city of rahway union county, new jersey...

CITY OF RAHWAY

UNION COUNTY, NEW JERSEY

REPORT OF AUDIT

YEAR ENDED DECEMBER 31, 2016

Exhibits

A A-1

A-2 A-3 B

B-1

B-2

c C-1

D D-1

D-2

D-3 D-4 E

E-1

E-2

E-3 E-4 F

A-4 A-5 A-6 A-7

A-8 A-9 A-10

CITY OF RAHWAY

TABLE OF CONTENTS

PART I- Report on Audit of Financial Statements and Supplementary Schedules

Independent Auditor's Report

Financial Statements

Comparative Balance Sheets- Regulatory Basis - Current Fund Comparative Statements of Operations and Changes in Fund Balance -

Regulatory Basis - Current Fund Statement of Revenues- Regulatory Basis- Current Fund Statement of Expenditures- Regulatory Basis- Current Fund Comparative Balance Sheets- Regulatory Basis- Trust Fund Statements of Changes in Fund Balance -Regulatory Basis-Assessment Trust Fund

Statements of Changes in Fund Balance- Regulatory BasisOther Trust Fund

Comparative Balance Sheets - Regulatory Basis - General Capital Fund Comparative Statements of Changes in Fund Balance- Regulatory Basis -

General Capital Fund Comparative Balance Sheets- Regulatory Basis- Water Utility Fund Comparative Statements of Operations and Changes in Fund Balance -

Regulatory Basis- Water Utility Operating Fund Comparative Statements of Changes in Fund Balance- Regulatory Basis -

Water Utility Capital Fund Statement of Revenues- Regulatory Basis -Water Utility Operating Fund Statement of Expenditures- Regulatory Basis- Water Utility Operating Fund Comparative Balance Sheets -Regulatory Basis - Sewer Utility Fund Comparative Statements of Operations and Changes in Fund Balance-

Regulatory Basis- Sewer Utility Operating Fund Comparative Statements of Changes in Fund Balance- Regulatory Basis-

1-3

4-5

6 7-9

10-14 15-16

17

17 18

19 20-21

22

23 24 25

26-27

28

Sewer Utility Capital Fund 29 Statement of Revenues- Regulatory Basis- Sewer Utility Operating Fund 30 Statement of Expenditures- Regulatory Basis- Sewer Utility Operating Fund 31 Comparative Balance Sheets- Regulatory Basis -General Fixed Assets Account Group 32

Notes to the Financial Statements

Supplementary Schedules

Current Fund

Statement of Cash - Treasurer Statement of Change Funds Statement of Grants Receivable Statement of Due from State of New Jersey- Senior Citizen and Veterans Deductions

Statement of Taxes Receivable and Analysis of Property Tax Levy Statement of Tax Title Liens Statement of Property Acquired for Taxes

33-80

81 82 83

84 85 86 86

Exhibits

A-ll A-12 A-13 A-14 A-15 A-16 A-17 A-18 A-19 A-20 A-21 A-22 A-23 A-24 A-25 A-26 A-27 A-28

B-3 B-4 B-5 B-6 B-7 B-8 B-9 B-10 B-11 B-12 B-13 B-14 B-15 B-16 B-17 B-18 B-19 B-20 B-21 B-22 B-23 B-24

CITY OF RAHWAY

TABLE OF CONTENTS

Supplementary Schedules (Continued)

Current Fund

Statement of Revenue Accounts Receivable Schedule of Other Liens Receivable Statement of Due From Rahway Redevelopment Agency Statement of Deferred Charges- Special Emergency Statement of 2015 Appropriation Reserves Statement of Encumbrances Payable Statement of Accounts Payable Statement of Tax Overpayments Statement of Prepaid Taxes Statement of Reserve for Federal and State Grants- Unappropriated Statement of Appropriated Reserves for Grants Statement of County Taxes Payable Statement of Amount Due County for Added Taxes Statement of Local District School Taxes Payable Statement of Special Improvement District Taxes Payable Statement of Reserve for Tax Appeals Statement of Reserve for FEMA Reimbursements Statement of Reserve for Host Community Fees

Trust Fund

Statement of Cash and Investments Statement of Amount Due To State ofNew Jersey- Animal Control Fund Statement of Reserve for Animal Control Expenditures Statement of Due to Current Fund- Animal Control Fund Statement of Community Development Block Grants Receivable Statement of Loans Receivable- Community Development Trust Fund Statement of Deferred Loans Receivable- Community Development Trust Fund Statement of Encumbrances Payable- Community Development Trust Fund Statement of Reserve for Community Development Expenditures Statement of Reserve for Workers' Compensation Claims Statement of Reserve for Unemployment Compensation Claims Statement of Due from Current Fund- Self Insurance Trust Fund Statement of Due to State ofNew Jersey- Self Insurance Trust Fund Statement of Miscellaneous Deposits and Reserves Statement of Due from Current Fund- Other Trust Fund Statement of Other Liabilities Statement of Reserve for Payroll Deductions Payable Statement of Accrued Salaries and Wages Statement of Reserve for Flex Spending- Self Insurance Trust Fund Statement of Due to Current Fund- Community Development Trust Fund Statement of Due to General Capital Fund- Community Development Trust Fund Statement of Due from Other Trust Fund- Self Insurance Trust Fund

87 88 88 89

90-91 92 92 93 93 94 95 96 96 97 97 97 98 98

99 100 100 100 101 102 102 102 103 104 104 105 105 106 107 107 108 108 108 109 109 109

Exhibits

C-2 C-3 C-4 C-5 C-6 C-7 C-8 C-9 C-10 C-11 C-12 C-13 C-14 C-15 C-16 C-17 C-18 C-19 C-20 C-21

CITY OF RAHWAY

TABLE OF CONTENTS


General Capital Fund

Statement of General Capital Cash - Treasurer Analysis of General Capital Cash Statement of Due from Current Fund Statement of Deferred Charges to Future Taxation- Funded Statement of Deferred Charges Unfunded Statement of Improvement Authorizations Statement of General Serial Bonds Statement of Grants Receivable Statement of Loans Receivable Statement of Bond Anticipation Notes Statement of Green Acres Loan Payable Statement of Department of Community Affairs Loan Payable Statement ofNew Jersey Redevelopment Authority Loan Payable Statement of Capital Improvement Fund Statement of Due from Rahway Redevelopment Agency Statement of Contracts Payable Statement of Reserve for Preliminary Expenses Statement of Reserve of Payment of Debt Statement of Deferred Charges- Cancelled Grants Receivable Statement of Bonds and Notes Authorized But Not Issued

Water Utility Fund

110 111-1!2

!13 113 114

115-116 117-119

120 121 122 123 123 123 123 124 124 124 125 125 126

D-5 Statement of Cash- Collector/Treasurer- Water Utility Cash 127 D-6 Analysis of Cash- Water Utility Capital Fund 128 D-7 Statement of Change Fund- Water Utility Operating Fund 129 D-8 Statement of Fixed Capital- Water Utility Capital Fund 129 D-9 Statement of Fixed Capital Authorized and Uncompleted- Water Utility Capital Fund 130 D-1 0 Statement of Consumer Accounts Receivable- Water Utility Operating Fund 131 D-11 Statement of Deferred Charges- Water Utility Operating Fund 131 D-12 Statement of 2015 Appropriation Reserves- Water Utility Operating Fund 132 D-13 Statement of Encumbrances Payable- Water Utility Operating Fund 133 D-14 Statement of Accounts Payable 133 D-15 Statement of Due From Water Utility Capital Fund- Water Utility Operating Fund 133 D-16 Statement of Due from/to Current Fund- Water Utility Operating Fund 134 D-17 Statement of Due to General Capital Fund- Water Utility Capital Fund 134 D-18 Statement of Due to Current Fund- Water Utility Capital Fund 134

CITY OF RAHWAY

TABLE OF CONTENTS

Exhibits


Water Utility Fund

D-19 Statement oflmprovement Authorizations- Water Utility Capital Fund 135 D-20 Statement of Contracts Payable- Water Utility Capital Fund 136 D-21 Statement of Reserve for Amortization- Water Utility Capital Fund 136 D-22 Statement of Reserve for Deferred Amortization- Water Utility Capital Fund 136 D-23 Statement of Water Serial Bonds- Water Utility Capital Fund 137 D-24 Statement of Bond Anticipation Notes- Water Utility Capital Fund 138 D-25 Statement of Capital Improvement Fund- Water Utility Capital Fund 139 D-26 Statement of Accrued Interest Payable on Bonds and Notes- Water Utility

Operating Fund 139 D-27 Statement of Bonds and Notes Authorized But Not Issued- Water Utility Capital Fund 140

Sewer Utility Fund

E-5 Statement of Cash -Collector/Treasurer - Sewer Utility Cash 141 E-6 Analysis of Cash- Sewer Utility Capital Fund 142 E-7 Statement of Consumer Accounts Receivable- Sewer Utility Operating Fund 143 E-8 Statement of Deferred Charges- Sewer Utility Operating Fund 143 E-9 Statement of Fixed Capital- Sewer Utility Capital Fund 144 E-1 0 Statement of Fixed Capital Authorized and Uncompleted- Sewer Utility Capital Fund 145 E-ll Statement of Due from/to Current Fund- Sewer Utility Operating Fund 146 E-12 Statement of Due from Current Fund- Sewer Utility Capital Fund 146 E-13 Statement of Due from Water Utility Operating Fund- Sewer Utility Operating Fund 14 7 E-14 Statement of Due from/to Sewer Utility Operating Fund- Sewer Utility Capital Fund 14 7 E-15 Statement of Due from General Capital Fund- Sewer Utility Capital Fund 147 E-16 Statement of 2015 Appropriation Reserves - Sewer Utility Operating Fund 148 E-17 Statement of Encumbrances Payable- Sewer Utility Operating Fund 148 E-18 Statement of General Serial Bonds - Sewer Utility Capital Fund 149 E-19 Statement of Environmental Infrastructure Loan Payable- Sewer Utility Capital Fund 150 E-20 Statement of Bond Anticipation Notes- Sewer Utility Capital Fund 151 E-21 Statement of Improvement Authorizations- Sewer Utility Capital Fund 152 E-22 Statement of Contracts Payable- Sewer Utility Capital Fund 153 E-23 Statement of Capital Improvement Fund- Sewer Utility Capital Fund 153 E-24 Statement of Accrued Interest on Bonds and Loans- Sewer Utility Operating Fund 153 E-25 Statement of Reserve for Amortization- Sewer Utility Capital Fund 154 E-26 Statement of Reserve for Deferred Amortization 154 E-27 Statement of Reserve for Payment of Debt- Sewer Utility Capital Fund 154 E-28 Statement of Bonds and Notes Authorized But Not Issued- Sewer Utility Capital Fund 155

CITY OF RAHWAY

TABLE OF CONTENTS

PART II- Government Auditing Standards and Single Audit

Report on Internal Control Over Financial Reporting and on Compliance and other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards-Independent Auditor's Report

Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by U.S. Uniform Guidance-Independent Auditor's Report

Schedule of Expenditures of Federal Awards- Schedule A Schedule of Expenditures of State Financial Assistance- Schedule B

Notes to the Schedules of Expenditures of Federal Awards and State Financial Assistance

Schedule of Findings and Questioned Costs Summary Schedule of Prior-Year Audit Findings and Questioned Costs

PART III- Supporting Data and Letter of Comments and Recommendations

Comparative Statements of Operations and Changes in Fund Balance -Current Fund

Comparative Statements of Operations and Changes in Fund Balance -Water Utility Operating Fund

Comparative Statements of Operations and Changes in Fund Balance-Sewer Utility Operating Fund

Comparative Schedule of Tax Rate Information Comparison of Tax Levies and Collection Currently Delinqu~nt Taxes and Tax Title Liens Property Acquired by Tax Title Lien Liquidation Comparison of Water Utility Levies Comparison of Sewer Utility Levies Comparative Schedule of Fund Balance Officials in Office and Surety Bonds General Comments Recommendations

156-157

158-160

161 162-163

164-165

166-168 169

170

171

172 173 173 174 174 174 174 175 176

177-179 180

CITY OF RAHWAY

COUNTY OF UNION

PART I

REPORT ON AUDIT OF FINANCIAL STATEMENTS

AND SUPPLEMENTARY SCHEDULES


LERCH, VINCI & HIGGINS,LLP . CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS

DIETER !'. LERCH. CPA, RMA, PSA

GARY J. VINCI, CPA. RMA, PSA

GARY W. HIGGINS. CPA. RMA. PSA

JEFFREY C. BUSS, CPA, RMA. PSA

PAUL l. LERCH, CPA, RMA, PSA

DONNA L. JAPHET. CPA. PSA

JULIUS B. CONSONl, CPA. PSA

ANDREW D. PARENTE. CPA. RMA. PSA

Honorable Mayor and Members of the City Council

City of Rahway Rahway, New Jersey

Report on the Financial Statements

INDEPENDENT AUDITOR'S REPORT

ELIZABETH A. SHICK, CPA. RMA, PSA

ROBERT W. HAAG. CPA, PSA

DEBORAH K. LERCH, CPA, I'SA

RALPH M. PICONE, CPA, RMA. PSA

DEBRA GOLLE. CPA

CINDY JANACEK, CPA, RMA

MARK SACO, CPA

SHERYL M . NICOLOSI, CPA, PSA

We have audited the accompanying balance sheets - regulatory basis of the various funds and account group of the City of Rahway, as of December 31 , 2016 and 2015, and the related statements of operations and changes in fund balance -regulatory basis for the years then ended, and the related statement of revenues - regulatory basis and statement of expenditures - regulatory basis of the various funds for the year ended December 31 , 2016, and the related notes to the financial statements.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordance with the financial accounting and reporting provisions and practices that demonstrate compliance with the regulatory basis of accounting and budget laws prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, as described in Note 1. Management is also responsible for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America, the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States and the audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

17-17 ROUTE 208 • FAIR LAWN, NJ 07410 • TELEPHONE (20 1) 791-7100 • FACSil'vlll..E (20 1) 79 1-3035

WWW.LVHCPA.COM

1

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opmwns.

Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles

As described in Note I of the financial statements, the financial statements are prepared by the City of Rahway on the basis of the financial accounting and reporting provisions and practices that demonstrate compliance with the regulatory basis of accounting and budget laws prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States of America, to meet the financial reporting requirements of the State of New Jersey for municipal government entities.

The effects on the financial statements of the variances between tbe regulatory basis of accounting described in Note I and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

Adverse Opinion on U.S. Generally Accepted Accounting Principles

In our opinion, because of the significance of the matter discussed in the "Basis for Adverse Opinion on U.S. Generally Accepted Accounting Principles" paragraph, the financial statements referred to above do not present fairly, in accordance with accounting principles generally accepted in the United States of America, the financial position of each fund of the City of Rahway as of December 31,2016 and 2015, or changes in financial position, or, where applicable, cash flows for the years then ended.

Unmodified Opinion on Regulatory Basis of Accounting

In our opinion, the financial statements - regulatory basis referred to above present fairly, in all material respects, the financial position - regulatory basis of the various funds and account group of the City of Rahway as of December 31, 2016 and 2015, and the results of operations and changes in fund balance- regulatory basis of such funds for the years then ended and the respective statement of revenues- regulatory basis and statement of expenditures- regulatory basis of the various funds for the year ended December 31, 2016 in accordance with the financial accounting and reporting provisions and practices prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey as described in Note 1.

Other Matters

Other Information

Our audit was conducted for the purpose of fonning an opinion on the financial statements of the City of Rahway as a whole. The supplementary schedules listed in the table of contents, schedule of expenditures of federal awards, as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance), schedule of expenditures of state financial assistance and the supplementary data and letter of comments and recommendations section are presented for purposes of additional analysis and are not a required part of the financial statements of the City of Rahway.

2

The supplementary schedules listed in the table of contents, schedule of expenditures of federal awards and schedule of expenditures of state financial assistance are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementary schedules listed in the table of contents, schedule of expenditures of federal awards and schedule of expenditures of state financial assistance are fairly stated, in all material respects, in relation to the financial statements as a whole on the basis of accounting described in Note I.

The supplementary data and letter of comments and recommendations section has not been subject to the auditing procedures applied in the audit of the financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated June 20, 2017 on our consideration of the City of Rahway's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Rahway's internal control over financial reporting and compliance.

Fair Lawn, New Jersey June 20, 2017

3

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS- REGULATORY BASIS- CURRENT FUND

AS OF DECEMBER 31, 2016 AND 2015

Reference

ASSETS

Cash A-4 Cash - Change Funds A-5 Grants Receivable A-6 Due from State of New Jersey- Senior Citizen

and Veterans Deductions A-7

Receivables with Full Reserves Taxes Receivable A-8 Tax Title Liens Receivable A-9 Property Acquired for Taxes (Assessed Value) A-10 Revenue Accounts Receivable A-ll Other Liens Receivable A-12 Due from Rahway Redevelopment Agency A-13 Due from Animal Control Fund B-6 Due from CDBG Trust Fund B-22 Due from Water Utility Operating Fund D-16 Due from Water Utility Capital Fund D-18 Due tfom Sewer Utility Operating Fund E-ll

Deferred Charges

Special Emergency Appropriation A-14

Total Assets

The Accompanying Notes are an Integral Part of these Financial Statements 4

20I6

$ I4,927,2IO $ I,395

370,644

53,93I

I5,353,I80

1,431,8IO 422,273

2,644,300 48,259

9,938 149,300 10,717 65,845

320,418 142,989

5,245,849

224,000

224,000

$ 20,823,029 $

EXHIBIT A Page I

20I5

I4,I46,039 I,295

39I,820

5I,725

I4,590,879

1,786,381 395,011

2,644,300 45,139 36,679 20,866 12,394 65,845

928,520

5,935,135

448,000

448,000

20,974,014

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS- REGULATORY BASIS- CURRENT FUND


Reference

LIABILITIES, RESERVES AND FUND BALANCE

Appropriation Reserves A-3, A-15 Encumbrances Payable A-16 Accounts Payable A-17 Tax Overpayments A-18 Prepaid Taxes A-19 Local School Taxes Payable A-24 County Taxes Payable A-23 Due to Other Trust Fund B-17 Due to Selflnsurance Trust Fund B-14 Due to General Capital Fund C-4 Due to Water Utility Operating Fund D-16 Due to Sewer Utility Operating Fund E-ll Due to Sewer Utility Capital Fund E-12 Reserve for Special Improvement District Taxes A-25 Reserve for Federal and Stale Grants- Unappropriated A-20 Reserve for Federal and Stale Grants- Appropriated A-21 Reserve for Tax Appeals A-26 Reserve for FEMA Reimbursements A-27 Reserve for Host Community Fees A-28

Reserve for Receivables A Fund Balance A-1

Total Liabilities, Reserves and Fund Balance


2016

$ 1,737,105 $ 840,853 127,093 93,496

323,989 110,510

15,113 605,362

17,376 734,619 687,725

675,000 198,602

I ,780,249 I ,400,000

199,102

9,546,194

5,245,849 6,030,986

$ 20,823,029 $

EXHIBIT A Page2

2015

905,229 731,446 38,370

154,500 285,972

70,860 20,759

1,184,969 I 7,564

937,090

8,172 351,434 675,000 247,967

1,679,456 1,400,000

461,605 109,810

9,280,203

5,935,135 5,758,676

20,974,014

EXHIBIT A-I

CITY OF RAHWAY COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE

REGULATORY BASIS- CURRENT FUND AS OF DECEMBER 31,2016 AND 2015

Reference

REVENUE AND OTHER INCOME REALIZED Fund Balance Anticipated A-2 Miscellaneous Revenue Anticipated A-2 Receipts from Delinquent Taxes A-2 Receipts from Current Taxes A-2 Non-Budget Revenues A-2 Other Credits to Income Unexpended Balance of Appropriation Reserves A-15 Redemption of Other Liens A-12 Interfunds Liquidated A Statutory Excess - Animal Control Trust fund B-6 Cancellation of Prior Year Accounts Payable A

Total Income

EXPENDITURES Budget Appropriations

Salaries and Wages A-3 Other Expenses A-3 Deferred Charges and Statutory Expenditures A-3 Capital Improvements A-3 Municipal Debt Service A-3

County Taxes A-22 Amount Due County for Added and Omilted Taxes A-23 Local District School Tax A-24 Special Improvement District Tax A-25 Interfunds Advanced A Senior Citizens and Veterans Deductions Disallowed - Prior Year A Cancellation of Grants Receivable A Refund of Prior Year Revenue and Taxes A-4

Total Expenditures

Excess in Revenue

Fund Balance, Beginning of Year A

Decreased by:

Utilized as Anticipated Revenue A-I,A-2

Fund Balance, End of Year A


2016 2015

$ 2,300,000 $ 2,500,000 13,560,225 13,653,946

1,809,776 1,202,752 9I,842,32I 90,496,121

369,941 246,493

404,751 896,239 26,741 11,456

961,780 737,713 I 0, 711 4,918

101,039

Ill ,286,246 I 09,850,677

21,598,900 21,117,300 18,030,665 18,027,313 5,207,956 5,031,885

160,000 165,000 6,253,104 6,046,380

13,639,824 13,497,818 15,113 20,759

42,753,589 41,959,236 130,000 740,000 623,424 1,027,625

130 77,385

301,361 223,831

108,713,936 I 07,934,662

2,572,310 1,916,015

5,758,676 6,342,661

8,330,986 8,258,676

2,300,000 2,500,000

$ 6,030,986 $ 5,758,676

CITY OF RAHWAY

STATEMENT OF REVENUES- REGULATORY BASIS- CURRENT FUND

FOR THE YEAR ENDED DECEMBER 31,2016

Adopted

Reference Budget

Surplus Anticipated A-2 $ 2,300,000

Miscellaneous Revenues

Licenses Alcoholic Beverages A-ll 57,000

Other A-ll 5,000

Fees and Permits A-ll 100,000

Fines and Costs Municipal Court A-ll 685,000

Interest and Costs on Taxes A-ll 200,000

Interest on -Investments and Deposits A-2 48,000

Anticipated Utility Operating Surplusw Water A-li,D-4 334,739

Anticipated Utility Operating Surplus- Sewer A-ll,E-4 342,815

Police Department Fees A-ll 95,000

Payments in Lieu of Taxes (PILOT)

Lower Essex St. - Denholtz Management A-ll 460,000

Landmark- Block 157 Lot 1 A-ll 571,377

Rahway Parking Authority A-ll 170,000

Rosegate A-ll 18,000

Housing Authority A-ll 48,000

Senior Citizen Housing A-ll 250,000

Meyers Sr. Residence A-ll 55,000

Metro A-ll 100,000

Waters Edge A-ll 212,000

Cellular Phone Tower Fees A-ll 425,000

Vacant/Foreclosure House Registration A-ll 325,000

Police Security M Administrative Fees A-ll 150,000

Planning Board Application Fees A-ll 35,000

Street Open Pennits A-ll 40,000

Motor Vehicle Fines A-ll 3,000

UCC Penalties A'll 15,000

Comcast Cable Franchise Fee A-ll 90,000

Unifonn Construction Code Fees A-ll 465,000

State Aid Without Offsetting Appropriations

Consolidated Municipal Property Tax Relief Aid A-ll 846,232

Energy Receipts Taxes A-ll 3,162,741

Interlocal Service Agreement Offset with Appropriations

Berkeley Heights Health Services Contract A-ll 67,000


Added by

NJSA 40A:4-87 Actual

$ 2,300,000

60,700

7,525

127,284

587,883

376,798

65,413

334,739

114,174

95,399

476,902

571,377

170,000

27,036

53,932

269,735

72,052

231,015

421,005

401,588

403,500

236,813

5,745

62,526

3,375

15,770

92,836

436,464

846,232

3,162,741

71,837

$

EXHIBIT A-2

Page 1

Excess or (Deficit)

3,700

2,525

27,284

(97,117)

176,798

17,413

(228,641)

399

16,902

9,036

5,932

19,735

17,052

131,015

209,005

(23,412)

78,500

86,813

(29,255)

22,526

375

770

2,836

(28,536)

