket interest rates. Increases inprevailing interest rates generally translate intodecreases infair value ofthose investments. Fairvalues ofinterest rate-sensitive instruments maybe affected by the creditworthiness of theissuer, prepayment options, relative values ofalternative investments, theliquidity oftheinstrument, and othergeneral market conditions. TheCity manages interest rateriskbyallocating specific percentages oftheportfolio over specified time periods, and generally holds investments forlessthanfiveyears, which minimizes thesensitivity offairvalue tochanges inmarket interest rates. TheCityhasno formal policy relating toaspecific deposit or interest rate risk. Theremainder ofthispageintentionally leftblank. 39 City of Seward, Alaska Notes toBasic Financial Statements Investment types andtheir maturities atDecember 31, 2016areasfollows: Investment Maturities (inYears) Less than 1 Investment Fair Valueyear1 to5yearsOver 5years Certificates ofdeposit $6,353,467$1,593,279$4,760,188$- U.S. government agencies 2,635,853-2,635,853- U.S. treasury SLGS 248,518--248,518 U.S. government bonds 6,668,930327,2916,341,639- TotalSubject toInterestRateRisk 15,906,768$1,920,570$13,737,680$248,518 Pooled investments 1,595,743 Money market account 2,664,124 Total investments 20,166,635 Bank deposits 9,107,712 TotalCashandInvestments $29,274,347 Option Risk Option riskistheriskthataninvestment’scounterparty may exercise aright embedded inthe investment – anembedded option. TheCity invests insecurities issued byU.S. government agencies thatcontain callprovisions. Theexercise of thecalloption bythe counterparty occurs during times ofdeclining interest rates; therefore theCityisexposed totheriskof having to reinvest atalower interest rate. Inthetable above, securities arecategorized according tothe final maturity, regardless ofcalloption dates. Ifcalloptions were exercised atthenext possible calldate, many ofthecallable securities would mature inlessthan oneyear. Concentration Risk TheCity’sinvestment policyplaces nolimit ontheamount thatcanbeinvested inanyone issuer. Approximately 47% of thetotal portfolio isinvested insecurities issued byfederal agencies and approximately 13% isheldwiththe Federal HomeLoan Bank. CreditRisk Generally, credit risk istherisk thatanissuer of aninvestment will notfulfill itsobligation tothe holder oftheinvestment. This ismeasured bytheassignment ofaratingby anationally recognized statistical rating organization. Theinvestments inU.S. government agencies include Federal Home Loan Bank andU.S. Treasuries. Allofthe U.S. government agencies investments arerated AAA byStandard and Poor’s. TheCity’sinvestment policy specifies thetypes ofinvestments that canbepurchased, inorder to limit credit risk. TheCity mayinvest inobligations oftheUnited Statesgovernment, itsagencies andinstrumentalities; insured or collateralized certificates of deposit; savings accounts; collateralized repurchase agreements; commercial paper maturing within ninemonths issuedby corporations having thehighest rating of anational rating agency; bankers’ acceptances; andthe State investment pool. Credit riskismitigated bylimiting theeligible investment options. 40 City of Seward, Alaska Notes toBasic Financial Statements Fair Value Measurement TheCity categorizes itsfairvalue measurements within thefairvalue hierarchy established by generally accepted accounting principles. The hierarchy isbased onthevaluation inputs used to measure thefairvalue oftheasset. Level1inputs arequoted prices inactive markets foridentical assets; Level 2inputs are significant other observable inputs; Level 3inputs are significant unobservable inputs. TheCity hasthefollowing recurring fair value measurements asofDecember 31, 2016: U.S. government agency securities of $2,884,371arevalued using information formarket sources, integrated relative creditinformation, observed market movements, andsector newsintotheevaluated pricing applications andmodels (Level 2inputs) U.S. government bondsof $6,668,930arevaluedusing information formarket sources, integrated relative creditinformation, observed market movements, andsector news intothe evaluated pricingapplications and models (Level 2inputs) TheCityhasinvestments inmoney marketfunds, certificates ofdeposits, andpooled investments totaling $10,613,334thatarevalued atamortized costasofDecember 31, 2016. 4. Capital Assets Capital asset activity fortheyearendedDecember 31, 2016 wasas follows: BalanceBalance Additions and Deletions andJanuary1,December 31, Governmental Activities 2016ReclassificationsReclassifications 2016 Capital assets not being depreciated: Land and land improvements $5,509,589$-$-$5,509,589 Construction in progress 502,839123,104502,839123,104 Total assets not being depreciated 6,012,428123,104502,8395,632,693 Capital assets being depreciated: Buildings 70,253,7521,085,999-71,339,751 Improvements other than buildings 22,388,669227,456-22,616,125 Machinery and equipment 15,817,735736,077317,22716,236,585 Total assets being depreciated 108,460,1562,049,532317,227110,192,461 Less accumulated depreciation for: Buildings 26,059,2151,671,029-27,730,244 Improvements other than buildings 14,979,655315,377-15,295,032 Machinery and equipment 11,721,775866,788317,22712,271,336 Total accumulated depreciation 52,760,6452,853,194317,22755,296,612 Total capital assets being depreciated, net 55,699,511(803,662) -54,895,849 Governmental Activity Capital Assets, net$61,711,939$(680,558) $502,839$60,528,542 Theending balances include $6,937,053and $4,838,339ofequipment costandaccumulated depreciation, respectively, related tothe Motor Pool Internal Service Fund. 41 City of Seward, Alaska Notes toBasic Financial Statements BalanceBalance January 1,Additions and Deletions and December 31, Business-type Activities 2016ReclassificationsReclassifications2016 Capital assets not being depreciated: Land and land improvements $30,639,257$-$-$30,639,257 Construction in progress 17,177,50416,175,31820,239,34513,113,477 Total assets not being depreciated 47,816,76116,175,31820,239,34543,752,734 Capital assets being depreciated: Buildings 37,128,71641,876-37,170,592 Infrastructure 970,606--970,606 Improvements other than buildings 139,370,24720,604,865-159,975,112 Machinery and equipment 18,139,651256,103-18,395,754 Total assets being depreciated 195,609,22020,902,844-216,512,064 Less accumulated depreciation for: Buildings 15,778,8801,352,610-17,131,490 Infrastructure 456,08380,606-536,689 Improvements other than buildings 88,084,1854,350,573-92,434,758 Machinery and equipment 12,114,272851,252-12,965,524 Total accumulated depreciation 116,433,4206,635,041-123,068,461 Total capital assets being depreciated, net 79,175,80014,267,803 -93,443,603 Business-type Capital Assets, net$126,992,561$30,443,121$20,239,345$137,196,337 Depreciation for the year ended December 31, 2016 was charged to the functions as follows: Depreciation Internal Excluding InternalService Fund Total Governmental Activities Service FundAllocationDepreciation General government $233,234$185,640$418,874 Public safety 202,401102,868305,269 Public works 289,827122,843412,670 Parks and recreation 86,11938,698124,817 Library 236,006-236,006 SeaLifeCenter 1,355,558-1,355,558 TotalGovernmental Activities $2,403,145$450,049$2,853,194 42 City of Seward, Alaska Notes toBasic Financial Statements Depreciation Excluding Internal Business-typeActivities Service Fund Electric $1,446,720 Water200,323 Wastewater 367,543 Harbor 1,853,141 SMIC 755,466 Parking 24,477 Healthcare facilities 1,987,371 TotalBusiness-typeActivities $6,635,041 5. Interfund Receivables, Payables andTransfers Aschedule ofinterfund balances andtransfers asofandfortheyear ended December 31, 2016, follows. Interfund balances typically resultfrom short-term operating orcapital advances. Transfers typically result from capital matching, operating subsidies, andpayment inlieuoftaxes. DueFromOtherFunds Due tothe General Fund from theSMIC Enterprise Fund $1,680,476 Due totheGeneral Fund from Nonmajor Governmental Funds 727,753 TotalDueFromOther Funds $2,408,229 Transfers From General Fund to: SMIC Enterprise Fund $165,750 Electric Enterprise Fund 8,400 Healthcare Facilities Enterprise Fund 1,239,672 Nonmajor enterprise funds 12,000 Nonmajor governmental funds 845,768 Total transfers from General Fund 2,271,590 From Harbor Enterprise Fund to: General Fund 375,978 Nonmajor governmental fund 269,149 Total transfers fromHarbor Enterprise Fund 645,127 43 City of Seward, Alaska Notes toBasic Financial Statements Transfers, continued From Heathcare Facilities Enterprise Fund tononmajor governmental fund $500,000 From SMIC Enterprise Fund to general fund 124,919 From Electric Enterprise Fund togeneral fund 1,243,180 Fromnonmajor enterprisefund tointernal service fund 72,308 From nonmajor enterprise funds toGeneralFund 233,961 Fromnonmajor governmentalfund toGeneral Fund 660 TotalTransfers toOther Funds $5,091,745 TheCityhasfour outstanding interfund loans. In 2006, theMotorPool Fund andthe Electric Fundissued interfund loans inthetotalamount of 1,708,125totheHealthcare Facilities Enterprise Fund forthepurpose ofpaying theSeward General Hospital PERS unfunded liability. Repayment isscheduled over twenty years bearing interest at5.25%. In2016, theElectric Fund portion oftheloanwas retired. Alsoin2006, theMotor PoolFund loaned $220,258totheHarbor Enterprise Fundforthepurpose of purchasing a50-ton Boat Lift. Theloan wasfortenyearsandboreinterest at5.5% andwasretired in 2016. In2014, theMotor PoolFund loaned $1,029,087 totheSMIC Fund forthepurpose ofpurchasing a330- tonBoat Lift. Theloanistoberepaid insevenannual installments of $147,012foratotalamount of 1,029,087. Amounts outstanding atDecember 31, 2016 follow: Payable from theHealthcare Facilities Enterprise Fundto: Motor Pool Internal Service Fund $752,024 Payable from theSMIC Enterprise FundtoMotor Pool Internal Service Fund 784,067 Total Interfund Loans $1,536,091 Theremainder ofthispageintentionally leftblank. 44 City of Seward, Alaska Notes toBasic Financial Statements 6. Long-term Liabilities Thefollowing isasummary oflong-term liability transactions oftheCity fortheyear ended December 31, 2016: Balance atBalance at Due January 1,December 31, Within Governmental Activities 2016AdditionsRetirements2016One Year General obligation bonds - 3,480,000 2012 General Obligation bonds, due in annual installments of $100,000 to 240,000, plus interest at 4.0% to 5.0% through September 1, 2036 $3,305,000$-$95,000$3,210,000$100,000 Accrued leave 505,354671,121689,705486,770103,010 Net pension liability 6,320,6271,753,377-8,074,004- Total Governmental Activities Long-term Liabilities $10,130,981$2,424,498$784,70511,770,774$203,010 Plus unamortized bond premium 205,719 11,976,493 Liquidation ofgovernmental accrued annual leave ismade bytheCompensated Annual Leave Internal Service Fund. Allother debt service payments above aremade by theGeneral Fund or Motor Pool Internal Service Fund. Theremainder ofthispageintentionally leftblank. 45 City of Seward, Alaska Notes toBasic Financial Statements Balance at Due Balance atDecember 31, Within Business-type Activities January 1, 2016AdditionsRetirements2016One Year Revenue bonds: 6,000,000 2008 electric revenue bonds, due in annual installments of $135,000 to $140,000, plus interest at 4.0% to 6.0% through June 1, 2018 $5,245,000$-$4,970,000$275,000$135,000 27,000,000 2008 Series One long- term care facility bonds, due in annual installments of $910,000 to $945,000, plus interest at 4.0% to 5.0% through April 1, 2018 23,250,000-21,395,0001,855,000910,000 4,500,000 2006 harbor revenue bonds, due in final installment of 215,000, plus interest at 4.0% on June 1, 2016 215,000-215,000-- 1,965,000 2007 refunding harbor revenue bonds, due in annual installments of $190,000, plus interest at 5.0% through December 1, 2016 1,265,000-1,265,000-- 17,135,000 refunding long-term care facility bonds, due in annual installments of $830,000 to 1,405,000, plus interest at 2.0% to 5.0% through August 1, 2038 -17,135,000225,00016,910,000- 5,045,000 refunding electric revenue bonds, due in annual installments of $15,000 to 330,000 at2.0% to 5.0%, through August 1, 2038 -5,045,000110,000 4,935,00015,000 r1,055,000 refunding harbo revenue bonds, due in annual installments of $200,000 to 230,000 at 2.0% to 4.0%, through December 1, 2021 -1,055,000- 1,055,000200,000 46 City of Seward, Alaska Notes toBasic Financial Statements Balance atBalance at Due January 1,December 31, Within 2016AdditionsRetirements2016One Year Revenue bonds, continued: 3,405,000 2014 refunding harbor revenue bonds, due in annual installments of $280,000 to 320,000, plus interest at 1.25% to 5.00% through October 1, 2025 $3,405,000$-$65,000$3,340,000$280,000 Notes payable: 678,740 sewer note payable to State of Alaska Department of Environmental Conservation, due in annual installment of $29,793 to 38,949, plus interest at 1.5% through September 11, 2035 678,740-29,353649,38729,793 685,232 sewer note payable to State of Alaska Department of Environmental Conservation, due in annual installment of $30,078 to 39,322, plus interest at 1.5% through September 11, 2035 685,232-29,633655,59930,078 2,652,849 water note payable to State of Alaska Department of Environmental Conservation, due in annual installments of $156,844, including interest at 1.5% through April 1, 2027 1,710,777-131,1821,579,595133,150 1,201,196 harbor note payable to U.S. Department of Defense, payment terms are yet to be established 1,201,196--1,201,196- Accrued leave 180,473174,917210,264144,76649,582 Net pension liability 2,665,266819,302-3,484,568- Total Business type Activities Long- term Liabilities $40,501,684$24,229,219$28,645,43236,085,111$1,782,603 Plus unamortized bond premium 2,411,880 38,496,991 47 City of Seward, Alaska Notes toBasic Financial Statements Annual debt service requirements tomaturity onthebonds andnotes follow: General Obligation BondsGovernmental Activities YearEnding December 31, PrincipalInterestTotal 2017 $100,000$146,800$246,800 2018 105,000141,800246,800 2019 110,000136,550246,550 2020 115,000132,150247,150 2021 120,000126,400246,400 2022-2026 695,000539,7501,234,750 2027-2031 865,000367,7501,232,750 2032-2036 1,100,000144,5001,244,500 3,210,000$1,735,700$4,945,700 Revenue Bonds Business-typeActivities YearEnding December 31, PrincipalInterestTotal 2017 $1,540,000$1,091,224$2,631,224 2018 1,595,0001,031,2062,626,206 2019 1,505,000987,5062,492,506 2020 1,570,000914,356 2,484,356 2021 1,650,000838,0062,488,006 2022-2026 8,115,0003,001,23111,116,231 2027-2031 7,530,0001,473,6949,003,694 2032-2036 4,220,000378,4254,598,425 2037-2038 645,00034,125679,125 28,370,000$9,749,773 $38,119,773 Notes Payable Business- typeActivities YearEnding December 31, PrincipalInterestTotal 2017 $193,021$43,269$236,290 2018 195,91640,374236,290 2019 198,85537,434236,289 2020 201,83834,452236,290 2021 204,865 31,424236,289 2022-2026 1,071,353110,0931,181,446 2027-2031 512,520 41,553554,073 2032-2035 306,213 11,570317,783 2,884,581$350,169$3,234,750 48 City of Seward, Alaska Notes toBasic Financial Statements DebtIssued during the Year During 2016, theCity issued $17,135,000inadvance refunding revenue bonds torefinance 20,530,000oftheoutstanding 2008 Long-Term Care Facility Revenue bonds. Thenewbonds were issued atapremium of $1,694,523 andwillresult inthetotalcashflowsavings of $8,221,963 andeconomic gain of $3,957,504. Inaddition, in2016, theCityissued $5,045,000inadvance refunding revenue bonds torefinance $4,840,000 oftheoutstanding 2008 Electric Revenue Bonds. These bondswere issued atapremium of $318,189andwillresult inatotal cash flow savings of 1,043,700andeconomic gainof $426,522. TheCityalsoissued $1,055,000inadvance refunding G.O. bonds torefinance $1,075,000 oftheoutstanding 2007 refunding harbor revenue bonds. There bonds were issued atapremium of $25,424and willresult inatotal cash savings of $54,707 andeconomic gainof $45,840. DebtIssued Subsequent toYearEnd Subsequent toyearend, theCityissued $2,890,000 inrevenue bonds forRoad Improvements. The newbonds were issued atapremium of $109,720. 7. Revenue Bond Requirements Certain covenants of therevenue bonds require establishment ofbond redemption andreserve accounts. Thebalances are reflected asrestricted cash and investments atDecember 31, 2016 as follows: Long-term care facility bond reserves $ 1,615,006 Electric bond reserves 349,739 Harbor bond reserves 1,891,394 TheElectric andHarbor revenue bonds alsorequire thatratesbemaintained atalevel thatwill produce netrevenues aftercertain adjustments, equal to1.3and1.2, respectively, times the amount required each year to paytheprincipal andinterest. TheCity met these revenue requirements forbothbonds in2016. Thebond coverage calculations areasfollows: Electric Revenue Bonds Total revenues, excluding grants $11,607,631 Total operating expenses, excluding depreciation (9,421,854) Available forDebtService $2,185,777 Debt service payments: Principal $240,000 Interest 109,739 TotalDebtService Payments $349,739 DebtCoverage 6.25 49 City of Seward, Alaska Notes toBasic Financial Statements Harbor Revenue Bonds Total revenues, excluding grants $3,323,340 Total operating expenses, excluding depreciation (2,500,625) Availablefor DebtService $822,715 Debt service payments: Principal $470,000 Interest 200,380 TotalDebtService Payments $670,380 DebtCoverage $1.23 8. Fund Balance Fund balances, reported forthemajor fund andthenonmajor fund intheaggregate onthe governmental funds balance sheet aresubject tothefollowing constraints: General Nonmajor FundFundsTotals Nonspendable: Prepaid items $622,337$5,858$628,195 Total nonspendable 622,3375,858628,195 Committed: Working capital 1,500,000-1,500,000 Insurance 126,418-126,418 Hospital lineofcredit 500,000-500,000 Total committed 2,126,418-2,126,418 Assigned: Park and recreation -2,4982,498 Public works -6,4096,409 General government -141,541141,541 Clinic -106,356110,670 Insurance 235,280-235,280 Capital projects -2,540,3302,540,330 Other assignments 100,000-100,000 Total assigned 335,2802,801,4483,136,728 Unassigned 4,873,463-4,873,463 TotalFundBalances $7,957,498$2,802,992$10,760,490 50 City of Seward, Alaska Notes toBasic Financial Statements 9. Defined Benefit (DB) Pension Plan General Information About thePlan The Cityparticipates intheAlaska Public Employees’ Retirement System (PERS). PERSisacost- sharing multiple employer planwhich covers eligible State andlocal government employees, other thanteachers. ThePlan wasestablished andisadministered bythe State ofAlaska Department of Administration. Benefit andcontribution provisions areestablished by Statelawandmay be amended onlybytheState Legislature. ThePlan isincluded inacomprehensive annual financial report thatincludes financial statements andother required supplemental information. That report isavailable viathe internet at http://doa.alaska.gov/drb/pers. Actuarial valuation reports, audited financial statements, and other detailed planinformation arealsoavailable onthiswebsite. The Planprovides forretirement, death anddisability, andpost-employment health carebenefits. There arethree tiers ofemployees, based onentry date. Forall tiers within theDefined Benefit DB) plan, full retirement benefits aregenerally calculated using aformula comprised ofa multiplier times theaverage monthly salary (AMS) times thenumber ofyears of service. The multiplier isincreased atlongevity milestone markers formost employees. Police/Fireemployees accrue benefits at anaccelerated rate. Thetiers withinthePlanestablish differing criteria regarding normal retirement age, early retirement age, and thecriteria forcalculation ofAMS, COLA adjustments, andother OPEB benefits. Acomplete benefit comparison chart isavailable at thewebsite noted above. The PERS DBPlanwasclosed tonewentrants effective June 30, 2006. Newemployees hired after thatdateparticipate inthePERS Defined Contribution (DC) Plan described later inthese notes. Historical Context and Special Funding Situation InApril 2008, theAlaska Legislature passed legislation converting thepreviously existing PERSplan from anagent-multiple employer plan toacost-sharing plan withaneffective dateofJuly 1, 2008. In connection with thisconversion, theStateof Alaska passed additional legislation which statutorily capped theemployer contribution rate, established astatefunded “on-behalf” contribution (subject tofunding availability), andrequired thatemployer contributions be calculated against allPERS eligible wages, including wages paidtoparticipants ofthePERS Tier IV defined contribution plan described later inthesenotes. Alaska Statute 39.35.255requires theState of Alaska tocontribute tothePlan anamount such that, when combined with theemployer contribution, issufficient topaythePlan’spast service liability contribution rateasadopted bytheAlaska Retirement Management Board. Assuch, the Plan isconsidered tobe inaspecial funding situation asdefined byGASB, andmanagement has recorded allpension related liabilities, deferred inflows and outflows ofresources, anddisclosures onthisbasis. Itisimportant tonote thattheAlaska Legislature hasthepower and authority tochange the aforementioned statute through thelegislative process. The Cityrecords theseon-behalf contributions asrevenue andexpense/expenditures in thefund financial statements. 