4,837

CITY OF RAHWAY



Modified

Reference Budget

Public and Private Revenues Offset with Appropriations

Clean Communities A-20 $ 51,064

Recycling Tonnage Grant A-20 62,670

Drunk Driving Enforcement Fund A-20 6,702

Multiple Housing Inspections A-20 ll,094

Body Armor Replacement Program A-20 6,624

Drug Free Communities A-6

Kids Recreation Trust A-20 425

Recreation Heart Grant A-20 1,250

RWJ Foundation A-6

UC History A-6

NJ DOT Highway Safety Grant A-20 87,041

Grabill Charitable Trust A-6 10,000

Alcohol Education and Rehabilitation A-20 11,097

County of Union- Police Body Cameras A-6 30,000

Other Special Items of Revenue

U.C.U.A- Host Community Fees A-ll 2,650,000

U.C.U.A.- Host Community Fees- Excess Tonnage A-28 109,810

Solid Waste Fees

Rahway Housing Authority A-ll 18,000

Rahway Board of Education A-ll 40,000

Bulky Waste Fees

Kenilworth A-ll 60,000

Outside Health Services

Scotch Plains A-ll 66,000

Hillside A-ll 20,000

Winfield A-ll 5,000

Reserve for FEMA Reimbursements A-27 461,605

Hotel Fees A-ll 150,000

Total Miscellaneous Revenues 13,234,286

Receipts from Delinquent Taxes A-2 930,000

Amount to be Raised by Taxes for Municipal Budget

Local Tax for Municipal Purposes 35,878,964

Minimum Library Tax 830,750

Total Amount to be Raised by Taxes A-2 36,709,714

Budget Totals $ 53,174,000

Non~Budget Revenues A-2


Added by

NJSA 40A:4-87

$ 125,000

500

1,125

$ 126,625

$ 126,625

Actual

$ 51,064

62,670

6,702

11,094

6,624

125,000

425

1,250

500

1,125

87,041

10,000

11,097

30,000

2,350,000

109,810

37,000

40,000

75,080

68,328

22,047

8,975

461,605 180,392

13,560,225

1,809,776

36,523,045

830,750

37,353,795

55,023,796

369,941

$ 55,393,737

EXHIBIT A-2

Page2

Excess or

<Deficit)

$ (300,000)

19,000

15,080

2,328

2,047

3,975

30,392

199,314

879,776

644,081

644,081

$ 1,723,171

CITY OF RAHWAY



Analysis of Current Tax Collections

Revenue from Collections

Less Allocated to School, County Taxes and

Special District Taxes

Add Appropriation "Reserve for Uncollected Taxes

Balance for Support of Municipal Budget Appropriations

Interest on Investments

Revenue Accounts Receivable

Due from Other Trust Fund

Due from General Capital Fund

Due from Self Insurance Tmst Fund Due from Animal Control Fund

Non~ Budget Revenue

Uniform Fire Safety Act

Zoning Maps/Ordinances

Copies

Engineering Fees

Police Confiscated Cash

Bail Forfeiture

Medicare Reimbursement

Solid Waste Fees

Rahway Geriatrics Center

Refund of Prior Year Expenditures

Sale ofRecyclables

Sale of Vehicles & Equip

Health Services- Board of Education

Board of Adjustment Applications

Administrative Fee- Senior Citizens/Veterans Deductions

Other Miscellaneous


Reference

A-8

A-22, A-23

A-24, A-25

A-3

A-2

A-ll

B-17

C-4

B-14 8-6

A-2

A-I, A-2

EXHIBIT A-2

Page3

$ 91,842,321

56,538,526

35,303,795

2,050,000

$ 37,353,795

$

$

$

44,348

5,675

15,137

188

65

65,413

78,502

10,418

4,409

7,050

3,530

2,716

11,596

34,500

117,603

17,614

16,786

3,240

12,957

4,125 44,895

369,941

EXHIBIT A-3 Page 1

CITY OF RAHWAY STATEMENT OF EXPENDITURES- REGULATORY BASIS- CURRENT FUND


Atmronriation Exnended Unexpended Budget After Paid or Balances

Budget Modification Charged Reserved Cancelled OPERATIONS- WITH!N "CAPS" General Government

Department of Administration Salaries and Wages $ 344,000 $ 344,000 $ 341,830 $ 2,170 Other Expenses 389,000 389,000 362,006 26,994

Mayor's Office Salaries and Wages 72,000 72,000 72,000

Municipal Council Salaries and Wages 75,000 75,000 74,021 979 Other Expenses 1,000 1,100 1,010 90

Environmental Commission Salaries and Wages 4,000 4,000 3,858 142 Other Expenses ll,OOO 11,000 815 10,185

City Clerk Salaries and Wages 114,000 143,000 139,694 3,306 Other Expenses 34,000 34,000 32,794 1,206

Department of Revenue and Finance Salaries and Wages 490,000 440,000 422,379 17,621 Other Expenses 637,000 677,000 671,230 5,770 Municipal Audit 60,000 73,000 59,000 14,000

Revenue Administration (Tax Collection) Salaries and Wages 161,000 111,000 97,168 13,832 Other Expenses 72,000 72,000 56,421 15,579

Department of Assessment Salaries and Wages 114,000 114,000 106,966 7,034 Other Expenses 80,000 80,000 26,545 53,455

Department of Law Salaries and Wages 77,000 80,000 79,358 642 Other Expenses 500,000 620,000 512,437 107,563

Division of Engineering Other Expenses 400,000 400,000 343,466 56,534

Department of Building, Planning & Economic Development

Salaries and Wages 74,000 74,000 73,974 26 Other Expenses 3,000 3,000 (71,060) 74,060

Planning Board Salaries and Wages 5,000 5,000 4,052 948 Other Expenses 6,000 6,000 4,094 1,906

Zoning Board of Adjustment Salaries and Wages 4,000 4,200 4,178 22 Other Expenses 6,000 6,000 4,097 1,903

Uniform Construction Code Enforcement (NJSA 52:270-120 etc.) Salaries and Wages 441,000 441,000 437,175 3,825

Other Expenses 32,000 32,000 13,891 18,109

Municipal A.B. C. Board Salaries and Wages 3,000 3,000 2,919 81

Other Expenses 1,000 1,000 992 8

Insurance Other Insurance 1,430,000 1,316,000 1,175,087 140,913

Employee Group Insurance 7,813,520 7,795,493 7,604,679 190,814

Police Department Salaries and Wages 8,646,000 8,791,000 8,788,620 2,380

Other Expenses 308,000 308,000 297,759 10,241


EXHIBIT A-3 Page2


FOR THE YEAR ENDED DECEMBER 31, 2016

Aunrouriation Expended Unexpended Budget After Paid or Balances

Budget Modification Charged Reserved Cancelled OPERATIONS- WITHIN "CAPS" (Continued) Office of Emergency Management

Salaries and Wages $ 56,000 $ 56,000 $ 55,835 $ I65 Other Expenses 28,000 28,000 28,000

Fire Department Salaries and Wages 5,433,000 5,588,000 5,587,66I 339 Other Expenses I75,000 I75,000 174,269 73I

Department of Public Works Salaries and Wages 2,60I,OOO 2,201,000 2,123,735 77,265 Other Expenses 1,266,000 1,266,000 932,774 333,226

Solid Waste and Recycling Salaries and Wages 1,108,000 1,I08,000 1,107,123 877 Other Expenses 1,154,000 1,154,000 1,009,907 144,093

Department of Health and Welfare Salaries and Wages 375,000 510,000 505,322 4,678 Other Expenses 152,000 152,000 122,154 29,846

Community Services ~ Senior Services Salaries and Wages 169,000 169,000 158,415 10,585 Other Expenses 44,000 44,000 34,002 9,998

Recreation Department Salaries and Wages 588,000 547,700 526,267 21,433 Other Expenses 200,000 205,000 I96,260 8,740 Municipal Court

Salaries and Wages 469,000 469,000 410,145 58,855 Other Expenses 30,000 38,000 29,931 8,069

Unclassified Electricity 325,000 315,000 259,239 55,76I Heating Fuels ll5,000 90,000 60,746 29,254 Telephone I50,000 160,000 !30,2I1 29,789 Street Lighting 525,000 550,000 463,523 86,477

Total Operations Within "CAPS" 37,370,520 37,35I,493 35,658,974 I,692,5I9

Contingent

Total Operations Including Contingent ~Within "CAPS" 37,370,520 37,35I,493 35,658,974 1,692,5I9

Detail: Salaries & Wages 2I,423,000 21,349,900 21,122,695 227,205 Otfier Expenses (Including Contingent) 15,947,520 16,001,593 I4,536,279 I,465,3I4




Aonrooriation Exnended Budget After Paid or

Budget Modification Charged Reserved DEFERRED CHARGES AND STATUTORY EXPENDITURES-MUNICIPAL WITHIN "CAPS"

STATUTORY EXPENDITURES Contribution to:

Public Employees' Retirement System $ 799,505 $ 799,505 $ 799,505 Police and Firemen's Retirement System 3,383,324 3,383,324 3,383,324 Pension Adjustment Fund 20,000 20,000 18,045 $ 1,955 Social Security 775,000 775,000 758,307 16,693 DCRP Contribution 5,127 6,127 5,917 210

Total Deferred Charges and Statutory Expenditures -Municipal Within "CAPS" 4,982,956 4,983,956 4,965,098 18,858

Total General Appropriations for Municipal Purposes Within "CAPS" 42,353,476 42,335,449 40,624,072 1,711,377

OPERATIONS- EXCLUDED FROM "CAPS" Maintenance of Free Public Library (Chapter 82, P.L. 1985) Other Expenses 1,414,000 1,414,000 1,414,000

Police Dispatch 9-1-l System Salaries and Wages 249,000 249,000 228,829 20,171 Other Expenses 90,000 90,000 84,443 5,557

Employee Group Insurance 53,480 53,480 53,480

Interlocal Service Agreements PHPF Berkeley Heights Direct 67,000 67,000 67,000

Public and Private Programs Offset with Revenues Clean Communities Program 51,064 51,064 51,064 Recycling Tonnage Grant 62,670 62,670 62,670 Multiple Housing Inspections 11,094 11,094 11,094 Alcohol Education & Ed 11,097 11,097 11,097 Police Body Armor 6,624 6,624 6,624 NJ DOT Safe Highway Grant 87,041 87,041 87,041 Drug Free Communities 125,000 125,000 Drunk Driving Enforcement Fund 6,702 6,702 6,702 RWJ Foundation 500 500 Recreation Heart Grant 1,250 1,250 1,250 UC History Grant 1,125 l,I25 UC Police Body Camera 30,000 30,000 30,000 UC Kids Recreation Grant 425 425 425 Grahill Charitable Trust 10,000 10,000 10,000

Total Operations M Excluded from "CAPS" 2,151,447 2,278,072 2,252,344 25,728

Detail: Salaries and Wages 249,000 249,000 228,829 20,171 Other Expenses 1,902,447 2,029,072 2,023,515 5,557


EXHIBIT A-3 Page 3

Unexpended Balances Cancelled

EXHIBIT A-3 Page4



Approoriation Expended Unexpended Budget After Paid or Balances

Budget Modification Charged Reserved Cancelled

CAPITAL IMPROVEMENTS- EXCLUDED FROM "CAPS" Capital Improvement Fund $ 160,000 $ 160,000 $ 160,000

Total Capital Improvements~ Excluded from "CAPS" 160,000 160,000 160,000

MUNICIPAL DEBT SERVICE- EXCLUDED FROM "CAPS" Payment of Bond Principal 2,929,685 2,929,685 2,929,685

Interest on Bonds 1,546,951 1,546,951 1,546,951 Interest in Notes 180,000 179,828 179,828 Green Acres Loan 73,471 91,670 91,670

Repayment of Principal and Interest NJ DCA Loan Repayment 20,000 20,000 20,000 Capital Grant Agreement ~ Rahway Redevelopment Agency

Library Project/Arts Center Project 1,127,970 1,127,970 1,127,970

Tax Appeal Refunding Note Principal 350,000 350,000 350,000 Interest 7,000 7,000 7,000

Total Municipal Debt Service Excluded from "CAPS" 6,235,077 6,253,104 6,253,104

DEFERRED CHARGES AND STATUTORY EXPENDITURES-

EXCLUDED FROM "CAPS"

Special Emergency Authorizations 224,000 224,000 224,000

Total Deferred Charges and Statutory Expenditures Excluded from "CAPS" 224,000 224,000 224,000

Total General Appropriations ~Excluded from "CAPS" 8,770,524 8,915,176 8,889,448 $ 25,728

Subtotal General Appropriations 51,124,000 51,250,625 49,513,520 1,737,105

Reserve for Uncollected Taxes 2,050,000 2,050,000 2,050,000

Total General Appropriations $ 53,174,000 $ 53,300,625 $ 51,563,520 $ 1,737,105 $

Reference A-2 A-I A-l,A


CITY OF RAHWAY STATEMENT OF EXPENDITURES - REGULATORY BASIS - CURRENT FUND


Budget as Adopted Added by N.J.S. 40A:4-87

Cash Disbursements Encumbrances Payable Due to General Capital Fund Transferred to Appropriated Grant Reserves Deferred Charges Reserve for Uncollected Taxes


Reference

A-2

A-4 A-16 C-4

A-21 A-14 A-2

Budget After

Modification

$ 53,174,000 126,625

$ 53,300,625

$

$

EXHIBIT A-3 Page 5

Paid or

Charged

47,747,426 787,502 350,000 404,592 224,000

2,050,000

51,563,520

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS- REGULATORY BASIS- TRUST FUND


ASSETS

Animal Control Fund Cash

Community Development Trust Fund Cash Community Development Grants Receivable Loans Receivable Deferred Loans Receivable

Other Trust Fund Cash Due from Current Fund

Self- Insurance Fund Cash Due from Current Fund Due from Other Trust Fund

Total Assets


Reference 2016

B-3 $ 23,047

23,047

B-3 615,203 B-7 380,366 B-8 224,124 B-9 2,535,802

3,755,495

B-3 4,605,386 B-17 605,362

5,210,748

B-3 132,946 B-14 17,376 B-24 26,538

176,860

$ 9,166,150

EXHlBIT B Page I

2015

$ 24,366

24,366

598,095 418,622 240,544

2,579,595

3,836,856

3,842,486 1,184,969

5,027,455

126,416 17,564

143,980

$ 9,032,657

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS - REGULA TORY BASIS - TRUST FUND


LIABILITIES, RESERVES AND FUND BALANCES

Animal Control Fund Due to State of New Jersey Reserve for Animal Control Expenditures Due to Current Fund

Community Development Trust Fund Due to Current Fund Due to General Capital Fund Reserve for Loans Receivable Encumbrances Payable Reserve for Community Development Expenditures

Other Trust Fund Due to Self Insurance Trust Fund Miscellaneous Reserves and Deposits Other Liabilities Payroll Deductions Payable Accrued Salaries and Wages Reserve for Flex Spending Fund Balance

Self- Insurance Fund Reserve for Workers' Compensation Reserve for Unemployment Compensation Due to State ofNew Jersey

Total Liabilities and Fund Balance


Reference 2016

B-4 $ 23 B-5 12,307 B-6 10,717

23,047

B-22 65,845 B-23 386,000

B-8, B-9 2,759,926 B-10 144,515 B-11 399,209

3,755,495

B-24 26,538 B-16 4,633,096 B-18 226,390 B-19 188,981 B-20 93,886 B-21 4,207 B-2 37,650

5,210,748

B-12 67,5 IO B-13 105,482 B-15 3,868

176,860

$ 9,166,150

EXHIBIT B Page 2

2015

$ 35 11,937 12,394

24,366

65,845 391,000

2,820,139 94,936

464,936

3,836,856

4,372,566 336,422 198,495 80,373

1,949 37,650

5,027,455

51,429 90,743

1,808

143,980

$ 9,032,657

CITY OF RAHWAY STATEMENTS OF CHANGES IN FUND BALANCE- REGULATORY BASIS

ASSESSMENT TRUST FUND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Reference

Balance, Beginning of Year B

Decreased by:

Current Fund Anticipated Revenue

Balance, End of Year B

STATEMENTS OF CHANGES IN FUND BALANCE- REGULATORY BASISOTHER TRUST FUND

FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015

Balance, Beginning of Year

Balance, End of Year


Reference

B

B

$

$

EXHIBIT B-1

$ 9,897

9,897

EXHIBIT B-2

3 7,650 =-$ ~~3"-'7-",6"'5"-0

3 7,650 :;;.$ ~~3;:;,;7:..;,6;,;;5;;,0

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS- REGULATORY BASIS- GENERAL CAPITAL FUND


ASSETS

Cash Deferred Charges to Future Taxation

Funded Unfunded Cancelled Grants Receivable

Grants Receivable Loans Receivable Due from Rahway Redevelopment Agency Due from Current Fund Due from Water Utility Capital Fund Due ti-om CDBG Trust Fund

Total Assets


Serial Bonds Payable Bond Anticipation Notes Payable Green Acres Loans Payable Department of Community Affairs Loan Payable NJ Redevelopment Authority Loan Payable Contracts Payable Improvement Authorizations:

Funded Unfunded

Due to Sewer Utility Capital Fund Capital Improvement Fund Reserve for Grants Receivable Reserve for Payment of Debt Reserve for Preliminary Expenses Fund Balance


Reference

C-2, C-3 $ 5,992,110

C-5 48,156,090 C-6 3,81 0,186

C-20 140,279 C-9 661,775

C-10 13,495 C-16 811,993 C-4 734,619

D-17 B-23 386,000

$ 60,706,547

C-8 47,611,970 C-11 1,812,570 C-12 336,620 C-13 20,000 C-14 187,500 C-17 1,296,214

C-7 5,042,598 C-7 1,237,259 E-15 C-15 260,175 C-9 421,775

C-19 91,978 C-18 8,257 C-1 2,379,631

$ 60,706,547

There were bonds and notes authorized but not issued on December 31, 2016 and 2015 of$! ,997,616 and $1,703,045, respectively (Exhibit C-21)


EXHIBIT C

$ 5,424,763

42,801,984 10,679,224

140,279 507,639

13,495 39,544

937,090 1,000,000

391,000

$ 61,935,018

$ 42,172,073 9,341,387

402,411 40,000

187,500 I ,902,433

2,552,306 3,139,819

198,566 218,034 175,950

8,257 1,596,282

$ 61,935,018

CITY OF RAHWAY COMPARATIVE STATEMENTS OF CHANGES IN FUND BALANCE- REGULATORY BASIS

GENERAL CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31,2016 AND 2015

Balance, Beginning of Year

Increased by:

Premium on Bond Anticipation Notes



Reference

c

C-2

c

2016

$ I ,596,282

783,349

$ 2,379,631

EXHIBITC-1

2015

$ 984,548

611,734

$ 1,596,282

CITY OF RAHWAY COMPARATIVE BALANCE SHEETS- REGULATORY BASIS

WATER UTILITY FUND AS OF DECEMBER 31, 2016 AND 2015

ASSETS

Operating Fund Cash Cash - Change Fund Due from Current Fund Due from Water Utility Capital Fund

Receivables and Other Assets With Full Reserves Consumer Accounts Receivable

Deferred Charges Emergency Appropriation Overexpenditure of Appropriations Overexpenditure of Appropriation Reserves

Total Operating Fund

Capital Fund Cash Fixed Capital Fixed Capital Authorized and Uncompleted

Total Capital Fund

Total Assets


Reference

D-5 D-7

D-16 D-15

D-10

D-11 D-11 D-11

D-5, D-6 D-8 D-9

2016

$ 1,717,769 $ 200

687,725 902,261

3,307,955

868,109

34,105

34,105

4,210,169

10,070,015 35,748,459 22,785,000

68,603,474

$ 72,813,643 $

EXHIBITD Page I

2015

443,536 200

780,266

1,224,002

828,397

360,000 29,154

389,154

2,441,553

14,426,331 33,048,459 25,085,000

72,559,790

75,001,343


WATER UTILITY FUND AS OF DECEMBER 31, 2016 AND 2015

Reference


Operating Fund Appropriation Reserves D-4, D-12 Encumbrances Payable D-13 Accrued Interest on Bonds and Notes D-26 Accounts Payable and Other Liabilities D-14 Due to Current Fund D-16 Due to Sewer Utility Operating Fund E-13

Reserve for Receivables D Fund Balance D-1


Capital Fund Serial Bonds Payable D-23 Bond Anticipation Notes Payable D-24 Contracts Payable D-20 Capital Improvement Fund D-25 Improvement Authorizations

Unfunded D-19 Reserve for Amortization D-21 Reserve for Deferred Amortization D-22 Due to Current Fund D-18 Due to General Capital Fund D-17 Due to Water Utility Operating Fund D-15 Fund Balance D-2

Total Capital Fund


2016

$ 67,470 32,483 70,815 19,896

2,495,762

2,686,426

868, I 09 655,634

4,210,169

3,005,000 22,664,498

8,098,924 106,472

6,993,024 25,863,932

303,929 320,418

902,261 345,016

68,603,474

$ 72,813,643

There were bonds and notes authorized but not issued on December 31, 2016 and 2015 of $6,696, I 00 and $6,452,970, respectively (Exhibit D-27).


$

$

EXHIBIT D Page 2

2015

65,791 65,362

800 928,520 385,852

I ,446,325

828,397 166,831

2,441,553

3,805,000 22,721,251

1,347,784 56,472

17,404,834 24,860,710

293,528

1,000,000 780,266 289,945

72,559,790

75,001,343


REGULATORY BASIS- WATER UTILITY OPERATING FUND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Revenue and Other Income Realized Rents Additional Water Rents Miscellaneous Revenue Other Credits to Income

Cancellation of Prior Year Accounts Payable Unexpended Balance of Appropriation Reserves

Expenditures Budget Appropriations

Operating Capital Improvements Debt Service Deferred Charges

Overecpenditure of Appropriation Reserves Refund of Prior Year Revenue

Excess (Deficiency) in Revenues Over (Under) Expenditures

Adjustments to Income Before Fund Balance Expenditures Included Above Which by Statute are

Required to be Raised in Subsequent Year's Budget Surplus to General Budget

Statutory Excess to Fund Balance

Fund Balance, Beginning of Year

Fund Balance, End of Year


Reference

D-3 D-3 D-3

D-14 D-12

D-4 D-4 D-4 D-4

D-5

D-11 D-4

D

D

2016

$ 6,082,360 286,000 125,643

800

6,494,803

3,933,484 50,000

1,288,222 399,555

34,105

5,705,366

789,437

34,105 (334,739)

488,803

166,83 I

$ 655,634

EXHIBIT D-1

2015

$ 5,721,332

34,382

326

5,756,040

4,228,458 50,000

I, 179,278 335,285

46,814

5,839,835

(83,795)

389,154 (!67,385)

!37,974

28,857

$ 166,83I


WATER UTILITY CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Balance, Beginning of Y car

Increased by:

Premium on Issuance of Bonds and Notes



Reference

D

D-5

D

2016

$ 289,945

55,071

$ 345,016

EXHIBIT D-2

2015

$ 189,847

100,098

$ 289,945

CITY OF RAHWAY STATEMENT OF REVENUES- REGULATORY BASIS

WATER UTILITY OPERATING FUND FOR THE YEAR ENDED DECEMBER 31,2016

Reference Anticipated

Rents Additional Water Rents

Nonbudget Revenue

Analysis of Realized Revenue:

Miscellaneous Water Connection Fees Interest on Investments

Cash Receipts Due from Water Utility Capital Fund

D-I,D-10 D-1

D-5 D-15


$ 5,720,000 286,000

$ 6,006,000

EXHIBITD-3

Excess Realized (Deficit)

$ 6,082,360 $ 362,360 286,000

6,368,360 $ 362,360

125,643

$ 6,494,003

$ 118,600 7,043

$ 125,643

$ 122,981 2,662

$ 125,643

CITY OF RAHWAY STATEMENT OF EXPENDITURES -REGULATORY BASIS

WATER UTILITY OPERATING FUND FOR THE YEAR ENDED DECEMBER 31, 2016

Operating Management Fee Other Expenses

Capital Improvements

Capital Improvement Fund

Debt Service

Payment of Bond Principal

Payment of Bond Anticipation Notes

Interest on Bonds Interest on Notes

Deferred Charges Emergency Authorization Overexpenditure of Appropriations Deferred Charges Unfunded~ Water Utility Capital

Surplus (General Budget)

Adopted Budget

Cash Disbursements Encumbrances Payable Due to Current Fund Due to Water Utility Capital Fund Deferred Charges Accrued Interest on Bonds and Notes

Reference

D-5 D-13 D-16 D-15 D-11 D-26


$

$

Appropriation Budget After

Modification

3,233,484 $ 3,233,484 700,000 700,000

50,000 50,000

800,000 800,000

203,222 203,222

130,000 130,000 155,000 155,000

360,000 360,000 29,154 29,154 10,401 10,401

334,739 334,739

6,006,000 $ 6,006,000

$ 6,006,000

EXHIBITD-4

Expended

Paid or Charged

$ 3,233,484 632,530

50,000

800,000

203,222

130,000 155,000

360,000 29,154 10,401

334,739

$ 5,938,530

$ 4,138,267 32,483

1,083,225 10,401

389,154 285,000

$ 5,938,530

Reserved

$ 67,470

$ 67,470


SEWER UTILITY FUND AS OF DECEMBER 31,2016 AND 2015

Reference

ASSETS

Operating Fund Cash E-5 Due from Current Fund E-ll Due from Water Utility Operating Fund E-13 Due from Sewer Utility Capital Fund E-14

Receivables and Other Assets With Full Reserves Consumer Accounts Receivable E-7

Deferred Charges

Overexpenditure of Appropriations E-8


Capital Fund Cash E-5, E-6 Fixed Capital E-9 Fixed Capital Authorized and Uncompleted E-10 Due from Current Fund E-12 Due from General Capital Fund E-15 Due from Sewer Utility Operating Fund E-14