51 City of Seward, Alaska Notes toBasic Financial Statements Employee Contribution Rates Regular employees arerequired tocontribute 6.75% oftheir annual covered salary. Police and firefighters arerequired tocontribute 7.5% of their annual covered salary. Employer andOther Contribution Rates There areseveral contribution rates associated with the pension andhealthcare contributions and relatedliabilities. These amounts arecalculated onanannual basis. Employer Effective Rate: This isthecontractual employer pay-inrate. Under current legislation, thisrateisstatutorily capped at22% ofeligible wages, subject toawage floor, andother termination events. This 22% rateis calculated on allPERS participating wages, including those wages attributable toemployees inthedefined contribution plan. Contributions derived from thedefined contribution employees arereferred to astheDefined Benefit Unfunded Liability orDBUL contribution. ARMBoard Adopted Rate: This istherate formally adopted bythe Alaska Retirement Management Board. This rateisactuarially determined andused tocalculate annual Plan funding requirements, without regard to thestatutory ratecaportheGASB accounting rate. Effective July 1, 2015, theLegislature requires theARM Boardto adopt employer contribution rates forpast service liabilities using alevel percent ofpaymethod over aclosed 25year term which ends in 2039. This willresult inlower ARM Board Rates than previously adopted. On-behalf Contribution Rate: This istheratepaid inbytheState asanon-behalfpayment under thecurrent statute. The statute requires theState tocontribute, based onfunding availability, anon-behalf amount equal tothedifference between theARM Board Rate andtheEmployer Effective Rate. In2015, theStateLegislature appropriated aone-timecontribution tothePlan in theamount of $1billion. As aresult, theon-behalf contribution in2015 wassignificantly higher than thestatutory amount. In2016, theon-behalf contribution hasreturned to “normal” levels andgenerally equals thestatutory calculation. Inthegovernmental fund financial statements, on-behalf contribution amounts have beenrecognized asadditional revenues andexpenditures. In theenterprise fundand government-wide financial statements, the on-behalf amounts reflect revenue andexpense only during themeasurement period inwhich thePlanrecognizes the payments, resulting inasignificant timing difference between thecash transfers andrevenue and expense recognition. GASBRate: This istherateused todetermine thelong-term pension andhealthcare liability for planaccounting purposes in accordance with generally accepted accounting principles as established byGASB. Certain actuarial methods andassumptions forthis ratecalculation are mandated byGASB. Additionally, theGASB Rate disregards allfuture Medicare PartDpayments. ForFY16, therateusesan8% pension discount rate anda4.3% healthcare discount rate. TheGASB Rate andtheARM BoardAdopted Rate differsignificantly asadirect result ofvariances inthe actuarial methods andassumptions used. 52 City of Seward, Alaska Notes toBasic Financial Statements Contribution ratesforthe yearsended June30, 2016 and June30, 2017 were determined in the June 30, 2013 andJune 30, 2014 actuarial valuations, respectively. City contribution rates forthe 2016 calendar yearwere asfollows: EmployerARM Board State EffectiveAdopted ContributionGASB January1, 2016toJune30, 2016 Rate RateRate Rate Pension 13.25% 16.38% 3.63%37.79% Postemployment healthcare (see Note 11) 8.75% 10.81% 1.56%58.73% TotalContribution Rates 22.00% 27.19% 5.19%96.52% EmployerARM Board State EffectiveAdopted ContributionGASB July1, 2016toDecember 31, 2016 Rate RateRate Rate Pension 14.96% 19.10% 4.14%27.26% Postemployment healthcare (see Note 11) 7.04% 7.04% -%56.64% TotalContribution Rates 22.00% 26.14% 4.14%83.90% In 2016, theCitywascredited withthefollowing contributions intothepension plan. Measurement PeriodCity Fiscal Year July1, 2015 January 1, 2016 to to June 30, 2016 December 31, 2016 Employer contributions (including DBUL) $ 520,461$ 541,407 Nonemployer contributions (on-behalf) 201,462212,563 TotalContributions $ 721,923$ 753,970 Inaddition, employee contributions tothePlan totaled $183,837duringtheCity’sfiscal year. Pension Liabilities, Pension Expense, andDeferred Outflows ofResources andDeferred Inflows ofResources Related toPensions. AtDecember 31, 2016, theCity reported aliability foritsproportionate share ofthenetpension liability (NPL) thatreflected areduction forState pension support provided totheCity. The amount recognized by theCity forits proportional share, therelated State proportion, andthe total were asfollows: 2016 City proportionate share of NPL $ 11,558,576 State’sproportionate share ofNPLassociated with the City 1,457,718 TotalNetPension Liability $ 13,016,294 53 City of Seward, Alaska Notes toBasic Financial Statements Thetotal pension liability for theJune 30, 2016 measurement date wasdetermined byan actuarial valuation asof June 30, 2015 rolled forward toJune 30, 2016 tocalculate thenet pension liability asofthatdate. TheCity’sproportion ofthenetpension liability wasbased ona projection oftheCity’slong-term share ofcontributions tothepension plan relative tothe projected contributions ofallparticipating entities, including theState, actuarially determined. Atthe June 30, 2016 measurement date, theCity’sproportion was 0.20679 percent, which wasan increase of0.02151 from itsproportion measured asofJune 30, 2015. For theyearended December 31, 2016, theCity recognized pension expense of $2,825,515. Of this amount, $201,462wasrecorded ason-behalf revenue andexpense foradditional contributions paid bytheState. AtDecember 31, 2016, theCity reported deferred outflows ofresources and deferred inflows of resources related to pensions fromthefollowing sources: Deferred Deferred Outflows Inflows ofResources ofResources Difference between expected andactual experience $1,064$(128,841) Changes in assumptions 53,311- Net difference between projected and actual earnings on pension plan investments 1,136,152- Changes inproportion and differences between City contributions and proportionate share ofcontributions 531,239- Citycontributions subsequentto the measurement date 290,576- TotalDeferredOutflows andDeferred Inflows ofResources Related toPensions $2,012,342$(128,841) The $290,576reported asdeferred outflows ofresources related topensions resulting from contributions subsequent tothemeasurement datewillberecognized asareduction inthenet pension liability intheyear endedDecember 31, 2016. Otheramounts reported as deferred outflows ofresources anddeferred inflows ofresources related topensions willberecognized in pension expense asfollows: YearEnding December 31, 2017 $613,887 2018 214,656 2019 464,462 2020 299,919 TotalAmortization $1,592,924 Theremainder ofthispageintentionally leftblank. 54 City of Seward, Alaska Notes toBasic Financial Statements Actuarial Assumptions Thetotal pension liability wasdetermined by anactuarial valuation asofJune 30, 2015, using the following actuarial assumptions, applied toallperiods included inthemeasurement period, and rolled forward tothemeasurement dateofJune 30, 2016. Theactuarial valuation fortheyear ended June 30, 2015 (latest available) was prepared byBuck Consultants. Theactuarial assumptions used intheJune 30, 2015 valuation were based ontheresults ofanactuarial experience study forthe periodfrom July 1, 2009 toJune 30, 2013, resulting inchanges in actuarial assumptions adopted bytheAlaska Retirement Management Boardtobetter reflect expected future experience. Actuarial Cost Method Entry AgeNormal – Level Percentage ofPayroll Asset Valuation Method Invested assets arereported atfairvalue. Allocation Methodology Amounts wereallocated toemployers based onthe projected present value ofcontributions forFY2017-FY2039. Theliability is expected togotozero at2039. Investment Return / Discount 8.00% peryear (geometric), compounded annually, netof Rate expenses Salary Scale Inflation – 3.12% peryear Productivity – 0.50% peryear Peace Officer/Firefighter – graded byyears ofservice from 9.66% to4.92% Allothers – graded byageandyears ofservice from 8.55% to 4.34% TotalInflation Measured bythe consumer price index for urban andclerical workers forAnchorage and isassumed toincrease 3.12% annually. Mortality Pre-termination – Based onthe 2010-2013 actual mortality experience Post-termination – 96% ofallrates oftheRP-2000 table, 2000 base yearprojected to2018with projection scale BB Theremainder ofthispageintentionally leftblank. 55 City of Seward, Alaska Notes toBasic Financial Statements Thelong-term expected rateof return onpension plan investments wasdetermined usinga building-block method inwhich best-estimate ranges ofexpected future realrates ofreturn expected returns, netofpension planinvestment expense andinflation) aredeveloped foreach major asset class. These ranges arecombined toproduce thelong-term expected rateofreturn by weighting theexpected future realrates of return bythetargetasset allocation percentage and byadding expected inflation. The bestestimates ofarithmetic realrates ofreturn foreach major asset class aresummarized in thefollowing table (note thattherates shown below exclude the inflation component: Asset Class Long-term Expected Real Rate ofReturn Domestic equity 5.35% Global equity (non-US) 5.55% Private equity 6.25% Fixed income composite 0.80% Real estate 3.65% Alternative equity 4.70% Discount Rate Thediscount rateused tomeasure thetotalpension liability was 8.00%. Theprojection ofcash flowsused todetermine thediscount rateassumed that employer andState contributions will continue tofollow thecurrent funding policy whichmeets State statutes. Based onthose assumptions, thepension plan'sfiduciary netposition wasprojected to beavailable tomake all projected futurebenefit payments ofcurrent plan members. Therefore, thelong-term expected rateofreturn onpension plan investments was applied toallperiods ofprojected benefit payments todetermine thetotal pension liability. Discount RateSensitivity Thefollowing presents theCity’sproportionate share ofthenetpension liability calculated using thediscount rateof8.00percent, as well aswhattheCity’sproportionate share ofthenet pension liability would beifitwere calculated using adiscount ratethatis1-percentage-point lower (7.00percent) or 1-percentage-point higher (9.00percent) than thecurrent rate: Current Proportional1% Decrease Discount Rate 1% Increase Share(7.00%) (8.00%)(9.00%) City’sproportionate share of the net pension liability 0.20679%$14,886,858$11,558,572$8,751,320 Pension PlanFiduciary NetPosition Detailed information about thepension plan’sfiduciary net position isavailable inthe separately issued PERS financial report. 56 City of Seward, Alaska Notes toBasic Financial Statements 10. Defined Contribution (DC) Pension Plan Employees hired afterJuly1, 2006 participate inPERS TierIV, adefinedcontribution plan. ThisPlan isadministered bytheState ofAlaska, Department ofAdministration inconjunction withthedefined benefit plan noted above. Benefit andcontribution provisions areestablished byState lawandmay beamended only bytheState Legislature. TheAlaska Retirement Management Board mayalso amend contribution requirements. Included inthePlan are individual pension accounts, retiree medical insurance planandaseparate HealthReimbursement Arrangement account thatwillhelp retired members paymedical premiums andother eligible medical expenses notcovered bythe medical plan. This Plan isincluded inthecomprehensive annual financial report forPERS, andat the following website, asnoted above. http://doa.alaska.gov/drb/pers. Contributions totheDC planconsist solely ofemployer andemployee contributions with no special funding orother nonemployer contributions. Inaddition, actual remittances tothePERS system require thattheCity contribute at22%. After deducting theDCplan contributions (and related OPEB contributions), theremaining remittance (theDBUL) isdeposited intotheDBplan as notedearlier. Benefit Terms Employees are immediately vested intheirowncontributions andvest25% withtwo years ofservice, plusanadditional 25% peryearthereafter forfull vestingatfiveyears of service. Employee Contribution Rate Employees are required tocontribute 8.0% oftheirannualcovered salary. Thisamount goesdirectly to theindividual’saccount. Employer Contribution Rate Fortheyearended December 31, 2016, theCitywasrequired tocontribute 5% ofcovered salary into thePlan. TheCityand employee contributions toPERS forpensions fortheyearended December 31, 2016 were $114,315 and $182,903, respectively. The Citycontribution amount wasrecognized aspension expense/expenditures. 11. Other Post-Employment Benefit (OPEB) Plans Defined Benefit OPEB Aspartofitsparticipation inthePERS DBPlan (Tiers I, II, III), theCityparticipates intheAlaska RetireeHealthcare Trust (ARHCT). TheARHCT isself-funded andprovides major medical coverage to retirees oftheSystem. Benefits vary byTierlevel. ThePlan isadministered bytheState of Alaska, Department ofAdministration. Employer contribution rates areestablished inconcert withtheDefined Benefit Pension Plandescribed earlier inthese notes. Employer Contribution Rate Forthe yearended December 31, 2016, theCity wasrequired tocontribute 8.75% ofcovered payroll intotheOPEBplan. Employees donotcontribute. 57 City of Seward, Alaska Notes toBasic Financial Statements Annual Postemployment Healthcare Cost Actual contributions intothe Plan forthelastthree years were asfollows. Theamounts reported hereinclude only theemployer required contributions anddonotinclude anyamounts attributed tothe on-behalf contributions bythe State. On-behalf contributions totheOPEBPlan in2016, 2015, and2014 were $46,475, $39,797and $161,942, respectively. AnnualCity% ofCosts YearEnded December 31, OPEB CostsContributionsContributed 2016 $302,388$302,388100 % 2015 371,054371,054100 % 2014 409,414409,414100 % Defined Contribution OPEB Defined Contribution Pension Planparticipants (PERS TierIV) participate intheOccupational Death andDisability Plan (ODD), andtheRetiree Medical Plan. Information onthese plans is included inthecomprehensive annual financial report forthePERS Plan noted above. These plans provide fordeath, disability, andpost-employment health care benefits. Employer Contribution Rates Employees donotcontribute to theDCOPEB plans. Employer contribution rates fortheyear ended December 31, 2016 were asfollows: OtherPolice/Fire Tier IVTier IV Retiree medical plan 1.18% 1.18% Occupational death and disability benefits 0.17% 0.49% TotalContribution Rates 1.35% 1.67% In addition, PERS defined contribution members alsoparticipate intheHealth Reimbursement Arrangement. AS39.30.370establishes this contribution amount as “three percent oftheaverage annual employee compensation ofall employees ofall employers intheplan”. AsofJuly1, 2016, foractual remittance, thisamount iscalculated asaflatrateforeach full-time orpart-time employee perpayperiod and approximates $2,049peryearforeach full-timeemployee, and $1.31 perhour for part-timeemployees. Annual Postemployment Healthcare Cost In2016, theCity contributed $130,234inDCOPEB costs. These amounts havebeen recognized as expense/expenditures. 58 City of Seward, Alaska Notes toBasic Financial Statements 12. International Brotherhood ofElectrical Workers Certain Electric Fund employees aremembers oftheInternational Brotherhood ofElectrical Workers (IBEW), whichmaintains its owndefined contribution pension plan, called the Alaska Electrical Pension Fund (AEPF) andAlaska Electrical Workers Money Purchase Pension Plan AEWMPP), pursuant toanagreement between theIBEW andtheAlaska Chapter oftheNational Electrical Contractors Association, Inc. ThePlan isdefined benefit, multi-employer plan, administered bythe Alaska Electrical Trust Funds. AEPT issues apublicly available financial report. Toobtain acopy oftheannual report, please callor write totheadministrative office: Alaska Electrical Pension Trust 2600 Denali Street, suite 200 Anchorage, Alaska 99503 The planprovides forretirement, death anddisability, andpost-employment health-carebenefits. Benefits aregenerally calculated using aformula comprised ofamultiplier times theaverage monthly salary times number ofyears ofservices. The multiplier isincreased at longevity milestones formost employees. The cityhassixparticipating employees. Contributions rates are setthrough acollective bargaining agreement. Thecurrent agreement became effective from July 1, 2016andexpires June 30, 2019, but willcontinue inforce thereafter year toyear; provided however, thateither party cangivetheother party written notice of itsdesire toterminate theagreement ortoeffect changes therein. Effective July1, 2015, theCitypays intothe AEPFthesumof $6.36foreach compensable hour earned inamonth byan eligible employee. Effective July1, 2016, therate increased to $6.71. Effective July1, 2015 themonthly payment foranemployee willnot exceed $1,110foreach month, withnomaximum payment goinginto effect July1, 2016 going forward. TheCity paysintotheAEWMPP $225permonthforeligible employees. TheCity contributes totheAlaska Electrical Health and Welfare Trust Fund (AEHWTF) forselected benefits andtheCity contributes $1,938permonth, peremployee beginning July 1, 2015 and decreased to $1,853permonth, peremployee beginning July1, 2016 andincreasing upto5% each year subsequent. There arenofuture minimum contributions andnowithdrawal provisions, provided therequired hourly contributions arecontributed. The totalCity contribution forthe yearended December 31, 2016 was $102,429. Employees are notrequired tocontribute. Thecity hadnorequired contribution payments inarearsat December 31, 2016. 59 City of Seward, Alaska Notes toBasic Financial Statements 13. Deferred Compensation Plan TheCityoffers itsemployees avoluntary deferred compensation plan created inaccordance with Internal Revenue Code Section 457. ThePlan, available to allemployees, permits them to defera portion oftheir salary untilfuture years. Thedeferred compensation isnotavailable to employees until termination, retirement, death, orunforeseeable emergency. Theprovisions of thePlan require thatallassets andincome ofthePlan beheldintrust fortheexclusive benefit of participants andtheir beneficiaries. 14. RiskManagement The Cityfaces aconsiderable number ofrisks ofloss, including (a) damage toandlossofproperty andcontents, (b) employee torts, (c) professional liability; i.e., errors and omissions, (d) environmental damage, (e) workers’ compensation; i.e., employee injuries, and (f) medical insurance costs ofemployees. TheCity isamember oftheAlaska Municipal League Joint Insurance Association (JIA), a governmental insurance poolestablished by theAlaska Municipal League. TheJIAprovides the Citycoverage forproperty, including building andcontents, automobiles, mobile equipment, data processing equipment andboiler andmachinery; casualty, including general liability, public officials andemployees liability, law enforcement professional liability, auto liability and employee benefit liability; workers’ compensation, including employers liability; andcommercial blanket bond. TheCity maintains supplemental marine insurance andfirefighters group accident coverage with insurance companies placed through JIA. TheCity hasnocoverage forpotential losses from environmental damages. TheJIAisapublicentity riskpoolorganized toshare risks among itsmembers. TheAssociation’s bylaws provide fortheassessment ofsupplemental contributions from members intheeventthat losses and expenses forany coverage yearexceed theannual contributions and income earned on such contributions forthe year. Such supplemental contributions shallbebased oneach member’sdeposit contribution incomparison totheaggregate deposit contributions ofall members. The Association made nosupplemental assessments during theyear ended December 31, 2016. TheJIAprovides losscontrol services andconducts periodic inspections to ensure safeoperations. TheCity hasutilized anestablished safetycommittee toreview andrecommend safety policies andprocedures foralldepartments. TheCity Council has committed aportion of theGeneral Fund balance tomeet potential losses not covered byinsurance andinsurance deductibles. TheCityalsoparticipates intheAlaska Public Utilities Insurance Trust, which provides insurance coverage foremployee health benefits. ThePlan isapublicentity riskpoolinwhich risks are shared among themembers. Stop lossinsurance limits participants’ liability forindividual and aggregate claims. There wasnosignificant reduction intheCity’smajor categories ofriskinsurance coverage from theprior year, andtheamount of settlements forthepast three fiscal years didnotmaterially exceed theCity’sinsurance coverage. 60 City of Seward, Alaska Notes toBasic Financial Statements 15. Commitments and Contingencies Amounts received orreceivable from grantor agencies aresubject toaudit andadjustment by grantor agencies, principally thestate andfederal government. Anydisallowed claims, including anyamount already collected, could become aliability oftheapplicable funds. TheCityof Seward istheowner ofthe Alaska Sealife Center (“Center”), which isoperated on the City’sbehalf bytheSeward Association fortheAdvancement ofMarine Science (“SAAMS”). The City isobligated toabide byprovisions of theCooperative Agreement (“Agreement”) between the CityandtheState ofAlaskaDepartment ofFishandGame, which served asasignificant funding source fortheconstruction oftheCenter. The City haspassed most ofits obligations for operating theCenter ontoSAAMS through amanagement andoperating agreement (“Operating Agreement”), buttheCity ultimately remains responsible toensure thatprovisions ofthe Agreement with theState aremet. TheOperating Agreement requires, inpart, that SAAMS maintain sufficient termination fund reserves toenable theCity to operate thefacility forupto onefull yearintheevent SAAMS isunable tomeet its obligations under theOperating Agreement. Theestimated costsofoperating theCenter forafull year arenoteasilymeasured based on imprecise definitions oftherequirements, butcould approach $3million peryear. TheOperating Agreement doesnotrequire SAAMS tomaintain that levelofreserves, andtotheextent their termination fund reserve levels areinadequate, theCitywould beexpected tocover anyshortfall. Should theCity berequired to cover anyshortfall, there could beamaterial adverse impact on theGeneral Fund undesignated reserves. Various other claims andlawsuits against theCity arepending, butare either covered by insurance orare thetypes which arenormal andreasonable inview oftheCity’soperations. City management believes thetotal amount oftheliability, ifany, which may arise from such claims andlawsuits beyond thatwhich iscovered byinsurance would nothave amaterial effect onthe City’sfinancial condition oritsability tocarry onitsactivities asnow conducted. 16. NewAccounting Pronouncements The Governmental Accounting Standards Board haspassed several newaccounting standards with upcoming implementation dates. Management hasnotfully evaluated thepotential effects ofthese statements, butbelieves thatGASB Statement 75willresultin thebiggest reporting change. However, actual impacts have notyetbeen determined. GASB 74 – Financial Reporting forPostemployment Benefit PlansOther ThanPension Plans – Effective foryear-endDecember 31, 2017, with earlier application encouraged – This statement contains financial reporting guidelines forPostemployment Benefit Plans. ThisisthePlan side requirements applicable toOPEBbenefits andgenerally brings theOPEB reporting rules into alignment withthenew GASB67Pension rules. GASB 75 – Accounting andFinancial Reporting forPostemployment Benefits OtherThanPensions – Effective foryear-endDecember 31, 2018, with earlier application encouraged – This statement contains accounting and financial reporting guidelines forOPEB related activities atthe participating employer level andgenerally brings theOPEB reporting rulesintoalignment withthe newGASB 68Pension rules. 61 City of Seward, Alaska Notes toBasic Financial Statements GASB 80 – Blending Requirements forCertain Component Units – Effective foryear-endDecember 31, 2017, with earlier application encouraged – This statement requires blending of acomponent unitincorporated asanot-for-profit corporation inwhich theprimary government isthesole corporate member. This statement amends the previous requirements established inparagraph 53 ofGASB 14. Thecriterion specified inGASB 80does notapplyto component units included inthe financial reporting entity pursuant toGASB 39. GASB81 – Irrevocable Split-Interest Agreements – Effective foryear-endDecember 31, 2017, with earlier application encouraged – This statement establishes recording and recognition criteria for governments whoreceive resources pursuant toanirrevocable split-interest agreement. GASB 82 – Pension-Issues – anamendment ofGASBStatements No. 67, No. 68, andNo. 73 – Effective foryear-endDecember 31, 2017, with earlier application encouraged – This statement further amends prior pension reporting toredefine “covered payroll” forrequired supplementary information, clarifies deviations from actuarial standards, andclarifies theclassification of employer-paidmember contributions. GASB 83 – Certain AssetRetirement Obligations – Effective foryear-endDecember 31, 2019, with earlier application encouraged – Thisstatement addresses accounting andfinancial reporting for certain assetretirement obligations thatarelegally enforceable liabilities associated with the retirement ofatangible capital asset. GASB 84 – Fiduciary Activities – Effective foryear-endDecember 31, 2019, with earlier application encouraged – This statement addresses criteria foridentifying andreporting fiduciary activities. GASB 85 – Omnibus – Effective foryear-endDecember 31, 2018, with earlier application encouraged – This statement addresses practice issues thathave been identified during implementation andapplication ofcertain GASB statements. Issuescovered include blending of component units, goodwill, fairvalue measurement andapplication, andpostemployment benefits. 62 Required Supplementary Information 63 Exhibit E-1 City of Seward, Alaska Public Employees Retirement System Schedule of the City's Information on the Net Pension Liability City's State ofProportionatePlan Fiduciary City'sCity'sAlaskaShare of theNet Position as MeasurementProportionProportionateProportionateNet Pension aPercentage YearPeriodof the NetShare of theShare of theTotalCity'sLiability asaof the Total EndedEndedPensionNet PensionNet PensionNet PensionCoveredPercentage ofPension LiabilityLiabilityLiabilityLiabilityPayrollPayrollLiabilityDecember31, June 30, 0.18528% 20152015$ 8,985,893 $ 2,408,070$ 11,393,963$ 5,021,085178.96%63.96% 0.20679% 20162016 11,558,576 1,457,718 13,016,294 4,968,887232.62%59.55% w { Exhibit E-2 City of Seward, Alaska Public Employees Retirement System Schedule ofCityContributions Contributions Relative to the ContractuallyContractuallyContributionCity'sContributions as a RequiredRequiredDeficiencyCoveredPercentage of ContributionContribution(Excess)PayrollCovered PayrollYearEndedDecember31, 485,647 $ 485,647 $ - $ 5,098,436 9.53% 2015 541,407 541,407 - 4,902,901 11.04% 2016 w { Exhibit E-3 City of Seward, Alaska International Brotherhood ofElectrical Workers (IBEW) Schedule ofCityContributions Contributions Relative to the ContractuallyContractuallyContributionCity'sContributions as a RequiredRequiredDeficiencyCoveredPercentage of ContributionContribution(Excess)PayrollCovered PayrollYearEndedDecember31, 2007$ 75,821$ 75,821$ -$ 535,90714.15% 2008 89,252 89,252 - 596,70514.96% 2009 62,313 62,313 - 649,5539.59% 2010 59,231 59,231 - 697,0568.50% 2011 65,956 65,956 - 661,0719.98% 2012 70,686 70,686 - 719,3819.83% 2013 88,389 88,389 - 806,72710.96% 2014 72,669 72,669 - 668,25710.87% 2015 81,964 81,964 - 752,58710.89% 2016 102,429 102,429 - 790,34812.96% w { City of Seward, Alaska Notes toRequired Supplementary Information December 31, 2016 1. Public Employees Retirement System Inaccordance withGASB Statement 82, “Covered Payroll” isdefined as payroll on which contributions to thepension plan are based. Because aportion oftheCity’scontributions to the Plan (theDBUL) arebased onDefined Contribution Wages, covered payroll reported hereincludes allPERSparticipating wages (bothDBand DC). Both pension tables areintended topresent 10years ofinformation. Additional year’s information willbeadded totheschedules as itbecomes available. Schedule ofCity’sInformation onthe NetPension Liability This table ispresented basedon thePlan measurement date. ForDecember 31, 2016, the Plan measurement dateisJune 30, 2016. There were nochanges inbenefit terms fromthe priormeasurement period. There were nochanges inassumptions from theprior measurement period. There were nochanges to theallocation methodology. Schedule ofCityContributions This table isbased ontheCity’scontributions during calendar year 2016. Aportion of these contributions areincluded intheplan measurement results, while aportion ofthe contributions arereported asadeferred outflow ontheDecember 31, 2016 basic financial statements. 2. International Brotherhood of Electrical Workers (IBEW) Schedule ofCity’sContributions This tableis based ontheCity’scontributions based ontheCity’sfiscal year. All contributions arerecognized inexpense/expenditures when paid. Thereisnonetpension liability associated with thisplanatthistime. 67 Thispageintentionally leftblank. 68 Supplementary Information 69 Exhibit F-1 City of Seward, Alaska Nonmajor Governmental Funds Combining Balance Sheet SpecialCapital RevenueProjectsTotalDecember31, 2016 Assets Cash and investments$ 168,576$ 2,344,340$ 2,512,916 Grants receivable 401,846 200,000 601,846 Other receivables 460,256 - 460,256 Prepaid items 5,858 - 5,858 Total Assets$ 1,036,536$ 2,544,340$ 3,580,876 Liabilities Accounts payable$ 8,487$ 4,010$ 12,497 Accrued payroll and related liabilities 20,066 - 20,066 Deferred Revenue 17,568 - 17,568 Due to other funds 727,753 - 727,753 Total Liabilities 773,874 4,010 777,884 Fund Balances Nonspendable - prepaid items 5,858 - 5,858 Assigned: Parks and recreation 2,498 - 2,498 Public works 6,409 - 6,409 Clinic 106,356 - 106,356 General government 141,541 - 141,541 Capital projects - 2,540,330 2,540,330 Total Fund Balances 262,662 2,540,330 2,802,992 Total Liabilities and Fund Balances$ 1,036,536$ 2,544,340$ 3,580,876 70 Exhibit F-2 City of Seward, Alaska NonmajorGovernmental Funds Combining Statement ofRevenues, Expenditures andChange inFund Balances SpecialCapital Year Ended December 31, 2016 RevenueProjectsTotal Revenues Intergovernmental$ 1,299,017 $ 796,196 $ 2,095,213 Local grants 87,232 - 87,232 Other 69,134 - 69,134 1,455,383 796,196 2,251,579TotalRevenues Expenditures Current: General government 165,682 103,142 268,824 Public safety - 14,250 14,250 Public works 129,851 550,000 679,851 Parks and recreation 14,688 - 14,688 Clinic 1,846,150 - 1,846,150 Capital outlay: General government - 422,212 422,212 Public safety - 334,286 334,286 2,156,371 1,423,890 3,580,261TotalExpenditures 700,988) (627,694) (1,328,682) Excess of Revenues Under Expenditures Other Financing Sources (Uses) Transfers in 839,038 775,879 1,614,917 Transfers out - (660) (660) 839,038 775,219 1,614,257NetOtherFinancingSources (Uses) 138,050 147,525 285,575NetChangeinFundBalances 124,612 2,392,805 2,517,417FundBalances, beginning 262,662 $ 2,540,330 $ 2,802,992FundBalances, ending 71 Exhibit G-1 City of Seward, Alaska NonmajorEnterprise Funds CombiningStatementofNetPosition December 31, 2016 WaterWastewaterParkingTotal Assets Current Assets Cash and investments$ 2,237,211$ 1,725,449$ 917,751 $ 4,880,411 Receivables: Accounts 190,357 106,425 - 296,782 Other 750 - - 750 Less allowance fordoubtful accounts (8,566) (4,789) - (13,355) Inventory 92,102 - - 92,102 2,511,854 1,827,085 917,751 5,256,690TotalCurrentAssets Noncurrent Assets Property, plant and equipment, netof accumulated depreciation 9,604,505 6,683,905 90,457 16,378,867 12,116,359 8,510,990 1,008,208 21,635,557TotalAssets 68,246 59,017 - 127,263DeferredOutflowsofResources - related topensions Total Assets and Deferred Outflows ofResources$ 12,184,605$ 8,570,007$ 1,008,208$ 21,762,820 Liabilities Current Liabilities Accounts payable$ 63,184$ 32,052$ 794$ 96,030 Accrued payroll and related liabilities 6,892 5,281 - 12,173 Accrued interest 17,770 5,900 - 23,670 Current portion: Accrued annual leave 4,869 5,759 - 10,628 Notes payable 133,150 59,871 - 193,021 225,865 108,863 794 335,522TotalCurrentLiabilities Noncurrent Liabilities, netofcurrent portion Accrued annual leave 3,792 17,543 - 21,335 Notes payable 1,446,445 1,245,115 - 2,691,560 Netpension liability 395,754 337,617 - 733,371 2,071,856 1,709,138 794 3,781,788TotalLiabilities 4,207 3,837 - 8,044DeferredInflowsofResources - related topensions Net Position Net investment incapital assets 8,024,910 5,378,919 90,457 13,494,286 Unrestricted 2,083,632 1,478,113 916,957 4,478,702 10,108,542 6,857,032 1,007,414 17,972,988TotalNetPosition Total Liabilities, Deferred Inflows ofResources and NetPosition$ 12,184,605$ 8,570,007$ 1,008,208$ 21,762,820 72 Exhibit G-2 City of Seward, Alaska Nonmajor EnterpriseFunds Combining Statement ofRevenues, Expenses andChange inNetPosition Year Ended December 31, 2016 WaterWastewaterParkingTotal Operating Revenues - charges for services 1,292,890$ 1,151,763$ 328,347 $ 2,773,000 Operating Expenses Salaries and employee benefits 419,348 342,653 134,589 896,590 Services and supplies 291,728 342,811 61,998 696,537 Administration 254,289 152,718 10,602 417,609 Depreciation 200,323 367,543 24,477 592,343 1,165,688 1,205,725 231,666 2,603,079TotalOperatingExpenses 127,202 (53,962) 96,681 169,921Earnings (Loss) from Operations Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 8,972 6,861 - 15,833 Investment income 6,643 2,997 970 10,610 Interest expense (24,098) (5,900) - (29,998) Net Nonoperating Revenues (Expenses) (8,483) 3,958 970 (3,555) Earnings (Loss) Before Contributions and Transfers 118,719 (50,004) 97,651 166,366 Capital contributions 147,469 - 38,654 186,123 Transfers in - 12,000 - 12,000 Transfers out (181,887) (98,114) (26,268) (306,269) Change in Net Position 84,301 (136,118) 110,037 58,220 Net Position, beginning 10,024,241 6,993,150 897,377 17,914,768 Net Position, ending 10,108,542$ 6,857,032$ 1,007,414$ 17,972,988 73 ExhibitG-3 City of Seward, Alaska Nonmajor Enterprise Funds Combining Statement of Cash Flows YearEndedDecember31, 2016 WaterWastewaterParkingTotal CashFlowsfrom (for) OperatingActivities Receiptsfromcustomersandusers$ 1,278,025$ 1,141,454$ 328,347$ 2,747,826 Paymentstosuppliers (232,111) (314,845) (61,651) (608,607) Paymentstoemployees (349,476) (275,221) (134,922) (759,619) Paymentsforinterfundservicesused (254,289) (152,718) (10,602) (417,609) Netcashflowsfromoperatingactivities 442,149 398,670 121,172 961,991 CashFlowsfrom (for) NoncapitalFinancingActivities - Transfersin - 12,000 - 12,000 Transfersout (181,887) (98,114) (26,268) (306,269) Netcashflowsfornoncapitalfinancingactivities (181,887) (86,114) (26,268) (294,269) CashFlowsfrom (for) CapitalandRelatedFinancingActivities Increaseinduetootherfunds - (62,221) - (62,221) Principalpaymentsonnotespayable (131,182) (58,986) - (190,168) Interestpaymentsonnotespayable (25,662) - - (25,662) Acquisitionofproperty, plantandequipment (1,052,788) (3,099) (51,804) (1,107,691) Capitalcontributionsreceived 1,201,540 1,534,202 38,654 2,774,396 Netcashflowsfrom (for) capitalandrelatedfinancingactivities (8,092) 1,409,896 (13,150) 1,388,654 CashFlowsfromInvestingActivities Investmentincome 6,643 2,997 970 10,610 NetIncreaseinCashandInvestments 258,813 1,725,449 82,724 2,066,986 CashandInvestments, beginning 1,978,398 - 835,027 2,813,425 CashandInvestments, ending$ 2,237,211$ 1,725,449$ 917,751$ 4,880,411 74 Exhibit G-3, continued City of Seward, Alaska Nonmajor Enterprise Funds Combining Statement of Cash Flows, continued Year Ended December 31, 2016 WaterWastewaterParkingTotal Reconciliation ofEarnings (Loss) from Operations toNet Cash from (for) Operating Activities Earnings (loss) from operations$ 127,202$ (53,962) $ 96,681$ 169,921 Adjustments toreconcile earnings (loss) from operations tonet cash flows from (for) operating activities: Depreciation 200,323 367,543 24,477 592,343 Noncash expense - PERS on-behalf 8,972 6,861 - 15,833 Increase inallowance fordoubtful accounts 715 486 - 1,201 Increase inassets and deferred outflows ofresources: Accounts receivable (15,580) (10,795) - (26,375) Inventory 2,189 - - 2,189 Deferred outflows ofresources related topensions (9,539) (7,294) - (16,833) Increase (decrease) inliabilities and deferred inflows ofresources: Accounts payable 57,428 27,966 347 85,741 Accrued payroll and related liabilities 895 1,148 (333) 1,710 Accrued annual leave (24,335) (5,069) - (29,404) Net pension liability 94,996 72,640 - 167,636 Deferred inflows ofresources related topensions (1,117) (854) - (1,971) Net Cash fromOperating Activities $ 442,149$ 398,670$ 121,172$ 961,991 Noncash Capital and Related Financing Activities Purchase ofproperty, plant and equipment included inaccounts payable$ 2,171$ - $ -$ 2,171 75 Exhibit H-1 City of Seward, Alaska Internal Service Funds Combining Statement ofNet Position Compensated MotorAnnual PoolLeaveTotalDecember31, 2016 Assets Current Assets Cash and investments$ 1,398,647$ 486,770$ 1,885,417 Receivables: Accrued interest 39,481 - 39,481 Interfund loans 157,104 - 157,104 1,595,232 486,770 2,082,002TotalCurrentAssets Noncurrent Assets Interfund loans, net of current portion 1,378,987 - 1,378,987 Property, plant and equipment: Equipment and vehicles 6,937,053 - 6,937,053 Less accumulated depreciation (4,838,339) - (4,838,339) Net property, plant and equipment in service 2,098,714 - 2,098,714 3,477,701 - 3,477,701TotalNoncurrentAssets Total Assets$ 5,072,933$ 486,770$ 5,559,703 Liabilities Current Liabilities Accounts payable$ 7,690$ -$ 7,690 Accrued annual leave - current portion - 103,010 103,010 7,690 103,010 110,700TotalCurrentLiabilities Noncurrent Liabilities, net of current portion Accrued annual leave - 383,760 383,760 7,690 486,770 494,460TotalLiabilities Net Position Net investment in capital assets 2,098,714 - 2,098,714 Unrestricted 2,966,529 - 2,966,529 Total Net Position 5,065,243 - 5,065,243 Total Liabilities and Net Position$ 5,072,933$ 486,770$ 5,559,703 76 Exhibit H-2 City of Seward, Alaska Internal Service Funds Combining Statement ofRevenues, Expensesand Change inNetPosition Compensated MotorAnnual Year Ended December 31, 2016 PoolLeaveTotal Operating Revenues Vehicle rental and interfund charges$ 291,600$ 489,034$ 780,634 Operating Expenses Salaries and employee benefits - 489,034 489,034 Contracted services 1,430 - 1,430 Supplies and maintenance 7,087 - 7,087 Depreciation 450,049 - 450,049 458,566 489,034 947,600TotalOperatingExpenses 166,966) - (166,966) Earnings (Loss) from Operations Nonoperating Revenues 40,952 - 40,952Investmentincome 2,598 - 2,598Insurancerecovery Gain on sale of equipment and vehicles 9,000 - 9,000 Earnings Before Transfers (114,416) - (114,416) Transfers in 72,308 - 72,308 Change in Net Position (42,108) - (42,108) Net Position, beginning 5,107,351 - 5,107,351 Net Position, ending 5,065,243$ -$ 5,065,243 77 Exhibit H-3 City of Seward, Alaska Internal Service Funds Combining Statement ofCash Flows Compensated MotorAnnual Year Ended December 31, 2016 PoolLeaveTotal Cash Flows from (for) Operating Activities Receipts from vehicle rentals and interfund charges$ 291,600$ 489,034$ 780,634 Payments to suppliers (827) - (827) Payments toemployees - (507,618) (507,618) Net cash flows from (for) operating activities 290,773 (18,584) 272,189 Cash Flows from Noncapital Financing Activities Transfers in 72,308 - 72,308 Cash Flows for Capital and Related Financing Activities Acquisition of equipment and vehicles (430,498) - (430,498) 9,000 - 9,000Gainondisposalofequipmentandvehicles 2,598 - 2,598Insurancerecovery Net cash flows for capital and related financing activities (418,900) - (418,900) Cash Flows from Investing Activities Interfund loan receipts 181,853 - 181,853 Investment income received 45,423 - 45,423 Net cash flows from investing activities 227,276 - 227,276 171,457 (18,584) 152,873NetIncrease (Decrease) in Cash and Investments 1,227,190 505,354 1,732,544CashandInvestments, beginning 1,398,647 $ 486,770$ 1,885,417CashandInvestments, ending Reconciliation ofEarnings (Loss) from Operations to Net Cash from Operating Activities Earnings (loss) from operations 166,966)$ -$ (166,966) Adjustments to reconcile earnings from operations to net cash flows from (for) operating activities: Depreciation 450,049 - 450,049 Increase (decrease) in liabilities: Accounts payable 7,690 - 7,690 Accrued payroll and related liabilities - (18,584) (18,584) Net Cash from (for) Operating Activities $ 290,773$ (18,584)$ 272,189 78 General Fund The General Fundisestablished toaccount fortherevenues andexpenditures necessary tocarry outbasic governmental activities ofthe Citysuch asfireandpolice protection, public works, recreation, planning, administrative services, etc. Appropriations aremadefrom theGeneral Fund annually. Revenue isrecorded bysource, i.e., taxes, charges forservices, intergovernmental. Expenditures arerecorded firstbyfunction thenbyactivity andobject of expenditures. 79 Exhibit I-1 City of Seward, Alaska General Fund Balance Sheet December 31,20162015 Assets Cash and investments$ 5,143,982$ 5,889,694 Receivables Taxes: Personal property 16,181 6,056 Less allowance for doubtful accounts (549) (660) Net personal property 15,632 5,396 Motor vehicle 3,262 4,973 Hotel/motel room 14,880 393 Real property 21,111 5,323 Sales 519,400 473,097 Net taxes 574,285 489,182 Accounts 222,811 210,666 Grants and shared revenues - 8,711 Accrued interest 676 63,022 Total Receivables 797,772 771,581 Prepaid items 622,337 591,597 Inventory - 8,711 Due from other funds 2,408,229 1,406,131 Total Assets$ 8,972,320$ 8,667,714 80 Exhibit I-1, continued City of Seward, Alaska General Fund Balance Sheet, continued December 31,20162015 Liabilities Accounts payable$ 444,156$ 366,742 Accrued payroll and related liabilities 362,094 347,694 Accrued liabilities 40,250 33,078 Deposits 116,955 99,069 Unearned revenue 33,310 30,760 996,765 877,343TotalLiabilities Deferred Inflows of Resources Delinquent property taxes 18,057 20,663 Total Liabilities and Deferred Inflows of Resources 1,014,822 898,006 Fund Balance Nonspendable: Inventory - 8,711 Prepaid items 622,337 591,597 Committed: Working capital 1,500,000 1,500,000 Insurance 126,418 126,418 Hospital line of credit 500,000 500,000 Assigned Insurance 235,280 224,465 Other assigments 100,000 100,000 Unassigned 4,873,463 4,718,517 Total Fund Balance 7,957,498 7,769,708 Total Liabilities, Deferred Inflows of Resources, and Fund Balance$ 8,972,320$ 8,667,714 81 Exhibit I-2 City of Seward, Alaska General Fund Schedule ofRevenues, Expenditures and Change inFund Balance - Budget andActual Year Ended December 31,20162015 BudgetVarianceActualActual Revenues Taxes: Sales$ 4,958,689$ 5,004,992$ 46,303$ 4,883,996 Property 1,024,992 1,152,216 127,224 1,003,665 Hotel/motel room 414,996 505,845 90,849 458,605 Payments in lieu of taxes 84,000 90,382 6,382 88,331 Penalty and interest 996 2,506 1,510 4,007 Total taxes 6,483,673 6,755,941 272,268 6,438,604 Licenses and permits: Building permits 60,000 55,367 (4,633) 97,588 Taxi permits 996 1,220 224 1,277 Department ofMotor Vehicles commissions 90,000 82,904 (7,096) 86,957 Animal control licenses 300 105 (195) 280 Business licenses 20,004 16,750 (3,254) 18,460 Miscellaneous 2,256 1,828 (428) 1,803 Total licenses and permits 173,556 158,174 (15,382) 206,365 Intergovernmental: Jail contract 335,004 368,952 33,948 519,887 Dispatch contracts 88,560 88,560 - 95,290 Raw fish tax 480,000 280,935 (199,065) 334,691 Shared fisheries and landing tax 17,004 2,707 (14,297) 17,356 Liquor tax 21,996 15,950 (6,046) 19,350 Library grants 30,599 15,888 (14,711) 19,358 Revenue sharing 143,580 143,461 (119) 216,994 PERS relief 176,545 176,545 - 983,049 Other grants - - - 74,086 Total intergovernmental 1,293,288 1,092,998 (200,290) 2,280,061 82 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Revenues, continued: Charges for services: 1,822,164$ 1,822,155Administrative$ (9) $ 1,776,294 115,308 134,086Rentsandleases 18,778 155,688 5,004 8,116Copyingcharges 3,112 10,743 2,496 9,195Workorders 6,699 2,994 799,296 913,970Recreation 114,674 778,350 35,496 25,200Library (10,296) 33,762 Total charges forservices 2,779,764 2,912,722 132,958 2,757,831 8,004 18,365Finesandbails 10,361 17,993 25,500 10,354Investmentincome (15,146) 78,716 Other: Sale of land, equipment and gravel - 1,854 15,000 18,790Refusecontract 3,790 17,430 45,668Insurancerecovery 45,668 52,591 18,792 26,277Other 7,485 53,937 Total other 33,792 90,735 56,943 125,812 Total Revenues 10,797,577 11,039,289 241,712 11,905,382 Expenditures General government: Mayor and council: 37,827 41,582Salaries (3,755) 49,314 16,035 17,345Employeebenefits (1,310) 21,578 102,984 102,981Audit 3 99,785 86,496 66,597Legal 19,899 98,611 10,100 6,945Purchasedservices 3,155 9,579 22,100 18,058Suppliesandmaintenance 4,042 11,136 176,700 176,508Legislativerepresentation 192 176,517 58,600 37,216Generalandadministrative 21,384 47,538 Total mayor and council 510,842 467,232 43,610 514,058 83 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Expenditures, continued: General government, continued: City manager: 201,782 $ 171,634Salaries$ 30,148$ 190,657 116,788 119,409Employeebenefits (2,621) 110,989 21,156 9,556Purchasedservices 11,600 19,346 7,008 9,820Suppliesandmaintenance (2,812) 14,995 33,264 30,857Generalandadministrative 2,407 42,335 Total city manager 379,998 341,276 38,722 378,322 City clerk: 165,365 148,650Salaries 16,715 135,737 123,907 120,242Employeebenefits 3,665 107,974 14,256 14,303Purchasedservices (47) 5,112 Supplies and maintenance - 939 18,192 10,400Generalandadministrative 7,792 14,174 Total city clerk 321,720 293,595 28,125 263,936 Management information systems: 190,685 186,025Salaries 4,660 180,654 104,017 103,741Employeebenefits 276 91,870 11,496 12,025Purchasedservices (529) 8,507 36,996 41,702Suppliesandmaintenance (4,706) 29,268 6,504 3,553Generalandadministrative 2,951 2,384 Total management information systems 349,698 347,046 2,652 312,683 Finance: 574,768 517,357Salaries 57,411 465,307 364,091 324,948Employeebenefits 39,143 275,821 22,092 36,907Purchasedservices (14,815) 22,240 57,000 60,184Suppliesandmaintenance (3,184) 69,484 23,988 41,737Generalandadministrative (17,749) 23,994 3,000 - Capital outlay 3,000 - Total finance 1,044,939 981,133 63,806 856,846 84 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Expenditures, continued: General government, continued: Community development: 163,410 $ 162,141Salaries$ 1,269$ 143,863 110,334 98,808Employeebenefits 11,526 84,201 30,396 25,246Purchasedservices 5,150 59,491 6,192 3,888Suppliesandmaintenance 2,304 3,135 5,496 1,510Generalandadministrative 3,986 3,583 Total community development 315,828 291,593 24,235 294,273 General services: 42,156 48,893Purchasedservices (6,737) 96,149 15,804 8,912Suppliesandmaintenance 6,892 17,365 79,363 71,111Generalandadministrative 8,252 5,779 2,568Capitaloutlay (2,568) - Total general services 137,323 131,484 5,839 119,293 Contributions toorganizations: 75,000 75,000SeniorCitizens - 75,000 210,996 210,991ChamberofCommerce 5 204,128 24,996 25,000BoysandGirlsClub (4) 25,000 Total contributions toorganizations 310,992 310,991 1 304,128 Total general government 3,371,340 3,164,350 206,990 3,043,539 Public safety: Police: 1,008,449 960,683Salaries 47,766 994,392 788,685 735,858Employeebenefits 52,827 652,300 100,896 115,023Purchasedservices (14,127) 132,161 59,700 39,772Suppliesandmaintenance 19,928 52,260 45,912 38,177Generalandadministrative 7,735 34,593 48,037Capitaloutlay (48,037) - Total police 2,003,642 1,937,550 66,092 1,865,706 85 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Expenditures, continued: Public safety, continued: Jail: 310,809 $ 262,871Salaries$ 47,938$ 272,115 258,704 206,462Employeebenefits 52,242 201,849 60,000 61,161Purchasedservices (1,161) 60,580 27,504 17,729Suppliesandmaintenance 9,775 19,336 102,936 100,940Generalandadministrative 1,996 91,549 Total jail 759,953 649,163 110,790 645,429 Animal control: 56,968 59,460Salaries (2,492) 61,336 40,909 47,255Employeebenefits (6,346) 38,915 8,796 8,154Purchasedservices 642 10,154 14,964 4,488Suppliesandmaintenance 10,476 4,825 1,500 830Generalandadministrative 670 2,724 Total animal control 123,137 120,187 2,950 117,954 Fire: 178,902 162,934Salaries 15,968 173,687 139,427 134,060Employeebenefits 5,367 115,991 122,280 117,330Purchasedservices 4,950 198,091 37,260 30,031Suppliesandmaintenance 7,229 33,121 9,240 7,940Generalandadministrative 1,300 10,342 Capital outlay - 5,566 Total fire 487,109 452,295 34,814 536,798 Volunteer training: Employee benefits - 2,746 1,020 2,458Purchasedservices (1,438) 1,191 25,579 24,916Suppliesandmaintenance 663 21,113 28,188 29,764Generalandadministrative (1,576) 24,600 Total volunteer training 54,787 57,138 (2,351) 49,650 Emergency preparedness: 4,308 2,584Purchasedservices 1,724 4,057 2,136 507Suppliesandmaintenance 1,629 2,034 1,752 396Generalandadministrative 1,356 - Total emergency preparedness 8,196 3,487 4,709 6,091 86 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Expenditures, continued: Public safety, continued: Building inspection: 82,268$ 73,282Salaries$ 8,986$ 73,455 55,358 53,434Employeebenefits 1,924 47,542 6,708 5,289Purchasedservices 1,419 9,471 4,908 4,140Suppliesandmaintenance 768 3,568 4,920 2,918Generalandadministrative 2,002 1,767 Total building inspection 154,162 139,063 15,099 135,803 Engineering: Salaries - 7,019 Employee benefits - 6,491 Purchased services - 336 Supplies and maintenance - 540 General andadministrative - 69 Total engineering - - - 14,455 Total public safety 3,590,986 3,358,883 232,103 3,371,886 Public works: Roads and streets: 200,748 183,403Salaries 17,345 199,719 163,252 148,042Employeebenefits 15,210 126,848 156,552 179,671Purchasedservices (23,119) 286,438 205,212 205,132Suppliesandmaintenance 80 139,334 7,908 7,097Generalandadministrative 811 16,647 Total roads and streets 733,672 723,345 10,327 768,986 City shop: 121,714 121,133Salaries 581 137,505 104,152 71,014Employeebenefits 33,138 92,253 71,016 62,805Purchasedservices 8,211 68,501 46,656 69,865Suppliesandmaintenance (23,209) 93,141 3,744 4,118Generalandadministrative (374) 4,844 Total city shop 347,282 328,935 18,347 396,244 Municipal building: 87,041 78,073Salaries 8,968 80,232 85,648 85,265Employeebenefits 383 69,271 159,384 134,453Purchasedservices 24,931 166,704 31,560 16,694Suppliesandmaintenance 14,866 16,860 252 451Generalandadministrative (199) - Total municipal building 363,885 314,936 48,949 333,067 Total public works 1,444,839 1,367,216 77,623 1,498,297 87 Exhibit I-2, continued CityofSeward, Alaska GeneralFund Scheduleof Revenues, Expenditures andChangein FundBalance - Budgetand Actual, continued 2016YearEndedDecember31,2015 BudgetActualVarianceActual Expenditures, continued: Parks and recreation: 565,423 $ 496,055Salaries$ 69,368$ 570,415 349,129 271,700Employeebenefits 77,429 287,972 236,112 315,496Purchasedservices (79,384) 345,969 114,408 160,688Suppliesandmaintenance (46,280) 135,654 36,780 42,687Generalandadministrative (5,907) 25,398 5,004 - Capital outlay 5,004 - Total parks and recreation 1,306,856 1,286,626 20,230 1,365,408 Library: 226,566 183,474Salaries 43,092 181,734 162,126 133,417Employeebenefits 28,709 122,350 166,596 161,684Purchasedservices 4,912 170,724 65,750 48,618Suppliesandmaintenance 17,132 64,659 19,357 15,930Generalandadministrative 3,427 13,805 Total library 640,395 543,123 97,272 553,272 Debtservice: 95,004 95,000Principalpayments 4 90,000 591,859 591,859Retirementbenefits - 1,401,165 151,548 151,550Interestandothercosts (2) 155,150 Total debt service 838,411 838,409 2 1,646,315 Total Expenditures 11,192,827 10,558,607 634,220 11,478,717 Excess ofRevenues Over (Under) Expenditures (395,250) 480,682 875,932 426,665 Other Financing Sources (Uses) 1,990,338 1,978,698Transfersin (11,640) 1,980,280 2,271,590) (2,271,590) Transfers out - (2,085,636) Net Other Financing Sources (Uses) (281,252) (292,892) (11,640) (105,356) Net Change in Fund Balance$ (676,502) 187,790$ 864,292 321,309 Fund Balance, beginning 7,769,708 7,448,399 Fund Balance, ending$ 7,957,498$ 7,769,708 88 SpecialRevenue Funds Special Revenue Funds areused toaccount forexpenditures associated with dedicated orrestricted revenue sources. Two Lakes Park – Toaccount foracquisition ofland, survey anddevelopment ofthe park area, including sitepreparation, picnic tables, andother improvements. LitterControl (ALPAR) – Toaccount forthecostofaCity–administered litter control program. Theprogram employs local youth andisfinanced by grants from thenon-profit Alaskans forLitter Prevention and Recycling andtheKenai Peninsula Borough. SCHC – Toaccount forthe costs ofrunning acommunity health center. Comprehensive Plan – Toaccount forcosts associated withthecomprehensive plan. BusTransportation – Toaccount forcitybussing transportation. Beachfront Erosion – Toaccount forthecosts associated withthebeachfront erosion. Natural Disasters – Toaccount forthecosts associated withflooding andother naturalevents. 