Total Capital Fund

Total Assets


2016

$ 274,721

2,495,762

2,770,483

367,953

3,138,436

95,624 3,655,428 2,590,000

798,916

7,139,968

$ 10,278,404

$

$

EXHIBITE Pagel

2015

1,671,637 8,172

385,852 295

2,065,956

349;806

20,745

2,436,507

910,924 3,655,428 1,840,000

351,434 198,566

6,956,352

9,392,859


SEWER UTILITY FUND AS OF DECEMBER 31, 2016 AND 2015

Reference 2016


Operating Fund Appropriation Reserves E-3, E-16 $ 34,414 Encumbrances Payable E-17 3,021 Due to Current Fund E-ll 142,989 Due to Sewer Utility Capital Fund E-14 798,916 Accrued Interest on Bond and Loans E-24 24,947

1,004,287

Reserve for Receivables E 367,953 Fund Balance E-1 1,766,196

Total Operating Fund 3,138,436

Capital Fund Serial Bonds Payable E-18 995,030 NJ Environmental Infrastructure Loan Payable E-19 745,467 Bond Anticipation Notes Payable E-20 I ,845,868 Due to Sewer Utility Operating Fund E-14 Improvement Authorizations

Unfunded E-21 I ,056,690 Contracts Payable E-22 52,398 Capital Improvement Fund E-23 374,500 Reserve for Amortization E-25 1,902,363 Deferred Reserve for Amortization E-26 6,700 Reserve for Payment of Debt E-27 111,892 Fund Balance E-2 49,060

Total Capital Fund 7,139,968

Total Liabilities, Reserves and Fund Balance $ 10,278,404

$

$

EXHIBITE Page2

2015

18,215 25,712

26,578

70,505

349,806 2,016,196

2,436,507

1,137,927 859,252

I ,856,793 295

755,604 190,773 353,300

I ,634,756 6,700

111,892 49,060

6,956,352

9,392,859

There were bonds and notes authorized but not issued of $750,000 and $-0-, on December 31, 2016 and 2015, respectively. (Exhibit E-28)


EXHIBITE-1


REGULATORY BASIS- SEWER UTILITY OPERATING FUND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Reference

Revenue and Other Income Realized Surplus Anticipated E-3 Rents E-3 Industrial Sewer Flow Charges E-3 Sewer Connection Fees E-3 Miscellaneous Revenue E-3 Other Credits to Income

Unexpended Balance of Appropriation Reserves E-16

Expenditures Budget Appropriations

Operating E-4 Capital Improvements E-4 Debt Service E-4 Deferred Charges and Statutory Expenditures E-4

Excess in Revenues Over Expenditures

Adjustments to Income Before Fund Balance Expenditures Included Above Which by Statute

are Required to be Raised in Subsequent Year E-8 Surplus to General Budget E-4

Statutory Excess to Fund Balance

Fund Balance, Beginning of Year E

Decreased by:

Utilized as Anticipated Revenue E-3

Fund Balance, End of Year E


2016

$ 250,000 4,488,364

302,070

66,576

3,352

5,110,362

4,579,000 21,200

363,243 32,745

4,996,188

114,174

(114,174)

2,016,196

2,016,196

250,000

$ 1,766,196

2015

$ 250,000 4,954,529

181,625

19,927

68,825

5,474,906

4,496,386 25,000

349,542 Il,200

4,882,128

592,778

20,745 (387,612)

225,911

2,040,285

2,266,196

250,000

$ 2,016,196

EXHIBIT E-2


SEWER UTILITY CAPITAL FUND FOR THE YEARS ENDED DECEMBER 31, 2016 AND 2015

Reference

Balance, Beginning of Year E

Increased by:

Premium on Bond Anticipation Notes E-5

Balance, End of Year E


$ 49,060 $ 22,378

26,682

$ 49,060 ;:;.$ ~~~49;;;,0;;;:6:;;0

Surplus Anticipated Rents

Industrial Sewer Flow Charges

Nonbudget Revenue

Analysis of Realized Revenue:

Miscellaneous Sewer Connection Fees Interest on Investments and Deposits

CITY OF RAHWAY STATEMENT OF REVENUES- REGULATORY BASIS

SEWER UTILITY OPERATING FUND FOR THE YEAR ENDED DECEMBER 31, 2016

Reference

E-1 E-l,E-3 E-I,E-5

E-4

E-3

E-5 Cash Receipts

Anticipated

$ 250,000 4,950,000

I50,000

$ 5,350,000

E-I4 Due from Sewer Utility

Capital Fund


$ 250,000 4,488,364

302,070

5,040,434

66,576

$ 5,I07,010

$ 63,445 3,13I

$ 66,576

$ 65,280

I,296

$ 66,576

EXHIBIT E-3

$

$

Excess <Deficit)

(461,636) I52,070

(309,566)

EXHIBITE-4

CITY OF RAIIWA Y STATEMENT OF EXPENDITURES -REGULATORY BASIS

SEWER UTILITY OPERATING FUND FOR THE YEAR ENDED DECEMBER31, 2016

Agpronriation Expended Budget Unexpended After Paid or Balances

Budget Modification Charged Reserved Cancelled

Operating Salaries and Wages $ 145,000 $ 145,000 $ 143,647 $ 1,353 Other Expenses 325,000 325,000 293,546 31,454

Sewer Treatment Expense Rahway Valley Sewer Authority 4,025,000 4,025,000 4,024,466 534 Sewer Permit Fees 84,000 84,000 83,984 16

Capital Improvements Capital Improvement Fund 21,200 21,200 21,200

Debt Service Payment of Bond Principal 125,315 125,315 125,315 Payment of Bond Anticipation Notes 10,925 10,925 10,925

Interest on Bonds 35,000 35,000 34,226 $ 774

Interest on Notes 43,000 43,000 35,505 7,495

Principal and Interest on Loans 160,000 160,000 157,272 2,728

Deferred Charges Overexpenditure of Appropriations 20,745 20,745 20,745

Statutory Expenditures Social Security System (O.A.S.I.) 12,000 12,000 10,943 1,057

Surplus (General Budget) 342,815 342,815 114,174 228,641

$ 5,350,000 $ 5,350,000 $ 5,075,948 $ 34,414 $ 239,638

Reference E-3 E-1 E,E-1

Cash Disbursements E-5 $ 4,766,868

Encumbrances Payable E-17 3,021

Deferred Charges E-8 20,745

Due to Current Fund E-1 I 207,601

Accrued Interest on Bonds and Notes E-24 77,713

$ 5,075,948



GENERAL FIXED ASSETS ACCOUNT GROUP AS OF DECEMBER 31,2016 AND 2015

2016

ASSETS

Land $ 15,993,700 Land Improvements 2,187,390 Buildings and Building Improvements 37,046,3 I 9 Machinery and Equipment 7,606,121

Total Assets $ 62,833,530

LIABILITIES AND RESERVES

EXHIBITF

2015

$ 15,993,700 2,187,390

36,882,784 7,212,224

$ 62,276,098

Investment in General Fixed Assets $ 62,833,530 $ 62,276,098


NOTES TO FINANCIAL STATEMENTS

CITY OF RAHWAY NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2016 AND 2015

NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. Reporting Entity

The City of Rahway (the "City") was incorporated in 1858 and operates under the Faulkner Act, an elected Mayor and Council Plan B form of government. The Mayor and nine members of the City Council are elected to four-year terms. Six members of the Council are elected from each of six wards. Three Council members are elected at-large at the same time as the Mayor, two years after the ward seats are up for an election. Under the City's form of government, all executive and administrative authority is rested in the office of the Mayor, who is the Chief Executive Officer of the City. The City Council exercises all legislative powers including final adoption of the municipal budget and bond ordinances. A Business Administrator is appointed by the Mayor and is responsible for the implementation of the policies of the Mayor and Council, the administration of all City affairs and for the day to day operations of the City. The Business Administrator is the Chief Administrator Officer of the City. The City's major operations include public safety, road repair and maintenance, sanitation, fire protection, recreation and parks, health services, and general administrative services.

GASB requires the financial reporting entity to include both the primary government and component units. Component units are legally separate organizations for which the City is financially accountable. The City is financially accountable for an organization if the City appoints a voting majority of the organization's governing board and (1) the City is able to significantly influence the programs or services performed or provided by the organization; or (2) the City is legally entitled to or can otherwise access the organization's resources; the City is legally obligated or has otherwise assumed the responsibility to finance the deficits of, or provide fmancial support to, the organization; or the City is obligated for the debt of the organization. Component units may also include organizations that are fiscally dependent on the City in that the City approves the budget, the issuance of debt or the levying of taxes. The City is not includable in any other reporting entity as a component unit.

The financial statements contained herein include only those boards, bodies, officers or commissions as required by NJS 40A:5-5. Accordingly, the financial statements of the City do not include the municipal library, parking authority or redevelopment agency, which are considered component units under GAAP. Complete financial statements of the above component units can be obtained by contacting the Treasurer of the respective entity.

B. Description of Regulatory Basis of Accounting

The financial statements of the City of Rahway have been prepared on a basis of accounting in conformity with accounting principles and practices prescribed or permitted by the Division of Local Government Services, Department of Community Affairs, State of New Jersey (the "Division") which is a regulatory basis of accounting other than accounting principles generally accepted in the United States of America (GAAP). Such principles and practices are designed primarily for determining compliance with legal provisions and budgetary restrictions and as a means of reporting on the stewardship of public officials with respect to public funds. Under this method of accounting, the City accounts for its financial transactions through separate funds, which differ from the fund structure required by GAAP.

The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. GASB has adopted accounting statements to be used by governmental units when reporting financial position and results of operations in accordance with accounting principles generally accepted in the United States of America. (GAAP). The municipalities in the State of New Jersey do not prepare financial statements in accordance with GAAP and thus do not comply with all of the GASB pronouncements.

33


NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

C. Basis of Presentation Financial Statements

The City uses funds, as required by the Division, to report on its fmancial position and the results of its operations. Fund accounting is designed to demonstrate legal compliance and to aid financial administration by segregating transactions related to certain City functions or activities. The City also uses an account group, which is designed to provide accountability for certain assets that are not recorded in those Funds.

The City has the following funds and account group:

Current Fund - This fund is used to account for the revenues and expenditures for governmental operations of a general nature and the assets and liabilities related to such activities, including Federal and State grants not accounted for in another fund.

Trust Funds - These funds are used to account for assets held by the government in a trustee capacity. Funds held by the City as an agent for individuals, private organizations, or other governments are recorded in the Trust Funds.

Animal Control Fund - This fund is used to account for fees collected from dog and cat licenses and expenditures which are regulated by NJS 4:19-15.11.

Community Development Block Grant Fund - This fund is used to account for grant proceeds, program income and related expenditures for Federal Block grant entitlements.

Other Trust Fund - This fund is established to account for the assets and resources, which are held by the City as a trustee or agent for individuals, private organizations, other governments and/or other funds. These funds include dedicated fees/proceeds collected, developer deposits, payroll related deposits and funds deposited with the City as collateral.

Self Insurance Fund - This fund is used to account for the resources and expenditures for workers compensation and unemployment self-insurance claims and premiums.

General Capital Fund - This fund is used to account for the receipt and disbursement of funds used and related fmancial transactions related to the acquisition or improvement of general capital facilities and other capital assets, other than those acquired in the Current Fund.

Water Utility Fund- This fund is used to account for the revenues and expenditures for the operation of the City's water utility and the assets and liabilities relative to such activities. Acquisition or improvement of capital facilities and other capital assets for the water utility is accounted for in the capital section of the fund.

34



C. Basis of Presentation- Financial Statements (Continued)

Sewer Utility Fund- This fund is used to account for the revenues and expenditures for the operation of the City's sanitary sewerage system and the assets and liabilities relative to such activities. Acquisition or improvement of capital facilities and other capital assets for the sewer utility is accounted for in the capital section of the fund.

General Fixed Assets Account Group - This account group is used to account for all general fixed assets of the City, other than those accounted for in the water and sewer utility funds. The City's infrastructure is not reported in the account group.

Comparative Data - Comparative data for the prior year has been presented in the accompanying fmancial statements in order to provide an understanding of changes in the City's financial position and operations. However, comparative data have not been presented in all statements because their inclusion would make certain statements unduly complex and difficult to understand.

Reclassifications - Certain reclassifications may have been made to the December 31, 2015 balances to conform to the December 31 , 2016 presentation.

Financial Statements- Regulatory Basis

The GASB Codification also requires the financial statements of a governmental unit to be presented in the basic financial statements in accordance with GAAP. The City presents the regulatory basis financial statements listed in the table of contents which are required by the Division and which differ from the basic fmancial statements required by GAAP. In addition, the Division requires the regulatory basis financial statements listed in the table of contents to be referenced to the supplementary schedules. This practice differs from reporting requirements under GAAP.

D. Measurement Focus and Basis of Accounting

The accounting and financial reporting treatment is determined by the accounting principles and p)'actices prescribed by the Division in accordance with the regulatory basis of accounting. Measurement focus indicates the type of resources being measured. The basis of accounting indicates the timing of transactions or events for recognition in the fmancial statements.

The City of Rahway follows a modified accrual basis of accounting. Under this method of accounting, revenues, except State/Federal Aid, are recognized when received and expenditures are recorded when incurred. The accounting principles and practices prescribed or permitted for municipalities by the Division ("regulatory basis of accounting") differ in certain respects from accounting principles generally accepted in the United States of America (GAAP) applicable to local government units. The more significant differences are as follows:

Cash and Investments - Cash includes amounts in demand deposits as well as short-term investments with a maturity date within three months of the date acquired by the government. Investments are reported at cost and are limited by N.J.S.A. 40A:5-15.1 et seq. GAAP requires that all investments be reported at fair value.

Inventories - The costs of inventories of supplies for all funds are recorded as expenditures at the time individual items are purchased. The costs of inventories are not included on the various balance sheets. GAAP requires inventories to be recorded as assets in proprietary-type funds.

35



D. Measurement Focus and Basis of Accounting (Continued)

Property Tax Revenues/Receivables - Real property taxes are assessed locally, based upon the assessed value of the property. The tax bill includes a levy for Municipal, County, and School purposes. The bills are mailed annually in June for that calendar year's levy. Taxes are payable io four quarterly iostallments on February I, May 1, August I, and November I. The amounts of the first and second installments are determined as one-quarter of the total tax levied agaiost the property for the preceding year. The installment due the third and fourth quarters is determined by taking the current year levy less the amount previously charged for the first and second installments, with the remaioder being divided equally. If unpaid on these dates, the amount due becomes delinquent and subject to ioterest at 8% per annum, or I 8% on any delioquency amount in excess of$ I ,500. A penalty of up to 6% of the delioquency may be imposed on a taxpayer with a delioquency in excess of$ I 0,000 who fails to pay that delinquency prior to the end of the fiscal year in which the charges become delinquent. The school levy is turned over to the Board of Education as expenditures are iocurred, and the balance, if any, must be transferred as of June 30, of each fiscal year. County taxes are paid quarterly on February 15, May 15, August 15 and November 15, to the County by the City. When unpaid taxes or any municipal lien, or part thereof, on real property, remains in arrears on April first io the year following the calendar year levy when the same became io arrears, the collector io the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placiog the property on a standard tax sale. The City also has the option when unpaid taxes or any municipal lien, or part thereof, on real property remains in arrears on the I I •• day of the eleventh month in the fiscal year when the taxes or lien became io arrears, the collector in the municipality shall, subject to the provisions of the New Jersey Statutes, enforce the lien by placing property on an accelerated tax sale, provided that the sale is conducted and completed no earlier than io the last month of the fiscal year. The City may iostitute annual io rem tax foreclosure proceediogs to enforce the tax collection or acquisition of title to the property. In accordance with the accountiog principles prescribed by the State of New Jersey, current and delinquent taxes are realized as revenue when collected. Sioce delioquent taxes and liens are fully reserved, no provision has been made to estimate that portion of the tax receivable and tax title liens that are uncollectible. GAAP requires property tax revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both levied and available), reduced by an allowance for doubtful accounts.

Miscellaneous Revenues/Receivables - Miscellaneous revenues are recognized on a cash basis. Receivables for the miscellaneous items that are susceptible to accrual are recorded with offsettiog reserves on the balance sheet of the City's Current Fund. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual (i.e., when they are both measurable and available).

Utilitv Revenues/Receivables - Utility charges are levied quarterly based upon a flat service charge and if applicable, an excess consumption or usage charge. Revenues from these sources are recognized on a cash basis. Receivables that are susceptible to accrual are recorded with offsettiog reserves on the balance sheet of the City's water and sewer utility operatiog funds. GAAP requires such revenues to be recognized in the accounting period when they become susceptible to accrual, reduced by an allowance for doubtful accounts.

Grant and Similar Award Revenues/Receivables- Federal and State grants, entitlements or shared revenues received for purposes normally financed through the Current Fund are recognized when anticipated io the City's budget. GAAP requires such revenues to be recognized as soon as all eligibility requirements imposed by the grantor or provider have been met.

Property Acquired for Taxes - Property acquired for taxes is recorded io the Current Fund at the assessed valuation when such property was acquired, and is fully reserved. GAAP requires such property to be recorded as a capital asset io the goverrnnent-wide fmancial statements at fair value on the date of acquisition.

36




Interfunds - Interfund receivables in the Current Fund are recorded with offsetting reserves, which are created by charges to operations. Income is recognized in the year the receivables are liquidated. Interfund receivables in the other funds are not offset by reserves. GAAP does not require the establishment of an offsetting reserve for interfunds and, therefore, does not recognize income in the year liquidated.

Deferred Charges - Certain expenditures, operating deficits and other items are required to be deferred to budgets of succeeding years. GAAP requires expenditures, operating deficits and certain other items generally to be recognized when incurred, if measurable.

Appropriation Reserves - Appropriation reserves are recorded as liabilities and are available, until lapsed at the close of the succeeding year, to meet specific claims, commitments or contracts incurred during the preceding year. Lapsed appropriation reserves are recorded as additions to income. Appropriation reserves do not exist under GAAP.

Expenditures - Expenditures are recorded on the "budgetary" basis of accounting. Generally, expenditures are recorded when an amount is encumbered for goods or services through the issuance of a purchase order in conjunction with an encumbrance accounting system. Outstanding encumbrances at December 31, are reported as a cash liability in the financial statements. Unexpended or uncommitted appropriations, at December 31, are reported as expenditures through the establishment of appropriation reserves unless cancelled by the governing body. GAAP requires expenditures to be recognized in the accounting period in which the fund liability is incurred, if measurable, except for unmatured interest on general long-term debt, as well as expenditures related to compensated absences and claims and judgements, which are recognized when due.

Encumbrances - Contractual orders outstanding at December 31, are reported as expenditures and liabilities through the establishment of an encumbrance payable. Encumbrances do not constitute expenditures or liabilities under GAAP.

Compensated Absences - Expenditures relating to obligations for unused vested accumulated vacation and sick leave are not recorded until paid; however, municipalities may establish and budget reserve funds subject to NJSA 40A:4-39 for the future payment of compensated absences. GAAP requires that the amount that would normally be liquidated with expendable available financial resources be recorded as an expenditure in the operating funds and the remaining obligations are recorded as a long-term obligation in the government-wide fmancial statements.

Tax Appeals and Other Contingent Losses - Losses arising from tax appeals and other contingent losses are recognized at the time a decision is rendered by an administrative or judicial body; however, municipalities may establish reserves transferred from tax collections or by budget appropriation for future payments of tax appeal losses. GAAP requires such amounts to be recorded when it is probable that a loss has been incurred and the amount of such loss can be reasonably estimated.

37

CITY OF RAHWAY NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER31, 2016 AND 2015



General Fixed Assets - In accordance with NJAC 5:30-5.6, Accounting for Governmental Fixed Assets, the City of Rahway has developed a fixed assets accounting and reporting system. Fixed assets are defined by the City as assets with an initial, individual cost of $2,000 and an estimated useful life in excess of two years.

General fixed assets used in governmental operations (general fixed assets) are accounted for in the General Fixed Assets Account Group. Public domain ("infrastructure") general fixed assets consisting of certain improvements other than buildings, such as roads, bridges, curbs and gutters, and streets and sidewalks are not capitalized.

General fixed Assets purchased after July I, 2002 are stated as cost. Donated fixed assets are recorded at estimated fair market value at the date of donation.

Fixed Assets purchased prior to July I, 2002 are stated as follows:

Land Buildings and Improvements Machinery and Equipment

No depreciation has been provided for in the financial statements.

Assessed Value Estimated Historical Cost Estimated Historical Cost

Expenditures for construction in progress are recorded in the General Capital Fund until such time as the construction is completed and put into operation for general fixed assets.

Accounting for utility fund "fixed capital" remains unchanged under NJAC 5:30-5.6.

Property and equipment purchased by the water and sewer utility funds are recorded in the capital account at cost and are adjusted for disposition and abandonment. The amounts shown do not purport to represent reproduction costs or current value. Contributions in aid of construction are not capitalized. The balance in the Reserve for Amortization and Deferred Reserve for Amortization accounts in the Utility Capital Funds represents charges to operations for the costs of acquisitions of property, equipment and improvements. The utilities do not record depreciation on fixed assets.

GAAP requires that capital assets be recorded in proprietary-type funds as well as the government-wide financial statement at historical or estimated historical cost if actual historical cost is not available. In addition, GAAP requires depreciation on capital assets to be recorded in proprietary-type funds as well as in the government-wide financial statements.

Use of Estimates - The preparation of financial statements requires management of the City to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of accrued revenues and expenditures during the reporting period. Accordingly, actual results could differ from those estimates.

38


NOTE 2 STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

A. Budgets aud Budgetary Accounting - An annual budget is required to be adopted and integrated into the accounting system to provide budgetary control over revenues and expenditures. Budget amounts presented in the accompanying financial statements represent amounts adopted by the City and approved by the State Division of Local Government Services as per N.J.S.A. 40A:4 et seq.

B.

The City is not required to adopt budgets for the following funds:

Trust Funds General Capital Fund Utility Capital Funds

The governing body is required to introduce and approve the annual budget no later than February I 0, of the fiscal year. The budget is required to be adopted no later than March 20, and prior to adoption must be certified by the Division of Local Government Services, Department of Community Affairs, State of New Jersey. The Director of the Division of Local Government Services, with the approval of the Local Finance Board may extend the introduction and approval and adoption dates of the municipal budget. The budget is prepared by fund, function, activity and line item (salary or other expense) and includes information on the previous year. The legal level of control for appropriations is exercised at the individual line item level for all operating budgets adopted. The governing body of the municipality may authorize emergency appropriations and the inclusion of certain special items of revenue to the budget after its adoption and determination of the tax rate. During the last two months of the fiscal year, the governing body may, by a 2/3 vote; amend the budget through line item transfers. Management has no authority to amend the budget without the approval of the governing body. Expenditures may not legally exceed budgeted appropriations at the line item level. During 2016 and 2015 the City Council increased the original budget by $126,625 and $510,487. The increase for 2016 was funded by additional aid allotted to the City. The increase for 2015 was funded by additional aid allotted to the City in the amount of $150,487, as well as an emergency resolution of $360,000 for water utility expenditures. In addition, the governing body approved several budget transfers during 2016 and 2015.

Excess Exl!enditures Over Al!l!rOl!riations

The following is a summary of expenditures in excess of available appropriations. The overexpended appropriations resulted in unfavorable variances.

Modified Unfavorable 2016 Budget Actual Variance Water Utility Ogerating Fund

Appropriation Reserves Other Expenses $ 20,528 $ 54,633 $ 34,105

2015 Water Utility Ogerating Fund

Other Expenses $ 1,060,000 $ 1,089,154 $ 29,154

Sewer Utility Ogerating Fund Debt Service

Principal and Interest on Loans 133,000 153,745 20,745

In accordance with the regulatory basis of accounting, the above variances or overexpenditures were recorded as deferred charges on the balance sheet of the respective fund at year end and are required to be funded in the succeeding year's budget. GAAP does not permit the deferral of overexpenditures at year end.

39

CITY OF RAHWAY NOTES TO FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31,2016 AND 2015

NOTE 3 CASH DEPOSITS AND INVESTMENTS

The City considers petty cash, change funds, cash in banks, certificates of deposit and deposits with the New Jersey Cash Management Fund as cash and cash equivalents.

A. Cash Deposits

The City's deposits are insured through either the Federal Deposit Insurance Corporation (FDIC), National Credit Union Share Insurance Fund (NCUSIF), Securities Investor Protection Corporation (SIPC) or New Jersey's Governmental Unit Deposit Protection Act (GUDPA). The City is required to deposit their funds in a depository which is protecting such funds pursuant to GUDPA. The New Jersey Governmental Unit Deposit Protection Act requires all banks doing business in the State of New Jersey to pledge collateral equal to at least 5% of the average amount of its public deposits and I 00% of the average amount of its public funds in excess of the lesser of 75% of its capital funds or $200 million for all deposits not covered by the FDIC.