89 Exhibit J-1 City of Seward, Alaska NonmajorSpecialRevenueFunds CombiningBalanceSheet Parksand RecreationClinicGeneral GovernmentPublic Works Two LakesComprehensiveBusBeachfrontNatural December 31, 2016 ParkSCHCPlanTransportationErosionDisastersTotal Assets Cash and investments$ 2,498$ -$ 22,387$ 141,541$ 2,150$ -$ 168,576 Grants receivable - 62,219 - - - 339,627 401,846 Other receivables - 460,256 - - - - 460,256 Prepaid items - 5,858 - - - - 5,858 Total Assets$ 2,498$ 528,333$ 22,387$ 141,541$ 2,150$ 339,627$ 1,036,536 Liabilities Accounts payable$ -$ 3,668$ 4,819$ -$ -$ -$ 8,487 Accrued payroll and related liabilities - 20,066 - - - - 20,066 Deferred Revenue - - 17,568 - - - 17,568 Due to other funds - 392,385 - - - 335,368 727,753 416,119 22,387 - - 335,368 773,874TotalLiabilities Fund Balances Nonspendable - prepaid items - 5,858 - - - - 5,858 Assigned: Parks and recreation 2,498 - - - - - 2,498 Public works - - - - 2,150 4,259 6,409 Clinic - 106,356 - - - - 106,356 General government - - - 141,541 - - 141,541 Total Fund Balances 2,498 112,214 - 141,541 2,150 4,259 262,662 Total Liabilities and Fund Balances$ 2,498$ 528,333$ 22,387$ 141,541$ 2,150$ 339,627$ 1,036,536 90 Exhibit J-2 City of Seward, Alaska NonmajorSpecialRevenueFunds CombiningStatementofRevenues, Expenditures andChangeinFundBalances Parks and RecreationClinicGeneral GovernmentPublic Works Two LakesLitterComprehensiveBusBeachfrontNatural Year Ended December 31, 2016 ParkControlSCHCPlanTransportationErosionDisastersTotal Revenues Intergovernmental$ - $ -$ 1,277,016$ -$ -$ -$ 22,001$ 1,299,017 Local grants - 4,800 - 32,432 - 50,000 - 87,232 Other - - 69,134 - - - - 69,134 4,800 1,346,150 32,432 - 50,000 22,001 1,455,383TotalRevenues Expenditures Salaries and employee benefits - 14,668 1,341,883 2,923 - - - 1,359,474 Contracted services - - 206,113 28,224 133,250 107,850 22,001 497,438 Supplies - 20 181,458 - - - - 181,478 General and administrative - - 40,022 1,285 - - - 41,307 Miscellaneous - - 76,674 - - - - 76,674 14,688 1,846,150 32,432 133,250 107,850 22,001 2,156,371TotalExpenditures Excess of Revenues Over 9,888) (500,000) - (133,250) (57,850) - (700,988) Under) Expenditures Other Financing Sources Transfers in - 9,888 500,000 - 269,150 60,000 - 839,038 Net Change in Fund Balances - - - - 135,900 2,150 - 138,050 2,498 - 112,214 - 5,641 - 4,259 124,612FundBalances, beginning 2,498 $ -$ 112,214$ -$ 141,541$ 2,150$ 4,259$ 262,662FundBalances, ending 91 Thispageintentionally leftblank. 92 CapitalProject Funds Capital Project Funds areestablished toaccount fortheresources expended toacquire orconstruct assets ofarelatively permanent nature. FireSimulator – Toaccount forthepurchase ofthefiredepartment simulator. Flood Mitigtation – Toaccount forallactivities related tofloodmitigation capital costs. Kawabe Park – Toaccount forall activities relatedtoKawabe Parkcapital costs. Streets andSidewalks – Toaccount for allactivities related tostreet andsidewalk capital costs. Capital Acquisition – Toaccount forpurchase ofequipment not financed bytheMotor Pool Fund andcapital improvements andprojects ofatleast $20,000. 93 Exhibit K-1 City ofSeward, Alaska Nonmajor Capital ProjectFunds Combining Balance Sheet Public WorksGeneral Government FloodStreets andKawabeCapital December 31, 2016 MitigationSidewalksParkAcquisitionTotal Assets Cash and investments$ 250,000$ 300,000$ 5,929$ 1,788,411$ 2,344,340 Grant receivables 200,000 - - - 200,000 Total Assets$ 450,000$ 300,000$ 5,929$ 1,788,411$ 2,544,340 Liabilities Account payable$ - $ - $ - $ 4,010$ 4,010 Fund Balances Assigned - capital projects 450,000 300,000 5,929 1,784,401 2,540,330 Total Liabilities and Fund Balances$ 450,000$ 300,000$ 5,929$ 1,788,411$ 2,544,340 94 Exhibit K-2 City of Seward, Alaska Nonmajor Capital Project Funds Combining Statement of Revenues, Expenditures and Change in Fund Balances Public SafetyPublic WorksGeneral Government Fire FloodStreets andKawabeCapital Year Ended December 31, 2016 SimulatorMitigationSidewalksParkAcquisitionTotal Revenues Intergovernmental$ 296,196 $ 500,000 $ -$ -$ -$ 796,196 Expenditures Contracted services - 550,000 - - 14,557 564,557 Supplies and maintenance 3,151 - - - 88,184 91,335 General and administrative 11,099 - - - - 11,099 Capital outlay 284,286 - 50,000 - 422,212 756,498 Other services and charges - - - - 401 401 Total Expenditures 298,536 550,000 50,000 - 525,354 1,423,890 Excess ofRevenues Over Under) Expenditures (2,340) (50,000) (50,000) - (525,354) (627,694) Other Financing Sources (Uses) Transfers in - 500,000 50,000 - 225,879 775,879 Transfers out (660) - - - - (660) Net Other Financing Sources (Uses) (660) 500,000 50,000 - 225,879 775,219 Net Change inFund Balances (3,000) 450,000 - - (299,475) 147,525 3,000 - 300,000 5,929 2,083,876 2,392,805FundBalances, beginning 450,000 $ 300,000 $ 5,929$ 1,784,401 $ 2,540,330FundBalances, ending 95 Thispageintentionally leftblank. 96 Enterprise Funds Enterprise Funds areestablished toaccount forthefinancing of self-supporting activities of governmental units, which render services tothegeneral public onauser-charge basis. Enterprise Funds aremaintained onthe accrual basis ofaccounting. Electric – Toaccount fortheprovision ofelectrical service to the residents ofthe Cityand other areas within theelectric service area. Water – Toaccount fortheprovision of waterservices totheresidents oftheCity. Wastewater – To account forthe provision ofsewer services totheresidents oftheCity. Harbor – To account fortheprovision ofharbor andmarine services tothepublic within the Small Boat Harbor basin. Seward Marine Industrial Center (SMIC) – To account fortheprovision ofmarine-related services tothepublic ontheeastsideofResurrection Bay. Parking – Toaccount fortheprovision ofpublic parking services. Healthcare Facilities - Toaccount for theprovision ofservices provided by Seward Community Health Center, Providence Seward Medical andCare Center (PSMCC) andlong-termcare facilities. 97 ExhibitL-1 City of Seward, Alaska Electric Enterprise Fund Statement of Net Position 20162015December31, Assets CurrentAssets Cashandinvestments$ 5,750,967$ 4,507,017 Receivables: Accounts 918,178 1,000,085 Interfundloan, currentportion - 20,578 Grants 1,713,760 1,037,210 Interest - 15,550 Other 61,253 9,640 Lessallowancefordoubtfulaccounts (41,318) (45,004) Netreceivables 2,651,873 2,038,059 Prepaidexpenses - 3,600 Inventory 993,588 978,626 TotalCurrentAssets 9,396,428 7,527,302 RestrictedCashandInvestments Bondretirement 349,739 396,036 Capitalprojects - 1,556,669 TotalRestrictedCashandInvestments 349,739 1,952,705 InterfundLoan, netofcurrentportion - 275,617 Property, PlantandEquipment Landandlandrights 230,951 230,951 Buildings 9,578,169 9,578,169 Improvementsotherthanbuildings 49,156,563 40,510,321 Equipment 7,616,911 7,612,418 Totalproperty, plantandequipmentinservice 66,582,594 57,931,859 Lessaccumulateddepreciation (40,322,838) (38,876,118) Netproperty, plantandequipmentinservice 26,259,756 19,055,741 Constructioninprogress - 5,622,906 TotalProperty, PlantandEquipment 26,259,756 24,678,647 TotalAssets 36,005,923 34,434,271 DeferredOutflowsofResources Relatedtopensions 284,626 245,004 Unamortizeddeferredlossonrefunding 459,875 - TotalDeferredOutflowsofResources 744,501 245,004 TotalAssetsandDeferredOutflowsofResources$ 36,750,424$ 34,679,275 98 Exhibit L-1, continued City of Seward, Alaska Electric Enterprise Fund Statement of NetPosition, continued December 31,20162015 Liabilities Current Liabilities Accounts payable$ 527,038$ 736,850 Accrued payroll and related liabilities 30,732 21,362 Accrued interest 76,974 21,991 Current portion: Accrued annual leave 20,999 24,323 Bonds payable 150,000 130,000 Customer deposits 265,898 254,239 1,071,641 1,188,765TotalCurrentLiabilities Noncurrent Liabilities, net of current portion Accrued annual leave 28,390 31,725 Bonds payable 5,060,000 5,115,000 Unamortized bond premium 304,355 25,054 Net pension liability 1,649,763 1,255,168 7,042,508 6,426,947TotalNoncurrentLiabilities 8,114,149 7,615,712TotalLiabilities 17,583 22,222DeferredInflowsofResources - related to pensions Net Position Net investment in capital assets 21,555,015 19,804,629 Unrestricted 7,063,677 7,236,712 28,618,692 27,041,341TotalNetPosition Total Liabilities, Deferred Inflows of Resources and Net Position$ 36,750,424$ 34,679,275 99 Exhibit L-2 City ofSeward, Alaska Electric EnterpriseFund Statement ofRevenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues Residential$ 3,262,167$ 3,209,933 Small general service 1,711,617 1,790,509 Large general service 4,549,676 4,493,965 Industrial 993,311 1,047,653 Harbor power 417,539 358,887 Street and yard lights 69,522 72,977 Miscellaneous 342,829 297,056 11,346,661 11,270,980TotalOperatingRevenues Operating Expenses Power 5,351,747 5,151,274 Distribution 359,367 308,029 Administration and general 3,422,832 2,879,521 Depreciation 1,446,720 1,724,295 10,580,666 10,063,119TotalOperatingExpenses 765,995 1,207,861EarningsfromOperations Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 37,268 52,010 Investment income 56,659 192,151 Salary credits - work orders 121,632 100,577 Supply credits - work orders 82,479 110,520 Bonding issue costs (73,457) - Interest expense (185,626) (271,699) Gain in disposal of property, plant and equipment 200 - Other expenses (28,825) (276,637) Net Nonoperating Revenues (Expenses) 10,330 (93,078) Earnings Before Contributions and Transfers 776,325 1,114,783 Capital contributions 2,035,806 3,518,402 Transfers in 8,400 110,784 Transfers out (1,243,180) (1,238,455) Change in Net Position 1,577,351 3,505,514 Net Position, beginning 27,041,341 23,535,827 28,618,692 $ 27,041,341NetPosition, ending 100 Exhibit L-3 City of Seward, Alaska Electric Enterprise Fund Statement ofCash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 11,384,928$ 11,282,909 Payments to suppliers (6,230,257) (6,075,150) Payments to employees (1,401,753) (1,202,996) Payments for interfund services used (888,835) (869,585) Net cash flows from operating activities 2,864,083 3,135,178 Cash Flows from (for) Noncapital Financing Activities Transfers in 8,400 110,784 Transfers out (1,243,180) (1,238,455) Net cash flows for noncapital financing activities (1,234,780) (1,127,671) Cash Flows from (for) Capital and Related Financing Activities Principal payments on bonds payable (240,000) (400,000) Proceeds from issuance of refunding bonds 5,045,000 - Payment to refunding bond escrow agent (4,913,457) - Interest payments on bonds payable (311,217) (276,722) 200 - Gain on dispoal of fixed assets Acquisition of property, plant and equipment (3,296,505) (3,639,991) Capital contributions received 1,359,256 2,949,650 Net cash flows for capital and related financing activities (2,356,723) (1,367,063) Cash Flows from Investing Activities Investment income received 72,209 193,215 Interfund loan receipts 296,195 19,552 Net cash flows from investing activities 368,404 212,767 359,016) 853,211NetIncreaseinCashandInvestments 6,459,722 5,606,511CashandInvestments, beginning 6,100,706 $ 6,459,722CashandInvestments, ending Reconciliation of Cash and Investments to Statement of Net Position Current assets$ 5,750,967 $ 4,507,017 Restricted assets 349,739 1,952,705 Total Cash and Investments$ 6,100,706 $ 6,459,722 101 Exhibit L-3, continued City of Seward, Alaska Electric Enterprise Fund Statement ofCash Flows, continued Year Ended December 31,20162015 Reconciliation of Earnings from Operations to Net Cash from (for) Operating Activities Earnings from operations$ 765,995$ 1,207,861 Adjustments to reconcile earnings from operations to net cash flows from (for) operating activities: Depreciation1,446,7201,724,295 Other nonoperating expenses(28,825)(276,637) Other nonoperating revenue - workorder reimbursements: Salaries121,632100,577 Supplies82,479110,520 Noncash expense - PERS on-behalf 52,01037,268 Increase (decrease) in allowance for doubtful accounts(3,686) 1,849 Increase) decrease in assets and deferred outflows of resources: Receivables30,294 (31,525) Prepaid expenses3,600 1,969 Inventory(14,962) (58,387) Deferred outflows of resources - related to pensions(39,622) (208,087) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable58,864 78,608 Accrued payroll and related liabilities9,370 (43,457) Accrued annual leave(6,659) 4,373 Customer deposits11,659 41,605 Net pension liability394,595 495,186 Deferred inflows of resources related to pensions(4,639) (65,582) Net Cash from Operating Activities$ 3,135,1782,864,083$ Noncash Capital and Related Financing Activities Purchase of property, plant and equipment included in accounts payable2,653$ 271,329$ Capital contributions 1,037,2101,713,760$ 102 Exhibit L-4 City of Seward, Alaska Electric Enterprise Fund Schedule ofOperating Expenses Year Ended December 31,20162015 Power Salaries and employee benefits$ 140,888$ 94,781 Purchased services 176,457 227,562 Power for resale 4,973,262 4,778,090 Supplies, maintenance and other 61,140 50,841 Total Power 5,351,747 5,151,274 Distribution Salaries and employee benefits 253,774 216,683 Purchased services 118,695 86,436 Supplies and maintenance (13,402) 3,883 Administration and general 300 1,027 Total Distribution 359,367 308,029 Administration and General Salaries and employee benefits 1,519,036 1,226,552 Purchased services 253,130 227,230 Supplies and maintenance 316,932 194,867 Administrative fee 888,535 868,558 Other 445,199 362,314 Total Administration and General 3,422,832 2,879,521 Depreciation 1,446,720 1,724,295 Total Operating Expenses$ 10,580,666 $ 10,063,119 103 Exhibit L-5 City of Seward, Alaska Electric Enterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 36,293,573$ 34,257,767 Related accumulated amortization (21,633,046) (20,857,305) City-generated equity and transfers from other funds 13,958,165 13,640,879 Total Net Position$ 28,618,692$ 27,041,341 104 Exhibit L-6 City of Seward, Alaska Electric Enterprise Fund Schedule ofElectric Capital Projects StandbyTransmission ElectricLineCustomer Year Ended December 31, 2016 GenerationUpgradeProjects Funding Sources Federal grants$ -$ 1,479,060$ - State grants 352,333 - - Electric fund customers - - 204,413 Electric funds - 493,020 6,401 352,333 1,972,080 210,814TotalFundingSources 352,333$ 1,972,080$ 210,814CapitalOutlay 105 Exhibit L-7 City of Seward, Alaska WaterEnterpriseFund StatementofNetPosition December 31,20162015 Assets Current Assets Cash and investments$ 2,237,211$ 1,034,762 Receivables: Accounts 190,357 174,777 Grants and loans - 1,054,071 Other 750 750 Less allowance for doubtful accounts (8,566) (7,851) Net receivables 182,541 1,221,747 Inventory 92,102 94,291 2,511,854 2,350,800TotalCurrentAssets Restricted Cash andInvestments - capital projects 943,636 Property, Plant and Equipment Land and land rights 100,420 100,420 Buildings 1,287,853 1,287,853 Improvements other than buildings 11,978,229 6,203,911 Equipment 1,361,985 1,312,085 14,728,487 8,904,269Totalproperty, plant and equipment in service 5,123,982) (4,923,659) Less accumulated depreciation 9,604,505 3,980,610Netproperty, plant and equipment inservice 4,781,313Constructioninprogress 9,604,505 8,761,923TotalProperty, Plant and Equipment 12,116,359 12,056,359TotalAssets 68,246 58,707DeferredOutflowsofResources - related topensions Total Assets and Deferred Outflows ofResoruces$ 12,184,605$ 12,115,066 Liabilities Current Liabilities Accounts payable$ 63,184$ 15,639 Accrued payroll and related liabilities 6,892 5,997 Accrued interest 17,770 19,334 Current portion: Accrued annual leave 4,869 8,847 Notes payable 133,150 131,182 225,865 180,999TotalCurrentLiabilities Noncurrent Liabilities, netofcurrent portion Accrued annual leave 3,792 24,149 Notes payable 1,446,445 1,579,595 Net pension liability 395,754 300,758 1,845,991 1,904,502TotalNoncurrentLiabilities 2,071,856 2,085,501TotalLiabilities 4,207 5,324DeferredInflowsofResources - related topensions Net Position Net investment incapital assets 8,024,910 7,051,146 Unrestricted 2,083,632 2,973,095 10,108,542 10,024,241TotalNetPosition Total Liabilities, Deferred Inflows of Resources and Net Position$ 12,184,605$ 12,115,066 106 Exhibit L-8 City of Seward, Alaska WaterEnterprise Fund Statement ofRevenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues Residential$ 481,202$ 455,795 Small general service 131,223 132,772 Large general service 229,373 210,460 Industrial 245,585 255,801 Seward Marine Industrial Center 47,066 49,367 Ship water sales 93,877 107,254 Miscellaneous 64,564 72,537 1,292,890 1,283,986TotalOperatingRevenues Operating Expenses Salaries and benefits 419,348 439,097 Purchased services 224,178 218,375 Contracted services 22,824 47,130 Supplies and maintenance 44,726 50,436 Administration and general 254,289 261,466 Depreciation 200,323 199,645 1,165,688 1,216,149TotalOperatingExpenses 127,202 67,837EarningsfromOperations Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 8,972 12,462 Investment income 6,643 47,774 Interest expense (24,098) (25,826) Net Nonoperating Revenues (Expenses) (8,483) 34,410 Earnings Before Contributions and Transfers 118,719 102,247 Capital contributions 147,469 4,305,736 Transfers out (181,887) (142,954) Change in Net Position 84,301 4,265,029 Net Position, beginning 10,024,241 5,759,212 Net Position, ending 10,108,542$ 10,024,241 107 Exhibit L-9 City of Seward, Alaska Water Enterprise Fund Statement of Cash Flows Year Ended December 31, 20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$1,278,025$1,266,130 Payments to suppliers(232,111)(303,471) Payments to employees(349,476)(364,799) Payments for interfund services used(254,289)(261,466) Net cash flows from operating activities442,149336,394 Cash Flows for Noncapital Financing Activities Transfers out(181,887)(142,954) Cash Flows from (for) Capital and Related Financing Activities Principal payments on notes payable(131,182)(129,244) Interest payments on notes payable(25,662)(27,287) Acquisition of property, plant and equipment(1,052,788)(4,318,269) Capital contributions received1,201,5403,255,199 Net cash flows for capital and related financing activities (1,219,601)(8,092) Cash Flows from Investing Activities Investment income received6,64347,774 Net Increase (Decrease) in Cash and Investments258,813(978,387) Cash and Investments, beginning1,978,3982,956,785 Cash and Investments, ending$2,237,211$1,978,398 Reconciliation ofCash and Investments to Statement of Net Position Current assets$2,237,211$1,034,762 Restricted assets 943,636- Total Cash and Investments$2,237,211$1,978,398 Reconciliation of Earnings from Operations to Net Cash from Operating Activities Earnings from operations$127,202$67,837 Adjustments to reconcile earnings from operations to net cash flows from (for) operating activities: Depreciation200,323199,645 Noncash expense - PERS on-behalf8,97212,462 Increase in allowance for doubtful accounts715801 Increase) decrease inassets and deferred outflows of resources: 18,657) Accounts receivable(15,580) Inventory2,189(991) Deferred outflows of resources related topensions(9,539)(49,861) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable57,42813,461 Accrued payroll and related liabilities895(3,866) Accrued annual leave(24,335)12,624 Net pension liability94,996118,654 Deferred inflows related to pensions(1,117)(15,715) Net Cash from Operating Activities$442,149$336,394 Noncash Capital and Related Financing Activities Purchase of property, plant and equipment included in accounts payable$2,171$12,054 Capital contributions 1,054,071-$ 108 Exhibit L-10 City of Seward, Alaska Water Enterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 8,034,398$ 7,886,929 Related accumulated amortization (1,987,073) (1,962,671) Contributions from other funds 596,766 596,766 City-generated equity 3,464,451 3,503,217 10,108,542$ 10,024,241TotalNetPosition 109 Exhibit L-11 City of Seward, Alaska Wastewater Enterprise Fund Statement ofNet Position December 31,20162015 Assets Current Assets Cash and investments$ 1,725,449$ - Receivables: Accounts 106,425 95,630 Grants andloans - 1,534,202 Lessallowance fordoubtful accounts (4,789) (4,303) Netreceivables 101,636 1,625,529 1,827,085 1,625,529TotalCurrentAssets Property, Plant andEquipment Land andland rights 111,011 111,011 Buildings 2,418,398 2,418,398 Infrastructure 29,698 29,698 Improvements other than buildings 11,804,000 11,804,000 Equipment 891,377 888,278 15,254,484 15,251,385Totalproperty, plant andequipment inservice 8,570,579) (8,203,036) Lessaccumulated depreciation 6,683,905 7,048,349NetProperty, Plant andEquipment in Service 8,510,990 8,673,878TotalAssets 59,017 51,723DeferredOutflowsofResources - related to pensions Total Assets andDeferredOutflows ofResources$ 8,570,007$ 8,725,601 Liabilities Current Liabilities Accounts payable$ 32,052$ 4,086 Accrued payroll and related liabilities 5,281 4,133 Accrued interest 5,900 - Due toother funds - 62,221 Current portion: Accrued annual leave 5,759 6,423 Notes payable 59,871 58,986 108,863 135,849TotalCurrentLiabilities Noncurrent Liabilities, netofcurrent portion Accrued annual leave 17,543 21,948 Notes payable 1,245,115 1,304,986 Netpension liability 337,617 264,977 1,600,275 1,591,911TotalNoncurrentLiabilities 1,709,138 1,727,760TotalLiabilities 3,837 4,691DeferredInflowsofResources - related topensions Net Position Net investment in capital assets 5,378,919 5,684,377 Unrestricted 1,478,113 1,308,773 6,857,032 6,993,150TotalNetPosition Total Liabilities, Deferred Inflows ofResouces andNetPosition$ 8,570,007$ 8,725,601 110 Exhibit L-12 City ofSeward, Alaska Wastewater EnterpriseFund Statement ofRevenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues Residential$ 637,860$ 604,405 Small general service 194,606 191,365 Large general service 279,178 260,495 Seward Marine Industrial Center 35,895 36,304 Miscellaneous 4,224 3,482 1,151,763 1,096,051TotalOperatingRevenues Operating Expenses Salaries and employee benefits 342,653 380,132 Purchased services 234,191 235,560 Contracted services 73,021 25,805 Supplies and maintenance 35,599 64,645 Administration and general 152,718 156,188 Depreciation 367,543 235,468 1,205,725 1,097,798TotalOperatingExpenses 53,962) (1,747) Loss from Operations Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 6,861 10,980 Investment income (loss) 2,997 (4,242) Other revenue - 239 Interest expense (5,900) - Net Nonoperating Revenues (Expenses) 3,958 6,977 Loss Before Contributions and Transfers (50,004) 5,230 Capital contributions - 1,470,230 Transfers in 12,000 30,826 Transfers out (98,114) (93,676) Change in Net Position (136,118) 1,412,610 Net Position, beginning 6,993,150 5,580,540 6,857,032$ 6,993,150NetPosition, ending 111 Exhibit L-13 City of Seward, Alaska Wastewater Enterprise Fund Statement of Cash Flows Year Ended December 31, 20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 1,141,454$ 1,089,219 Payments to suppliers (314,845) (329,642) Payments toemployees (275,221) (325,630) Payments forinterfund services used (152,718) (156,188) Net cash flows from operating activities 398,670 277,759 CashFlows from (for) Noncapital Financing Activities Transfers in 12,000 30,826 Transfers out (98,114) (93,676) Netcash flows fornoncapital financing activities (86,114) (62,850) Cash Flows from (for) Capital and Related Financing Activities Principal payments onnotes payable (58,986) - Increase (decrease) indueto other funds (62,221) 62,221 Capital contributions received 1,534,202 1,300,000 Acquisition ofproperty, plant and equipment (3,099) (2,865,040) Netcash flows from (for) capital and related financing activities 1,409,896 (1,502,819) CashFlows from (for) Investing Activities Investment income (loss) 2,997 (4,242) 1,725,449 (1,292,152) Net Increase (Decrease) inCash and Investments 1,292,152CashandInvestments, beginning 1,725,449$ - Cash and Investments, ending Reconciliation ofLoss from Operations toNet Cash from (for) Operating Activities Loss from operations$ (53,962)$ (1,747) Adjustments toreconcile lossfrom operations tonet cash flows from (for) operating activities: Depreciation 367,543 235,468 Noncash expense - PERSon-behalf 6,861 10,980 Other nonoperating revenue - 239 Increase inallowance fordoubtful accounts 486 333 Increase inassets and deferred outflows ofresources: Accounts receivable (10,795) (7,404) Deferred outflows ofresources related topensions (7,294) (43,929) Increase (decrease) inliabilities and deferred inflows ofresources: Accounts payable27,966 (3,632) Accrued payroll andrelated liabilities 1,148 (9,702) Accrued annual leave (5,069) 6,460 Net pension liability 72,640 104,538 Deferred inflows related topensions (854) (13,845) Net Cashfrom Operating Activities$ 398,670$ 277,759 Noncash Capital and Related Financing Activities Capital contributions$ 1,534,202-$ 112 Exhibit L-14 City of Seward, Alaska Wastewater Enterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 11,705,799 $ 11,705,799 Related accumulated amortization (7,967,389) (7,555,867) Contributions from other funds 704,376 692,376 City-generated equity 2,414,246 2,150,842 6,857,032$ 6,993,150TotalNetPosition 113 Exhibit L-15 City of Seward, Alaska Harbor Enterprise Fund Statement ofNetPosition December 31,20162015 Assets Current Assets Cash and investments$- $ 313,275 Receivables: Accounts 169,993 226,191 Grants 917,500 3,509,291 Less allowance for doubtful accounts (38,918) (33,435) Net receivables 1,048,575 3,702,047 1,048,575 4,015,322TotalCurrentAssets Restricted Cash and Investments Bond retirement 1,891,394 690,198 Capital projects 2,267,143 2,969,951 Total Restricted Cash and Investments 4,158,537 3,660,149 Property, Plant and Equipment Land and land rights 18,175,054 18,175,054 Buildings 775,201 775,201 Infrastructure97,723 97,723 Improvements other than buildings 37,693,445 31,522,291 Equipment 1,620,993 1,612,698 58,362,416 52,182,967Totalproperty, plant and equipment in service 18,202,577) (16,349,436) Less accumulated depreciation 40,159,839 35,833,531Netproperty, plant and equipment in service 20,169 2,891,027Constructioninprogress 40,180,008 38,724,558TotalProperty, Plant and Equipment 45,387,120 46,400,029TotalAssets Deferred Outflows of Resources Related to pensions 190,630 164,817 Unamortized deferred loss on refunding 198,715 216,637 Total Deferred Outflows of Resources 389,345 381,454 Total Assets and Deferred Outflows of Resources$ 45,776,465$ 46,781,483 114 Exhibit L-15, continued City of Seward, Alaska Harbor Enterprise Fund Statement of NetPosition, continued December 31,20162015 Liabilities Current Liabilities Accounts payable$ 74,275$ 434,613 Accrued payroll and related liabilities19,973 13,460 Accrued interest 41,908 32,842 Current portion: Accrued annual leave 17,955 18,784 Bonds payable 480,000 470,000 Interfund loan - 27,698 Unearned revenue 584,361 554,560 Customer deposits45,777 42,753 1,264,249 1,594,710TotalCurrentLiabilities Noncurrent Liabilities, net of current portion Accrued annual leave45,459 44,274 Bonds payable 3,915,000 4,415,000 Notes payable 1,201,196 1,201,196 Unamortized bond premium 507,142 500,433 Net pension liability 1,101,434 844,363 6,770,231 7,005,266TotalNoncurrentLiabilities 8,034,480 8,599,976TotalLiabilities 11,927 14,949DeferredInflowsofResources - related to pensions Net Position Net investment in capital assets 36,166,779 33,044,764 Restricted for commercial passenger vessel tax 675,181 1,354,473 Unrestricted 888,098 3,767,321 37,730,058 38,166,558TotalNetPosition Total Liabilities, Deferred Inflows of Resources and Net Position$ 45,776,465$ 46,781,483 115 Exhibit L-16 City of Seward, Alaska Harbor Enterprise Fund Statement of Revenues, Expenses and Change in Net Position Year Ended December 31,20162015 Operating Revenues Moorage$ 1,628,053$ 1,603,487 Wharfage 28,216 61,526 Boat lift fees 92,660 111,347 Power sales 461,575 436,353 Rentals and leases 326,020 352,469 Passenger transit fees 636,027 666,246 Miscellaneous 130,138 128,027 3,302,689 3,359,455TotalOperatingRevenues Operating Expenses Salaries and employee benefits 1,297,954 1,178,441 Purchased services 337,270 366,107 Power for resale 260,390 250,279 Supplies and maintenance 112,981 116,737 Administration and general 258,985 377,916 Depreciation 1,853,141 1,367,544 4,120,721 3,657,024TotalOperatingExpenses 818,032) (297,569) Loss from Operations Nonoperating Revenues (Expenses) Intergovernmental - PERS on-behalf 24,279 34,987 Investment income 20,651 36,758 Commercial passenger vessel tax 917,500 1,242,072 Bond issue costs(50,594) - Interest expense (182,451) (205,318) Net Nonoperating Revenues (Expenses) 729,385 1,108,499 Earnings (Loss) Before Contributions and Transfers(88,647) 810,930 Capital contributions 297,274 2,911,132 Transfers in - 243,861 Transfers out (645,127) (410,352) Change in Net Position (436,500) 3,555,571 Net Position, beginning 38,166,558 34,610,987 Net Position, ending 37,730,058$ 38,166,558 116 Exhibit L-17 City of Seward, Alaska Harbor Enterprise Fund Statement ofCash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 3,397,195$ 3,291,919 Payments to suppliers (1,070,979) (388,919) Payments toemployees (1,038,570) (1,040,451) Payments for interfund services used (258,985) (377,916) Net cash flows from operating activities 1,028,661 1,484,633 Cash Flows from (for) Noncapital Financing Activities Transfers in-243,861 Transfers out (645,127) (410,352) Net cash flows for noncapital financing activities (645,127) (166,491) Cash Flows from (for) Capital and Related Financing Activities Principal payments on long-term debt (470,000) (460,000) Proceeds from issuance of refunding bonds 1,055,000 - Payment to refunding bond escrow agent (1,125,595) - Interest payments on long-term debt (148,754) (229,197) Acquisition of property, plant and equipment (3,308,590) (3,129,018) Capital contributions received 2,912,225 325,665 Interfund loan payment (27,698) (26,254) Commercial passenger vessel tax receipts 894,340 695,465 Net cash flows for capital and related financing activities (219,072) (2,823,339) Cash Flows from Investing Activities Investment income received20,651 36,758 185,113 (1,468,439) Net Increase (Decrease) in Cash and Investments 3,973,424 5,441,863CashandInvestments, beginning 4,158,537$ 3,973,424CashandInvestments, ending Reconciliation of Cash and Investments to Statement of Net Position Current assets$- $ 313,275 Restricted assets 4,158,537 3,660,149 Total Cash and Investments $ 4,158,537$ 3,973,424 117 Exhibit L-17, continued City of Seward, Alaska Harbor Enterprise Fund Statement ofCash Flows, Continued Year Ended December 31,20162015 Reconciliation ofLoss from Operations to Net Cash from (for) Operating Activities Loss from operations$ (818,032)$ (297,569) Adjustments to reconcile loss from operations to net cash flows from (for) operating activities: Depreciation 1,853,141 1,367,544 Noncash expense - PERS on-behalf24,279 34,987 Increase in allowance for doubtful accounts 5,483 9,601 Increase) decrease in assets and deferred outflows of resources: Receivables56,198 (70,695) Deferred outflows of resources related topensions (25,813) (139,982) Increase (decrease) in liabilities and deferred inflows of resources: Accounts payable (360,338) 344,204 Accrued payroll and related liabilities 6,513 (44,134) Accrued annual leave 356 (1,879) Customer deposits 3,024 6,675 Unearned revenue29,801 (13,117) Net pension liability 257,071 333,116 Deferred inflows of resources related topensions (3,022) (44,118) Net Cash from Operating Activities $ 1,028,661$ 1,484,633 Noncash Capital and Related Financing Activities Capital contributions$- $ 2,614,951 118 Exhibit L-18 City of Seward, Alaska Harbor Enterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 39,629,203$ 39,334,929 Related accumulated amortization (11,367,953) (10,303,788) Contributions from other funds 6,482,874 6,482,874 City-generated equity 2,985,934 2,652,543 37,730,058$ 38,166,558TotalNetPosition 119 Exhibit L-19 City of Seward, Alaska Harbor Enterprise Fund Schedule ofHarbor Capital Projects Fish FloatFloatsCleaning Year Ended December 31, 2016 ReplacementReplacementStation Funding Sources State grants$ 8,295$ -$ - Federal grants- - 297,274 Harbor Fund 20,168 2,913,002 69,851 Total Funding Sources $ 28,463$ 2,913,002 $ 367,125 28,463$ 2,913,002 $ 367,125CapitalOutlay 120 ExhibitL-20 City of Seward, Alaska Seward Marine Industrial Center Enterprise Fund Statement of Net Position December31,20162015 Assets CurrentAssets Accountreceivable$ 56,321$ 55,545 Grantreceivable 1,666,727 1,146,534 1,723,048 1,202,079TotalCurrentAssets Property, PlantandEquipment Landandlandrights 12,021,821 12,021,821 Buildings 280,287 280,287 Improvementsotherthanbuildings 40,647,334 40,647,334 Equipment 1,650,360 1,650,360 Totalproperty, plantandequipmentinservice 54,599,802 54,599,802 Lessaccumulateddepreciation (30,177,787) (29,422,321) Netproperty, plantandequipmentinservice 24,422,015 25,177,481 Constructioninprogress 13,093,308 3,746,518 TotalProperty, PlantandEquipment 37,515,323 28,923,999 TotalAssets$ 39,238,371$ 30,126,078 Liabilities CurrentLiabilities Accountspayable$ 201,456 $ 1,123,402 Accruedpayrollandrelatedliabilities 2,799 1,093 Interfundloanpayable - currentportion 98,009 98,008 Deposits 13,600 12,200 Unearnedrevenue 43,606 63,100 Duetootherfunds 1,680,476 185,768 2,039,946 1,483,571TotalCurrentLiabilities NoncurrentLiabilities Interfundloan, netofcurrentportion 686,058 784,066 2,726,004 2,267,637TotalLiabilities NetPosition Netinvestmentincapitalassets 37,515,323 28,923,999 Unrestricted (deficit) (1,002,956) (1,065,558) 36,512,367 27,858,441TotalNetPosition TotalLiabilitiesandNetPosition$ 39,238,371$ 30,126,078 121 Exhibit L-21 City ofSeward, Alaska Seward MarineIndustrial CenterEnterprise Fund Statement ofRevenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues Moorage$ 23,573$ 14,201 Wharfage 10,996 6,969 Boat lift fees 163,286 176,776 Storage 96,362 98,727 Rentals and leases 161,275 157,073 Power sales 148,482 134,838 Miscellaneous 4,836 4,723 608,810 593,307TotalOperatingRevenues Operating Expenses Salaries and employee benefits 101,549 116,769 Purchased services 250,688 109,885 Contracted services 7,221 89,000 Supplies and maintenance 24,350 33,067 Administration and general 203,232 177,808 Depreciation 755,466 733,630 Total Operating Expenses 1,342,506 1,260,159 Loss from Operations (733,696) (666,852) Nonoperating Revenues (Expenses) Investment income (loss) - (1,582) Insurance recovery - 522 Net Nonoperating Revenues (Expenses) - (1,060) Loss Before Contributions and Transfers (733,696) (667,912) Capital contributions 9,346,791 1,244,350 Transfers in 165,750 27,520 Transfers out (124,919) (312,858) 8,653,926 291,100ChangeinNetPosition Net Position, beginning 27,858,441 27,567,341 36,512,367$ 27,858,441NetPosition, ending 122 Exhibit L-22 City of Seward, Alaska Seward Marine Industrial Center Enterprise Fund Statement of Cash Flows Year Ended December 31, 20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 589,940$ 602,346 Payments tosuppliers (287,487) (236,492) Payments to employees (99,843) (115,947) Payments forinterfund services used (203,232) (177,278) Netcash flows from (for) operating activities (622) 72,629 Cash Flows from (for) Noncapital Financing Activities Transfers in 165,750 27,520 Transfers out (124,919) (312,858) Net cash flows from (for) noncapital financing activities 40,831 (285,338) Cash Flows from (for) Capital and Related Financing Activities Acquisition ofproperty, plant, and equipment (10,263,507) (324,790) Increase (decrease) indue to other funds 1,494,708 (719,358) Interfund loan payments (98,008) (147,013) Insurance recovery - 522 Capital contributions received 8,826,598 1,404,930 Net cashflows from (for) capital andrelated financing activities (40,209) 214,291 Cash Flows from (for) Investing Activities Investment income (loss) - (1,582) Net Decrease inCash and Investments Cash and Investments, beginning Cash and Investments, ending Reconciliation ofLoss from Operations toNet Cash from (for) Operating Activities Loss from operations$ (733,696) $ (666,852) Adjustments toreconcile loss from operations to netcash flows from (for) operating activities: Depreciation 755,466 733,630 Increase in assets - Accounts receivable (776) (17,414) Increase (decrease) inliabilities: Accounts payable (5,228) (4,010) Accrued payroll and related liabilities 1,706 822 Deposits 1,400 3,000 Unearned revenue (19,494) 23,453 Net Cash from (for) Operating Activities $ (622)$ 72,629 Noncash Capital and Related Financing Activities Purchase ofproperty, plant and equipment included inaccounts payable$ 197,767$ 1,114,485 Capital contributions 1,666,727$ 1,146,534 123 Exhibit L-23 City of Seward, Alaska Seward Marine Industrial Center Enterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 49,461,818$ 40,115,027 Related accumulated amortization (27,185,044) (26,683,814) Contributions from other funds 17,638,143 17,472,393 City-generated deficit (3,402,550) (3,045,165) 36,512,367$ 27,858,441TotalNetPosition 124 Exhibit L-24 City of Seward, Alaska Seward Marine Industrial Center Enterprise Fund Scheduleof Seward Marine Industrial Center Capital Projects SMIC Year Ended December 31, 2016 Breakwater Funding Sources State grants$ 9,346,791 Total Funding Sources $ 9,346,791 9,346,791CapitalOutlay 125 Exhibit L-25 City of Seward, Alaska ParkingEnterprise Fund Statement ofNetPosition December 31,20162015 Assets Current Assets Cash and investments$ 917,751$ 835,027 Property, Plant and Equipment Improvements other than buildings 526,690 513,540 Equipment 189,014 150,360 Total property, plant and equipment in service 715,704 663,900 Less accumulated depreciation (625,247) (600,770) 90,457 63,130NetProperty, Plant and Equipment in Service Total Assets$ 1,008,208$ 898,157 Liabilities Current Liabilities Accounts payable$ 794$ 447 Accrued payroll and related liabilities - 333 794 780TotalCurrentLiabilities Net Position Net investment in capital assets 90,457 63,130 Unrestricted 916,957 834,247 1,007,414 897,377TotalNetPosition Total Liabilities and Net Position$ 1,008,208$ 898,157 126 Exhibit L-26 City of Seward, Alaska ParkingEnterprise Fund Statement of Revenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues - parking fees 328,347$ 318,223 Operating Expenses Salaries and employee benefits 134,589 88,891 Supplies and maintenance 36,770 22,479 Purchased services 25,228 15,054 Rents and leases - 13,000 Administration and general 10,602 15,861 Depreciation 24,477 24,477 Total Operating Expenses 231,666 179,762 Earnings from Operations 96,681 138,461 Nonoperating Revenues - investment income 970 7,816 Earnings Before Contributions and Transfers 97,651 146,277 Capital contributions 38,654 - Transfers out (26,268) (26,377) Change in Net Position 110,037 119,900 Net Position, beginning 897,377 777,477 Net Position, ending 1,007,414 $ 897,377 127 Exhibit L-27 City of Seward, Alaska ParkingEnterprise Fund Statement ofCash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 328,347$ 318,223 Payments to suppliers (61,651) (50,409) Payments toemployees (134,922) (88,558) Payments for interfund services used (10,602) (15,861) Net cash flows from operating activities 121,172 163,395 Cash Flows for Noncapital Financing Activities Transfers out (26,268) (26,377) Cash Flows from (for) Capital Financing Activities 51,804) - Acquisition of equipment Capital contributions received 38,654 - Net cash flows for financing activities (13,150) - Cash Flows from Investing Activities Investment income received 970 7,816 82,724 144,834NetIncreaseinCashandInvestments 835,027 690,193CashandInvestments, beginning 917,751 835,027CashandInvestments, ending Reconciliation of Earnings from Operations to Net Cash from Operating Activities Earnings from operations 96,681 138,461 Adjustments to reconcile earnings from operations to net cash flows from (for) operating activities: Depreciation 24,477 24,477 Increase (decrease) in liabilities: Accounts payable 347 124 Accrued payroll and related liabilities (333) 333 Net Cash from Operating Activities $ 121,172$ 163,395 128 Exhibit L-28 City of Seward, Alaska ParkingEnterprise Fund Schedule ofComposition of NetPosition December 31,20162015 Grants and other external contributions$ 425,893$ 425,893 Related accumulated amortization (425,893) (425,893) Contributions from other funds 46,304 7,650 City-generated equity 961,110 889,727 1,007,414$ 897,377TotalNetPosition 129 Exhibit L-29 City of Seward, Alaska Healthcare Facilities Enterprise Fund Statement ofNet Position December 31,20162015 Assets Current Assets Cash and investments$ 2,927,676$ 6,426,831 Receivables: Accounts 4,286,000 4,270,000 Other 126,000 109,000 Less allowance for doubtful accounts (1,044,000) (1,754,000) Net receivables 3,368,000 2,625,000 Other Assets 303,589 76,589 6,599,265 9,128,420TotalCurrentAssets Restricted Cash and Investments - bond retirement 1,615,006 1,973,360 Other Assets 727,000 713,000 Property, Plant and Equipment Buildings 22,830,684 22,788,808 Infrastructure 843,185 843,185 Improvements other than buildings 8,168,851 8,168,851 Equipment 5,065,114 4,913,451 Total property, plant and equipment in service 36,907,834 36,714,295 Less accumulated depreciation (20,045,451) (18,058,080) Net property, plant and equipment in service 16,862,383 18,656,215 Construction in progress - 135,740 16,862,383 18,791,955TotalProperty, Plant and Equipment Total Assets 25,803,654 30,606,735 Deferred Outflows of Resources - unamortized deferred loss on refunding 1,669,324 - Total Assets and Deferred Outflows of Resources$ 27,472,978$ 30,606,735 Liabilities Current Liabilities Accounts payable$ 95,000$ 250,000 Accrued payroll and related liabilities 923,000 763,000 Accrued interest 328,405 336,541 Current portion: Bonds payable 910,000 865,000 Interfund loan payable 59,095 76,726 Unearned revenue 735,000 1,585,000 Deposits 68,822 150,000 Payable to Providence Health and Services - Washington 6,612,000 4,868,000 Due to contractual agencies 277,000 27,000 10,008,322 8,921,267TotalCurrentLiabilities Noncurrent Liabilities, net of current portion Bonds payable 17,855,000 22,385,000 Interfund loan payable 692,929 1,027,641 Unamortized bond premium 1,600,383 304,559 20,148,312 23,717,200TotalNoncurrentLiabilities 30,156,634 32,638,467TotalLiabilities Net Position Net investment in capital assets (218,670) (2,789,244) Unrestricted (2,464,986) 757,512 2,683,656) (2,031,732) Total Net Position Total Liabilities and Net Position$ 27,472,978$ 30,606,735 130 Exhibit L-30 City of Seward, Alaska Healthcare Facilities Enterprise Fund Statement of Revenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues Net patient service revenues$ 17,556,000$ 18,035,000 Miscellaneous 173,000 295,000 Total Operating Revenues 17,729,000 18,330,000 Operating Expenses Salaries and employee benefits 12,304,000 12,001,000 Purchased services 2,368,573 2,619,000 Supplies and maintenance 962,000 978,000 Administration and general 1,127,985 880,639 Depreciation 1,987,371 1,946,744 Total Operating Expenses 18,749,929 18,425,383 Loss from Operations (1,020,929) (95,383) Nonoperating Revenues (Expenses) Investment income 1,658 13 Interest expense (478,018) (1,164,401) Bond issue costs (101,775) - Nonoperating grant revenue 14,000 3,000 Net Nonoperating Revenues (Expenses) (564,135) (1,161,388) Loss Before Contributions and Transfers (1,585,064) (1,256,771) Capital contributions 193,468 109,300 Transfers in 1,239,672 1,129,829 Transfers out (500,000) (500,000) Change in Net Position (651,924) (517,642) Net Position (Deficit), beginning 2,031,732) (1,514,090) Net Position (Deficit), ending 2,683,656)$ (2,031,732) 131 Exhibit L-31 City of Seward, Alaska Healthcare Facilities Enterprise Fund Statement of Cash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from customers and users$ 16,136,000$ 21,785,795 Payments to suppliers (2,063,751) (4,756,589) Payments to employees (12,144,000) (12,228,000) Payments for interfund services used (1,127,985) (880,639) Net cash flows from operating activities 800,264 3,920,567 Cash Flows from (for) Noncapital Financing Activities Transfers in 1,239,672 1,129,829 Transfers out (500,000) (500,000) Net cash flows from noncapital financing activities 739,672 629,829 Cash Flows from (for) Capital and Related Financing Activities Principal payments on long-term debt (1,090,000) (825,000) Payment to refunding bond escrow agent (20,631,775) - Proceeds from issuance of refunding bonds 17,135,000 - Acquisition of property, plant, and equipment (57,799) (225,300) Principal payments on interfund loans (352,343) (72,898) Capital contributions received 207,468 112,300 Interest payments on long-term debt (859,654) (1,194,868) Increase (decrease) in due to contractual agencies 250,000 27,000 Net cash flows for capital and related financing activities (5,399,103) (2,178,766) Cash Flows from Investing Activities Investment income received 1,658 13 3,857,509) 2,371,643NetIncrease (Decrease) in Cash and Investments 8,400,191 6,028,548CashandInvestments, beginning 4,542,682$ 8,400,191CashandInvestments, ending Reconciliation of Cash and Investments to Statement of Net Position Current assets$ 2,927,676$ 6,426,831 Restricted assets 1,615,006 1,973,360 4,542,682$ 8,400,191TotalCashandInvestments Reconciliation of Loss from Operations to Net Cash from Operating Activities Loss from operations$ (1,020,929) $ (95,383) Adjustments to reconcile loss from operations to net cash flows from (for) operating activities: Depreciation 1,987,371 1,946,744 Increase (decrease) inallowance for doubtful accounts (710,000) 737,000 Increase) decrease in assets: Accounts receivable (33,000) 3,026,795 Other assets (241,000) (671,589) Increase (decrease) in liabilities: Accounts payable (155,000) 60,000 Other payables and deposits 1,662,822 (548,000) Accrued payroll and related liabilities 160,000 (227,000) Unearned revenue (850,000) (308,000) Net Cash from Operating Activities $ 800,264$ 3,920,567 132 Internal ServiceFunds Motor Pool – TheMotorPool Internal Service Fund accounts forpayments fromdepartments for theuseofvehicles, inorder toaccumulate cash toforward-fund replacement of vehicles. This funding mechanism spreads the costof thevehicles over theexpected lifeofthe vehicle ineach program'sannual budget, rather than toshow thecostofvehicles asaone-time expenditure to each fund inthe yearofpurchase. Compensated Annual Leave – TheCompensated Annual Leave Internal Service Fund wascreated in 2005 forthepurpose ofaccumulating cash reserves topayannual leavecash-outs for governmental funds. 