Bank balances are insured up to $250,000 in the aggregate by the FDIC for each bank. NCUSIF insures credit union accounts up to $250,000 in the aggregate for each financial institution. SIPC replaces cash claims up to a maximum of $250,000 for each failed brokerage firm. At December 31,2016 and 2015, the book value of the City's deposits were $38,455,626 and $41,616,088 and bank and brokerage firm balances of the City's deposits amounted to $38,867,556 and $42,883,139, respectively. The City's deposits which are displayed on the various fund balance sheets as "cash" are categorized as:

Bank Balance Depository Account 2016 2015

Insured $ 38,867,556 ~$~~4~2,~8~83dc,1~3~9

Custodial Credit Risk - Deposits - Custodial credit risk is the risk that in the event of a bank failure, the government's deposits may not be returned to it. The City does not have a formal policy for custodial credit risk. As of December 31, 2016 and 2015, the City's bank balances were not exposed to custodial credit risk.

B. Investments

The City is permitted to invest public funds in accordance with the types of securities authorized by N.J.S.A. 40A:5-15 .I. Investments include bonds or other obligations of the United States or obligations guaranteed by the United States of America, Government Money Market Mutual Funds, bonds or other obligations of the City or bonds or other obligations of the school districts which are a part of the City or school districts located within the City, Local Government investment pools, and agreements for the repurchase of fully collateralized securities, if transacted in accordance with NJSA 40A:5-15.1 (8a-8e).

As of December 31, 2016 and 2015 the City had no outstanding investments.

Interest earned in the General Capital Fund, Animal Control Fund and certain Other Trust Funds are assigned to the Current Fund in accordance with the regulatory basis of accounting. Interest earned in the Utility Capital Funds are assigned to the Utility Operating Funds in accordance with the regulatory basis of accounting.

40


NOTE 4 TAXES AND UTILITY CHARGES RECEIVABLE

Receivables at December 31, 2016 consisted of the following:

Current 2016 Property Taxes $ 1,431,810

Tax Title Liens 422,273

Utility Rents $

$ 1,854,083 $

Utility Water Sewer Total

$ 1,431,810

422,273

868,109 $ 367,953 1,236,062

868,109 $ 367,953 $ 3,090,145

In 2016, the City collected $1,809,776 and $1,178,203 from delinquent taxes and utility charges and fees, which represented 83% and 100% of the delinquent tax, water and sewer charges receivable at December 31, 2015.

Receivables at December 31, 2015 consisted of the following:

Utility Current Water Sewer Total

2015 Property Taxes $ 1,786,381 $ 1,786,381

Tax Title Liens 395,011 395,011

Utility Rents $ 828,397 $ 349,806 1,178,203

$ 2,181,392 $ 828,397 $ 349,806 $ 3,359,595

In 2015, tbe City collected $1,202,752 and $1,011,302 from delinquent taxes and utility charges and fees, which represented 74% and 100% of the delinquent tax, water and sewer charges receivable at December 31, 2014.

41


NOTE 5 DUE TO/FROM OTHER FUNDS

As of December 31, interfund receivables and payables that resulted from various interfund transactions were as follows:

Current Fund Trust Fund:

Animal Control Other Trust Community Development Self Insurance

General Capital Fund Water Utility Fund:

Operating Capital

Sewer Utility Fund: Operating Capital

Total

$

$

Due from Other Funds

539,969

605,362

43,914 1,120,619

1,589,986

2,495,762 798,916

7,194,528

Due to Due from Other Funds Other Funds

$ 2,045,082 $ 1,006,759

10,717 26,538 1,184,969

451,845 17,564

2,328,090

2,495,762 780,266 1,222,679

941,905 394,319 550,000

$ 7,194,528 $ 6,261,967

$

$

Due to Other Funds

2,499,229

12,394

456,845

198,566

1,314,372 1,780,266

295

6,261,967

The above balances are the result of expenditures being paid by one fund on behalf of another and/or to cover cash balances which were in an overdraft position.

The City expects all interfund balances to be liquidated within one year.

42


NOTE 6 DEFERRED CHARGES TO BE RAISED IN SUCCEEDING BUDGETS

Under the regulatory basis of accounting, certain expenditures are required to be deferred to budgets of succeeding years. At December 31, the following deferred charges are reported on the balance sheets of the following funds:

Subsequent Year Balance to Balance Budget Succeeding

December 31 ArmroQriation Budgets 2016 Current Fund

Special Emergency Authorizations (40A:4-55) $ 224,000 $ 224,000 General Capital Fund

Cancelled Grants Receivable 140,279 $ 140,279 Water Utility Operating Fund

Overexpenditure of Appropriation Reserves 34,105 34,105

$ 398,384 $ 258,105 $ 140,279

Subsequent Year Balance to Balance Budget Succeeding

December 31 AQQrogriation Budgets 2015 Current Fund

Special Emergency Authorizations (40A:4-55) $ 448,000 $ 224,000 $ 224,000 General Capital Fund

Cancelled Grants Receivable 140,279 140,279 Water Utility Operating Fund

Emergency Appropriation 360,000 360,000 Overexpenditure of Appropriations 29,154 29,154

Sewer Utility Opearating Fund Overexpenditure of Appropriations 20,745 20,745

$ 998,178 $ 633,899 $ 364,279

43


NOTE 7 FUND BALANCES APPROPRIATED

Under the regulatory basis of accounting, fund balances in the Current Fund and Utility Operating Funds are comprised of cash surplus (fund balance) and non-cash surplus (fund balance). All or part of cash surplus as of December 31 may be anticipated in the subsequent year's budget. The non-cash surplus portion of fund balance may be utilized in the subsequent year's budget with the prior written consent of the Director of the Division of Local Government Services if certain guidelines are met as to its availability. Fund balances at December 31, which were appropriated and included as anticipated revenue in their own respective fund's budget for the succeeding year were as follows:

2016

Fund Balance December 31

Current Fund Cash Surplus $ 5,382,411 Non-Cash Surplus 648,575

$ 6,030,986

Water Utility Operating Fund

Cash Surplus $ 621,529 Non-Cash Surplus 34,105

$ 655,634

Sewer Utility Operating Fund Cash Surplus $ 1,766,196 Non-Cash Surplus

$ 1,766,196

Utilized in Subsequent Year's Budget

$ 2,200,000

$ 2,200,000

$

250,000

$ 250,000

44

Fund Balance December 31

$ 4,867,131 891,545

$ 5,758,676

$ 166,831

$ 166,831

$ 1,995,451 20,745

$ 2,016,196

2015 Utilized

in Subsequent Year's Budget

$ 2,300,000

$ 2,300,000

$

250,000

$ 250,000


NOTE 8 FIXED ASSETS

A. General Fixed Assets

The following is a summary of changes in the general fixed assets account group for the years ended December 31, 2016 and 2015.

Balance, Balance, December 31 , December 31 ,

2015 Increases Decreases 2016 2016 Land $ 15,993,700 $ 15,993,700 Land Improvements 2,187,390 2,187,390 Buildings and Building Improvements 36,882,784 $ 163,535 37,046,319 Machinery and Equipment 7,212,224 393,897 7,606,121

$ 62,276,098 $ 557,432 $ $ 62,833,530

Balance Balance, December 31 , December 31,

2014 Increases Decreases 2015 2015 Land $ 15,993,700 $ 15,993,700 Land Improvements 2,187,390 2,187,390 Buildings and Building Improvements 36,798,556 $ 84,228 36,882,784 Machinery and Equipment 6,792,865 419,359 7,212,224

$ 61,772,511 $ 503,587 $ $ 62,276,098

45


NOTE 8 FIXED ASSETS (Continued)

B. Utility Funds Fixed Assets

The following is a summary of changes in the utility fund fixed assets for the years ended December 31, 2016 and 2015.

Balance, Balance, December 31 , December 31 ,

Water Utility Fund 2015 Increases Decreases 2016

2016 Fixed Capital

System and System Improvements $ 14,357,915 $ 14,357,915 Land, Plant, Building and Building

Improvements 18,116,708 $ 2,700,000 20,816,708 Vehicles and Equipment 573,836 573,836

$ 33,048,459 $ 2,700,000 $ $ 35,748,459

Balance Balance, December 31, December 31,

2014 illcreases Decreases 2015

2015 Fixed Capital

System and System Improvements $ 14,357,915 $ 14,357,915 Land, Plant, Building and Building

Improvements 18,116,708 18,116,708 Vehicles and Equipment 573,836 573,836

$ 33,048,459 $ $ $ 33,048,459

46


NOTE 8 FIXED ASSETS (Continued)

B. Utility Funds Fixed Assets (Continued)

Sewer Utility Fund

2016 Fixed Capital

System and System hnprovements

2015 Fixed Capital

System and System hnprovements

Balance December 31,

2015

$ 3,655,428


2014

$ 3,655,428

47

illcreases Decreases

Increases Decreases

Balance, December 31 ,

2016

$ 3,655,428

Balance, December 31,

2015

$ 3,655,428


NOTE 9 MUNICIPAL DEBT

The Local Bond Law governs the issuance of bonds and notes used to finance capital expenditures. General obligation bonds have been issued for both general capital and utility capital fund projects. All bonds are retired in serial installments within the statutory period of usefulness. Bonds issued by the City are general obligation bonds, backed by the full faith and credit of the City. Bond anticipation notes, which are issued to temporarily fmance capital projects, must be paid off within ten years and four months or retired by the issuance of bonds.

The City's debt is summarized as follows:

Issued General

Bonds, Notes and Loans Water Utility

Bonds and Notes Sewer Utility Bonds, Notes and Loans

Less Funds Temporarily Held to Pay Bonds and Notes

Net Debt Issued

Authorized But Not Issued General

Bonds and Notes Water Utility

Bonds and Notes Sewer Utility Bonds and Notes

Net Bonds and Notes Issued and Authorized But Not Issued

$

$

48

49,968,660 $ 52,143,371

25,669,498 26,526,251

3,586,365 3,853,972

79,224,523 82,523,594

203,870 477,100

79,020,653 82,046,494

1,997,616 1,703,045

6,696,100 6,452,970

750,000

88,464,369 ;;,.$~.,;;9.;;.0,;;;,2.;,;02;;;,5;;,.;0;,;..9


NOTE 9 MUNICIPAL DEBT (Continued)

Statutory Net Debt

The statement of debt condition that follows is extracted from the City's Annual Debt Statement and indicates a statutory net debt of2.11% and 2.12% at December 31, 2016 and 2015, respectively.

Gross Debt Deductions Net Debt 2016 General Debt $ 51,966,276 $ 91,978 $ 51,874,298

School Debt 19,025,000 19,025,000

Utility Debt 36,701,963 35,706,933 995,030

Debt Guarantees (Note 9) 12,210,000 12,210,000

Total $ 119,903,239 $ 67,033,911 $ 52,869,328

Gross Debt Deductions Net Debt

2015 General Debt $ 53,846,416 $ 715,208 $ 53,131,208

School Debt 20,080,000 20,080,000

Utility Debt 36,833,193 35,695,266 1,137,927

Debt Guarantees (Note 9) 13,235,000 13,235,000

Total $ 123,994,609 $ 69,725,474 $ 54,269,135

Statutory Borrowing Power

The City's remaining borrowing power under N.J.S. 40A:2-6, as amended, at December 31, was as follows:

3-1/2% of Equalized Valuation Basis (Municipal) Less: Net Debt

Remaining Borrowing Power

$

$

49

87,660,922 $ 52,869,328

89,686,822 54,269,135

34,791,594 $~~3,:;;5.:::,4,:;.;17:,:.6;,::8~7



A. Long-TermDebt

The City's long-term debt consisted of the following at December 31:

General Obligation Bonds

The City levies ad valorem taxes to pay debt service on general obligation bonds. General obligation bonds outstanding at December 31 are as follows:

2016 2015 $4,319,000,2006 Bonds, due in an annual installment of$275,000 on June 15,2016, interest at 4.25%. $ 275,000

$7,945,000, 2006 Refunding Bonds, due in an annual installment of$478,887on December 15,2016,

interest at 4.00%. These bonds were refunded in 2016. 5,447,932

$11,650,000,2011 Bonds, due in annual installments of $560,000 to $700,000 through

April 15, 2020, interest at 4.00%. $ 2,600,000 10,150,000

$4,994,538,2012 Refunding Bonds due in annual installments of$451,389 to $509,903 through

December I, 2023, interest at 2.125% to 3.00% 3,439,753 3,895,322

$7,425,000, 2013 Bonds, due in annual installments of $325,000 to $515,000 through

September 15,2032, interest at 3.00% to 4.00% 6,500,000 6,815,000

$1,720,000,2014 Refunding Bonds, due in annual installments of $230,000 to $270,000 through

June 15, 2023, interest at 3.00% to 4.00% 1,710,000 1,710,000

$9,460,000,2015 Bonds, due in annual installments of $350,000 to $700,000 through

August I, 2013, interest at 3.00% to 4.00% 9,l!O,OOO 9,460,000

$4,463,056,2015 Refunding Bonds, due in annual installments of$476,780 to $516,102 through

October!, 2024, interest at 4.00% to 4.25% 3,942,039 4,418,819

50



A. Long-Term Debt (Continued)

General Obligation Bonds (Continued)

$8,627,000,2016 Bonds, due in annual installments of$400,000 to $797,000 through August 1, 2031, interest at 3.00% to 4.00%.

$11,683,178, 2016 Refunding Bonds, due in annual installments of $484,404 to $1 ,179,92I through Aprill5, 2030, interest at 2.00% to 4.00%.

General Intergovernmental Loans Payable

$ 8,627,000

II,683,I78

$ 4 7,61 I ,970 "-$ ~=-'4,;;;,2,""1 7,;,;2;;,;.,0;.;7,;;.3

The City has entered into loan agreements with the State of New Jersey for the financing relating to the various projects within the City. The City levies ad valorem taxes to pay debt service on general intergovernmental loans issued. General intergovernmental loans outstanding at December 3 I are as follows:

$249,722, 1998 Green Acres Loan due in a Semi-annual installment of $8,407 in June, 2016, interest at 2.00%

$375,000, 1999 Green Acres Loan due in Semi-annual installments of$16,964 to $17,478 through August, 2018, interest at 2.00%

$4 77,200, 2006 Green Acres Loan due in Semi-annual installments of$I2,160 to $I4,690 through August, 2026, interest at 2.00%

$300,000, 2002 New Jersey Downtown hnprovement Zone Loan due in annual an installment of $20,000, interest free.

$750,000, 2003 New Jersey Redevelopment Authority Loan (Amortization schedule not determined at audit date)

51

$

$

$ 8,407

68,880 102,305

267,740 291,699

20,000 40,000

187,500 187,500

544,120 ;;;_$ ~~.;;.62;;;;;94',9.;;1.,;;.1




Utility Bonds

The City pledges revenue from operations to pay debt service on utility bonds issued. The water and sewer utility bonds outstanding at December 31 are as follows:

Water Utility

$2,775,000, 2006 Bonds, due in an annual installment of$165,000 on

June 15,2016, interest at 4.25%

$5,190,000, 2009 Refunding Bonds, due in annual installments of $655,000 to $680,000 through

December I, 2018, interest at 3.0% to 3.5%

$1,670,000,2014 Refunding Bonds, due in annual installments of $225,000 to $265,000 through June 15, 2023, intrest at 3.0% to 4.0%

Sewer Utility

Allocated $410,828,2006 Refunding Bonds, due in an annual installment of$27,664 on December 15, 2016.

These bonds were refunded in 2016.

Allocated $980,462, 2012 Refunding Bonds, due in annual installments of$88,611 to $100,097 through December 15, 2023

interest at 2.125% to 3.00%

Allocated $76,944, 2015 Refunding Bonds, due in annual

installments of $8,220 to $8,898 through October I, 2024 interest at 3.00% to 4.00%

Allocated $251 ,822, 2016 Refunding Bonds, due in annual installments of $23,269 to $26,889 through April 15, 2026, interest at 2.00% to 4.00%

52

$

$

$

$

$ 165,000

1,335,000 1,970,000

1,670,000 1,670,000

3,005,000 ;:;,$ ~=3 '"'80;;;5;,;, 0;;,;;0;;;;,0

$ 297,068

675,247 764,678

67,961 76,181

251,822

995,030 ;:;.$ ~....:,;1 ·~13~7~,9;,;;2~7




Sewer Utility Intergovernmental Loans Payable

The City has entered into loan agreements with the State of New Jersey for the fmancing relating to the improvement of the City's sewer infrastructure. The City pledges revenue from operations to pay debt service on utility intergovernmental loans issued. Utility intergovernmental loans outstanding of the sewer utility at December 31 are as follows:

$2,606,505, 2002 Environmental Infrastructure Loans, due in annual installments of$17,985 to $133,625 through August 1, 2022, interest at 3.00% to 5.25% $ 745,467 $ 859,252

The City's principal and interest for long-term debt issued and outstanding as of December 31, 2016 is as follows:

Calendar General Capital Water Utility Sewer Utilitv Year Principal Interest Principal Interest Principal Interest Total

2017 $ 3,409,140 $ 1,659,273 $ 880,000 $ 102,208 $ 244,462 $ 48,996 $ 6,344,079

2018 3,538,619 1,538,324 905,000 75,834 249,080 41,811 6,348,668

2019 3,625,761 1,415,333 225,000 44,189 253,776 34,549 5,598,608

2020 3,741,777 1,292,478 245,000 34,829 256,032 28,028 5,598,144

2021 3,867,901 1,162,898 245,000 25,075 261,390 21,176 5,583,440

2022-2026 16,968,392 3,755,212 505,000 20,641 475,757 23,295 21,748,297

2027-2031 12,302,000 1,267,950 13,569,950

2032 515,000 20,600 535,600

Amortization

Unavailable 187,500 187,500

$ 48,156,090 $ 12,112,068 $ 3,005,000 $ 302,776 $ 1,740,497 $ 197,855 $ 65,514,286

53




Advance Refundings of Debt

On September 30, 2016, the City issued $11,935,000 in General Obligation Refunding Bonds having an interest rate of 2.00% to 4.00%. These bonds were issued in order to advance refund certain principal maturities and certain interest payments of various General Obligation Refunding Bonds of the City. The total bond principal defeased was $12,210,000 and the total interest payments defeased to the call date was $4,388,594. The net proceeds of$13,336,762 (after payment of underwriting fees, insurance and other issuance costs) were used to purchase U.S. Government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments. As a result, the advance refunding met the requirements of an in-substance debt defeasance and the refunded bond liability was removed from the General Capital Fund and Sewer Utility Capital Fund. This advance refunding resulted in an increase of cash flows over the life of these bond issues in the amount $985,633; however, the economic gain (difference between the present value of the old and new debt service payments) was $987,853. The advanced refunding was undertaken to reduce total debt service payments over the next nine years by $1,180,685.

Debt Guarantees

Rahway Redevelopment Agency-Public Library Project

The Rahway Redevelopment Agency (the "Agency") is a public body corporate and politic created by the City pursuant to the Redevelopment Law by adoption of an ordinance on January 5, 2001. The City has designated the Agency as redeveloper of a public/private project to construct and operate a new free public library for the City's use. In connection with said project, the Agency on October 29, 2001 issued $12,000,000 City-secured Public Library project notes. Such project notes were subsequently refunded on October 17, 2002 by the issuance of $4,665,000 City-secured Public Library Revenue Bonds, Series 2002 and $5,780,000 City-secured Public Library Project Notes, Series 2002. The Series 2002 notes were then refunded on October 29, 2003 by the issuance of $3,500,000 Citysecured Public Library Project Notes, Series 2003. The Series 2003 notes were refunded on October 29, 2004 by the issuance of $2,000,000 City-secured Public Library Revenue Bonds, Series 2004, and $2,500,000 City-secured Public Library Project Notes, Series 2004. The Series 2004 Project Notes were subsequently retired on October 29, 2005 from grant proceeds received as part of the Library project. The Series 2002 bonds were refunded in 2012 through the issuance of $4,505,000 City-Secured Public Library Revenue Refunding Bonds. The Series 2004 bonds were refunded in 2014 through the issuance of $1 ,260,000 City-Secured Public Library Revenue Refunding Bonds. Said bonds and notes are secured through a "Use, Occupancy and Capital Grant Agreement" (the "Agreement"), between the Rahway Redevelopment Agency and the City of Rahway.

The obligation of the City to pay grants and to pay all other amounts provided for under the agreement and to perform its obligations under the Agreement shall be absolute and unconditional.

54




Debt Guarantees (Continued)

Rahway Redevelopment Agency-Public Library Proiect (Continued)

The cost aud expense of the performance by the City of its obligations under this Capital Grant Agreement and the incurrence of auy liabilities of the City under this Capital Graul Agreement, including, without limitation, the obligation for the payment of all Basic Grants and additional Grants and all other amounts required to be paid by the City under this Capital Graul Agreement, is a direct, general aud irrevocable obligation, full faith aud credit pledge of the City for which the City is obligated to make any required payments under this Capital Grant Agreement out of the first fimds becoming legally available for such purpose, and to provide fimds for such payments, if not otherwise available, from the levy of ad valorem taxes upon all the taxable property in the City without limitation as to rate or amount, which obligation is not subject to appropriation. As of December 31, 2016 aud 2015, the Agency had outstanding $4,075,000 aud $4,650,000, respectively, subject to the City guarantee.

Rahway Redevelopment Agency- Arts District Extension

On September 15, 2008, the Rahway Redevelopment Agency issued $5,950,000 in tax exempt project notes and $1,550,000 in taxable project notes. The notes, which are guaranteed by the City, were used to (i) refund the $4,000,000 principal balloon payment due on the UClA loan; (ii) provide $3,500,000 for the design and construction of au outdoor amphitheater in the Rahway Arts District; and (iii) pay costs associated with the issuance of such notes. These notes were renewed for an additional year on September 15, 2009 and again on September 15, 2010. On September 8, 2011, the Agency issued $5,075,000 in City-secured Arts District Extension Revenue Bonds. As of December 31, 2016 and 2015, the Agency had outstanding $4,045,000 and $4,310,000, respectively, subject to City guarantee.

Rahway Parking Authority

The Parking Authority of the City of Rahway (the "Authority") is a public body corporate and politic created pursuant to the Parking Authority Law. The Authority has determined to finance the construction of a new multilevel parking garage in the City of Rahway (the "Project") through the issuance of revenue bonds, notes or other debt obligations, in an aggregate principal amount not to exceed $6,000,000 (the "Obligations"). The Obligations shall be general obligations of the Authority payable solely from the revenues of the Authority, including revenues generated by the Project. The Obligations shall also be secured by an Ordinance of the City of Rahway adopted September 8, 2003 unconditionally and irrevocably guaranteeing the payment of principal of and interest on the Obligations and the City shall, if necessary, be obligated to levy ad valorem taxes upon all the taxable property within the City for the payment thereof, without limitation as to rate or amount.

On December 3, 2003, the Authority issued $5,800,000 City-guaranteed Parking Revenue Bonds, Series 2003, subject to this agreement. On May 14,2013, the Authority issued $4,745,000 to refimd the 2003 Bonds. As of December 31, 2016 aud 2015, the Authority had outstanding $4,090,000 and $4,275,000, respectively, subject to the City guarantee.

The parties agree to hold each other harmless for any loss, damage or claim incurred or asserted resulting from the negligence of either party in performing their duties and responsibilities under this Agreement.