133 Exhibit M-1 City of Seward, Alaska Motor PoolInternal Service Fund Statement ofNetPosition December 31,20162015 Assets Current Assets Cash and investments$ 1,398,647$ 1,227,190 Receivables: Accrued interest 39,481 43,952 Interfund loans 157,104 181,854 1,595,232 1,452,996TotalCurrentAssets Interfund Loans, net of current portion 1,378,987 1,536,090 Property, Plant and Equipment Equipment and vehicles 6,937,053 6,563,057 Less accumulated depreciation (4,838,339) (4,444,792) 2,098,714 2,118,265NetProperty, Plant and Equipment Total Assets$ 5,072,933$ 5,107,351 Liabilities Current Liabilities Accounts Payable$ 7,690$ - Total Current Liabilities 7,690 - Net Position Net investment in capital assets 2,098,714 2,118,265 Unrestricted 2,966,529 2,989,086 Total Net Position 5,065,243 5,107,351 Total Liabilities and Net Position$ 5,072,933$ 5,107,351 134 Exhibit M-2 City of Seward, Alaska Motor PoolInternal Service Fund Statement of Revenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues - vehicle rental 291,600$ 470,439 Operating Expenses Contracted services 1,430 - Supplies and maintenance 7,087 3,900 Depreciation 450,049 434,783 Total Operating Expenses 458,566 438,683 Earnings (Loss) from Operations (166,966) 31,756 Nonoperating Revenues Investment income 40,952 46,920 Insurance recovery 2,598 - Gain on sale of equipment and vehicles 9,000 - Nonoperating Revenues 52,550 46,920 114,416) 78,676Income (Loss) Before Transfers Transfers in 72,308 147,012 Change in Net Position (42,108) 225,688 Net Position, beginning 5,107,351 4,881,663 Net Position, ending 5,065,243 $ 5,107,351 135 Exhibit M-3 City of Seward, Alaska Motor PoolInternal Service Fund Statement ofCash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from vehicle rentals and other charges$ 291,600$ 470,439 Payments to suppliers (827) (3,900) Net cash flows from operating activities 290,773 466,539 Cash Flows from Noncapital Financing Activities Transfers in 72,308 147,012 Cash Flows from (for) Capital and Related Financing Activities Acquisition of equipment and vehicles (430,498) (400,189) Gain on sale offixed assets 9,000 - Insurance recovery 2,598 - Net cash flows for capital and related financing activities (418,900) (400,189) Cash Flows from Investing Activities Interfund loan receipts 181,853 226,613 Investment income received 45,423 51,165 Net cash flows from (for) investing activities 227,276 277,778 Net Increase in Cash and Investments 171,457 491,140 Cash and Investments, beginning 1,227,190 736,050 Cash and Investments, ending$ 1,398,647$ 1,227,190 Reconciliation ofEarnings (Loss) from Operations to Net Cash from Operating Activities Earnings (loss) from operations$ (166,966)$ 31,756 Adjustments to reconcile earnings (loss) from operations to net cash flows from operating activities: Depreciation 450,049 434,783 Increase in liabilities - accounts payable 7,690 - Net Cash from Operating Activities $ 290,773$ 466,539 136 Exhibit M-4 City of Seward, Alaska Motor PoolInternal ServiceFund Schedule ofComposition ofNetPosition Year Ended December 31,20162015 Grants and other external contributions$ 97,289$ 97,289 Related accumulated amortization (97,289) (97,289) Contributions from other funds 1,051,644 979,336 City-generated equity 4,013,599 4,128,015 5,065,243 $ 5,107,351TotalNetPosition 137 Exhibit M-5 City of Seward, Alaska Compensated Annual Leave InternalService Fund Statement ofNetPosition December 31,20162015 Assets 486,770$ 505,354CurrentAssets - cash and investments Liabilities Current Liabilities - accrued annual leave - current portion 103,010$ 116,215 Noncurrent Liabilities, net of current portion - accrued annual leave 383,760 389,139 Total Liabilities$ 486,770$ 505,354 138 Exhibit M-6 City of Seward, Alaska Compensated Annual Leave InternalService Fund Statement of Revenues, Expenses andChange inNetPosition Year Ended December 31,20162015 Operating Revenues - interfund charges 489,034$ 473,650 Operating Expenses - salaries and employee benefits 489,034 473,650 Change in Net Position - - Net Position, beginning Net Position, ending 139 Exhibit M-7 City of Seward, Alaska Compensated Annual Leave InternalService Fund Statement ofCash Flows Year Ended December 31,20162015 Cash Flows from (for) Operating Activities Receipts from interfund charges$ 489,034$ 473,650 Payments toemployees (507,618) (443,366) Net cash flows from (for) operating activities (18,584) 30,284 Cash and Investments, beginning 505,354 475,070 Cash and Investments, ending$ 486,770$ 505,354 Reconciliation of Earnings from Operations to Net Cash from Operating Activities Earnings from operations$ -$ - Adjustments to reconcile earnings from operations to net cash flows from operating activities - increase (decrease) in accrued annual leave (18,584) 30,284 Net Cash from (for) Operating Activities $ (18,584)$ 30,284 140 Exhibit N-1 City of Seward, Alaska TeenCouncil AgencyFund Statement of Changes inAssets andLiabilities Balance atBalance at January 1,December 31, Year Ended December 31, 2016 2016AdditionsDeletions2016 Assets Cash and investments$ 45,460$ 32,136$ 27,900$ 49,696 Other assets 150 - - 150 Total Assets$ 45,610$ 32,136$ 27,900$ 49,846 Liabilities Accounts payable$ 5,625$ -$ 4,026$ 1,599 Other accrued liabilities 193 15,923 - 16,116 Due to Teen Council 39,792 16,213 23,874 32,131 Total Liabilities$ 45,610$ 32,136$ 27,900$ 49,846 141 Exhibit O-1 City of Seward, Alaska Schedule ofGovernmental Capital Assets December 31,20162015 Capital Assets Land and land improvements$ 5,509,589$ 5,509,589 Buildings 71,339,751 70,253,752 Improvements other than buildings 22,616,125 22,388,669 Equipment * 9,299,532 9,254,678 Construction in progress 123,104 502,839 Total Capital Assets$ 108,888,101 $ 107,909,527 All Exhibit O Schedules exclude the Motor Pool Internal Service Fund assets. Those assets are included in the Governmental Capital Assets as reported in Note 4 to the financial statements. 142 Exhibit O-2 City of Seward, Alaska Schedule ofChanges inGovernmental Capital Assets Balance atBalance at January 1,Additions/Deletions/December 31, Year Ended December 31, 2016 2016ReclassReclass2016 Land and land improvements$ 5,509,589$ - $ - $ 5,509,589 Buildings 70,253,752 1,085,999 - 71,339,751 Improvements other than buildings 22,388,669 227,456 - 22,616,125 Equipment * 9,254,678 305,579 260,725 9,299,532 Construction in progress 502,839 123,104 502,839 123,104 107,909,527 $ 1,742,138$ 763,564$ 108,888,101 All Exhibit O Schedules exclude the Motor Pool Internal Service Fund assets. Those assets are included in the Governmental Capital Assets as reported in Note 4 to the financial statements. 143 ExhibitO-3 City of Seward, Alaska Schedule of Governmental Capital Assets by Function and Activity December 31, 2016 LandandImprove- Landments Improve-Otherthan FunctionandActivitymentsBuildingsBuildingsEquipment *Total GeneralGovernment CityCouncil/Mayor$ -$ -$ -$ 44,554$ 44,554 Citymanager - - - 499,102 499,102 Cityclerk - - - 33,910 33,910 Finance - - - 311,904 311,904 Communitydevelopment - 5,232 - 7,142 12,374 Municipalbuilding - 3,437,048 43,666 55,597 3,536,311 AlaskaSeaLifeCenter - 50,557,238 2,981,948 4,912,222 58,451,408 Generalservices - 1,479,080 8,005,937 64,812 9,549,829 CommunityandSeniorCenter - 2,524,330 - - 2,524,330 Non-departmental 5,509,589 127,105 9,000 19,805 5,665,499 TotalGeneralGovernment 5,509,589 58,130,033 11,040,551 5,949,048 80,629,221 PublicSafety Police - 17,922 - 1,786,379 1,804,301 Jail - - - 9,408 9,408 Animalcontrol - 156,720 - - 156,720 Fire - 1,470,180 62,296 766,397 2,298,873 Buildinginspection - - - 2,600 2,600 SewardVolunteerAmbulanceCorp - 58,382 11,930 56,977 127,289 TotalPublicSafety - 1,703,204 74,226 2,621,761 4,399,191 PublicWorks Streets - 254,567 9,928,113 313,992 10,496,672 Engineering - - - 3,621 3,621 Cityshop - 785,766 - 78,970 864,736 TotalPublicWorks - 1,040,333 9,928,113 396,583 11,365,029 ParksandRecreation - 769,066 1,573,235 269,471 2,611,772 Library - 9,697,115 - 62,669 9,759,784 TotalCapitalAssets AllocatedtoFunctions$ 5,509,589 $ 71,339,751$ 22,616,125 $ 9,299,532 108,764,997 Constructioninprogress 123,104 TotalCapitalAssets$ 108,888,101 AllExhibitOSchedulesexcludetheMotorPoolInternalServiceFundassets. Thoseassetsareincludedinthe GovernmentalCapitalAssetsasreportedinNote4tothefinancialstatements. 144 Exhibit O-4 City of Seward, Alaska Schedule ofChanges in Governmental CapitalAssets byFunction andActivity Year Ended December 31, 2016 CapitalCapital Assets atAssets at January 1,Additions/Deletions/December 31, Function and Activity2016ReclassReclass2016 General Government City Council/Mayor$ 44,554$- $- $ 44,554 City manager 495,092 4,010- 499,102 City clerk33,910 - -33,910 Finance 309,336 2,568- 311,904 Community development12,374 - -12,374 Municipal building 3,268,103 268,208- 3,536,311 Alaska Sealife Center 57,662,079 871,05481,725 58,451,408 General services 9,549,829 - - 9,549,829 Community and Senior Center 2,524,330 - - 2,524,330 Non-departmental 5,665,499 - - 5,665,499 Total General Government 79,565,106 1,145,84081,725 80,629,221 Public Safety Police 1,742,57161,730 - 1,804,301 Jail 9,408 - - 9,408 Animal control 156,720 - - 156,720 Fire 2,193,587 284,286 179,000 2,298,873 Building inspection 2,600 - - 2,600 Seward Volunteer Ambulance Corp96,890 30,399 - 127,289 Total Public Safety 4,201,776 376,415 179,000 4,399,191 Public Works Streets 10,423,61073,062 - 10,496,672 Engineering 3,621 - - 3,621 City shop 864,736 - - 864,736 Total Public Works 11,291,96773,062 - 11,365,029 Parks and Recreation 2,588,05523,717 - 2,611,772 Library 9,759,784 - - 9,759,784 Construction in Progress 502,839 123,104 502,839 123,104 107,909,527 $ 1,742,138$ 763,564$ 108,888,101 145 Exhibit P-1 CityofSeward, Alaska ScheduleofExpenditures ofFederalAwards FortheYearEndedDecember 31, 2016 Pass-ThroughPassedTotal FederalEntityThrough toTotalFederal CFDAIdentifyingSubre-GrantExpen- Federal Grantor/Pass-Through Grantor/Program or Cluster TitleNumberNumbercipientsAwardditures Department ofAgriculture Emergency Watershed Protection Program10.923N/A$ -$ 1,479,060$ 1,479,060 Passed through State of Alaska Department of Natural Resources - Cooperative Forestry Assistance10.66439740 -7,988 7,988 Total Department of Agriculture - 1,487,048 Department of Defense Lowell Creek Flood Diversion Feasibility Study12.UnknownN/A - 1,500,000 200,000 Department of Interior Passed through State of Alaska Department of Commerce, Community & Economic Development - Coastal Impact Assistance15.66810-CIAP-036 - 579,000 297,274 Institute of Museum and Library Services Passed through State of Alaska Department of Education and Early Development - Grants to States45.310CED-16-770-02 -1,000 1,000 Department of Health & Human Services Health Center Program Cluster: N/ASewardCommunityHealthCenter - HRSA93.224 1,026,292 25,467 Seward Community Health Center - HRSA93.224N/A 1,246,963 1,251,549 Total Health Center Program Cluster - 1,277,016 Department ofHomeland Security Assistance toFirefighters Grant97.044N/A - 284,286 284,286 Passed through State of Alaska Department ofMilitary and Veterans Affairs - 97.036FEMA-4161-DR-AK -17,650 16,500DisasterGrants - Public Assistance Total Department ofHomeland Security - 300,786 Total Expenditures ofFederal Awards$ -$ 3,563,124 146 Exhibit P-2 CityofSeward, Alaska Schedule of State Financial Assistance Year Ended December 31, 2016 State TotalShare of GrantGrantExpendi- Grant Title NumberAwardtures Department of Commerce, Community and Economic Development 14-DC-133$ 10,000,000$ 2,806,411SMICHomeportCVRFExpansion 13-GO-014 10,000,000 6,540,380MarineIndustrialCenterExpansion 17-DC-004300,000 300,000FloodProtectionScopingandFeasibilityStudy Fisheries Resource LandingN/A2,707 2,707 Water Storage Tank12-RR-030 1,992,000 147,469 State Revenue SharingN/A143,461 143,461 Total Department of Commerce, Community and Economic Development 9,940,428 Department of Military and Veteran Affairs Oct 2013 Flood/StormFEMA-4161-DR-AK 5,884 5,500 Total Department of Military and Veteran Affairs 5,500 Department of Revenue Fish TaxesN/A280,935 280,935 Liquor LicensesN/A 15,950 15,950 Commercial Passenger Vessel Tax 2015N/A447,170 415,523 Commercial Passenger Vessel Tax 2016N/A458,750 16,222 Passed through Kenai Peninsula Borough: Commercial Passenger Vessel Tax 2013N/A306,723 144,048 Commercial Passenger Vessel Tax 2014N/A347,733 347,733 Commercial Passenger Vessel Tax 2015N/A447,170 447,170 Commercial Passenger Vessel Tax 2016N/A458,750 225,797 Total Department of Revenue 1,893,378 Department of Administration PERS ReliefN/A259,038 259,038 Department of Transportation and Public Facilities 16-HG-001 2,594,520 (89,480) Seward Harbor B, C, S Dock Replacement Project Department of Education and Early Development Public Library AssistancePLA-17-770-016,900 6,900 Total Department of Education and Early Development 6,900 Alaska Energy Authority Seward Power Plant Integration7910011 5,940,000 352,333 Total State Financial Assistance$ 12,368,097 Major program 147 City of Seward, Alaska Notes toSchedule ofExpenditures ofFederal Awards andScheduleofState Financial Assistance YearEnded December 31, 2016 1.Basis ofPresentation Theaccompanying schedule ofexpenditures offederal awards andschedule ofstate financial assistance (the “Schedules”) include thefederal and state award activity ofCity ofSeward, Alaska under programs ofthe federal andstate governments for theyearended December 31, 2016. The information intheSchedules ispresented inaccordance with therequirements ofTitle 2U.S. CodeofFederal Regulations Part 200, Uniform Administrative Requirements, CostPrinciples, and AuditRequirements forFederal Awards (Uniform Guidance) andtheStateofAlaska AuditGuide andCompliance Supplement forStateSingle Audits. Because theSchedules present only a selected portion oftheoperations ofCityofSeward, Alaska, theyarenotintended toanddonot present thefinancial position, changes innetposition orcashflows ofCityofSeward, Alaska. Fortheyearended December 31, 2016, allof theCity’sfederal awards were intheform ofcash assistance. 2.Summary ofSignificant Accounting Policies Expenditures reported on theSchedules arereported on themodified accrual basis ofaccounting. Such expenditures arerecognized following thecostprinciples contained intheUniform Guidance, wherein certain typesofexpenditures arenotallowable orarelimited asto reimbursement. Negative amounts shown ontheSchedule represent adjustments orcredits madein thenormal course ofbusiness toamounts reported asexpenditures inprior years. 3.IndirectCostRate TheCityhas notelected tousethe10percent de minimis indirect cost rateallowed under the Uniform Guidance. 4.Commercial Passenger Vessel Tax – State Assistance Cash receipts forcommercial passenger vessel taxeshave been recorded asrevenue intheHarbor Fundonanaccrual basis. Anyunspent portion ofthese funds, isreported asrestricted netposition in thefund financial statements. AtDecember 31, 2016, thecumulative unspent vessel taxreceipts were $675,181. Total vessel taxfunds expended in2016 andreported ontheschedule ofstate financial assistance were $1,596,793. 148 City of Seward, Alaska Notes toSchedule ofExpenditures ofFederal Awards andScheduleofState Financial Assistance, continued YearEnded December 31, 2016 5.PERS On-behalf TheCity hasrecorded $259,038inPERS On-behalf payments intheschedule ofstate financial assistance. Thisrepresents thePERS relief payments appropriated and transferred intotheplan duringcalendar year 2016 andrelatestobothpension andOPEB contributions. Inthe governmental fund financial statements, on-behalf revenue andexpenditures havebeen recognized intheirproportional share ofon-behalfpayments within thecalendar yearunder audit. However, inthefullaccrual financial statements (thegovernment-wideandenterprise fundfinancial statements), GASB 68provisions prescribe thaton-behalfpension contributions inaspecial funding situation mayonlyberecognized during themeasurement period inwhich the plan recognizes the contributions. FortheCityofSeward, thePERS planmeasurement periodisJuly1, 2015 through June 30, 2016, creating asix-month timing difference between the cash contribution andrevenue andexpense recognition forthe pension on-behalf bytheCityinthose funds. Asaresult of these perspective andtimingdifferences, amounts reported onthefinancial statements donotagree totheamount reported ontheschedule ofstate financial assistance. 149 Thispageintentionally leftblank. 150 City ofSeward, Alaska Statistical Section This part of the City of Seward's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. ContentsPage Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Table 1Net Position by Component152 Table 2Changes in Net Position153-154 Table 3Fund Balances of Governmental Funds155 Table 4Changes in Fund Balances of Governmental Funds156 Table 5General Fund Revenues by Source157 Table 6General Fund Tax Revenues by Source158 Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue sources, sales and property tax. Table 7Property Tax Rates159 Table 8Property Tax Levies and Collections160 Table 9Assessed and Estimated Actual Value of Taxable Property161 Table 10Principal Property Taxpayers162 Table 11Principal Taxable Sales by Line of Business163 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current level of outstanding debt and the City's ability to issue additional debt Table 12Ratios of Outstanding Debt by Type164 Table 13 Ratio of General Obligation Bonded Debt to Assessed Value and General Obligation Bonded Debt per Capita 165 Computation of Direct and Overlapping Bonded DebtTable14166 Table 15Legal Debt Margin167 Table 16Revenue Bond Coverage - Electric Enterprise Fund168 Revenue Bond Coverage - Harbor Enterprise FundTable17169 Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Table 18Demographic and Economic Statistics170 Table 19Principal Employment by Industry171 Table 20Full-Time Equivalent Employees by Fund172 Table 21Operating Indicators by Function173 Table 22Capital Asset Statistics by Function174 Table 23Property Value, Construction, and Bank Deposits175 Table 24Miscellaneous Statistics176 151 3 05653147770146569 75,3272055611Table1108,513119,764165,626182,204 088342493079768581756 812473579381 864117091355691142 7111 8255966178160416061910357044525765238920225914407851942 711 0639912297 5142406490063171954893408 0000506151761771832 511 36980044263192681540071961309903160 180550275926761821511 205778948412383584913373176666143 635581555115661825124,7791 23535085 3328076926731917425426 69673013075661824123,8951 152 897217010670121170219 226811703138 684424102355661822411LastTenFiscalYears City of Seward, AlaskaNetPositionbyComponentaccrualbasisofaccounting) 300900amountsexpressedinthousands) 977 5 64,00966,75414,79682,25020,789124,770146,259 5662110 5 14,59519,620 2007200820092010201120122013201420152016 58,016 63,041 80,051$143,092 Net investment incapital assets$58,016RestrictedUnrestrictedNet investment incapital assets$65,440RestrictedUnrestricted Net investment incapital assets$123,456RestrictedUnrestricted Governmental ActivitiesTotal Governmental Activities Net PositionBusiness-type ActivitiesTotalBusiness-typeActivities NetPositionPrimary GovernmentTotal Primary Government Net Position Table 2 City of Seward, Alaska Changes in Net Position Last Ten Fiscal Years accrual basis of accounting) 2007200820092010201120122013201420152016 Expenses Governmental activities: General government$1,161,765 2,501,443 1,451,682 800,716 2,031,590 1,981,876 2,199,711 3,291,580 3,517,517 3,473,276 Public safety 2,980,785 2,934,607 3,029,935 3,168,421 3,140,921 3,360,091 3,510,922 3,476,471 3,563,666 3,902,294 Public works 2,650,977 1,310,474 1,456,468 1,991,925 1,988,748 2,410,794 1,851,321 1,635,967 1,791,967 2,421,447 Parksandrecreation 981,222 1,236,411 1,247,366 1,462,365 1,395,705 1,320,447 1,338,404 1,315,282 1,463,364 1,446,971 Library 384,835 398,108 478,385 437,082 466,300 446,200 489,548 804,539 785,299 806,047 Clinic - - - - - - - 1,454,476 1,682,532 1,846,150 Healthcare facilities 535,226 412,797 3,910,190 2,804,000 - - - - -- Sealife Center 1,672,365 1,736,147 1,294,636 731,5285 1,939 965,206 848,940 1,279,570 1,457,308 1,355,558 Unallocated interest 306,989 116,906 236,982 1,505,248 173,993 206,778 208,840 157,984 153,950 149,966 10,646,893 13,105,644 12,901,285 9,249,196 10,691,392 10,447,686 13,415,869 14,415,60315,401,709Totalgovernmentalactivitiesexpenses10,674,164 Business-type activities: Electric 8,029,054 8,626,745 10,363,820 8,569,240 10,493,512 9,935,695 10,590,994 10,255,601 10,599,64111,023,942 Water 859,799 1,194,311 1,066,860 1,093,419 1,230,833 1,246,997 1,087,747 1,175,129 1,241,671 1,189,786 Wastewater 747,484 901,759 916,909 1,078,318 1,044,654 1,013,492 1,015,474 1,117,152 1,097,494 1,211,625 r 3,006,0692,457,216 3,934,866 5,947,066 3,676,190 4,243,734 3,837,952 3,792,623 3,858,440 4,353,766Harbo Seward Marine Industrial Center1,076,730 1,149,453 990,466 926,290 1,081,862 928,458 899,343 1,013,658 1,260,159 1,342,506 Healthcare facilities - - - - 20,416,615 21,856,797 20,858,042 20,344,929 19,589,78419,329,722 Parking 129,623 119,723 118,309 157,229 205,407 237,522 146,239 214,775 178,886 231,666 Total business-type activities expenses 13,299,906 14,998,060 17,391,230 17,771,562 38,149,073 39,462,695 38,435,791 37,913,867 37,826,07538,683,013 Total Primary Government Expenses$23,974,070 25,644,953 30,496,874 30,672,847 47,398,269 50,154,087 48,883,477 51,329,736 52,241,67854,084,722 Program Revenues Governmental activities: Charges forservices: General government$400,074196,240223,545201,335190,795184,410202,893282,318294,499233,945 Public safety706,575669,988744,939682,906740,204809,645897,319937,659817,995614,253 Public works111,756116,8338 4,849168,1964 0,910 36,7213 0,565 20,3832 2,27827,985 Parksandrecreation 592,063 627,038 622,067 608,361 620,943 609,342 653,054 663,298 778,350 913,970 Library 7,736 12,8001 4,799 13,794 9,953 9,2082 9,911 39,7073 3,762 25,200 Clinic - - - - - - - 62,3067 5,085 69,134 Healthcare facilities - - - 2,569,886 - - - - -- Operating grants andcontributions 680,176 84,144 542,354 620,310 1,128,278 1,037,711 1,002,434 1,148,124 1,156,755 1,402,137 Capital grants andcontributions 1,459,744 999,171 2,860,172 1,709,977 3,573,497 3,442,5992 3,034 819,241 621,712 1,278,997 Totalgovernmental activities program revenues:3,958,124 2,706,214 5,092,725 6,574,765 6,304,580 6,129,636 2,839,210 3,973,036 3,800,436 4,565,621 Business-type activities: Electric 8,428,106 8,565,180 9,060,636 8,842,150 10,309,524 11,224,511 11,040,608 11,433,004 11,482,07711,550,772 Water 996,633 998,541 972,713 1,034,888 1,069,732 1,150,109 1,280,710 1,227,631 1,283,986 1,292,890 Wastewater800,168 801,095796,454 851,416864,740 929,514 960,591 1,016,890 1,096,290 1,151,763 Harbor 2,776,6762,751,916 2,596,924 2,803,828 2,968,021 3,169,744 3,235,923 3,212,432 3,359,455 3,302,689 Seward Marine Industrial Center290,221 304,517 263,775 296,139 413,454 414,737 391,954 469,793 593,307 608,810 Healthcare facilities - - - - 16,838,000 18,728,364 21,880,406 18,004,351 18,330,00017,729,000 Parking 182,133 240,339 162,120 192,046 268,105 293,443 312,248 293,379 318,223 328,347 Operating grants and contributions6 5,247 159,595 445,228 2,674,610 401,734 154,295 170,531 472,944 113,439 91,380 Capital grants andcontributions 2,578,739 2,769,005 2,354,601 1,988,430 2,291,919 1,732,343 4,125,258 14,713,420 13,559,15012,059,662 Totalbusiness-typeactivities program revenues16,093,163 16,614,948 16,652,451 18,683,507 35,425,229 37,797,060 43,398,229 50,843,844 50,135,92748,115,3 13 Total Primary Government Revenues$20,051,287 19,321,162 21,745,176 25,258,272 41,729,809 43,926,696 46,237,439 54,816,880 53,936,36352,680, 934 Net (Expenses)/ Revenue Governmental activities$(6,716,040) (7,940,679) (8,012,919) (6,326,520) (2,944,616) (4,561,756) (7,608,476) (9,442,833) (10,615,167)(10,836, 088)Business-type activities2,793,257 1,616,888(738,779) 911,945(2,723,844) (1,665,635) 4,962,438 12,929,977 12,309,852 9,432, 300 Total Primary Government Net Expense$(3,922,783)(6,323,791)(8,751,698)(5,414,575)(5,668,460)(6,227,391)(2,646,038)3,487,1441,694,685(1,403, 788) Healthcare facilitiesisanew enterprise fundin2011 previously reportedas governmental fundand discreetly presented component unit. See Statementof Activities (Exhibit A-2) of CAFR, p. 21. 