55




Changes in Long-Term Municipal Debt

The City's long-term capital debt activity for the years ended December 31, 2016 and 2015 were as follows:

Balance, Balance, Due December 31 December 31, Within

2015 Additions Reductions 2016 One Year 2016 General Capital Fund:

Bonds Payable $ 42, I 72,073 $ 20,310,178 $ 14,870,281 $ 47,611,970 $ 3,330,602 lntergovernmental Loans Payable:

Community Affairs Loan 40,000 20,000 20,000 20,000 NJ Redevelopment Authority 187,500 187,500 Green Acres Loans 402,411 65,791 336,620 58,538

General Capital Fund Long-Term Liabilities $42,801,984 $20,310,178 $ 14,956,072 $ 48,156,090 $ 3,409,140

Water Utility Capital Fund: Bonds Payable $ 3,805,000 $ $ 800,000 $ 3,005,000 $ 880,000

Water Utility Capital Fund Long-Term Liabilities $ 3,805,000 $ $ 800,000 $ 3,005,000 $ 880,000

Sewer Utility Capital Fund: Bonds Payable $ 1,137,927 $ 251,822 $ 394,719 $ 995,030 $ 124,398 lntergovernmental Loans Payable: NJ Environmentallnfrastructure 859,252 113,785 745,467 120,064

Sewer Utility Capital Fund Long-Term Liabilities $ 1,997,179 $ 251,822 $ 508,504 $ 1,740,497 $ 244,462

56




Changes in Long-Term Municipal Debt (Continued)

2015 General Capital Fund:

Bonds Payable Intergovernmental Loans Payable:

Community Affairs Loan NJ Redevelopment Authority Green Acres Loans

General Capital Fund Long-Term Liabilities

Water Utility Capital Fund: Bonds Payable

Water Utility Capital Fund Long-Term Liabilities

Sewer Utility Capital Fund: Bonds Payable Intergovernmental Loans Payable: NJ Environmental Infrastructure

Sewer Utility Capital Fund Long-Tem1 Liabilities

Balance, December 31

2014

$ 35,465,625

60,000 187,500 475,231

$36,188,356

$ 4,580,000

$ 4,580,000

$ 1,269,375

966,597

$ 2,235,972

Additions

$ 13,923,056

$ 13,923,056

$

$

$ 76,944

$ 76,944

57


Reductions 2015

$ 7,216,608 $ 42,172,073

20,000 40,000 187,500

72,820 402,411

$ 7,309,428 $42,801,984

$ 775,000 $ 3,805,000

$ 775,000 $ 3,805,000

$ 208,392 $ 1,137,927

107,345 859,252

$ 315,737 $ 1,997,179

$

$

$

$

$

$

Due Within

One Year

2,929,685

20,000

65,792

3,015,477

800,000

800,000

125,315

113,784

239,099



B. Short-Term Debt

The City's short-term debt activity for the years ended December 31, 2016 and 2015 was as follows:

Bond Antici[!ation Notes Balance,

Rate Maturity December 31, Renewed/ Retired/

00 Date 2015 Issued Redeemed

2016 General Capital Fund

Pumose

Road Resurfacings 2.00% 8/5/2016 $ 1,587,708 $ 1,587,708

Various General Improvements 1.50% 8/7/2015 3,352,129 3,352,129

Acquisitions and Improvements within a Duly

Designated Redevelopment Area 2.00% 8/5/2016 750,000 750,000

DPW and Fire Equipment 2.00% 8/5/2016 522,500 522,500

Traffice Maintenance Pickup Truck 1.50% 8/712015 147,250 147,250

Various High School Park Improvements 2.00% 8/5/2016 704,000 704,000

Sidewalk Replacement Program 2.00% 8/5/2016 142,500 142,500

Athletic Field Improvements 2.00% 8/5/2016 1,238,000 1,238,000

Tax Appeal Refunding -Merck 2.00% 8/5/2016 350,000 350,000

Imprvts. To 911 Dispatch Center 2.00% 8/5/2016 247,500 247,500

Acq. Of Police Ballistic Equipment 2.00% 8/5/2016 38,000 38,000 Investigation of Groundwater

Contamination and Remediation 2.00% 8/5/2016 190,400 190,400

Asbestos Remediation 2.00% 8/5/2016 71,400 71,400 Acquisition and Installation of

Police Body Cameras 1.50% 8/3/2017 $ 94,430 2015 Road Improvements 1.50% 8/3/2017 551,595 Various 2015 Improvements 1.50% 8/3/2017 904,760 Improvements to Crosswalk - East

Milton and Lenox 1.50% 8/3/2017 47,500 Environmental Remediation- Various 1.50% 8/3/2017 214,285

9,341,387 1,812,570 9,341,387

58

Balance,

December 31,

2016

$ 94,430 551,595

904,760

47,500 214,285

1,812,570



B. Short-Term Debt (Continued)

Bond Anticination Notes (Continued)

Balance, Balance,

Rate Maturity December 31, Renewed/ Retired/ December 31,

Gfl Date 2015 Issued Redeemed 2016

2016

Water Utility Caoital Fund

Pumose Various Water Improvements 2,00% 6/29/2017 $ 2,325,174 $ 2,279,911 $ 2,325,174 $ 2,279,911

Various Water Improvements ],50% 6/29/2017 3,027,570 2,957,706 3,027,570 2,957,706

Monroe St. Bridge Water Improvements LSO% 8/3/2017 146,202 144,303 146,202 144,303

Replace Water Main- Hamilton St. ],50% 8/3/2017 1,309,000 1,275,436 1,309,000 1,275,436

Water Treatment Plan Improvements 2.00% 6/29/2017 1,332,874 I ,280,242 1,332,874 1,280,242 Water Treatment Plan Improvements 0.00% 6/29/2017 14,580,431 14,726,900 14,580,431 14,726,900

22,721,251 22,664,498 22,721,251 22,664,498

Sewer Utility Capital Fund

Pumose

Sewer System Improvements L50% 8/3/2017 573,493 565,986 573,493 565,986

Impvts. To Donal Avenue Storm Sewer L50% 8/3/2017 133,300 129,882 133,300 129,882

Emergency Sinkhole Repair ],50% 8/3/2017 500,000 500,000 500,000 500,000

Flood Control Mitigation ],50% 8/3/2017 300,000 300,000 300,000 300,000 Storm Sewer - Kline Place ],50% 8/3/2017 350,000 350,000 350,000 350,000

1,856,793 1,845,868 1,856,793 1,845,868

Total Bond Anticipation Notes $ 33,919,431 $ 26,322,936 $ 33,919,431 $ 26,322,936

59




Bond Anticipation Notes (Continued)

Rate

00 2015

General CaQital Fund

Pumose

Road Resurfacings 2.00%

Streetscape Improvements 1.50%

Various General Improvements 1.50%

Acquisition of Equipment 1.50%

Acquisitions and Improvements within a Duly

Designated Redevelopment Area 2.00%

DPW and Fire Equipment 2.00%

Traffice Maintenance Pickup Truck 1.50%

Various High School Park Improvements 2.00%

Sidewalk Replacement Program 2.00%

Athletic Field Improvements 2.00%

Groundwater Remediation at Caniage

City Site 1.50%

Basketball Court Renovations 1.50%

Demolition and Improvements to

Various Redevelopment Properties 1.50%

Tax Appeal Refunding -Merck 2.00%

Acquisition of Fire Pumper and

Rebuild Street Sweeper 1.50%

Improvements to Elm Avenue 1.50%

Imprvts. To 911 Dispatch Center 2.00%

Acq. Of Police Ballistic Equipment 2.00% Investigation of Groundwater

Contamination and Remediation 2.00% Asbestos Remediation 2.00%

Maturity

Date

8/5/2016

8/7/2015

8/7/2015

8/7/2015

8/5/2016

8/5/2016

8/7/2015

8/5/2016

8/5/2016

8/5/2016

8/7/2015

8/7/2015

8/7/2015

8/5/2016

8/7/2015

8/7/2015

8/5/2016

8/5/2016

8/5/2016 8/5/2016

60

Balance, Balance,

December 31, Renewed/ Retired/ December 31,

2014 Issued Redeemed 2015

$ 3,202,065 $ 1,587,708 $ 3,202,065 $ 1,587,708

150,000 150,000

5,098,302 3,352,129 5,098,302 3,352,129

121,600 121,600

3,100,000 750,000 3,100,000 750,000

522,500 522,500 522,500 522,500

147,250 147,250 147,250 147,250

514,000 704,000 514,000 704,000

142,500 142,500 142,500 142,500

2,238,000 1,238,000 2,238,000 1,238,000

200,000 200,000

190,000 190,000

285,000 285,000

700,000 350,000 700,000 350,000

500,000 500,000

238,000 238,000

247,500 247,500 247,500 247,500

38,000 38,000 38,000 38,000

190,400 190,400 190,400 190,400 71,400 71,400

17,825,117 9,341,387 17,825,117 9,341,387




Bond Antici2ation Notes (Continued)

Balance, Balance, Rate Maturity December 31, Renewed/ Retired/ December 31,

00 Date 2014 Issued Redeemed 2015

2015 Water Utility Ca2ital Fund

Purpose

Various Water Improvements 1.25% 9/29/2015 $ 2,370,437 $ 2,370,437

Various Water Improvements 2.00% 8/5/2016 2,216,482 $ 5,352,744 2,216,482 $ 5,352,744

Monroe St. Bridge Water Improvements 2.00% 8/5/2016 148,101 146,202 148,101 146,202 Replace Water Main- Hamilton St. 2.00% 8/5/2016 1,309,000 1,309,000 1,309,000 1,309,000

Water Treatment Plan Improvements 2.00% 8/5/2016 1,332,563 1,332,874 1,332,563 1,332,874 Water Treatment Plan Improvements 0.0775% 6/29/2016 14,580,431 14,580,431

7,376,583 22,721,251 7,376,583 22,721,251

Sewer Utility Capital Fund

Puroose

Sewer System Improvements 2.00% 8/5/2016 581,000 573,493 581,000 573,493 Impvts. To Donal Avenue Storm Sewer 2.00% 8/5/2016 133,300 133,300 133,300 133,300

Emergency Sinkhole Repair 2.00% 8/5/2016 300,000 500,000 300,000 500,000 Flood Control Mitigation 2.00% 8/5/2016 300,000 300,000 300,000 300,000 Storm Sewer - Kline Place 2.00% 8/5/2016 350,000 350,000

1,314,300 1,856,793 1,314,300 1,856,793

Total Bond Anticipation Notes $ 26,516,000 $ 33,919,431 $ 26,516,000 $ 33,919,431

The purpose of these short-term borrowings was to provide resources for capital construction, acquisitions or improvement projects and other purposes permitted by State Local Bond Law NJSA 40A:2 et. seq. The amounts issued for governmental activities are accounted for in the General Capital Fund. The amounts issued for the water and sewer utility activities are accounted for in the Water and Sewer Utility Capital Fund.

State law requires that notes are to be issued for a period not exceeding one year and may be renewed from time to time for additional periods, none of which shall exceed one year. All bond anticipation notes, including renewals, shall mature and be paid not later than the first day of the fifth month following the close of the tenth fiscal year following the date of the original notes. In addition any note renewed beyond the third anniversary date of the original note, requires one legally payable installment to be paid.

61


NOTE 10 CONSTRUCTION AND OTHER SIGNIFICANT COMMITMENTS

As of December 31, the City had the following commitments with respect to unfinished capital projects:

Capital Project

Water Treatment Plant Filtration Improvements 2016 Road Resurfacing Project

New Interconnection Pipeline Water Treatment Plant Filter System Improvements Sinkhole Repair Kline Place Drainage Improvements Roadway Resurfacing

NOTE 11 OTHER LONG-TERM LIABILITIES

A. Compensated Absences

Construction Commitment

$7,459,226 573,342

$366,757 166,161 77,763 81,080

277,877

Estimated Date of

Completion

2018 2017

2016 2016 2016 2016 2016

Under the existing policies and labor agreements of the City, employees are allowed to accumulate (with certain restrictions) unused vacation benefits and sick leave over the life of their working careers and to redeem such unused leave time in cash (with certain limitations) upon death, retirement or by extended absence immediately preceding retirement. In addition, the City has entered into agreements with certain employees allowing for the deferral of a portion of such employees' salary increases. These salary deferrals will be paid in full upon termination of employment.

It is estimated that the current cost of such unpaid compensation and salary related payments would approximate $7,518,476 and $7,342,267 at December 31, 2016 and 2015, respectively. These amounts which is are considered material to the financial statements, are not reported either as an expenditure or liability.

As of December 31, 2016 and 2015, the City has reserved in the Other Trust Fund $631,318 and $632,977, respectively to fund compensated absences in accordance with NJSA 40A:4-39.

B. Deferred Pension Obligation

During the year ended December 31, 2009 the City elected to contribute 50% of its normal and accrued liability components of the PFRS and PERS obligations and deferred the remaining 50% in accordance with P.L. 2009, c.19. The deferred amount totaled $1,554,082 and will be paid back with interest over 15 years beginning in the 2012 year. The City is permitted to payoff the deferred PFRS and PERS pension obligations at any time. It is estimated that the total deferred liability including accrued interest (at 7.90% effective July I, 2012 and 8.25% prior to July 1, 2012) at December 31, 2016 and 2015 is $1,441,069 and $1,563,008, respectively.

62


NOTE 11 OTHER LONG-TERM LIABILITIES (Continued)

Changes in Other Long-Term Liabilities

Under the regulatory basis of accounting, certain other long-term liabilities which may be considered material to the financial statements are not reported either as an expenditure or a liability. However, under the regulatory basis of accounting, these other long-term liabilities and related information are required to be disclosed in the notes to the fmancial statements in confomrity with the disclosure requirements of the Governmental Accounting Standards Board.

The City's changes in other long-term liabilities for the years ended December 31, 2016 and 2015 were as follows:

Compensated Absences Deferred Pension Obligation Net Pension Liability - PERS Net Pension Liability - PFRS


2015 Additions

$ 7,342,267 $ 1,563,008

20,004,845 65,229,534

759,536 $ 111,476

8,938,022 11,053,197


Reductions 2016

583,327 $ 233,415 842,878

3,122,639

7,518,476 1,441,069 $

28,099,989 73,160,092

Due Within

One Year

235,730

Total Other Long-Term Liabilities $94,139,654 $ 20,862,231 $ 4,782,259 $ 110,219,626 $ 235,730

Compensated Absences Deferred Pension Obligation Net Pension Liability- PERS Net Pension Liability- PFRS


2014

$ 7,567,201 1,675,114 $

17,275,682 47,044,318

Additions

120,512 3,495,325

21,368,468

$

Reductions


2015

224,934 $ 232,618 766,162

7,342,267 1,563,008 $

20,004,845 65,229,534 3,183,252

Due Within

One Year

233,415

Total Other Long-Term Liabilities $73,562,315 $ 24,984,305 $ 4,406,966 $ 94,139,654 $ 233,415

63


NOTE 12 EMPLOYEE RETIREMENT SYSTEMS

The State of New Jersey sponsors and administers the following contributory defined benefit public employee retirement systems (retirement systems) covering substantially all state and local government employees which includes those City employees who are eligible for pension coverage.

Consolidated Police and Firemen's Pension Fund (CPFPF) - established in January 1952, under the provisions ofN.J.S.A. 43:16 to provide coverage to municipal police and firemen who were appointed prior to July 1, 1944. The fund is a closed system with no active members. CPFPF is a cost-sharing plan with special funding situations.

Police and Firemen's Retirement System (PFRS) - established in July 1944, under the provisions of N.J.S.A. 43: 16A to provide coverage to substantially all full time county and municipal police or firemen and State firemen appointed after December 31, 1944. Membership is mandatory for such employees with vesting occurring after I 0 years of membership. PFRS is a cost-sharing multi-employer defined benefit pension plan.

Public Employees' Retirement System (PERS)- established in January 1955, under the provisions ofN.J.S.A. 43: !SA to provide coverage, including post-retirement health care for those eligible employees whose local employers elected to do so, to substantially all full-time employees of the State or any county, municipality, school district, or public agency provided the employee is not a member of another State-administered retirement system. Membership is mandatory for such employees and vesting occurs after I 0 years of service for pension benefits and, if applicable, 25 years for post-retirement healthcare coverage. PERS is a cost-sharing multi-employer defined benefit pension plan.

The State of New Jersey sponsors and administers the following defined contribution public employee retirement program covering certain state and local government employees which include those City employees who are eligible for pension coverage.

Defined Contribution Retirement Program (DCRP)- established under the provisions of Chapter 92, P.L. 2007 and Chapter 103, P.L. 2008 to provide coverage to elected and certain appointed officials, effective July I, 2007. Membership is mandatory for such individuals with vesting occurring after one (1) year of membership. This provision was extended by Chapter 1, P.L. 2010, effective May 21, 2010, to new employees (Tier 2) of the PFRS and new employees who would otherwise be eligible to participate in PERS and do not work the minimum required hours but earn a base salary of at least $5,000 are eligible for participation in the DCRP. DCRP is a defined contribution pension plan.

Other Pension Funds

The state established and administers a Supplemental Annuity Collective Trust Fund (SACT) which is available to active members of the State-administered retirement systems to purchase annuities to supplement the guaranteed benefits provided by their retirement system. The state or local governmental employers do not appropriate funds to SACT.

The State also administers the Pensions Adjustment Fund (PAF). Prior to the adoption of pension reform legislation, P .L. 20 II, C. 78, it provided cost of living increases equal to 60 percent of the change in the average consumer price index, to eligible retirees in some State-sponsored pension systems which includes the CPFPF.

64


NOTE 12 EMPLOYEE RETIREMENT SYSTEMS (Continued)

Other Pension Funds (Continued)

Cost-of-living increases provided under the State's pension adjustment program are currently suspended as a result of the reform legislation. This benefit is funded by the State as benefit allowances become payable.

The cost of living increase for PFRS and PERS are funded directly by each of the respective systems, but are currently suspended as a result of refonn legislation.

According to state law, all obligations of each retirement system will be assumed by the State of New Jersey should any retirement system be terminated.

The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly available financial reports that include the financial statements and required supplementary information of each of the above systems, funds, and trust. The financial reports may be accessed via the New Jersey, Division of Pensions and Benefits website at www.state.nj.us/treasmy/pensions.

Basis of Accounting

The financial statements of the retirement systems are prepared on the accrual basis of accounting. Employer contributions are recognized when payable to the retirement systems. Benefits and refunds are recognized when due and payable in accordance with the terms of the retirement systems.

Investment Valuation

Investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. The fair value of real estate investments is based on independent appraisals. Investments that do not have an established market are reported at estimated fair values.

The State of New Jersey, Department of the Treasury, Division of Investment, issues publicly available financial reports that include the financial statements of the State of New Jersey Cash Management Fund. The financial report may be obtained by writing to the State of New Jersey, Department of the Treasury, Division ofinvestment, P.O. Box 290, Trenton, New Jersey 08625-0290, or at www.state.niltreasury/doinvest.

Funded Status and Funding Progress

As of July I, 2015, the most recent actuarial valuation date, which was rolled forward to June 30, 2016, the aggregate funded ratio for all the State administered retirement systems, including CPFPF, local PERS and local PFRS is 45.7 percent with an unfunded actuarial accrued liability of $50.3 billion. The CPFPF system is 19.15 percent funded with an unfunded actuarial accrued liability of $8.0 million. The aggregate funded ratio and unfunded accrued liability for the local PERS system is 40.14 percent and $29.6 billion, respectively and the aggregate funded ratio and unfunded accrued liability for local PFRS is 52.0 I percent and $20.7 billion, respectively.

65



Funded Status and Funding Progress (Continued)

The funded status and funding progress of the retirement systems includes actuarial ·valuations which involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. These amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the probability of future events.

Actuarial calculations reflect a long-term perspective and are based on the benefits provided under the terms of the retirement systems in effect at the time of each valuation and also consider the pattern of the sharing of costs between the employer and members at that point in time. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and members in the future.

Actuarial Methods and Assumptions

In the July 1, 2015 actuarial valuations, the date of the most recent actuarial valuations, the projected unit credit was used as actuarial cost method, and the five year average of market value was used as asset valuation method for pension trust funds. The actuarial assumptions included (a) 7.65% for investment rate of return for all the retirement systems except CPFPF ( 2.85%) and (b) changes to projected salary increases applied through the year 2026 of 1.65-5.15 percent based on age for PERS and 2.10-9.98 percent based on age for PFRS.

Employer and Employee Pension Contributions

The contribution policy is set by laws of the State of New Jersey and contributions are required by active members and participating employers. Plan members and employer contributions may be amended by State of New Jersey legislation, with the amount of contributions by the State of New Jersey contingent upon the annual Appropriations Act. As defined, the various retirement systems require employee contributions based on 10.0% for PFRS, 7.06% for PERS and 5.50% for DCRP of employee's annual compensation for fiscal year 2016.

Annual Pension Cost (APC)

Per the requirements of GASB Statement No. 27, Accounting for Pensions by State and Local Government Employees, for the years ended December 31, 2016 and 2015 for CPFPF, which is a cost sharing plan with special funding situations, the annual pension cost differs from the annual required contribution. For PFRS and PERS, which are cost sharing multi-employer defined benefit pension plans, annual pension cost equals contributions made. In the DCRP, which is a defined contribution plan, member contributions are matched by a 3% employer contribution.

During the years ended December 31, 2016, 2015 and 2014, the City, was required to contribute for normal cost pension contributions, accrued liability pension contributions and non-contributory life insurance premiums the following amounts which equaled the required contributions for each respective year:

2016 2015 2014

CPFPF

$ 18,045 18,059 27,640

$ 3,183,252 2,872,492 2,859,218

$

66

766,162 751,264 676,787

$ 5,917 3,086 3,627

CITY OF RAHWAY NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2016 AND 2015


Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

Public Employees Retirement System (PERS)

At December 31, 2016 and 2015, the City reported a liability of $28,099,989 and $20,004,845, respectively, for its proportionate share of the PERS net pension liability. The net pension liability was measured as of June 30,2016 and 2015, respectively, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015 and 2014, respectively. The City's proportionate share of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating govermnental entities, actuarially determined. As of the measurement date of June 30, 2016, the City's proportionate share was .09487 percent, which was an increase of .00576 percent from its proportionate share measured as of June 30, 2015 of .08911 percent.

For the years ended December 31, 2016 and 2015, the pension system has determined the City's pension expense to be $2,844,737 and $960,884, respectively, for PERS based on the actuarial valuation which is more than the actual contributions reported in the City's financial statements of $766,162 and $751,264, respectively. At December 31, 2016 and 2015, the City's deferred outflows of resources and deferred inflows of resources related toPERS pension which are not reported on the City's financial statements are from the following sources:

2016 2015 Deferred Deferred Deferred Deferred Outflows Inflows Outflows Inflows

of Resources of Resources of Resources of Resources

Difference Between Expected and Actual Experience $ 522,575 $ 477,245

Changes of Assumptions 5,820,817 2,148,361 Net Difference Between Projected and Actual

Earnings on Pension Plan Investments 1071478 $ 321,639 Changes in Proportion and Differences Between

City Contributions and Proportionate Share

of Contributions 1,188,941 $ 394,946 322,775 501,114

Total $ 8,603,811 $ 394,946 $ 2,948,381 $ 822,753

At December 31, 2016 the amounts reported as deferred outflows of resources and deferred inflows of resources related to PERS pension will be recognized in pension expense as follows:

Year Ending

December 31. Total

2017 $ 1,838,040 2018 1,838,040 2019 2,095,424 2020 1,786,434 2021 650,927

Thereafter

$ 8,208,865

67

CITY OF RAHWAY NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31,2016 AND 2015


Pnblic Employees Retirement System (PERS) (Continued)

Actuarial Assumptions

The City's total pension liability reported for the year ended December 31, 2016 was based on the June 30, 2016 measurement date as determined by an actuarial valuation as of July I, 2015, which was rolled forward to June 30, 2016. The total pension liability reported for the year ended December 31, 2015 was based on the June 30, 2015 measurement date as determined by an actuarial valuation as of July I, 2014, which was rolled forward to June 30, 2015. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement date:

PERS 2016 2015

Inflation Rate 3.08% 3.04%

Salary Increases: 2012-2021 2.15-4.40%

Based on Age Through 2026 1.65-4.15%

Based on Age

Thereafter 2.65-5.15% 3.15-5.40% Based on Age Based on Age

Investment Rate of Return 7.65% 7.90%

Mortality Rate Table RP-2000 RP-2000

Assumptions for mortality improvements are based on Society of Actuaries Scale AA.

The actuarial assumptions used in the July I, 2015 valuation were based on the results of an actuarial experience study for the period July I, 2011 to June 30,2014. The actuarial assumptions used in the July I, 2014 valuation were based on the results of an actuarial study for the period July I, 2008 to June 30, 2011.

68



Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued)

Public Employees Retirement System (PERS) (Continued)

Long-Term Expected Rate of Return

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plans investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plans' target asset allocation as of June 30, 2016 and 2015, as reported for the years ended December 31, 2016 and 2015, respectively, are summarized in the following table:

2016 Long-Term

Target Expected Real Target

Asset Class Allocation Rate of Return Allocation

Cash 5.00% 0.87% 5.00% U.S. Treasuries 1.50% 1.74% 1.75% Investment Grade Credit 8.00% 1.79% 10.00% Mortgages 2.00% 1.67% 2.10% High Yield Bonds 2.00% 4.56% 2.00% Inflation-Indexed Bonds 1.50% 3.44% 1.50% Broad US Equities 26.00% 8.53% 27.25% Developed Foreign Equities 13.25% 6.83% 12.00% Emerging Market Equities 6.50% 9.95% 6.40% Private Equity 9.00% 12.40% 9.25% Hedge Funds/Absolute Return 12.50% 4.68% 12.00%

Real Estate (Property) 2.00% 6.91% 2.00% Commodities 0.50% 5.45% 1.00%

Global Debt ex US 5.00% -0.25% 3.50% REIT 5.25% 5.63% 4.25%

Discount Rate

The discount rate used to measure the total pension liabilities of the PERS plan was as follows:

2016

2015

Measurement Date

June 30,2016

June 30, 2015

Discount Rate

3.98% 4.90%

69

2015 Long-Term

Expected Real

Rate of Return

1.04% 1.64% 1.79% 1.62% 4.03% 3.25% 8.52% 6.88% 10.00% 12.41% 4.72%

6.83% 5.32%

-0.40% 5.12%





Discount Rate (Continued)

The following table represents the crossover period, if applicable, for the PERS defined benefit plan:

Period of Projected Benefit

Payments for which the Following

Rates were Applied: Long-Term Expected Rate of Return

Municipal Bond Rate *

Through June 30, 2034

From July 1, 2034

and Thereafter * The municipal bond return rate used is 2.85% and 3.80% as of the measurement dates of June 30, 2016 and 2015, respectively. The source is the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AA/ Aa or higher.