716805263052912507709708912636555375 42681397605605905981824101563934008,806,965511897,016,58271,393,673)(2,029,123) 2016Table2, continued 2606762782072973935887315939268060456051289332181452807434805811622394118181,181,852)(2,013,080) 12,649,28210,636,20210,636,2022015 175,187,361 182,203,943 012415580887701823727729207996014115214591613861508438264493645459471202903119491,243,171) 12,889,67912,545,27112,545,2712014 170,356,262 182,578,327 85975 64,625) 489,926546,005138,115343,265546,005) 20134,583,0571,261,2761,491,5118,429,7338,365,1084,897,8133,884,7133,884,7131,013,100) 157,810,991 170,356,262 456,370119,662209,176343,265 20124,189,3301,025,2661,250,8951,970,9839,012,5067,593,9644,450,7501,366,5731,366,5731,970,983)(1,418,542)(3,084,177) 152,091,921 155,976,634 788 9 8439212773193131919089421 4,147,0101,346,7555,707,1501,411,4351,290,9982,905,5628,612,7122,762,5342,944,2522,944,25220111,290,998) 149,457,107 151,796,018 153,162,591 154 00continued0 5 960,397403,713753,653138,940347,281149,288720,040528,220383,725) Changes inNetPositionLastTenFiscalYears20107,604,7883,742,7511,258,0537,221,0631,278,2681,806,4881,806,4881,258,053) 146,897,565CityofSeward, Alaskaaccrualbasisof accounting) 152,401,359 435112396527932207367532660204553427909750342688600804110526944488772263871100005936164817535499 311882221,466,933) 2009 143,992,713 148,704,053 820119787829869188533711137751821922781863942193055688322248039215777749344511004131889533194369596719548177 41892008 143,254,885 146,897,565 081921131838022057940760330544880627768708880298493198622858661318958354733084539169387255 47612007 143,992,713 142,722,843$ Taxes: Salestax Propertytax OthertaxGrantsandentitlementsInvestmentearningsOtherTransfersSpecial item -write-off NPO/OPEBInvestment earningsGrants andentitlementsOtherTransfers Beginning netpositionrestated forHealthcare Facilities becoming anewenterprise fundin2011. Changes inNet PositionTotal Primary GovernmentGeneralRevenuesandOtherChangesinNetPositionGovernmentalactivities:TotalgovernmentalactivitiesBusiness-typeactivities:Totalbusiness-typeactivitiesTotalprimarygovernmentGovernmental activitiesBusiness-typeactivitiesBeginning NetPositionEndingNetPosition143,254,885ChangeinNetPositionSeep. 21 (ExhibitA-2) ofCAFRfordetails 5,858Table3622,337335,2804,873,4637,957,4982,126,4182,797,1342,802,99210,760,490 9,676 600,308324,4652,126,4184,718,5177,769,7082,507,7412,517,41710,287,125 351,045271,9662,126,4184,698,9707,448,3992,752,1192,768,86510,217,264 16,746- 26,080481,449864,471890,5518,677,0942,126,4185,948,4599,567,645 120,768- 26,080 12880(12,880) 27990121264182,126,41835106014,827,0553730137891,865 60344257,411,370$-$3997158905,065$100315838,316,435397406457,897 75,369 155584,948235,860 2,126,4184,039,2646,750,6302,472,3762,783,6059,534,235 LastTenFiscalYears CityofSeward, Alaska 657,029100,330308,485 2,126,4182,983,4245,766,8711,177,6971,586,5127,353,383modifiedaccrualbasisofaccounting) FundBalancesofGovernmentalFunds 693,590409,326 2,126,4181,289,6194,109,6271,063,26012,321,37813,793,96417,903,591 34,649) 315,698) 20072008200920102011201220132014201520162,126,4181,433,552 458,860$4,018,830$945,478$595,131$4,613,961 DesignatedUndesignatedSpecial revenue fundsCapital projects funds ReservedUnreserved:UnassignedNonspendableAssignedUnassigned (deficit) Reserved - debt serviceUnreserved, reported in:NonspendableCommittedAssignedRestricted Total General FundAll Other Governmental FundsTotal All Governmental FundsPRIORTOGASB54GeneralFundTotalGeneralFundAllOtherGovernmentalFundsTotalAllOtherGovernmentalFundsTotalAllGovernmentalFundsPOSTGASB54GeneralFundTotalAllOtherGovernmentalFundsGASB54implementationeffectivefrom2011. Prioryearsnotrestated.See p. 22 (Exhibit B-1) of CAFR Table 4 1.76%1.76% 10,35495,000158,174247,101543,123591,859756,498151,550473,365473,365848,000) 20166,755,9413,188,2112,931,0873,433,1743,373,1332,047,0671,301,3141,846,1503,593,6151,321,3652,272,250) 13,290,86814,138,86810,287,12510,760,49014,043,86814,043,868 1.90%1.90% 78,71690,00069,86169,861206,365208,397553,272647,858155,150 964,979) 20156,438,6043,401,3342,775,8243,279,9723,366,3201,523,5571,374,3931,682,5321,401,1653,421,7591,034,8402,386,919) 13,109,24014,074,21910,217,26410,287,12512,870,11112,870,111 674 2.36%2.36% 480,658585,000185,925693,177572,5124775,862159,400649,619649,619593,552) 20146,027,6323,921,8582,650,9953,229,7543,480,3081,659,6421,363,57211,373,2715,003,4001,243,1719,567,6453,760,229) 13,560,24514,153,79710,217,26410,366,36910,366,369 953 1.54%1.54% 5 204,926186,662535,747836,750378,147159,400705,205546,00520136,351,5253,091,7942,614,6843,434,8833,280,7241,832,8971,291,1972,389,2201,251,2108,316,4359,567,6451,251,2101,843,215) 12,454,95011,749,74510,366,36910,366,369 1.48%1.48% 56,752159,114708,556656,294153,20120125,661,1365,749,3942,540,7173,084,3563,535,1532,339,9961,501,3667,291,4344,263,6681,970,9838,316,4353,686,131)(2,292,685)(1,715,148)(1,715,148) 14,875,66918,561,80010,031,58310,354,04810,354,048 000 1.94%1.94% 025,74475,5478160,096167,034631,278100,477532,9664259,8542011 9,074,1435,563,2496,542,8632,645,9483,186,2574,767,5751,883,2971,563,3612,364,17631,979,2902,448,8562,981,8227,049,7612,981,8229,074,1433,270,288) 15,104,93414,571,96810,031,583 19.96%20.01% 30,076148,948138,940529,778838,386922,79920105,102,1543,409,4072,853,3103,334,6712,771,3834,127,7041,886,7091,392,4831,026,7971,461,3152,792,4411,258,0532,180,8527,353,3839,534,2352,180,8521,534,388) 14,987,43014,064,63111,521,74811,491,672 156 11.35% 166.06% 214,966128,971463,427596,907787,695695,299893,02220094,932,5553,907,1512,553,4802,448,9983,485,9324,774,6041,618,0751,608,9572,947,0531,466,9337,353,3831,480,120) Last Ten Fiscal Years 14,186,12112,172,36526,203,26117,903,59013,065,38712,017,140)(10,550,207)(10,550,207) City ofSeward, Alaska 8ModifiedAccrualBasisofAccounting) 70 6 18.36% 0 62.08% 129,956612,611789,411368,696470,573738,9994ChangesinFundBalancesofGovernmentalFunds20085,535,0812,355,0382,610,5153,369,4783,333,4331,662,6951,198,7981,328,5063,176,78874,613,9612,264,469)(3,330,395) 12,032,61214,590,20127,061,379228,318,39713,289,63017,903,59013,289,62911,259,80615,028,767) 11.79%13.37% 144,654314,642125,186339,222293,114854,977260,544989,80120072,072,8112,375,7672,956,7063,011,9202,678,4931,084,0021,114,6933,631,3164,613,9612,197,346)(2,641,515) 10,396,32512,593,671 5,363,265$(1,207,545)$5,821,506$(1,207,545) b)9,458,715(b)8,344,022 Par valuePremiumPrincipalInterestandothercosts Under) ExpendituresTaxesLicensesandpermitsIntergovernmentalChargesforServicesInvestmentearningsOtherrevenuesGeneralgovernmentPublicsafetyPublicworksParksandRecreationLibraryClinicRetirementbenefitsCapitaloutlayDebtservice:Proceeds from debtissuance:Transfers inTransfers outNet bond proceedsnoncapital expenditures (a ÷ b) ^Totalnon-capital expendituresnoncapital expenditures a ÷ b) ^Total non-capital expenditures RevenuesTotal RevenuesExpendituresTotal ExpendituresExcess of Revenues OverOther Financing Sources (Uses)TotalOtherFinancingSources (Uses)Net Change inFund BalanceFund Balances,beginningFund Balances, endingNet Change inFund Balances*BeginningfundbalancesrestatedforPSMCCbecominganewenterprisefundin2011.^Computedasfollows: (Principal + Interest)Totalexpenditures - capitalizedexpenditures (principal))#Healthfacilitiesarenolongerclassifedasgovernmentalfundsafter2010, soforthesakeofconsistency, providingdatabothwithandwithouthealthfacilities.See p. 24-25 (Exhibit B-3 & B-4) of CAFRHealthcarefacilitiesIncludingHealthcareFacilities: #Debt service asapercentage of ExcludingHealthcareFacilities: #Debt service as a percentage of Table 5 Total 9,473,066 10,431,33911,080,99710,597,391 *10,181,373 11,448,74210,454,24911,695,374 11,905,382 11,039,289 1,741,084 51,824167,36097,445 141,602 532,39059,189124,873 125,812 90,735 BailsInterestOther 285,066 226,854 50,311 122,710Finesand56,690 5,35925,74480,658 78,716 10,354 ServicesChargesfor17,611 18,209 11,836 10,210 8,386 9,53012,177 14,073 17,993 18,365 157 Last Ten Fiscal Years CityofSeward, AlaskaInter- governmental2,375,767 2,610,515 2,553,480 2,853,310 2,540,717 2,614,6842,645,948GeneralFundRevenuesbySource2,650,995 2,757,831 2,912,722 Permits 1,189,258 1,935,174 1,576,765 1,411,651 1,953,472 2,095,3581,987,846 2,611,218 2,280,061 1,092,998Licensesand 129,956 214,966 148,948 159,114 204,926144,654160,096 185,925 206,365 158,174 20075,363,26520085,535,08120094,932,55520105,102,15420115,563,24920125,661,13620136,351,52520146,027,63220156,438,60420166,755,941 Fiscal YearTaxes Includes one-time Exxon Valdez Oil Settlement Proceeds of $1.6 Million in 2009 and $331,791 in 2010. Table 6 Cityof Seward, Alaska General Fund Tax Revenues by Source Last Ten Fiscal Years FiscalPayments-in-Hotel/Motel Tax YearProperty TaxSales Tax (1)Lieu-of-Tax(2)Other (3) Total 2007$ 873,513 4,068,600 76,609 343,162 1,381 5,363,265 2008 953,957 4,137,758 80,126 362,004 1,236 5,535,081 2009 975,687 3,585,304 84,922 285,313 1,329 4,932,555 2010 954,687 3,742,751 75,317 328,396 1,003 5,102,154 20111,001,020 4,147,010 78,574 334,824 1,821 5,563,249 20121,013,580 4,189,330 76,160 380,210 1,856 5,661,136 20131,276,898 4,583,057 81,670 408,256 1,644 6,351,525 7 82,490 421,981 1,005 6,027,6322014986,4494,535,70 20151,003,665 4,883,996 88,331 458,605 4,007 6,438,604 20161,152,216 5,004,992 90,382 505,845 2,506 6,755,941 1)Sales tax rate has been 4% since July 1, 2003 and one-quarter (1/4) of all sales tax revenue is transferred out of the General Fund to the Hospital Enterprise Fund to pay healthcare-related debt, capital, and operating costs. 2)The hotel/motel tax rate is 4%. 3)Represents tax-related penalties and interest. Property, Sales Tax, and Other (3)is penalties and interest from the KPB Sales Tax payments 158 Table 7 CityofSeward, Alaska Property Tax Rates Direct and Overlapping Governments Last Ten Fiscal Years Per $1,000 of Assessed Value) KPCCFlood Service Fiscal YearCityBorough (1)(2)(3) Total 20073.125.500.000.509.12 20083.124.500.000.508.12 20093.124.500.000.508.12 20103.124.500.000.508.12 20113.124.500.000.508.12 20123.124.500.000.508.12 20133.124.500.000.508.12 20143.124.500.000.508.12 20153.124.500.000.758.37 20163.124.500.000.758.37 1) Includes Kenai Peninsula Borough only. 2) Kenai Peninsula Community College. 3) Seward/Bear Creek Flood Service Area created effective 2004. Source: "Alaska Taxable, 2016" and www.kpb.us 159 Table 8 City ofSeward, Alaska Property TaxLevies andCollections LastTenFiscal Years Collected in the Fiscal Year of the LevyTotal Collections to Date Collections in FiscalTotal Tax Levy Percentage of Percentage ofSubsequent Yearfor Fiscal YearAmountLevyAmountLevyYears 2007847,411$ 816,305$ 96.329%31,079 847,384$ 99.997% 2008919,341 903,535 98.281%15,779 919,314 99.997% 2009948,693 937,198 98.788%11,468 948,666 99.997% 2010966,821 944,796 97.722% 559 945,35597.780% 2011 973,756 945,19497.067% 20,773 965,96799.200% 2012 981,134 944,95096.312% 29,603 974,55399.329% 2013 1,235,742 1,212,49098.118% 18,734 1,231,22499.634% 2014 968,272942,95297.385% 21,572 964,52399.613% 2015 1,006,912978,62997.191% 21,119 978,62997.191% 2016 1,101,7231,074,98797.573% 22,950 1,097,93799.656% Source: Kenai Peninsula Borough 160 Table 9 88.03%83.25%60.66%81.08%88.91%87.61% Ratio of to Total Est. Actual ValueAssessedValue 7 8.128.128.128.128.128.3Rate Combined Tax 5.005.005.005.005.005.25TaxRates KPCC & BCFSA)^ Overlapping (KPB, 3.123.123.123.123.123.12 of Seward) Direct (City 000000 1) 346,412,90378,178,10653,810,30360,431,50360,165,60397,385,50EstimatedActualValue3.126.009.1284.47% 3.125.008.1286.60% 3.125.008.1286.94% 3.125.008.1288.69% 635575 Total Property 2) 161304,943,87314,827,71292,232,94320,218,90348,138,37 329,290,500338,091,300 347,109,100 350,973,400AssessedValue 396,612,66 000000LastTenFiscalYears City of Seward, Alaska 103,889,20124,568,80110,605,00109,149,80129,667,60Value (1) 278,152,529292,802,485301,784,066 311,277,229EstimatedActual 405,452,50 65596AssessedandEstimatedActualValueofTaxableProperty Personal Property 2) 77,748,6792,111,31379,542,0480,345,81168,416,86100,668,60 108,717,600AssessedValue102,404,800102,716,300 108,936,200 000000 242,523,70253,609,30248,357,80249,826,50251,015,80267,717,90Estimated 75,020,32981,943,98574,492,996 81,421,729ActualValue (1) 000089 Real Property 2) 212,690,90 226,885,700229,373,700244,392,800 242,037,200AssessedValue 4 2007203,132,2002008210,858,5002009227,291,0702010229,855,5002011227,195,202012222,716,402013228,195,802012015239,873,082016247,469,76YearFiscalAssessed Value (Kenai Peninsula Borough), but Estimated Actual Value (State of Alaska ) was not downward revised. IncludesKenaiPeninsulaBorough, KenaiPeninsulaCommunityCollegeandBearCreekFloodServiceArea.Source: StateofAlaska "AlaskaTaxable2016" (2) andKenaiPeninsulaBoroughCertifiedTaxRoll (1).*2013 values include one-time Shell oil rig "Noble Discoverer". Original assessed value of $283,337,326 was appealed; revised value $78,000,000 is included above in e Table 10 14.3% AssessedValue (2) Total TaxablPercentageof k 70.9%12.8%41.7%51.5%60.9%80.7%31.8%90.7% 100.6% 2,348,5357,733,3474,511,1993,994,4962,488,0161,923,6754,762,9001,881,1001,626,900200738,767,268Value (1)Ran 22.8% e Taxabl 25.4% AssessedAssessedValue (2) TotalPercentage of k 14.9%24.1%42.0%52.0%61.9%71.9%81.7%91.7% 101.2% 0200400600896189644140334384610974007666664,060,000201616,925,31014,399,60313,781,80088,445,349Value (1)Ran 162 34.0%7,497,100 December 31, 2016 City ofSeward, AlaskaPrincipalPropertyTaxpayersComparedwithNineYears Ago Type ofBusiness y yrecorTourismPetroleumProductsPropertGCommunicationsHotel/RetailHotel/RetailSeafood ProcessingCommunicationsPetroleum ProductsHotel/RetailReal Estate/HousingRealEstate/Housing nTaxpayer (2) ietsttoGrraCGCI, Inc.Mindenbergs, JurisHarbor360, LLCIcicle/SewardFisheriesSpartanOffshoreDrilling, LLC1)Includesrealandpersonalpropertybasedon2016taxrolls. Source: KenaiPeninsulaBoroughAssessorsDepartmentAboveassessedvaluesareabestefforttoidentifytenlargestpropertytaxpayers, althoughvaluesreflectaggregationofmultipletaxaccounts. Itispossiblethatsometaxaccountsmayhavedifferentnames, makingitdifficulttoidentifyasbeingownedbythesameentity. Therefore, somevaluationsmayhavebeeninadvertentlyomittedabove.2)Based on total assessed value of $263,528,984 in2006 and $320,218,907 in2015. CiriAlaskaTourismCPD Alaska, LLCLeirerEnterprises, LLCKing River, LLCTelalaskaShoreside Petroleum, Inc.KishanGroup, LLCPacificParkGateway-SewardAssociatesTotal Table 11 City of Seward, Alaska PrincipalTaxableSalesbyLineofBusiness December31, 2016 Percentof CY07Percentof CY16Taxable TotalTaxable TaxableTotalTaxable Sales (1)SalesSales (2)SalesTypeofBusiness Retail Trade$ 35.8%40,521,53745,381,243$ 40.3% Accomodations, Food Service, Entertainment30,532,614 24.1%33,949,525 33.8% Services31,121,291 24.5%5,890,900 5.9% Wholesale Trade4,746,384 3.7%5,462,524 5.4% Transportation & Warehousing 214,9970.2% 5,443,4855.4% Public Administration 8,022,4156.3% 4,606,4544.6% Rental Property 3,527,7032.8% 2,316,9492.3% Manufacturing 1,095,3300.9% 998,4461.0% Professional 1,647,7931.3% 644,6120.6% Construction 637,5650.5% 578,2910.6% Other 10,0000.0% 76,3730.1% 126,937,335100%$ 100,489,096100% 1)Source: Kenai Peninsula Borough, Finance Dept, Sales TaxDivision 2)Services category isbroken down in more detail in2015; allblankTypes ofBusiness in 2006 canbeconsidered "Services". Note: Information regarding thetenprincipal revenue payers, and theamount collected from each, isnotavailable. The Kenai Peninsula Borough collects sales taxonbehalf oftheCity ofSeward asrequired byState law. The Borough does notdisclose sales taxdata byindividual business, even tothecities within theBorough. Rather than toprovide information onthetenprincipal revenue payers, weareproviding information ontaxable sales byLine of Business. 163 Table 12 5.40%6.93%8.98% 14.53%14.15%13.67%12.73%11.66% 11.98%11.38% Value ofEstimatedProperty (5) Debt as a % ofActualTaxable 884408501744382451319056483093 6897767453111111111Gov'tTotalPrimary 565977895552234200804855145322 1111111111 mentalGovern- 6243898426 8672945005Gov'tTotal1444333332Primary 9797211763 4332333222Debtasa % ofTotalPersonal Income (3)Debt per Capita (4) mentalGovern- 18,251,53550,420,73449,658,61647,355,04748,156,05645,298,68942,007,53735,665,78143,162,61740,993,818 Governmentweb/portals/4/pub/osa/14taxable.pdf) Total Primary ough per-capita personal income by Seward population, as Seward- ities; per GASB Statement No. 61. 173694815755713682473933319760 747055805583750464781054979820Loans3222331144 164 LeasesCapital 460240400LastTenFiscalYears (1) 100CityofSeward, Alaska 317523 485Bonds41,325,00039,930,00038,475,00010,175,00042,645,00042,000,000332RevenueRatiosofOutstandingDebtbyType Business-Type Activities (6) 584000 37,444,40900412303210000294952615121157 1 G.O. Bonds (2) 441780798743121727743 9951401041122318642LeasesCapital BondsRevenue Governmental Activities (6) 2)* 4,737,655 G.O. Bonds 200720084,015,78220093,245,87520102,425,97020113,480,00020123,729,02720133,718,20020143,622,37320153,521,54620163,210,000YearFiscal 1)Excludesotherthandebtinstruments (i.e. compensatedabsences, netpensionobligation, inter-fundloans)2)G.O. BondsrepresentgeneralobligationbondspledgingthefullfaithandcreditoftheCity.3)Source: USDept. ofCommerce, BureauofEconomicAnalysis. PersonalincomeisestimatedbymultiplyingKenaiPeninsulaBorspecificdataunavailable (http://www.bea.gov/iTable/index_regional.cfm)4)Source: AlaskaDepartmentofCommerce, Community & EconomicDevelopmentCertifiedMunicipalPopulation.5)EstimatedActualTaxableValuedatacanbefoundinStateofAlaska "AlaskaTaxable2016" (https://www.commerce.alaska.gov/6)Source: CityofSewardfinance department*Beginningin 2011, Healthcare Facilities became Business-Type Activities butwere previously classifiedas Governmental ActivNote: Details regarding theCity's outstanding debtcanbefoundin the notesto the financial Table 13 City ofSeward, Alaska Ratio of General Bonded Debt to Assessed Value and General Bonded Debt per Capita Last Ten Fiscal Years General Bonded Debt # ^ Ratio of General FiscalAssessedBonded Debt to General Bonded YearPopulation (1)Value (2)GovernmentalBusiness-TypeTotalAssessed ValueDebt per Capita 20072627278,153 4,7382 22 4,9601.69%1 ,888 20082661 292,802 4,0161 69 4,1851.39%1 ,573 20092609 301,784 3,2461 14 3,3601.08%1 ,288 20102693 311,277 2,426 59 2,4850.81%9 23 20112733 304,944 3,4801 ,550 5,0301.60%1 ,840 20122754 314,828 3,7297 10 4,4391.12%1 ,612 20132487 *296,613 3,718- 3,7181.27%1 ,495 20142768 292,233 3,622- 3,6221.13% 1,309 20152740 320,219 3,522- 3,5221.10% 1,285 20162663 348,138 3,210- 3,2100.92% 1,205 Amounts expressed in thousands. Excludes revenue bonds of Business-Type entities. 2013 Assessed Value includes one-time oil property originally assessed at $283,337,326, downward adjusted on appeal to $78,000,000. Beginning in2011, Healthcare Facilities became Business-Type Activities but were previously classified asGovernmental Activities; per GASB Statement No. 61. Hospital debt classified as Governmental through 2010, then as Business-Type in 2011 and 2012. Matured 2013. 1)Source: Alaska Department of Commerce, Community & Economic Development Certified Municipal Population. 2)Source: Kenai Peninsula Borough (expressed in thousands). 165 Table 14 City ofSeward, Alaska Computation ofDirectandOverlapping Bonded Debt December 31, 2016 Net General Amount Obligation Percentage Applicable to Bonded Debt Applicable to City of JurisdictionOutstandingSewardSeward Direct: City of Seward$3,210,000 100%3,210,000 Overlapping: Kenai Peninsula Borough (KPB)37,125,000 4.5%1,665,004 40,335,000 4,875,004 1)Excluding general obligation bonds reported in the Enterprise Funds. Includes governmental activities' general obligation bonds, revenue bonds, and capital leases. 2)Source: KPB finance department. Total $40,815,000 less Central Emergency Services unrelated to Seward. 3)Basedon ratio of City of Seward assessed value (real and personal property = $348,138,375) to total assessed value of the Kenai Peninsula Borough ($7,762,527,659) Source: "2016 Alaska Taxable" p. 25, State of Alaska, and KPB main and supplemental tax rolls. Note: Excludes State assessed values which are exempt from taxation at City and Borough level. 166 Table 15 City of Seward, Alaska Legal DebtMargin December 31, 2016 No debt limit mandated by law. 167 Table 16 City of Seward, Alaska Revenue Bond Coverage Electric Enterprise Fund Last Ten Fiscal Years Debt Service Requirements (3) Net Revenue FiscalGrossOperatingAvailable for YearRevenues (1)Expenses (2)Debt ServicePrincipalInterestTotalCoverage (4) 20078,709,107$ 6,651,455 2,057,652 195,000 80,938 275,938 7.46 20088,920,730 6,396,886 2,523,844 205,000 175,825 380,825 6.63 20099,173,257 8,589,154 584,103 305,000 367,023 672,023 0.87 20108,903,337 6,854,897 2,048,440 315,000 353,586 668,586 3.06 201110,410,908 8,620,529 1,790,379 330,000 339,298 669,298 2.68 201211,344,047 7,844,098 3,499,949 345,000 323,987 668,987 5.23 201311,139,471 8,531,996 2,607,475 360,000 308,210 668,210 3.90 201411,236,195 8,073,997 3,162,198 380,000 290,053 670,053 4.72 201511,674,228 8,887,162 2,787,066 400,000 273,261 673,261 4.14 201611,607,631 9,421,854 2,185,777 240,000 109,739 349,739 6.25 1) Total revenues, including interest, exclusive ofgrants. 2) Totaloperating expenses exclusive ofdepreciation andpayments inlieu oftaxes. 3) Includes principal and interest ofrevenue bonds only. 4) Revenue bond agreements require NetRevenue Available forDebt Service beat least 1.30times theamount ofthetotal annual debt service requirement. 168 Table 17 Cityof Seward, Alaska Revenue Bond Coverage Harbor Enterprise Fund Last Ten Fiscal Years Debt Service Requirements (3) Net Revenue FiscalGross Revenues OperatingAvailable for Year(1)Expenses (2)Debt ServicePrincipalInterestTotalCoverage (4) 20072,905,013$ 1,472,842 1,432,171 310,000 376,504 6 86,504 2.09 2008 2,896,828 1,506,685 1,390,143 325,000 374,203 6 99,203 1.99 2009 2,632,937 1,903,985 728,952 340,000 356,540 6 96,540 1.05 2010 2,850,942 1,784,887 1,066,055 360,000 337,990 6 97,990 1.53 2011 3,017,003 2,040,903 976,100 385,000 318,459 7 03,459 1.39 2012 3,228,955 2,171,180 1,057,775 400,000 299,765 6 99,765 1.51* 2013 3,266,821 2,187,206 1,079,615 420,000 284,374 7 04,374 1.53 2014 3,257,122 2,358,618 898,504 294,885 179,484 4 74,369 1.89 2015 3,396,213 2,289,480 1,106,733 460,000 223,262 6 83,262 1.62 2016 3,323,340 2,500,625 822,715 470,000 200,380 6 70,380 1.23 1)Total revenues, including interest, exclusive of grants. 2)Total operating expenses exclusive of depreciation and payments in lieu of taxes. 3)Includes principal and interest of revenue bonds only. 4)Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.20 times the amount of the total annual debt service requirement. Operating Expenses were restated in 2012 for 2011. Note: 2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds were issued in 2005 in the amount of $1.5 million for float construction and in 2006 in the amount of $4.5million for expansion of the south harbor; both of these bonds were refunded in 2014. 169 Table 18 Rate (4) Unemployment eau ofdBorough School Enrollment For the Kenai Peninsula Borough (A) MedianAge (4)Population (1) 170 PersonalPerCapitaIncome (2) 39.152,3709,3687.60% 39.252,9909,2507.80% 39.252,9909,2569.80% 39.453,5789,14510.00% 40.655,4009,1489.50% 40.656,3699,0838.60%41.456,7568,8927.90% 40.056,8628,8327.80% 41.157,7639,1327.80% 40.858,0609,1418.20% Last Ten Fiscal Years CityofSeward, Alaska Demographic and Economic Statistics PersonalIncome (3) City of Seward School Enrollment99,432,19737,366 106,989,86041,008 108,250,13740,197 113,609,00341,569 122,039,03944,313 117,189,66647,121 134,207,62848,485 133,515,89948,728 139,082,61450,760 139,082,61452,639 577 523 569 549 552 593 574 588 605 634Population 20072,62720082,66120092,60920102,69320112,73320122,75420132,76820142,76820152,74020162,663 Fiscal Year A) AgeandUnemploymentdataforCityofSewardisnotavailable, butisconsideredcomparabletodatafortheKenaiPeninsula(1) AlaskaDepartmentofLaborestimatesasofJuly1ofeachfiscalyear(2) Source: USDeptofCommerce, BureauofEconomicAnalysisforKenaiPeninsulaBorough; specificdatanotavailableforSewar(http://www.bea.gov/iTable/index_regional.cfm)(3)UsesKenaiPeninsulaBoroughPerCapitaPersonalIncomemultipliedbySewardpopulation. Source: USDeptofCommerce, BurEconomicAnalysis, usingannualmidyearpopulationestimates.Borough;assumedtoberepresentativeofSeward, asspecificSewarddataunavailable (http://live.laborstats.alaska.gov/labforce/labdata.cfm?s=14&a=0) Table19 CityofSeward, Alaska Principal Employment by Industry - Current and Nine Years Ago 20152007 ResidentResident IndustryWorkersWorkers Trade, Transportation and Utilities239249 y145230LeisureandHospitalit Educational and Health Services120127 Local Government110104 t110133StateGovernmen Professional and Business Services9138 Manufacturing4341 Construction3857 Other2731 Financial Activities2335 g2419NaturalResourcesandMinin Information85 9781069 Source: AlaskaDepartmentofLaborandWorkforceDevelopment, Research andAnalysis. Http://live.laborstats.alaska.gov/alari/ 2016dataunavailableduetoa lagfromthe DepartmentofLabor andWorkforce Development. Used2015datatocompareto2007. rBeginningin2012, theStateof Alaskaby statuteprohibitsreleaseofdatarelativetothenumbe ofemployees workingforanemployer. Norcanitrankemployersaccordingtosize. Beginningin2014, theCity ofSewardisprovidingEmploymentbyIndustrydatatodemonstrate thecomparativechangeinemploymentovertimebyIndustryratherthanEmployer. 