Sensitivity of Net Pension Liability

The following presents the City's proportionate share of the PERS net pension liability as of December 31,2016 and 2015 calculated using the discount rate of 3.98% and 4.90%, respectively, as well as what the City's proportionate share of the PERS net pension liability would be if it were calculated using a discount rate that is !-percentage-point lower (2.98% aud 3.90%, respectively) or !-percentage-point higher (4.98% and 5.90%, respectively) than the current rate:

1% Current 1% Decrease Discount Rate Increase {2.98%} {3.98%} {4.98%}

2016 City's Proportionate Share of the PERS Net Pension Liability $ 34,433,257 $ 28,099,989 $ 22,871,327

1% Current 1% Decrease Discount Rate Increase {3.90%} {4.90%} {5.90%}

2015

City's Proportionate Share of the PERS Net Pension Liability $ 24,863,575 $ 20,004,845 $ 15,931,321

The sensitivity analysis was based on the proportionate share of the City's net pension liability at December 31, 2016 and 2015. A sensitivity analysis specific to the City's net pension liability was not provided by the pension system.

70

CITY OF RAHWAY NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER31, 2016 AND 2015


Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Peusious


Pension Plan Fiduciary Net Position

Detailed information about the PERS pension plan's fiduciary net position is available in the separately issued financial report from the State of New Jersey, Department of the Treasury, Division of Pension and Benefits. The financial report may be accessed via the New Jersey, Division of Pensions and Benefits, website at www.state.nj.us/treasury/pensions.

Police and Firemen's Retirement System (PFRS)

At December 31, 2016 and 2015, the City reported a liability of $73,160,092 and $65,229,534, respectively, for its proportionate share of the PFRS net pension liability. The net pension liability was measured as of June 30,2016 and 2015, respectively, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of July 1, 2015 and 2014, respectively. The City's proportionate share of the net pension liability was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating governmental entities, actuarially determined. As of the measurement date of June 30, 2016, the City's proportionate share was .38298 percent, which was a decrease of .00863 percent from its proportionate share measured as of June 30, 2015 of .39161 percent.

For the years ended December 31, 2016 and 2015, the pension system has determined the City pension expense to be $7,652,036 and $5,669,411, respectively, for PFRS based on the actuarial valuation which is more than the actual contributions reported in the City's financial statements of $3,183,252 and $2,872,492, respectively. At December 31, 2016 and 2015, the City's deferred outflows of resources and deferred inflows of resources related to PFRS pension which are not reported on the City's financial statements are from the following sources:

2016 2015 Deferred Deferred Deferred Deferred Outflows Inflows Outflows Inflows

of Resources of Resources of Resources of Resources

Difference Between Expected and Actual Experience $ 479,575 $ 562,625

Changes of Assumptions $ 10,133,274 $ 12,042,992 Net Difference Between Projected·and Actual

Earnings on Pension Plan Investments 5,126,180 1,!35,263 Changes in Proportion and Differences Between City Contributions and Proportionate Share

of Contributions 1,506,688 2,216,119 1,933,5!2 1,609,328

Total $ 16,766,142 $ 2,695,694 $ 13,976,504 $ 3,307,216

71




Police and Firemen's Retirement System (PFRS) (Continued)

At December 31, 2016 the amounts reported as deferred outflows of resources and deferred inflows of resources related to PFRS pension will be recognized in pension expense as follows:

Year

Ending December 31, Total

2017 $ 3,381,556

2018 3,381,556

2019 4,581,734 2020 2,758,266

2021 (32,664) Thereafter

$ 14,070,448

Actuarial Assumptions

The City's total pension liability reported for the year ended December 31, 2016 was based on the June 30, 2016 measurement date as detennined by an actuarial valuation as of July 1, 2015, which was rolled forward to June 30, 2016. The total pension liability reported for the year ended December 31, 2015 was based on the June 30, 2015 measurement date as detennined by an actuarial valuation as of July I, 2014, which was rolled forward to June 30, 2015. This actuarial valuation used the following actuarial assumptions, applied to all periods in the measurement date:

PFRS 2016 2015

Inflation Rate 3.08% 3.04% Salary Increases: 2012-2021 2.60-9.48%

Based on Age Through 2026 2.10-8.98%

Based on Age

Thereafter 3.10-9.98% 3.60-10.48% Based on Age Based on Age

Investment Rate of Return 7.65% 7.90%

Mortality Rate Table RP-2000 RP-2000

Assumptions for mortality improvements are based on Society of Actuaries Scale AA and one year using Scale BB.

The actuarial assumptions used in the July I, 2015 and July I, 2014 valuations were based on the results of an actuarial experience study for the period July I, 2010 to June 30, 2013.

72

CITYOFRAIIWAY NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31, 2016 AND 2015





The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rate of return (expected returns, net of pension plans investment expense and inflation) are developed for each m'\ior asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plans' target asset allocation as of June 30,2016 and 2015, as reported for the years ended December 31,2016 and 2015, respectively, are summarized in the following table:

2016 2015 Long-Term Long-Term

Target Expected Real Target Expected Real Asset Class Allocation Rate of Return Allocation Rate of Return

Cash 5.00% 0.87% 5.00% 1.04%

U.S. Treasuries 1.50% 1.74% 1.75% 1.64%

Investment Grade Credit 8.00% 1.79% 10.00% 1.79%

Mortgages 2.00% 1.67% 2.10% 1.62%

High Yield Bonds 2.00% 4.56% 2.00% 4.03% Inflation-Indexed Bonds 1.50% 3.44% 1.50% 3.25%

Broad US Equities 26.00% 8.53% 27.25% 8.52%

Developed Foreign Equities 13.25% 6.83% 12.00% 6.88%

Emerging Market Equities 6.50% 9.95% 6.40% 10.00% Private Equity 9.00% 12.40% 9.25% 12.41% Hedge Funds/ Absolute Return 12.50% 4.68% 12.00% 4.72% Real Estate (Property) 2.00% 6.91% 2.00% 6.83% Commodities 0.50% 5.45% 1.00% 5.32%

Global Debt ex US 5.00% -0.25% 3.50% -0.40% REIT 5.25% 5.63% 4.25% 5.12%

Discount Rate

The discount rate used to measure the total pension liabilities of the PFRS plan was as follows:

2016

2015

Measurement Date

June 30,2016

June 30, 2015

Discount Rate

5.55%

5.79%

73

CITY OF RAHWAY NOTES TO THE FINANCIAL STATEMENTS YEARS ENDED DECEMBER 31,2016 AND 2015




Discount Rate (Continued)

The following table represents the crossover period, if applicable, for the PFRS defmed benefit plan:

Period of Projected Benefit

Payments for which the Following

Rates were Applied:


Municipal Bond Rate *

Through June 30, 2050

From July 1, 2050

and Thereafter *The municipal bond return rate used is 2.85% and 3.80% as of the measurement dates of June 30, 2016 and 2015, respectively. The source is the Bond Buyer Go 20-Bond Municipal Bond Index, which includes tax-exempt general obligation municipal bonds with an average rating of AAI Aa or higher.

Sensitivity of Net Pension Liability

The following presents the City's proportionate share of the PFRS net pension liability as of December 31, 2016 and 2015 calculated using the discount rate of 5.55% and 5.79%, respectively, as well as what the City's proportionate share of the PFRS net pension liability would be if it were calculated using a discount rate that is !-percentage-point lower (4.55% and 4.79%, respectively) or !-percentage-point higher (6.55% and 6.79%, respectively) than the current rate:

1% Current 1% Decrease Discount Rate Increase {4.55%) {5.55%) {6.55%)

2016 City's Proportionate Share of the PFRS Net Pension Liability $ 94,334,574 $ 73,160,092 $ 55,893,575

1% Current 1%

Decrease Discount Rate Increase

{4.79%) {5.79%) (6.79%)

2015

City's Proportionate Share of the PFRS Net Pension Liability $ 85,993,235 $ 65,229,534 $ 48,298,591

The sensitivity analysis was based on the proportionate share of the City's net pension liability at December 31,2016 and 2015. A sensitivity analysis specific to the City's net pension liability was not provided by the pension system.

74





Special Funding Situation- PFRS

Under N.J.S.A. 43:16A-15, the City is responsible for their own PFRS contributions based on actuarially determined amounts, except where legislation was passed which legally obligated the State to make contributions if certain circumstances occurred. The legislation which legally obligates the State is as follows: Chapter 8, P .L. 2000, Chapter 318, P.L. 2001, Chapter 86, P.L. 2001, Chapter 511, P.L. 1991, Chapter 109, P.L. 1979, Chapter 247, P.L. 1993 and Chapter 201, P.L. 2001. The amounts contributed on behalf of the City by the State under this legislation is considered to be a special funding situation as defined by GASB Statement No. 68 and the State is treated as a nonemployer contributing entity. Accordingly, the City's proportionate share percentage determined under GASB Statement No. 68 is zero percent and the State's proportionate share is I 00% for PFRS under this legislation.

At December 31, 2016 and 2015, the State's proportionate share of the net pension liability attributable to the City for the PFRS special funding situation is $6,143,633 and $5,720,411, respectively. For the years ended December 31, 2016 and 2015, the pension system has determined the State's proportionate share of the pension expense attributable to the City for the PFRS special funding situation is $784,687 and $713,539, respectively, which is more than the actual contributions the State made on behalf of the City of $235,406 and $297,777, respectively. The State's proportionate share attributable to the City was developed based on actual contributions made to PFRS allocated to employers based upon covered payroll. These on-behalf contributions have not been reported on the City's financial statements.

Pension Plan Fiduciary Net Position

Detailed information about the PFRS pension plan's fiduciary net position is available in the separately issued financial report from the State of New Jersey, Department of the Treasury, Division of Pension and Benefits. The financial reports may be accessed via the New Jersey, Division of Pensions and Benefits, website at www .state.nj. us/treasurv/pensions.

NOTE 13 POST-RETIREMENT MEDICAL BENEFITS

The State of New Jersey sponsors and administers the post-retirement health benefit program plans for participating municipalities including the City. The plans are classified as either single employer plans or cost sharing multiple employer defmed benefit plans depending on the plan the eligible employee is covered under.

75


NOTE 13 POST-RETIREMENT MEDICAL BENEFITS (Continued)

As a result of implementing Governmental Accounting Standards Board (GASB) Statement No. 43, Financial Reporting for Post-employment Benefit Plans Other than Pension Plans (OPEB), effective for Fiscal Year 2007, the State Health Benefits Program (SHBP), and the Prescription Drug Program (PDP), and Post-Retirement Medical (PRM) of the PERS and the Teacher's Pension and Annuity (TP AF) are combined and reported as Pension and Other Employee Benefit Trust Funds in the State's Comprehensive Annual Financial Report (CAFR). Specifically, SHBPState, PDP-State, and the PRM of the PERS are combined and reported as Health Benefits Program Fund - State classified as a single employer plan. The SHBP-Local, PDP-Local, and the PRM of the TPAF-Local are combined and reported as Health Benefits Program Fund -Local Government classified as a cost sharing multiple-employer plan. The post-retirement benefit programs had a total of 584 state and local participating employers and contributing entities for Fiscal Year 2016.

The State of New Jersey sponsors and administers the following health benefit program covering substantially all local government employees from local participating employers.

State Health Benefits Program Funds (HBPF) - Local Government (including Prescription Drug Program Fund) -Certain local employers who participate in the State Health Benefits Program provide health insurance coverage to their employees at retirement. Under provisions of P.L. 1997, c.330, the State of New Jersey provides partially funded benefits to local police officers and firefighters who retire with 25 years of service (or on disability) from an employer who does not provide coverage. Retirees who are not eligible for employer paid health coverage at retirement can continue in the program by paying the cost of the insurance for themselves and their covered dependents. Also, local employees are eligible for the PDP coverage after 60 days of employment.

The State of New Jersey, Department of the Treasury, Division of Pensions and Benefits, issues publicly available financial reports that include the financial statements and required supplementary information of the above Fund. The financial reports may be assessed via, the New Jersey, Division of Pensions and Benefits website at www .state.nj .us/treasury/pensions.

Basis of Accounting

The financial statements of the health benefit programs are prepared on the accrual basis of accounting. Employer contributions are recognized when payable to the health benefit programs. Benefits or refunds are recognized when due and payable in accordance with the terms of the health benefit programs.

Investment Valuation

Investments are reported at fair value. Investments that do not have an established market are reported at estimated fair values.

Funded Status and Funding Progress

As of July 1, 2015, the most recent actuarial valuation date, the State had a $84.3 billion unfunded actuarial liability for other postemployment benefits (OPEB) which is made up of $25.9 billion for state active and retired members, $16.8 billion for local active and retired members and $41.6 billion for education employees and retirees that become the obligation of the State of New Jersey upon retirement.

'

76



Funded Status and Funding Progress (Continued)

The funded status and funding progress of the OPEB includes actuarial valuations which involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. These amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the probability of future events.

Actuarial calculations reflect a long-term perspective and are based on the benefits provided under the terms of the OPEB in effect at the time of each valuation and also consider the pattern of the sharing of costs between the employer and members at the point in time. The projection of benefits for financial reporting purposes does not explicitly incorporate the potential effects of legal or contractual funding limitations on the pattern of cost sharing between the employer and members in the future.

Actuarial Methods and Assumptions

In the July I, 2015 OPEB actuarial valuation, the projected unit credit was used as the actuarial cost method, and the market value was used as asset valuation method for the OPEB. The actuarial assumptions included an assumed investment rate of return of 4.50 percent.

Post-Retirement Medical Benefits Contribution

P.L. 1987, c. 384 and P.L. 1990, c.6 required the Public Employees' Retirement System to fund post-retirement medical benefits for those State and participating local government employees who retire after accumulating 25 years of credited service or on a disability retirement. As ofJune 30, 2016, there were II 0,512 retirees receiving post-retirement medical benefits, and the State contributed $1.37 billion on their behalf. The cost of these benefits is funded through contributions by the State and participating local governments in accordance with P.L. 1994, c.62. Funding of postretirement medical benefits changed from a pre-funding basis to a pay-as-you-go basis beginning in Fiscal Year 1994.

P.L. 1977, c. 136 provides for the State and participating local governments to pay health benefits on a pay-as-you-go basis for all enrolled retired employees, regardless of retirement date, under two provisions. The first is for employees whose pensions are based on 25 years or more of credited service (except those who elect a deferred retirement). The second is for retired employees who are eligible for a disability retirement regardless of years of service. The State and participating local governments contributed $181.9 million for 10,725 eligible retired members for Fiscal Year 2016. This benefit covers the Police and Firemen's Retirement System.

P.L. 1997, c. 330 provides paid post-retirement health benefits to qualified retirees of the Police and Firemen's Retirement System and the Consolidated Police and Firemen's Pension Fund and to dependents of qualified retirees. The State and participating local governments are responsible for 80 percent of the premium for the category of coverage elected by the retiree under the State managed care plan or a health maintenance organization participating in the program, whichever provides the lower charge. The State and participating local governments contributed $48.3 million in Fiscal Year 2016 to provide benefits under Chapter 330 to qualified retirees.

77



Post-Retirement Medical Benefits Contribution (Continued)

The State sets the employer contribution rate based on a pay-as-you-go basis rather than the annual required contribution of the employers (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) of the plan over a period not to exceed thirty years. The City's contributions to the State Health Benefits Program Fund-Local Government for post-retirement benefits for the years ended December 31, 2016, 2015 and 2014 were $3,333,962, $3,159,656 and $2,952,040, respectively, which equaled the required contributions for each year.

NOTE 14 RISK MANAGEMENT

The City is exposed to various risks of loss related to general liability, automobile coverage, theft of, damage to and destruction of assets; errors and omissions; injuries to employees; termination of employees and natural disasters. The City has obtained commercial insurance coverage to guard against these events to minimize the exposure to the City should they occur.

The City of Rahway is a member of the Garden State Municipal Joint Insurance Fund (GSJIF). The joint insurance fund is both an insured and self-administered group of municipalities established for the purpose of insuring against property damage, general liability, motor vehicles and equipment liability and worker's compensation. The Fund is a risk-sharing public entity pool.

The relationship between the City and the insurance fund is governed by a contract and by-laws that have been adopted by resolution of each unit's governing body. The City is contractually obligated to make all annual and supplementary contributions to the insurance fund, to report claims on a timely basis, to cooperate with the management of the fund, its claims administrator and attorneys in claims investigation and settlement, and to follow risk management procedures as outlined by the fund. Members have a contractual obligation to fund any deficit of the fund attributable to a membership year during which the municipality was a member.

The fund provides its members with risk management services, including the defense of and settlement of claims, and established reasonable and necessary loss reduction and prevention procedures to be followed by the members. Complete fmancial statements of the fund can be obtained by contacting the fund's Treasurer.

There has been no significant reduction in insurance coverage from the previous year nor have there been any settlements in excess of insurance coverage in any of the prior three years.

78


NOTE 14 RISK MANAGEMENT (Continued)

The City has elected to fund its New Jersey Unemployment Compensation Insurance under the "Benefit Reimbursement Method". Under this plan the City is required to reimburse the New Jersey Unemployment Trust Fund for benefits paid to its former employees and charged to its account with the State. The City is billed quarterly for amounts due to the State. The following is a summary of City contributions, employee contributions, reimbursements to the State for benefits paid and the ending balance of the City's unemployment compensation trust fund for the current and previous two years:

Year Ended City Employee Amount Ending December 31, Contributions Contributions Reimbursed Balance

2016 $ 26,538 $ 11,799 $ 105,482 2015 17,580 12,862 90,743 2014 $ 27,864 40,434 13,174 86,025

NOTE 15 CONTINGENT LIABILITIES

The City is a party defendant in some lawsuits, none of a kind unusual for a municipality of its size and scope of operation. In the opinion of the City's Attorney, the potential claims against the City not covered by insurance policies would not materially affect the financial condition of the City.

Pending Tax Appeals- Various tax appeal cases were pending in the New Jersey Tax Court at December 31, 2016 and 2015. Amounts claimed have not yet been determined. The City is vigorously defending its assessments in each case. Under the accounting principles prescribed by the Division of Local Government Services, Department of community Affairs, State of New Jersey, the City does not recognize a liability, if any, until these cases have been adjudicated. The City expects such amounts, if any, could be material. As of December 31, 2016 and 2015, the City reserved $1,400,000 and $1,400,000, respectively in the Current Fund for tax appeals pending in the New Jersey Tax Court. Funding of any ultimate liability would be provided for in succeeding years' budget or from fund balance.

Federal and State Awards -The City participates in a number of federal and state programs that are fully or partially funded by grants received from other governmental units. Expenditures financed by grants are subject to audit by the appropriate grantor government. If expenditures are disallowed due to noncompliance with grant program regulations, the City may be required to reimburse the grantor government. As of December 31, 2016 and 2015, significant amounts of grant expenditure have not been audited by the various grantor agencies but the City believes that disallowed expenditures, if any, based on subsequent audits will not have a material effect on the overall fmancial position of the City.

79


NOTE 16 FEDERAL ARBITRAGE REGULATIONS

The City is subject to Section 148 of the lntemal Revenue Code as it pertains to the arbitrage rebate on all tax-exempt obligations, both long and short-term debt. Under the 1986 Tax Reform Act, the lntemal Revenue Service (IRS) required that all excess earnings from investment proceeds be rebated to the IRS. Arbitrage, for purposes of these regulations, is defined as the difference between the yield on the investment and the yield on the obligations issued. If there are excess earnings, this amount may be required to be rebated to the IRS. At December 31, 2016 and 2015, the City had no estimated arbitrage earnings due to the IRS.

NOTE 17 PUBLIC/PRIVATE PARTNERSHIPS

The City preseotly owns a water supply, treatment, transmission, storage and distribution system, and a billing and collections department (the "Water System"). The City has entered into a management services agreemeot with United Water Operations, lnc. for the operation, management, maintenance and repair of the Water System in accordance with the provisions of the "New Jersey Water Supply Public-Private Contracting Act" set forth at N.J.S.A. 58:26-19 et ~·

Pursuant to the terms of the agreement, the City will retain ownership of the Water System and United Water Operations, lnc. will operate, manage, maintain and repair the Water System for a period of tweoty (20) years, beginning September 29, 1999. 1n exchange for these services, the City will pay United Water Operations, lnc. an annual Fixed Management Fee. The agreement does not provide for the payment of any concession fees by United Water Operations, lnc. to the City.

NOTE 18 TAX ABATEMENTS

For the years ended December 31, 2016 and 2015, the City provided property tax abatements through certain programs authorized under State statutes.

• The Long Term Tax Exemption Law (NJSA 40A:20 et.seq.) is focused on broad areas of redevelopment. It allows for a longer abatement term to carry out a larger development plan through declaring an area as being "in need of redevelopment". These long-term property abatements may last up to 30 years from completion of a project or 35 years from execution of the financial agreement. The process is initiated when the municipality passes a resolution calling for the municipal planning board to study the need for designating an area "in need of redevelopment". Upon adopting the planning board's recommendations and formalizing the redevelopment area designation, a municipality adopts a redevelopment plan, engages redevelopment entities to carry out the plan, and may authorize long-term tax abatements in the process. Developers submit abatement applications to the governing body for review. The financial agreement is approved through adoption of a local ordinance. The agreemeot exempts a project from taxation, but requires a payment in lieu of taxes (PILOTs) in an amount based generally on a percentage of project costs or revenue generated by the project, depeoding on the type of project. For the years ended December 31,2016 and 2015 the City abated property taxes totaling $4,248,063 and $2,550,394, respectively under the LTTE program. The City received $2,293,054 and $968,531 in PILOT payments under this program for the years ended December 31, 2016 and 2015, respectively.

80

SUPPLEMENTARY SCHEDULES

CURRENT FUND

CITY OF RAHWAY STATEMENT OF CASH- TREASURER

Balance, December 3 I, 2015

Increased by: Taxes Receivable Tax Title Liens Revenue Acct. Receivable Other Liens Receivable Prepaid Taxes Tax Overpayments Grants Receivable Non Budget Revenue Due from State-Senior and Veterans Deductions Receipts from Animal Control Trust Fund Receipts from Water Utility Operating Fund Receipts from Sewer Utility Operating Fund Other Trust Fund Receipts Deposited in Current Fund General Capital Fund Receipts Deposited in Current Fund Reserve for FEMA Reimbursements Unappropriated Reserves for Grants

Decreased by: 2016 Budget Appropriations 2015 Appropriation Reserves Encumbrances Payable Change Fund County Taxes County Added Taxes Local District School Taxes Special Improvement District Taxes Appropriated Reserves for Grants Tax Overpayments Payments to Rahway Redevelopment Agency Refund of Prior Year Revenue Payments to Other Trust Fund Payments to General Capital Fund Payments to Water Utility Capital Fund Payments to Sewer Utility Capital Fund Water Utility Operating Fund Expenditures Paid by Current Fund Sewer Utility Operating Fund Expenditures Paid by Current Fund

Balance, December 31, 20 I 6

81

EXHIBIT A-4

$ 14,146,039

$ 93,I 18,912 38,759

I2,364,069 26,741

323,989 93,496

I 77,801 369,941 206,248

12,453 2,699,470

56,440 825,630 896,760 199,I02 198,602

111,608,413

125,754,452

47,747,426 579,650 563,55 I

100 13,639,824

20,759 42,713,939

130,000 250,448 154,500 128,434 301,361

1,200,478 1,434,094

320,418 35I,434

1,083,225 207,601

110,827,242

$ 14,927,2IO

Tax Collector

City Clerk

Health Officer

Municipal Court

Recreation

CITY OF RAHWAY STATEMENT OF CHANGE FUNDS


2015

$ 1,000

20

25

250

$

$ 1,295 $

82

EXHIBIT A-5


Increased: 2016

$ 1,000

20

25

250

100 100

100 ~$~~~1"',3~9,;;,5

Municipal Alliance Program

Drug Free Communities

Assistance to Firefighters

CITY OF RAHWAY STATEMENT OF GRANTS RECEIVABLE

Balance, 2016

December 31, Revenue

2015 Realized

$ 26,689

250,000 $ 125,000

1,097

County of Union- Police Body Cameras 30,000

Pandemic Influenza Grant 44,114

NJ Health Dept Grant 20

Union County Recreation Grant 69,900

Union County History Grant 1,125

R W J Foundation 500

$ 391,820 $ 156,625

83

EXHIBIT A-6

Balance,

Cash December 31,

Receipts 2016

$ 26,689

49,587 $ 325,413

1,097

30,000

44, I 14

20

69,900

1,125

500

$ 177,801 $ 370,644

CITY OF RAHWAY STATEMENT OF DUE FROM STATE OF NEW JERSEY

SENIOR CITIZEN AND VETERAN DEDUCTIONS

Balance, December 31, 2015

Increased by: Senior Citizens' and Veterans'

Deductions Per Tax Billings

Senior Citizens' and Veterans'

Deductions Allowed by Tax Collector

Decreased by: Cash Receipts

Senior Citizen and Veteran Deductions Disallowed by Tax Collector


84

$ 208,000

4,750

206,248

4,296

EXHIBIT A-7

$ 51,725

212,750

264,475

210,544

$ 53,931

Year

2014 2015

2016

Tax Yield


2015

$ 4,840 1,781,541

1,786,381

$ 1,786,381

General Purpose Tax

$

$

Special Improvement District Tax Added Taxes (54:4-63.1 et seq.)