171 Table 20 172 Last Ten Fiscal Years CityofSeward, Alaska Full-Time Equivalent Employees by Fund 3.003.002.502.802.752.802.752.752.752.938.506.006.007.006.907.205.905.945.946.454.204.504.504.504.604.504.604.594.594.983.223.153.152.502.302.101.603.293.091.043.003.002.882.702.702.702.603.533.532.523.003.003.003.002.903.003.203.003.003.114.704.063.703.404.104.404.104.004.003.002.002.002.002.002.002.002.002.502.502.767.007.127.506.706.907.106.707.007.009.293.002.001.941.201.251.201.251.251.251.0 03.303.524.162.701.901.602.002.002.002.012.002.002.002.002.002.002.102.032.032.022.002.001.882.702.602.502.602.532.532.18 22.5823.1424.1424.6024.9024.2024.3025.5025.5024.3414.7814.7914.7915.8016.0014.2014.9015.2414.1013.7478.0675.1376.2375.7076.2074.2073.8075.8074.6675.6311.3911.3111.3111.2011.7012.0011.6011.6511.6511.7 210.9010.4010.4010.1010.1010.9011.3011.0011.0010.82 108.57104.99105.85104.90105.60104.40103.50107.80106. 46103.912007200820092010201120122013201420152016CityClerkCity ManagerandLegislativeM.I.S.FinancePolice, Jail, Animal ControlFireBuilding InspectionPublic WorksCommunity DevelopmentMaintenanceParks & RecreationLibraryTotalAllFundsGeneralFund:General Fund TotalParkingHarbor andSMICElectricWaterWastewaterSource: City of 931960659607593115997Table215210,085 652,321 3,637,4011,484,754 53,103,072 6 04222768013397394881616412 20152016 3,450,0541,130,528 54,842,755 9 300489439589341512014 2,042785 91173752315961935 703192467949922 327920,4213206507950922 11453262477946918 173 03LastTenFiscalYears92257436945917CityofSeward, Alaska Operating Indicators by Function 992287425606928898 891362417582933901 1,6303,3473,5933,5493,3483,6083,9924,9283,0893,1123,1673,1943,2243,2182,70627352,75921,87316,29912,01820,64713,47117,11924,56310,862 2007200820092010201120122013 56,228,59056,360,69855,716,46654,683,68157,253,82558,738,00357,950,08755,190,496 a c)2,957,7322,780,7232,349,6952,595,9582,310,6943,934,8062,856,9682,536,738b) derewsnasllacfFunctionorebmu rPhysicalarrests257257290253300251345289270322Trafficviolations/warnings1,1871,1871,0841,6331,4661,1291,4001,225Parkingviolations4040971013015079296374NRegisteredvesselsNumberonwaitinglistforslipsNumberofboatliftsGeneralcargotonnageFishproducttonnagePetroleum (gallons)Dailyaverageconsumption (gallons)1,565,0001,300,0001,300,0001,233,0101,029,0771,580,6411,472,0001,144,677SewerserviceconnectionsDailyaveragetreatment (gallons)715,000504,745504,745598,457723,896681,749657,821519132519,132NumberofserviceconnectionsTotalkilowatthoursales(a)BeginningJune2008, beganprovidingaidresponseformedicalcalls.(b)In2012, includes20,361tonsdredgedmaterialremovedfrom harbor.(c)In2012, includes1,344,546gallonsinbarrelsthatcrossedthedock.Source: Cityof Seward police, fire, harbor, water, wastewater, and financedepartmentsWaterservice connections Police Services:Fireand Emergency Services: Public SafetyHarboWaterand WastewaterSystems:Electric 2101293506226Table2222 520101293626222 520101293622622 520101293622622 520101293622622 520101253622622 520101253622622 5201012536226 17422 5201012536226LastTenFiscalYears22CityofSeward, Alaska Capital AssetStatistics ByFunction821191253521624/94/94/95/95/95/95/94/94/94/92 52.0052.0053.0053.0054.4054.4054.4054.454.854.82007200820092010201120122013201420152016 snoitatserifforebmuNFirerating (ISO)Number offirehydrantsNumber ofpolicestationsParks andplaygroundsLibrariesSewer treatmentplantsElectric distributionline (miles)Electric substations Lane miles of streetNumber of street lightsPublic SafetyNumber of Facilities Source: City of Seward fire, public works and finance departments Table 23 Cityof Seward, Alaska Property Value, Construction (3), and Bank Deposits Last Ten Fiscal Years Commercial ConstructionResidential Construction FiscalTotal Real Property Number of Value of Number of Value of Bank Deposits YearValue (1)PermitsPermitsPermitsPermits(2) 2007226,885,70020 22,555,44617 589,254 59,042,303 2008229,373,70014 903,50016 1,928,879 60,821,068 2009244,392,80031 18,694,20124 966,926 54,337,541 2010242,037,200364,376,32115 941,261 57,426,000 03610,468,12827 873,920 76,678,6912011242,523,70 0366,254,64118 717,400 82,765,4892012253,609,30 2013248,357,8003014,551,64422 927,616 75,607,197 0258,072,21726 1,070,400 79,852,0002014249,826,50 03016,808,76511 759,860 75,514,0002015251,015,80 2016267,717,900272,661,97426 1,603,866 87,091,000 1)"Estimated Actual Value" from Table 9. 2)Bank deposit data as of 12/31 through 2014. Beginning 2015, data as of June 30. t3)Source: Construction Data - City of Seward Building Departmen 175 Table 24 City of Seward, Alaska Miscellaneous Statistics December 31, 2016 Date of IncorporationJune 1, 1912 ClassHome Rule City Form of GovernmentCouncil / Manager Area, Square Miles22 Miscellaneous Operational Statistics: Library - number ofvolumes 30,613 Fire Department - Number of volunteers3 0 Sewer System - Maximum daily capacity (gallons)1,300,000 Water System - Maximum daily capacity (gallons)8,856,000 Electric System: Miles of distribution lines70 Miles of transmission lines42 Harbor - Number of permanent slips5 65 City Employees: Regular Employees - Full-time equivalent9 2 Temporary Employees - Full-time equivalent1 2 Demographics: School Enrollment, City ofSeward (3)6 34 Unemployment Rate - Borough-Wide (1)8.2% Population (2)2 ,663 Per-capita Personal Income (4) 52,639 Qualified Voters1 ,777 Facilities and Services notincluded inthereporting entity: Education: Elementary School Number of students enrolled310 Number of teachers19 Middle School Number of students enrolled146 Number of teachers10 High School Number of students enrolled178 Number of teachers13 Alaska Vocational Technical Center Number of students served annually1,209 Number ofteachers (includes Instructional Aides)3 0 Healthcare Facilities - acomponent unit ofthereporting entity: rProvidenceSewardMedical & Care Cente Number of patient beds (6) combination of inpatient care & swing beds6 Number of long-term care beds40 Number ofemployees: Exempt28 1 29Non-Exempt (includes non-staff rotating physicians) Peninsula Borough; assumed toberepresentative ofSeward, asspecific Seward data unavailable http://live.laborstats.alaska.gov/labforce/labdata.cfm?s=14&a=0) 2)Source: Alaska Department ofCommerce, Community & Economic Development Certified Municipal Population. 3)State ofAlaska Department ofEducation & Early Development - https://education.alaska.gov/stats/ 4)Source: USDept. ofCommerce, Bureau ofEconomic Analysis. Personal income isestimated bymultiplying Kenai Peninsula Borough per-capita personal income bySeward population, as Seward-specific dataunavailable http://www.bea.gov/iTable/index_regional.cfm) 176 Tel: 907-278-8878 3601CStreet, Suite600 Fax: 907-278-5779 Anchorage, AK99503 www.bdo.com Independent Auditor'sReport onInternal Control Over Financial Reporting and onCompliance and Other Matters Based onanAudit ofFinancial Statements Performed inAccordance WithGovernment Auditing Standards Honorable MayorandCityCouncil Cityof Seward, Alaska Wehave audited, inaccordance with theauditing standards generally accepted inthe United States ofAmerica andthestandards applicable tofinancial audits contained inGovernment Auditing Standards issued bytheComptroller General oftheUnited States, thefinancial statements ofthegovernmental activities, thebusiness-typeactivities, each major fund, and the aggregate remaining fund information ofCity ofSeward, Alaska, asof andfortheyear ended December 31, 2016, andtherelated notes tothefinancial statements, which collectively comprise CityofSeward’sbasicfinancial statements, andhave issued ourreport thereon dated August 28, 2017. Ourreport includes areference toother auditors whoaudited theoperating account ofthe Providence Seward Medical andCare Center, asdescribed inourreport on City ofSeward’s financial statements. Theoperating account ofProvidence Seward Medical andCare Centerwas notaudited inaccordance withGovernment Auditing Standards, andaccordingly, thisreport does notinclude reporting oninternal control over financial reporting orinstances ofreportable noncompliance associated with theoperating account ofProvidence Seward Medical andCare Center. Internal Control OverFinancial Reporting Inplanning andperforming ouraudit ofthefinancial statements, weconsidered City of Seward’sinternal control over financial reporting (internal control) todetermine theaudit procedures thatareappropriate in thecircumstances forthepurpose ofexpressing ouropinions onthe financial statements, butnot forthepurpose ofexpressing an opinion onthe effectiveness ofCityofSeward’sinternal control. Accordingly, we donotexpress anopinion on theeffectiveness ofCityofSeward’sinternal control. Adeficiency ininternal control exists when thedesign oroperation ofacontrol does notallow management or employees, inthe normal course ofperforming their assigned functions, to prevent, ordetectandcorrect, misstatements onatimely basis. A material weaknessisa deficiency, oracombination ofdeficiencies, ininternal control, such thatthereisareasonable possibility thatamaterial misstatement oftheentity’sfinancial statements willnotbe prevented, ordetected andcorrected onatimelybasis. Asignificant deficiency isadeficiency, oracombination ofdeficiencies, ininternal control that islesssevere than amaterial weakness, yetimportant enough tomerit attention bythose charged with governance. Our consideration ofinternal control was forthelimited purpose described inthefirst paragraph ofthis section andwasnotdesigned toidentify alldeficiencies in internal control that mightbematerial weaknesses orsignificant deficiencies. Given theselimitations, during ouraudit wedid notidentify anydeficiencies ininternal control thatweconsider tobematerial weaknesses. However material weaknesses may exist that have notbeen identified. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 177 Compliance andOtherMatters Aspartofobtaining reasonable assurance about whether City ofSeward’sfinancial statements arefreefrom material misstatement, weperformed tests ofitscompliance with certain provisions oflaws, regulations, contracts, andgrant agreements, noncompliance with which could have adirectand material effect onthedetermination offinancial statement amounts. However, providing anopinion oncompliance with thoseprovisions wasnotanobjective ofour audit, andaccordingly, wedonotexpress such an opinion. The resultsofour testsdisclosed no instances ofnoncompliance orother matters that arerequired tobereported under Government AuditingStandards. Purpose ofthisReport Thepurpose ofthis report issolely todescribe thescope ofourtesting ofinternal control and compliance andtheresults ofthat testing, andnottoprovide anopinion ontheeffectiveness of theentity’sinternal control or oncompliance. This report isanintegral part ofanaudit performed in accordance with Government Auditing Standards inconsidering theentity’s internal control andcompliance. Accordingly, this communication isnot suitable foranyother purpose. Anchorage, Alaska August 28, 2017 178 Tel: 907-278-8878 3601CStreet, Suite600 Fax: 907-278-5779 Anchorage, AK99503 www.bdo.com Independent Auditor’sReport onCompliance forEach Major Federal Program andReport on Internal Control Over Compliance Required bytheUniform Guidance Honorable MayorandCityCouncil Cityof Seward, Alaska Report onCompliance forEachMajorFederal Program Wehave audited Cityof Seward’scompliance with thetypes ofcompliance requirements described intheOMBCompliance Supplement thatcould have adirect andmaterial effect on each ofCity ofSeward’smajor federal programs fortheyear ended December 31, 2016. Cityof Seward’smajor federal programs areidentified inthesummary ofauditor’sresults section of theaccompanying schedule offindings andquestioned costs. Management’sResponsibility Management isresponsible for compliance withfederal statutes, regulations, andtheterms and conditions ofitsfederal awards applicable toits federal programs. Auditor’sResponsibility Ourresponsibility istoexpress anopinion oncompliance foreachofCity ofSeward’smajor federal programs based onouraudit ofthetypesofcompliance requirements referred toabove. Weconducted ouraudit ofcompliance inaccordance with auditing standards generally accepted intheUnited StatesofAmerica; thestandards applicable tofinancial audits contained inGovernment Auditing Standards, issued by theComptroller General oftheUnited States; and theaudit requirements ofTitle 2U.S. CodeofFederal Regulations Part 200, Uniform Administrative Requirements, CostPrinciples, andAudit Requirements forFederalAwards Uniform Guidance). Those standards and theUniform Guidance require that weplanand perform theaudit to obtain reasonable assurance about whether noncompliance with thetypes ofcompliance requirements referred toabove thatcould have adirect andmaterial effect ona major federal program occurred. Anaudit includes examining, onatestbasis, evidence about CityofSeward’scompliance with those requirements andperforming such other procedures as we considered necessary inthecircumstances. Webelieve thatouraudit provides areasonable basis forouropinion oncompliance foreach major federal program. However, ouraudit does notprovide alegal determination ofCityof Seward’scompliance. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 179 Opinion onEach MajorFederal Program Inouropinion, CityofSeward complied, inallmaterial respects, withthetypes ofcompliance requirements referred toabove thatcouldhave adirect andmaterial effect oneach ofits major federalprograms for theyearended December 31, 2016. Report onInternalControl OverCompliance Management of CityofSeward isresponsible forestablishing andmaintaining effective internal control over compliance with the typesofcompliance requirements referred to above. In planning andperforming ouraudit ofcompliance, weconsidered City ofSeward’sinternal control over compliance with the types ofrequirements thatcould have adirect andmaterial effect on each major federal program todetermine theauditing procedures that are appropriate inthecircumstances forthepurpose ofexpressing anopinion oncompliance for each major federal program andtotestandreport oninternal control over compliance in accordance withtheUniform Guidance, butnotforthepurpose ofexpressing anopinion onthe effectiveness ofinternal control over compliance. Accordingly, wedonotexpress anopinion on theeffectiveness ofCityofSeward’sinternal control over compliance. Adeficiency ininternal control overcompliance exists when thedesign or operation ofa control over compliance does not allow management oremployees, inthenormal course of performing their assigned functions, toprevent, ordetect andcorrect, noncompliance with a typeofcompliance requirement ofafederalprogram onatimely basis. Amaterial weakness in internal control overcompliance isadeficiency, orcombination ofdeficiencies, ininternal control overcompliance, such thatthere isareasonable possibility thatmaterial noncompliance with atypeofcompliance requirement ofafederal program willnotbeprevented, ordetected andcorrected, on atimely basis. Asignificant deficiency ininternal control overcompliance is adeficiency, oracombination ofdeficiencies, ininternal control overcompliance with atype ofcompliance requirement ofafederal program thatislesssevere thanamaterial weakness in internal control over compliance, yetimportant enough to merit attention by those charged with governance. Ourconsideration of internal control over compliance wasfor thelimited purpose described in thefirst paragraph ofthissection andwasnotdesigned to identify alldeficiencies ininternal control over compliance thatmight bematerial weaknesses orsignificant deficiencies. Wedid notidentify anydeficiencies ininternal control overcompliance thatweconsider tobematerial weaknesses. However, material weaknesses may exist that have notbeen identified. Thepurpose ofthisreport oninternal control overcompliance issolely todescribe thescope of ourtesting ofinternal control over compliance and theresults ofthattesting basedon the requirements oftheUniform Guidance. Accordingly, thisreport isnotsuitable foranyother purpose. Anchorage, Alaska August28, 2017 180 Tel: 907-278-8878 3601CStreet, Suite600 Fax: 907-278-5779 Anchorage, AK99503 www.bdo.com Independent Auditor’sReport onCompliance forEach MajorState Program and Report onInternal Control OverCompliance Required bytheState ofAlaska Audit Guide andCompliance Supplement forStateSingle Audits Honorable MayorandCityCouncil Cityof Seward, Alaska Report onCompliance for EachMajorStateProgram Wehaveaudited CityofSeward’scompliance with thetypes ofcompliance requirements described intheState ofAlaska AuditGuideandCompliance Supplement forState SingleAudits thatcould have adirect andmaterial effectoneach ofCityofSeward’smajor state programs fortheyear ended December 31, 2016. City ofSeward’smajor state programs areidentified inthe accompanying Schedule ofState Financial Assistance. Management’sResponsibility Management isresponsible forcompliance withtherequirements oflaws, regulations, contracts, and grantsapplicable to itsstate programs. Auditor’sResponsibility Ourresponsibility istoexpress anopinion oncompliance foreach ofCity ofSeward’smajor state programs based onouraudit ofthetypes ofcompliance requirements referred toabove. Weconducted ouraudit ofcompliance inaccordance with auditing standards generally accepted intheUnited StatesofAmerica; thestandards applicable tofinancial audits contained inGovernment Auditing Standards, issued bythe Comptroller General ofthe United States; and theaudit requirements oftheState ofAlaska Audit GuideandCompliance Supplement forState SingleAudits. Those standards andthe StateofAlaska AuditGuideandCompliance Supplement forStateSingle Audits require thatwe planandperform theaudit toobtain reasonable assurance about whether noncompliance with thetypes ofcompliance requirements referred to above thatcould have adirect andmaterial effect onamajorstate program occurred. An audit includes examining, onatest basis, evidence about City of Seward’scompliance with those requirements andperforming such other procedures as weconsidered necessary inthe circumstances. Webelieve thatouraudit provides areasonable basis for ouropinion oncompliance for each major state program. However, ouraudit does notprovide alegal determination ofCity of Seward’scompliance. Opinion onEachMajor State Program In ouropinion, CityofSeward complied, inallmaterial respects, with thetypesof compliance requirements referred toabove thatcould have adirectandmaterial effect oneach of itsmajor state programs fortheyearended December 31, 2016. BDO USA, LLP, a Delaware limited liability partnership, is the U.S. member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO is the brand name for the BDO network and for each of the BDO Member Firms. 181 Report onInternal Control OverCompliance Management of CityofSeward isresponsible forestablishing andmaintaining effective internal control overcompliance withthetypes ofcompliance requirements referred toabove. Inplanning and performing ouraudit ofcompliance, we considered City ofSeward’sinternal control over compliance with thetypes ofrequirements thatcouldhave adirect and material effect oneach major stateprogram todetermine theauditing procedures thatare appropriate in the circumstances forthe purpose ofexpressing an opinion oncompliance foreach major state program andtotestandreportoninternal control overcompliance inaccordance withtheState ofAlaska AuditGuideandCompliance Supplement forStateSingleAudits, butnotforthepurpose ofexpressing anopinion ontheeffectiveness ofinternal control overcompliance. Accordingly, we donotexpress anopinion on theeffectiveness ofCity ofSeward’sinternal control over compliance. Adeficiency ininternal control overcompliance exists when thedesign or operation ofa control over compliance does notallow management oremployees, inthenormal course of performing their assigned functions, toprevent, ordetect andcorrect, noncompliance with a typeofcompliance requirement ofastate program on atimely basis. Amaterial weakness in internal control overcompliance isadeficiency, orcombination ofdeficiencies, ininternal control overcompliance, such thatthere isareasonable possibility thatmaterial noncompliance with atype ofcompliance requirement ofastate program will notbeprevented, ordetected andcorrected, on atimely basis. Asignificant deficiency ininternal control overcompliance is adeficiency, oracombination ofdeficiencies, ininternal control overcompliance with atype ofcompliance requirement ofastate program thatislesssevere than amaterial weakness in internal control over compliance, yetimportant enough to merit attention by those charged with governance. Ourconsideration of internal control over compliance wasfor thelimited purpose described in thefirst paragraph ofthissection andwasnotdesigned to identify alldeficiencies ininternal control over compliance thatmight bematerial weaknesses orsignificant deficiencies. Wedid notidentify anydeficiencies ininternal control overcompliance thatweconsider tobematerial weaknesses. However, material weaknesses mayexist thathave notbeen identified. Thepurpose ofthisreport oninternal control overcompliance issolely todescribe thescope of ourtesting ofinternal control over compliance and theresults ofthattesting basedon the requirements oftheStateofAlaska AuditGuide andCompliance Supplement forStateSingle Audits. Accordingly, thisreport isnotsuitable foranyotherpurpose. Anchorage, Alaska August28, 2017 182 City of Seward, Alaska Schedule ofFindings andQuestioned Costs YearEnded December 31, 2016 Section I - Summary ofAuditor’sResults Financial Statements Type ofreport theauditor issued onwhether thefinancial statements audited were prepared in accordance withGAAP: Unmodified Internal control over financial reporting: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Noncompliance material tofinancial statements noted? yes Xno Federal Awards Internal control overmajor federal programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Type ofauditor’sreport issued oncompliance for major federal programs: Unmodified Anyaudit findings disclosed thatarerequired tobereported inaccordance with2CFR 200.516(a)? yes X no Identification ofmajor federal programs: CFDA Number Name ofFederal Program orCluster Agency 93.224 Health ClusterDepartment ofHealthand Human Services 10.923 Emergency Watershed Protection Program Department ofAgriculture Dollar threshold used todistinguish between aType Aand Type Bprograms: $750,000 Auditee qualified as low-risk auditee? yes X no StateFinancial Assistance Type of auditor’sreport issued oncompliance formajor state programs: Unmodified Internal control over major state programs: Material weakness(es) identified? yes X no Significant deficiency(ies) identified? yes X none reported Dollar threshold used todistinguish astate major program: $100,000 183 City of Seward, Alaska Schedule ofFindingsandQuestioned Costs, continued YearEnded December 31, 2016 Section II - Financial Statement Findings Required tobeReported inAccordance with Government AuditingStandards There were nofindings related tothefinancial statements whicharerequired tobereported in accordance with thestandards applicable tofinancial audits contained inGovernment Auditing Standards. Section III - FederalAward Findings andQuestioned Costs There were nofindings and questioned costsforfederal awards (as defined in2CFR 200.516(a)) thatarerequired tobereported. Section IV – StateAward FindingsandQuestioned Costs There wereno findings andquestioned costs forState awards (asdefined intheStateofAlaska Audit GuideandCompliance Supplement forStateSingleAudits) thatarerequired tobe reported. 184