Tax Levy Special Improvement District Tax

2016

1=

93,247,071

93,247,071

Local District School Tax (Abstract) County Tax County Share of Added Taxes

Local Tax for Municipal Purposes Minimum Library Tax Additional Tax Levied

EXHIBIT A-8 CITY OF RAHWAY

STATEMENT OF TAXES RECEIVABLE AND ANALYSIS OF PROPERTY TAX LEVY

Senior Senior Citizens' and Citizens' and

Veterans' Veterans' Transferred Balance, Added Deductions Collected In Deductions to Tax December 31, Taxes Disallowed 2015 2016 Allowed Cancelled Title Liens 2016

s 4,340 $ 500 $ 3,808 1,766,677 18,672

3,808 1,771,017 19,172

103,242 $ 4,296 $ 285,972 __ 9_1,347,895 s 212,750 $ 34,048 $ 61,306 1,412,638

$ 107,050 $ 4,296 $ 285,972 $ 93,118,912 s 212,750 $ 34,048 $ 61,306 s 1,431,810

Ana1vsis of 2016 Tax Levv

$ 93,116,780 130,291 103,242

$ 93,350,313

$ 130,000 42,753,589

$ 13,639,824 15,113

13,654,937

35,878,964 830,750 102,073

36,811,787

$ 93,350,313

85

Balance, December 31,2015

Increased by: Transfers from Taxes Receivable

Interest and Costs on Tax Sale

Decreased by:

Redemptions


CITY OF RAHWAY STATEMENT OF TAX TITLE LIENS

$

STATEMENT OF PROPERTY ACQUIRED FOR TAXES



86

61,306

4,715

EXHIBIT A-9

$ 395,011

66,021

461,032

38,759

$ 422,273

EXHIBIT A-10

$ 2,644,300

$ 2,644,300

EXHIBIT A-ll

CITY OF RAHWAY STATEMENT OF REVENUE ACCOUNTS RECEIVABLE

Balance, Balance, December 31, Accrued in December 31,

2015 2016 Collected 2016

Licenses

Alcoholic Beverages $ 60,700 $ 60,700

Other 7,525 7,525

Fees and Pennits 127,284 127,284

Municipal Court

Fines and Costs $ 45,139 591,003 587,883 $ 48,259

Interest and Costs on Taxes 376,798 376,798

Medicare Reimbursement

Interest on Investments 44,348 44,348

Anticipated Utility Operating Surplus ~ Water Utility 334,739 334,739

Anticipated Utility Operating Surplus M Sewer Utility 114,174 114,174

Police Department Fees 95,399 95,399

Payments in Lieu of Taxes Lower Essex St. - Denholtz Management 476,902 476,902

Landmark- Block !57 Lot 1 571,377 571,377

Rahway Parking Authority 170,000 170,000

Rosegate 27,036 27,036

Housing Authority 53,932 53,932

Senior Citizen Housing 269,735 269,735

Meyers Senior Residence 72,052 72,052

Metro 231,015 231,015

Waters Edge 421,005 421,005

Comcast Cable Franchise Fee 92,836 92,836

Cellular Phone Tower Fees 401,588 401,588

Vacant/Foreclosure House Registration 403,500 403,500

Police Security- Administrative Fees 236,813 236,813

Planning Board Application Fees 5,745 5,745

Street Opening Permits 62,526 62,526

Motor Vehicle Fines 3,375 3,375

Uniform Construction Code Penalties 15,770 15,770

Uniform Construction Code Fees 436,464 436,464

Energy Receipts Taxes 3,162,741 3,162,741

Consolidated Municipal Property Tax Relief Aid 846,232 , 846,232

U.C.U.A Host Community Fees 2,350,000 2,350,000

Berkeley Heights Health Services Contract 71,837 71,837

Solid Waste Fees Rahway Housing Authority 37,000 37,000

Rahway Board of Education 40,000 40,000

Bulky Waste Fees

Kenilworth 75,080 75,080

Outside Health Services

Scotch Plains 68,328 68,328

Hillside 22,047 22,047

Winfield 8,975 8,975

Hotel Fees 180,392 180,392

$ 45,139 $ 12,566,273 $ 12,563,153 $ 48,259

Cash Receipts $ 12,364,069

Due from Other Trust Fees 199,084

$ 12,563,153

87

EXHIBIT A-12

CITY OF RAHWAY SCHEDULE OF OTHER LIENS RECEIVABLE

Balance, December 3 1 , 20 15 $ 36,679

Decreased by:

Redemptions 26,741

Balance, December 31, 2016 $ 9,938

EXHIBIT A-13

STATEMENT OF DUE FROM RAHWAY REDEVELOPMENT AGENCY

Balance, December 31, 20 15 $ 20,866

Increased by: Payments to Rahway Redevelopment Agency 128,434


88

EXHIBIT A-14

CITY OF RAHWAY STATEMENT OF DEFERRED CHARGES- SPECIAL EMERGENCY

Not Less Than Balance, Amount Balance, Amount 1/5 of Amount December 31, Resulting from Reduced December 31,

Puroose Authorized Authorized 2015 2016 2016 2016

Terminal Pay $ 1,120,000 $ 224,000 $ 448,000 $ $ 224,000 $ 224,000

$ 1,120,000 $ 224,000 $ 448,000 $ - $ 224,000 $ 224,000

89

EXHIBIT A-15 Page 1

CITY OF RAHWAY STATEMENT OF 2015 APPROPRIATION RESERVES

Balance Cancelled Balance December 31, Encumbrances After Balance

2015 Payable Modification Expended Lapsed General Government

Department of Administration Salaries and Wages $ 810 $ 8,000 $ 810 $ 810

Other Expenses 23,002 28,002 $ 27,230 772

Mayor's Office Salaries and Wages 629 629 629

Municipal Council Salaries and Wages 979 979 979

Other Expenses 1,973 1,973 1,973

Environmental Commission Salaries and Wages 132 132 132

Other Expenses 257 257 257

City Clerk Salaries and Wages 283 283 283

Other Expenses 1,998 1,998 52 1,946 Department of Revenue and Finance Salaries and Wages 907 1,500 907 907

Other Expenses 1,233 1,333 514 819 Municipal Audit

Department of Assessment Salaries and Wages 499 499 499

Other Expenses 8,922 8,922 76 8,846

Department of Law Salaries and Wages 142 142 142

Other Expenses 38,601 76,601 76,340 261

Municipal Court Salaries and Wages 8,440 8,440 8,440

Other Expenses 6,175 8,175 3,140 5,035

Division of Engineering Other Expenses 92,911 212,911 205,449 7,462

Department of Building, Planning & Economic Development

Salaries and Wages 537 537 537

Other Expenses 2,915 2,915 555 2,360

Planning Board Salaries and Wages 165 165 165

Other Expenses 1,807 4,867 1,674 1,674

Board of Adjustment Salaries and Wages 105 105 105

Other Expenses 2,698 2,698 2,698

Municipal A.B. C. Board Salaries and Wages 333 333 333

Other Expenses 105 105 105

Insurance Other Insurance 67,603 90,603 89,640 963

Employee Group Insurance 59,748 18,177 3,925 3,925

Police Department Salaries and Wages 394 20,000 394 394

Other Expenses 2,774 1,865 4,639 4,639

Office of Emergency Management Salaries and Wages 148 148 148

Other Expenses 318 318 10 308

Fire Department Salaries and Wages 17 58,017 58,000 17

Other Expenses 3,968 7,868 7,732 136

90

EXHIBIT A-15 Page 2


Balance Cancelled Balance December 31, Encumbrances After Balance

2015 Payable Modification Exoended Lapsed Department of Public Works

Salaries and Wages $ 204 $ 1,204 $ 1,000 $ 204 Other Expenses 191,739 191,739 19,697 172,042

Solid Waste and Recycling Salaries and Wages 774 $ 82,000 774 774 Other Expenses 192,358 167,358 91,022 76,336

Department of Health and Weltluc Salaries and Wages 5 3,205 3,200 5 Other Expenses 5,273 2,554 7,827 7,827

Community Services - Senior Services Salaries and Wages 615 615 615 Other Expenses 277 5,436 713 713

Recreation Department Salaries and Wages 802 14,000 802 802 Other Expenses 14,134 14,134 7,834 6,300

Revenue Administration Salaries and Wages 1,274 1,274 1,274 Other Expenses 5,714 5,714 758 4,956

Uniform Construction Code Enforcement Salaries and Wages 74 5,374 5,300 74 Other Expenses 3,695 9,000 3,695 3,695

Unclassified Electricity 43,323 43,323 17,998 25,325 Heating Fuels 16,597 16,597 25 16,572 Telephone 18,301 18,301 5,797 12,504 Street Lighting 50,263 50,263 47,004 3,259

Statutory Expenditures Contribution to: Social Security System (O.A.S.I.) 5,277 5,277 5,277 Pension Adjustment Fund 41 41 41 DCRP 1,914 1,914 1,914

Police Dispatch 9-1-1 System Salaries and Wages 16,787 787 787 Other Expenses 4,260 496 4,756 4,756

Total $ 905,229 $ 167,895 $ 1,073,124 $ 668,373 $ 404,751

Cash Disbursements $ 579,650

Accounts Payable 88,723

$ 668,373

91

CITY OF RAHWAY STATEMENT OF ENCUMBRANCES PAY ABLE

Balance, December 31, 20 15

Increased by: Charged to 2016 Budget Appropriations

Charged to Appropriated Grant Reserves

Decreased by: Cash Disbursements Cancelled to Appropriation Reserves


STATEMENT OF ACCOUNTS PAYABLE


Increased by: Transferred from 20 15 Appropriation Reserves


92

$

EXHIBIT A-16

$ 731,446

787,502

53,351

840,853

1,572,299

563,551 167,895

731,446

$ 840,853

EXHIBIT A-17

$ 38,370

88,723

$ 127,093

EXHIBIT A- 18

CITY OF RAHWAY STATE ME NT OF TAX OVERPAYMENTS


Increased by:

Tax Overpayments 93,496

247,996 Decreased by: Cash Disbursements 154,500


EXHIBIT A-19

STATEMENT OF PREPAID TAXES


Increased by: Collection of2017 Taxes 323,989

609,961

Decreased by: Applied to 2016 Taxes 285,972


93

EXHIBIT A-20

CITY OF RAHWAY STATEMENT OF RESERVE FOR FEDERAL AND STATE GRANTS- UNAPPROPRIATED

Balance, Increased 2016 Balance, December 31, by Revenue December 31,

2015 Receipts Realized 2016

Multiple Housing Inspection $ 11,094 $ 10,612 11,094 $ 10,612 Police Body Annor Grant 6,624 6,355 6,624 6,355 Recycling Tonnage Grant 62,670 34,969 62,670 34,969 Alcohol Education and Rehabilitation 1,472 1,472 NJ DOT Highway Safety 87,041 87,041 Recreation Heart Grant 1,250 1,250 Thomas Grahill Trust 10,000 15,000 10,000 15,000 Clean Communities 51,064 58,394 51,064 58,394 Kids Recreation Trust 425 425 Union County Recreation Grant 54,180 54,180 Blue Acres 8,684 8,684 Municipal Alliance 4,985 4,985 Business Action Center 9,625 9,625 Drunk Driving Enforcement Fund 6,702 5,423 6,702 5,423

$ 247,967 $ 198,602 $ 247,967 $ 198,602

94

EXHIBIT A-21 CITY OF RAHWAY

STATEMENT OF APPROPRIATED RESERVES FOR GRANTS

Balance, Transferred from Balance, December 31, 2016 Budget December 31,

2015 Approoriattons Expended 2016

Multiple Housing Inspections $ 18,973 $ ll,094 $ 10,608 $ 19,459 Clean Communities 112,411 51,064 30,844 132,631

Senior Services 15,463 2,168 13,295 Drunk Driving Enforcement Fund 5,090 6,702 11,792 Body Armor Grant 6,720 6,624 3,540 9,804 Public Health Priority Grant 282 282 RWJ Foundation- Kaboom 500 150 350 Municipal Alliance Program 15,207 15,207 Recycling Tonnage Grant 55,009 62,670 25,262 92,417 Safe and Secure Communities 113,305 113,305 Emergency Management Grant 13,242 13,242 Infant Smoke Detector Program 432 432 NJ Tree Foundation 2,500 2,500 Local Law Enforcement Block Grant 17,548 17,548 Hazardous Discharge Site Remediation 208,019 10,299 197,720 ADA Taser Grant 11,240 11,240 Alcohol Education and Rehabilitation Fund 975 11,097 12,072 General Motors- DARE Programs 7,260 7,260 Merck & Co. Mini Grant 15,415 15,415 Recreation Heart Grant 2,628 1,250 3,878 Recreation History Grant 1,125 1,125 County PDA Grant 345 345 Grahill Charitable Trust 12,702 10,000 22,702 NY /NJ Snowflake Youth 5,118 5,118 Drug Free Communities 276,591 125,000 122,014 279,577 Smart Growth Program 8,000 8,000

Green the Streets 97,403 97,403 Statewide Livable Communities- Library 72,396 72,396

Local Domestic Preparedness 2,630 2,630

NJ Health Dept Grant 20 20

Union County Recreation Grant 6,899 6,899

Kids Recreation Grant 203,444 425 17,200 186,669

Pandemic Influenza Grant 44,114 44,114

Child Passenger Safety Grant 2,375 2,375

NJ DOT Highway Safety 58,686 87,041 24,503 121,224

NJ Wayfinding System 75,000 75,000

NJ 911 General Assistance Grant 301 301

NJ 911 Equipment Grant 47 47

You Drink, Your Drive, You Lose 7,091 7,091

NJ DCA Brownfields 27,271 27,271

Downtown Retail Study 2Q,OOO 20,000

Assistance to Firetlghtcrs 1,097 1,097

NJ BPU Clean Energy Program 44,839 44,839

Obey the Signs 4,000 4,000

Click It or Ticket 12,730 4,724 8,006

Byrne Justice Grant 49,638 13,453 36,185

State Forestry Services 3,000 3,000

UC Police Body Cameras 30,000 30,000

Matching Funds for Grants 22,000 22,000

$ 1,679,456 $ 404,592 $ 303,799 $ 1,780,249

Cash Disbursements $ 250,448

Encumbrances Payable 53,351

$ 303,799

95

Increased by: 2016 Levy

General Taxes

County Open Space Taxes

Decreased by: Payments

CITY OF RAHWAY STATEMENT OF COUNTY TAXES PAYABLE

$ 13,260,44 7

379,377

STATEMENT OF AMOUNT DUE COUNTY FOR ADDED TAXES


Increased by: 2016 County Added Taxes



96

EXHIBIT A-22

$ 13,639,824

$ 13,639,824

EXHIBIT A-23

$ 20,759

15,113

35,872

20,759

$ 15,113

EXHIBIT A-24

CITY OF RAHWAY STATEMENT OF LOCAL DISTRICT SCHOOL TAXES PAYABLE


Increased by: 2016 Levy 42,753,589

42,824,449

Decreased by: Payments 42,713,939


EXHIBIT A-25

STATEMENT OF SPECIAL IMPROVEMENT DISTRICT TAXES PAYABLE

Balance, December 31, 20 15 $ 675,000

Increased by: 2016 Levy 130,000

805,000

Decreased by:

Payments 130,000


EXHIBIT A-26

STATEMENT OF RESERVE FOR TAX APPEALS

Balance, December 31, 2015 $ 1,400,000

Balance, December 31, 2016 $ 1,400,000

97

EXHIBIT A-27

CITY OF RAHWAY STATEMENT OF RESERVE FOR FEMA REIMBURSEMENTS


Increased by: FEMA Proceeds 199,102

660,707 Decreased by:

Realized as 20 16 Budgeted Revenue 461,605


EXHIBIT A-28

STATEMENT OF RESERVE FOR HOST COMMUNITY FEES


Decreased by: Realized as 2016 Budgeted Revenue $ 109,810

98

TRUST FUND

EXHIBIT B~3 CITY OF RAHWAY

TRUST FUNDS STATEMENT OF CASH AND INVESTMENTS

Animal Control Community Other Trust Self-

Fund Development Fund Insurance

Balance, December 31, 2015 $ 24,366 $ 598,095 $ 3,842,486 s 126,416

Increased by Receipts: Due State ofNew Jersey Animal Control Licenses 12,249 Community Development Receipts

Grants Receivable 686,636 Loans Receivable 16,420 Deferred Loans Receivable 191,774 Interest on Loans 47,611

Miscellaneous Deposits and Reserves 2,162,549 Current Fund Receipts Deposited in Other Trust Fund 199,084 Selfinsurance Trust Fund Receipts Deposited in Other Trust Fund 26,538 Payroll Deductions Payable 27,711,132 Accrued Salaries and Wages 13,032,467 Reserve for Flex Spending 25,244 Current Fund Budget Appropriations 46,959 Receipts from Current Fund 1,200,478 Interest Eamed 65 5,675 347

12,314 942,441 44,363,167 47}06_

36,680 1,540,536 48,205,653 173,722

Decreased by Disbursements: Reserve for:

Community Development Expenditures Reserve for Expenditures 633,815 Encumbrances Payable 36,518

Miscellaneous Deposits and Reserves 2,632,649

Unemployment Claims 9,739

Workmen's Compensation 31,037 Payroll Deductions Payable 27,720,646 Accrued Salaries & Wages 13,018,954

Other Liabilities 205,032 Reserve for Flex Spending 22,986 Due to State of New Jersey 1,180 Payments to Current Fund 12,453 Payments to General Capital Fund 255,000

13,633 925,333 43,600,267 40,776

Balance, December 31, 2016 $ 23,047 $ 615,203 s 4,605,386 $ 132,946

99

EXHIBIT B-4

CITY OF RAHWAY STATEMENT OF AMOUNT DUE TO STATE OF NEW JERSEY

ANIMAL CONTROL FUND

Balance, December 3 I, 20 15 $ 35

Increased by: License Fees Collected 1,168

1,203

Decreased by: Payments to State of New Jersey I, 180

Balance, December 31,2016 $ 23

EXHIBIT B-5

STATEMENT OF RESERVE FOR ANIMAL CONTROL EXPENDITURES


Increased by: Animal License Fees Collected

Decreased by:

Statutory Excess Due to Current Fund


Balance, December 3 1, 20 15

Increased by: Interest Earned

Statutory Excess

Decreased by:

Payments to Current Fund


STATEMENT OF DUE TO CURRENT FUND ANIMAL CONTROL FUND

100

$

$ 11,937

11,081

23,018

10,711

$ 12,307

EXHIBIT B-6

65

I 0, 711

$ 12,394

10,776

23,170

12,453

$ 10,717

EXHIBIT B-7

CITY OF RAHWAY STATEMENT OF COMMUNITY DEVELOPMENT BLOCK GRANTS RECEIVABLE

Balance, 2016 Balance, December 3 1, Grant Cash December 3 I ,

2015 Awards Receipts 2016

Program Year 2016- Year 41 $ 418,622 $ 418,622 2017- Year 42 $ 648,380 268,014 $ 380,366

$ 418,622 $ 648,380 $ 686,636 $ 380,366

101

CITY OF RAHWAY STATEMENT OF LOANS RECEIVABLE

COMMUNITY DEVELOPMENT TRUST FUND


Decreased by: Loan Repayments - Principal


STATEMENT OF DEFERRED LOANS RECEIVABLE COMMUNITY DEVELOPMENT TRUST FUND


Increased by: Loans Advanced

Decreased by: Loan Repayments


STATEMENT OF ENCUMBRANCES PAY ABLE COMMUNITY DEVELOPMENT TRUST FUND


Increased by: Charged to Program Expenditures



102

EXHIBIT B-8

$ 240,544

16,420

$ 224,124

EXHIBITB-9

$ 2,579,595

147,981

2,727,576

191,774

$ 2,535,802

EXHIBIT B-1 0

$ 94,936

86,097

181,033

36,518

$ 144,515

EXHIBIT B-11 CITY OF RAHWAY

STATEMENT OF RESERVE FOR COMMUNITY DEVELOPMENT EXPENDITURES

Balance, 2016 Balance, December 31, Grants December 31,

2015 ReceiQts Authorized Expenditures Transfer 2016 Union County Projects:

2015 Projects (Year 40) $ 36,692 $ 25,271 $ 11,421 2016 Projects (Year 41) 415,010 404,542 10,468 2017 Projects (Year 42) $ 648,380 413,099 $ 24,000 259,281

Program Income 13,234 $ 255,805 127,000 (24,000) 118,039

$ 464,936 $ 255,805 $ 648,380 $ 969,912 $ $ 399,209

Cash Expended $ 633,815 Encumbrances Payable 86,097

Due to General Capital Fund 250,000

$ 969,912

103

EXHIBIT B-12

CITY OF RAHWAY STATEMENT OF RESERVE FOR WORKERS' COMPENSATION CLAIMS


Increased by: Current Fund Budget Appropriations $ 46,959 Interest Earned 159

47,118

98,547

Decreased by: Claims 31,037


EXHIBIT B-13

STATEMENT OF RESERVE FOR UNEMPLOYMENT COMPENSATION CLAIMS


Increased by: Employee Contributions Due from Other Trust Fund 26,538

117,281

Decreased by: Claims Due to State of New Jersey ll,799


104


Decreased by: Interest Earnings


CITY OF RAHWAY STATEMENT OF DUE FROM CURRENT FUND

SELF INSURANCE TRUST FUND

STATEMENT OF DUE TO STATE OF NEW JERSEY SELF INSURANCE TRUST FUND


Increased by: Unemployment Claims

Decreased by: Cash Disbursements


105

EXHIBIT B-14

$ 17,564

188

$ 17,376

EXHIBIT B-15

$ 1,808

11,799

13,607

9,739

$ 3,868

EXHIBIT B-16

CITY OF RAHWAY STATEMENT OF MISCELLANEOUS DEPOSITS AND RESERVES

Balance, Balance, December 31, December 3 I,

2015 Increases Decreases 2016

State Fees- Building Department $ 68,400 $ 23,068 $ 18,195 $ 73,273 County Red Light Camera Program 70,180 70,180 Street Opening Deposits 129,469 32,939 9,900 152,508 State Department of Human Services 1,932 5,625 6,250 1,307 Parking Offense Adjudication Act 15,051 2,504 17,555 Police Outside Employment 340,707 738,038 655,594 423,151 Professional Review Fees 583,374 248,235 213,016 618,593 Building Department Rezoning Deposits 4,054 4,054 Fire Safety Penalties 10 3,875 3,885 Elevator Inspections 86,348 79,644 68,489 97,503

Narcotics Investigation 40,060 44,448 84,508

Recreation Deposits 40,218 144,413 180,893 3,738

Public Defender 50,586 6,089 56,675

Tax Sale Premiums 1,358,823 725,240 668,840 1,415,223

Third Party Liens 331,584 933,689 904,813 360,460

Terminal Pay 632,977 1,659 631,318

Police Confiscated Money 9,485 9,485 Miscellaneous 14,308 372 14,680 Passaic Valley River Litigation 95,000 95,000 Health Insurance Claims 500,000 500,000

$ 4,372,566 $ 2,988, I 79 $ 2,727,649 $ 4,633,096

Cash Receipts $ 2,162,549 Due from Current Fund 825,630

$ 2,988,179

Cash Disbursements $ 2,632,649 Other Liabilities 95,000

$ 2,727,649

106

CITY OF RAHWAY STATEMENT OF DUE FROM CURRENT FUND- OTHER TRUST FUND


Increased by: Other Trust Fund Receipts Deposited in Current Fund

Decreased by:

Interest Earned Current Fund Receipts Deposited in Other Trust Fund

Receipts ti·om Cunent Fund


STATEMENT OF OTHER LIABILITIES

Balance, December 3I, 20I5

Increased by:

Charges to Miscellaneous Reserves and Deposits

Decreased by:

Cash Disbursements


I07

$

5,675

199,084

1,200,478

$

$

$

EXHIBIT B-17

1,184,969

825,630

2,010,599

1,405,237

605,362

EXHIBIT B-18

336,422

95,000

431,422

205,032

226,390

CITY OF RAHWAY STATEMENT OF RESERVE FOR PAYROLL DEDUCTIONS PAY ABLE


Increased by: Payroll Deductions Received

Decreased by: Payroll Deductions Paid


STATEMENT OF ACCRUED SALARIES AND WAGES


Increased by: Accrued Salaries and Wages Earned

Decreased by: Accrued Salaries and Wages Paid


STATEMENT OF RESERVE FOR FLEX SPENDING SELF INSURANCE TRUST FUND


Increased by: Cash Receipts



108

$

$

$

$

$

$

EXHIBIT B-19

198,495

27,711,132

27,909,627

27,720,646

188,981

EXHIBIT B-20

80,373

13,032,467

13,112,840

13,018,954

93,886

EXHIBIT B-21

1,949

25,244

27,193

22,986

4,207



CITY OF RAHWAY STATEMENT OF DUE TO CURRENT FUND

COMMUNITY DEVELOPMENT TRUST FUND

STATEMENT OF DUE TO GENERAL CAPITAL FUND COMMUNITY DEVELOPMENT TRUST FUND


Increased by:

General Capital Fund Receipts Deposited in CDBG Trust Fund

Decreased by:

Payments to General Capital Fund


STATEMENT OF DUE FROM OTHER TRUST FUND SELF INSURANCE TRUST FUND

Increased by:

Employee Unemployment Contributions Deposited in Other Trust Fund

Balance, December31, 2016

109

EXHIBIT B-22

$ 65,845

$ 65,845

EXHIBIT B-23

$ 391,000

250,000

641,000

255,000

$ 386,000

EXHIBIT B-24

$ 26,538

$ 26,538

GENERAL CAPITAL FUND

CITY OF RAHWAY STATEMENT OF GENERAL CAPITAL CASH- TREASURER


Increased by Receipts: Interest Earned Grant Proceeds Current Fund Budget Appropriation

Capital Improvement Fund Reserve for Payment of Debt

Receipts from Current Fund Receipts from CDBG Trust Fund Receipts from Water Utility Capital Fund Bond Sale Proceeds Bond Anticipation Note Proceeds

Decreased by Disbursements: Improvement Authorizations Contracts Payable Bond Anticipation Notes Payable Current Fund Expenditures Paid by General Capital Fund Redevelopment Agency Expenditures Paid by General Capital Fund Payments to Sewer Utility Capital Fund


II 0

$ 15,137 37,733

160,000 32,523

I ,434,094 255,000

1,000,000 8,627,000 1,812,570

993,072 1,500,415 8,992,208

350,000 772,449 198,566

EXHIBIT C-2

$ 5,424,763

13,374,057

18,798,820

12,806,710

$ 5,992,110

Fund Balance

CITY OF RAHWAY ANALYSIS OF GENERAL CAPITAL CASH

Capital Improvement Fund Grants Receivable Loans Receivable Due from Current Fund Due from Rahway Redevelopment Agency Due from CDBG Trust Contracts Payable Reserve for Preliminary Expenses Reserve for Payment of Debt Deferred Charge - Cancelled Grants Receivable

Ord. No.

41-97 70-97 26-00/48-0 I /20-02 38-00 14-01/51-01 4-03 21-04 22-04/43-04/43-05 26-05/14-06 31-05/40-06/21-07 10-06 21-06/05-08/33-08/3-11 5-07 36-07/17-09 38-07 4-08 9-08 16-08/24-08 25-08 4-09/35-09 9-09 I 0-09/19-09 12-09 18-09 49-09 7-10/12-11

19-10 8-11 I 0-11

Description

Underground Storage Tanks Combined Sewer Overflow Study CSO Solids and Floatables Control Acq of Property/Construction of Parking Lots 200 I Road Resurfacing Redevelopment Various 2004 Capital Improvements Streetscapc Improvements Construction of Bridge St. Bike Path Various Streetscape Improvements, Phase II 2006 Road Improvements Creation of a Park on Essex Street 2007 Road Resurfacing Downtown Street Loop Modifications Hamilton Arts 2008 Road Resurfacing Acquisition of Police and Fire Equipment Strectscape Improvements - Phase IV Acquisition of Equipment and Improvements Reconstruction and Renovation of Madden Fieldhouse Acquisition of Real Property Storm water Control Projects 2009 Road Resurfacings Completion ofRiverwalk in the Right of Ways of Essex and Hancock St. Acquisition of Vehicles and Equipment Acquisitions and Improvements Within a Duly Designated

Redevelopment Area Acquisition of Real Property- 324 Hamilton St. Basketball Court Renovations 2001 Road Resurfacing Project

Ill

EXI-l!B IT C-3 Page 1


2016

$ 2,379,631 260,175

(240,000) (13,495)

(734,619) (811,993) (386,000)

1,296,214 8,257

91,978 (140,279)

13,460 141,085 52,861

310,826 1,113

10,677 3,175

19,239 34,404 73,472 12,498 58,399 79,129 29,398 18,068

102,837 440

2,232 83,329 69,304 13,834 17,149 16,483 65,179 38,218

515,087 99,879

6,999 114,827

EXHIBIT C-3 Page 2

CITY OF RAHWAY ANALYSIS OF GENERAL CAPITAL CASH

Balance, December 3 I ,

Ord. No. Description 2016

13-11 Various General Improvements $ 31,268 32-11 Acquisition of Equipment 6,018 39-11 Various General Improvements 97,930 14-12 Various 2012 Capital Improvements 13,067 18-12 Acquisition of Fire Pumper and Rebuild of Street Sweeper 39,146 29-12 Improvements to Elm Avenue 14,776 31-12 Resurfacing of a Portion of Hamilton Street 159,967 33-12 Improvements to Police Dept. 911 Dispatch Center 9,323 35-12/16-13/24-13 Various 2012 Capita! Improvements 11,719 9-13/38-13 Various Capital Improvements 239,565 I 0-13 Police Ballistic Equipment 9,677 37-13 DPW and Fire Equipment 56,631 44-13/12-14 2013 Road Improvements 80,853 50-13 Acquisition of Equipment 38,044 6-14 2014 Sidewalk Replacement Program 3,182 7-14 Rahway River Park Athletic Field Improvements 1,135,618 13-14 Various 2014 Capital Improvements 95,009 26-14 Contribution and/or Loan to Rahway Redevelopment Agency

for the Purpose of Acquiring Real Property 750,000 27-14 2014 Road Reconstruction and Resurfacing Program 240,751 30-14 Asbestos Remediation of City Properties 6,453 13-15 Acquisition and Installation of Police Body Cameras 15,279 14-15 2015 Road Improvements 98,484 19-15 Various 2015 Improvements I47,842 27-15 Improvements to Crosswalk- East Milton and Lenox 43,149 35-I5 2015 Basketball and Tennis Court Improvements (I 04,705) 9-16 Environmental Remediation of Various Properties 3,190 18-16 2016 Road Reconstruction and Resurfacing (736, I 06) 30-16 Various 20 16 Capital Improvements (227,490)

$ 5,992,110

112

CITY OF RAHWAY STATEMENT OF DUE FROM CURRENT FUND


Increased by: General Capital Fund Receipts Deposited in Current Fund

Premium on Bond Anticipation Note Reserve for Payment of Debt Grants Receivable

Current Fund Expenditures Paid by General Capital Fund Bond Anticipation Notes

Decreased by: Interest on Investments

Receipts from Current Fund


$

EXHIBIT C-4

$ 937,090

783,349 59,455 53,956

350,000

1,246,760

2,183,850 15,137

1,434,094

1,449,231

$ 734,619

EXHIBIT C-5

STATEMENT OF DEFERRED CHARGES TO FUTURE TAXATION- FUNDED


Increased by: Serial Bonds Issued Refunding Bonds Issued

Decreased by: Serial Bonds Refunded Current Fund Budget Appropriations:

Serial Bonds Principal Paydowns

Community Affairs Loan Principal

Green Acres Loan Principal Paydowns


$

113

$ 42,801,984

8,627,000 11,683,178

20,310,178

63,112,162

11,940,596

2,929,685

20,000

65,791

14,956,072

$ 48,156,090

EXHIBIT C-6 CITY OF RAHWAY

STATEMENT OF DEFERRED CHARGES UNFUNDED

Analxsis of Balance Balance Balance Bond Unexpended

December 31, 2016 Serial Bonds Budget Grant December 31, Anticipation Improvement Ord. No. Description 2015 Authorizations Issued APPropriation Proceeds 2016 Notes Expended Authorization

14-11 Tax Appeal Refunding- Merck $ 350,000 $ 350,000 33-12 Improvements to Police Dept. 911 Dispatch Center 247,500 s 247,500

35-l2/l6-13/24-13 Various 2012 Capital Improvements 1,304,757 1,304,757

9-13/38-13 Various Capital Improvements 1,475,945 1.475,945

10-13 Police Ballistic Equipment 38,000 38,000

22-13 Groundwater Investigation 190,400 190,400

37-13 DPW and Fire Equipment 522,500 522,500

44-13/02-14 2013 Road Improvements 691,942 691,942 50-13 Traffic Maintenance Pickup Truck 147,250 147,250

03-14/20-14 Various High School Park Improvements 489,950 489,950

06-14 2014 Sidewalk Replacement Program 142,500 142,500

07-14 Rahway River Park Athletic Field Improvements 1,238,000 1,238,000

13-14 Various 2014 Capital Improvements 571,427 571,427

26-14 Acquisitions and Imprvts. Within A Duly

Designated Redevelopments Area 750,000 750,000

27-14 Road Resurfacing Project 744,608 744,608

30-14 Asbestos Remediation 71,400 71,400

13-15 Acquisition and Installation ofPolice Body Cameras 94,430 $ 94,430 $ 94,430

14-15 2015 Road Improvements 551,595 551,595 551,595

19-15 Various 2015 Improvements 904,760 904,760 904,760

27-15 Improvements to Crosswalk -East Milton and Lenox 47,500 47,500 47,500

35-15 2015 Basketball and Tennis Court Improvements 104,760 104,760 $ 104,705 $ 55

9-16 Environmental Remediation of Various Properties $ 214,285 214,285 214,285

18-16 2016 Road Reconstruction and Resurfacing 1,190,476 $ 250,000 940,476 736,106 204,370

30-16 Various 2016 Capital Improvements 952,380 952,380 227,490 724,890

$ 10,679,224 $ 2,357,141 $ 8,626,179 $ 350,000 $ 250 000 $ 3,810,186 $ 1,812,570 $ 1,068,301 $ 929,315

Improvement Authorizations- Unfunded $ 1,237,259

Less: Unexpended Note Proceeds 13-15 s 15,279

14-15 98,484 19-15 147,842 27-15 43,149

9-16 3,190

307,944

$ 929,315

II4

Description

Underground Storage Tanks Combined Sewer Overflow Study CSO Solids & Floatables Controls

Acq. OfProperty/Constr. Park UJts 2001 Road Resurfacing Redevelopment Various 2004 Capital Improvements Streetscape Improvements Construction of Bridge St. Bike Path Various Streetscape Improvements., Phase 11

2006 Road Improvements Creation of a Park on Essex Street 2007 Road Reconstruction and Resurfacing Sewer 1&1 Downtown Street Loop Modifications Hamilton Arts 2008 Road Resurfacing Project Acquisition of Police and Fire Equipment Streetscape Improvements- Phase IV Acquisition of Equipment and Improvements Reconstruction and Renovation ofMadden Fieldhouse Acqulsition of Real Property

Storm water Control Projects 2009 Road Resurfacings Completion ofR.iverwalk in the Right of Ways

of Essex: and Hancock Streets Acqulsition of Easements Relating to The

Monroe Street Bridge Replacement Acqulsition of Vehicles & Equip. Acqulsitions and Imprvts. Within A Duly

Designated Redevelopments Area Remediation of Hamilton Laundry Site Acquisition of Real Property -324 Hamilton St. Basketball Court Renovations Streetscape Improvements 2011 Road Resurfacing Project Various General Improvements Ground Water Remediation at Caniage City Site Acquisition of Equipment Various General Improvements Various 2012 Capital Improvements Acquisition of Fire Pumper and Rebuild of Street Sweeper Improvements to Elm A venue Resurfacing of a Portion of Hamilton Street Improvements to Police Dept. 911 Dispatch Center Various 2012 Capital Improvements Various Capital Improvements Police Ballistic Equlpment DPW and Fire Equipment 2013 Road Improvements Acquisition of Equipment 2014 Sidewalk Replacement Program

Ord No

41-97 $

70-97 26-00/48-0 1120-02

38-00

14-01/51-01 4-03 21-04

22-04/43-04/43-05 26-05/14-06

31-05/40-06/21-07 10-06

21-06/05-08/33-08/3-11 5-07

0-20-09 36-07/17-09

38-07 4-08 9-08

16-08/24-08 25-08

4-09/35-09 9-09

10-09/19-09 12-09

18-09

41-09 49-09

7-10/12-11

12-IO 19-10 8-11 9-11 10-11 13-11 4-11 32-11 39-11

14-12 18-12 29-12 31-12 33-12

35-12/16-13/24-13 9-13/38-13

10-13 37-13

44-13/12~14

50-13 6-14

EXHIBIT C-7 Page I

CITI' OF RAHWAY STATEMENT OF IMPROVEMENT AUTHORIZATIONS

2016 Authorizations Balance, Capital Deferred Balance,

Decernber3l 2015 Improvement Charges- Cancelled December 31. 2016 Funded Unfunded Fund Unfunded Expended Contracts Funded Unfunded

13,460 $ 13,460 141,085 141,085 52,861 52,861

310,826 310,826

1,113 1,113 8,100 s 2,577 10,677 3,175 3,175

19,239 19,239 34,404 34,404 73,472 73,472 12,498 12,498 58,399 58,399 79,129 79,129

29,398 29,398 18,068 18,068

102,837 102,837 440 440

2,232 2,232 83,329 83,329 69,304 69,304 13,834 13,834 19,134 $ 1,985 17,149 16,483 16,483

65,179 65,179

1,198 1,198 38,218 38,218

584,672 69,585 515,087 23,467 23,467

139,276 39,397 99,879 6,999 6,999

115,160 333 114,827 31,958 690 31,268

6,018 6,018 99,632 1,702 97,930 16,480 3,413 13,067 39,146 39,146 14,776 14,776

159,967 159,967 $ 9,323 9,323

11,719 11,719 239,565 239,565

9,677 9,677 56,631 56,631 80,853 80,853 68,044 30,000 38,044

7,551 4,369 3,182

115

CITY OF RAHWAY STATEMENT OF IMPROVEMENT AUTHORIZATIONS

2016 Authorizations Balance, Capital Deferred

December31 2015 Improvement Charges-

Description Ord. No. Funded Unfunded F~d Unfimded

Rahway Rlver Park Athletic Field Improvements 7-14 $ 1,135,618

Various 2014 Capital Improvements 13-14 131,769

Contribution and/or Loan to the Rahway Redevelopment Agency for the Purpose of Acquiring Real Property 26-14 750,000

2014 Road Reconstruction and Resurfacing Program 27-14 55,568

Asbestos Remediation of City Properties 30-14 6,453

Acquisition and Installation of Police Body Cameras 13-15 16,807

2015 Road Improvements 14-15 222,699

Various 2015 Improvements 19-15 197,001

Improvements to Crosswalk- East Milton and Lenox 27-15 $ 2,100 47,500

2015 Basketball and Tennis Court Improvements 35-15 45,240 104,760 Environmental Remediation of Various Properties 9-16 $ 10,715 s 214,285

2016 Road Reconstruction and Resurfacing 18-16 59,524 1,190,476

Various 2016 Capital Improvements 30-16 47,620 952,380

$ 2~ $ 3,139,819 $ 117,859 $ 2,357,141

Cash Disbursements

Contracts Payable

116

Cancelled Expended Contracts

$ 36,760

37,357 s 222,540

1,528 124,215 49,159

6,451 149,945 221,810

1,045,630

275,110

$ 2 124,104 $ 236,836

$ 993,072

1,131,032

$ 2,124,104

$

$

Balance,

EXHIBIT C-7

Page 2

December 31, 2016 Funded Unfunded

1,135,618 95,009

750,000 240,751

6,453 $ 15,279

98,484 147,842 43,149

55 3,190

204,370

724,890

5,042,598 $ 1,237,259

Purpose

2006 General Obligation Bonds

2006 Refunding Bonds

20 II General Obligation Bonds

2012 Refunding Bonds

Date of Issue

6/15/2006

1/4/2007

4/15/20 II

5/24/2012

$

CITY OF RAHWAY STATEMENT OF GENERAL SERIAL BONDS

Original Issue

4,319,000

7,945,000

11,650,000

4,994,538

Maturities of Bonds Outstanding

December 3 1. 20 16 Date Amount

4115/2017 $ 560,000 4115/2018 640,000

4115/2018-20 700,000

12/1/2017 451,389

1211/2018 489,005

12/112019 484,825

1211/2020 509,903

12/1/2021 509,903

1211/2022 501,544

12/112023 493,185

Interest Rate

4.000 4.000 4.000

3.000

3.000

2.000

2.125

2.375

2.500

2.625

117

%

Balance, December 3 1,

2015

s 275,000

5,447,932

10,150,000

3,895,322

Increased Decreased

$ 275,000

5,447,932

7,550,000

455,569

EXHIBIT C-8 Page 1

Balance,

December 31, 2016

$ 2,600,000

3,439,753

EXHIBIT C-8 Page 2


Maturities of Bonds Outstanding Balance, Balance,

Date of Original December3L ?016 Interest December 31, December 31,

Pumose Issue Issue Date Amount Rate 2015 Increased Decreased 2016

2013 General Obligation Bonds 913012013 $ 7,425,000 911512017-18 $ 325,000 3.000 %

9115/2019· 345,000 3.000

911512020 355,000 3.000

911512021 365,000 3.000

911512022 375,000 3.000

911512023 385,000 3.000

911512024 395,000 3.000

911512025 405,000 3.125

911512026 420,000 3.375

9/lS/2027 430,000 3.500

9115/2028 440,000 3.750

911512029 455,000 4.000

911512030 475,000 4.000

9115/2031 490,000 4.000

911512032 515,000 4.000 $ 6,815,000 $ 315,000 $ 6,500,000

2014 Refunding Bonds 9/29/2014 1,720,000 611512017-2018 230,000 3.000 611512019 230,000 4.000

611512020-2022 250,000 4.000 6/15/2023 270,000 4.000 1,710,000 1,710,000

2015 General Obligation Bonds 8/l/2015 9,460,000 8/l/2017 350,000 3.000 8/l/2018 390,000 4.000 8/l/2019 450,000 4.000 8/l/2020 525,000 4.000

8/l/2021 625,000 4.000 81112022-2025 650,000 4.000

8/l/2026 680,000 3.000 8/l/2027 690,000 3.000

8/l/2028-2029 700,000 3.000 8/l/2030 700,000 3.125 8/l/2031 700,000 3.250 9,460,000 350,000 9,110,000

118

EXHIBIT C-8

Page 3



Date of Original December 31, ?016 Interest December 3 I, December 3 1,

Pumose Issue Issue Date Amount Rate 2015 Increased Decreased 2016

2015 Refunding Bonds 8/28/2015 $ 4,463,056 10/1/2017 $ 516,102 4.000 % 1011/2018 506,272 4.000

1011/2019 501,357 4.000 10/112020 491,526 4.125

10/112021 486,611 4.125 1011/2022 476,780 4.200

I 0/1/2023 486,611 4.250 1011/2024 476,780 4.250 $ 4,418,819 $ 476,780 $ 3,942,039

2016 General Obligation Bonds 8/4/2016 8,627,000 8/1/2017-2020 400,000 3.000 8/1/2021 425,000 3.000

8/1/2022-2023 500,000 4.000 8/112024-2026 600,000 4.000 8/1/2027-2029 750,000 3.000

8/1/2030 755,000 3.000 8/1/2031 797,000 3.000 $ 8,627,000 8,627,000

2016 Refunding Bonds 9/15/2016 11,683,178 4/15/2017 498,111 2.000 4/15/2018 498,628 3.000 4/15/2019 489,146 3.000

4/15/2020 484,404 3.000

4115/2021 1,179,921 4.000

4115/2022 1,175,180 4.000

4/15/2023 1,175,180 4.000 4/15/2024 1,170,180 4.000

4115/2025 1,160,697 4.000

4115/2026 1,131,731 2.000 4115/2027 690,000 4.000

4115/2028 685,000 4.000

4115/2029 675,000 4.000 4115/2030 670,000 4.000 11,683,178 __ 1_1,683,178

$ 42,172,073 $ 20,310,178 $ 14,870,78] $ 47,611,970

Paid by Budget Appropriation $ 2,929,685 Refunded 11,940,596

$ 14,870,281

119

EXHIBIT C-9

CITY OF RAHWAY

STATEMENT OF GRANTS RECEIVABLE

Balance, Balance, Pledged to:

December 31, Grants Cash December 31, Improvement Reserve for 2015 Awarded Receipts 2016 Authorization Receivable

NJ Department ofTransJJortation

Ord. 27-14-2014 Road Improvements $ 36,098 $ 36,098

Or d. 14-15-2015 Road Program 53,956 53,956

Ord. 18-16-2016 Road Program $ 195,825 $ 195,825 $ 195,825

County of Union

Ord. 3-14 - HS Park Improvements 75,950 75,950 75,950

Ord. 18-16-2016 Road Program 50,000 50,000 50,000

Recreation Trust

Ord. 17-07- Madden Field Lighting 200,000 200,000 $ 200,000

Ord. 35-09- Madden Fieldhouse 100,000 100,000 100,000

Ord. 35-15 Basketball and Tennis Courts 40,000 40,000 40,000

Community Development Block Grants

Ord. 27-14-2014 Road Improvements I ,635 1,635 Ord. 18-16 - 2016 Road Program 250,000 250,000

$ 507,639 $ 495,825 $ 341,689 $ 661,775 $ 240,000 $ 421,775

Cash Receipts $ 37,733

Due from Current Fund 53,956 Due from CDBG Trust Fund 250,000

$ 341,689

120

CITY OF RAHWAY STATEMENT OF LOANS RECEIVABLE

Balance, December 3 l, 2015


Pledged to: Improvement Authorization

121

EXHIBIT C-10

NJ Environmental Infrastructure

$ 13,495

$ 13,495

$ 13,495

EXlllBITC-11

CUYOFRAHWAY STATEMENT OF BOND ANTICIPATION NOTES

Date of Balance Balance

Original Date of Date of Interest December 31, December3l,

Ord No_ Improvement Description ~ Issue Maturitv "'" 2015 Increases Decreases 2016

14-11 Tax Appeal Refunding- Merck 8/11/2011 8/6/2015 8/5/2016 2.00% $ 350,000 $ 350,000

33-12 Improvements to Police Dept. 911 Dispatch Center 8/9/2013 8/6/2015 8/5/2016 2.00% 247,500 247,500 1.50%

35-12/16-13/24-13 Various 2012 Capital Improvements 8/9/2013 8/6/2015 8/5/2016 2.00% 1,304,757 1,304,757

9-13 Various 2013 Capital Improvements 8/912013 8/6/2015 8/5/2016 2.00% 1,475,945 1,475,945

10-13 Acquisition ofPolice Ballistic Equipment 8/9/2013 8/6/2015 8/512016 2.00% 38,000 38,000

22-13 Investigation of Groundwater Contamination and Remediation 8/9/2013 8/6/2015 8/5/2016 2.00% 190,400 190,400

37-13 DPW and Fire Equipment 8/8/2014 8/6/2015 8/5/2016 2.00% 522,500 522,500

44-13/02-14 20 13 Road Improvements 8/8/2014 8/6/2015 8/5/2016 2.00% 843,100 843,100

50-13 Traffic Maintenance Pickup Truck 8/8/2014 8/6/2015 815/2016 2.00% 147,250 147,250

03-14 Various High School Park Improvements 8/8/2014 8/6/2015 815/2016 2.00% 704,000 704,000

06-14 2014 Sidewalk Replacement Program 8/8/2014 8/6/2015 8/5/2016 2.00% 142,500 142,500

07-14 Rahway River Park Athletic Field Improvements 8/8/2014 8/6/2015 8/5/2016 2.00% 1,238,000 1,238,000

13-14 Various 2014 Capital Improvements 8/8/2014 8/6/2015 8/512016 2.00% 571,427 571,427

26-14 Acquisitions and Imprvts. Within A Duly Designated Redevelopments Area 8/6/2015 8/6/2015 8/5/2016 2.00% 750,000 750,000

27-14 Road Resurfacing Project 8/6/2015 8/6/2015 8/5/2016 2.00% 744,608 744,608

30-14 Asbestos Remediation 8/612015 8/6/2015 8/5/2016 2.00% 71,400 71,400

13-15 Acquisition and Installation ofPolice Body Cameras 8/4/2016 8/4/2016 8/3(2017 1.50% $ 94,430 $ 94,430

14-15 2015 Road Improvements 8/4/2016 8/4/2016 8/3/2017 1.50% 551,595 551,595

19-15 Various 2015Improvements 8/4/2016 8/4f2016 8/3/2017 1.50% 904,760 904,760

27-15 Improvements to Crosswalk- East Milton and Lenox 8/4/2016 8/4/2016 8/3/2017 1.50% 47,500 47,500

9-16 Environmental Remediation ofVarious Properties 8/4/2016 8/4/2016 8/3/2017 1.50% 214,285 214,285

____ 9,341,387 $ 1,812,570 $ 9.341,387 L_h812,570

New Issues- Cash Receipts $ 1,262,570 Due from Current Fund 550,000 Paid with Bond Sale Proceeds $ 8,627,000 Paid with Excess Proceeds 364,387 Paid by Budget Appropriation 350,000

$ 1.812.570 $ 9,341,387

122

EXHIBIT C-!2

CITY OF RAHWAY STATEMENT OF GREEN ACRES LOAN PAY ABLE

Ord. Or d. Ord. Total 22-95 8-97 9-97

Balance, December 3!, 2015 $ 402,411 $ 8,407 $ 102,305 $ 291,699

Decreased by: Principal Paid by Budget Appropriation 65,791 8,407 33,425 23,959

Balance, December 3!, 2016 $ 336,620 $ $ 68,880 $ 267,740

EXHIBIT C-13

STATEMENT OF DEPARTMENT OF COMMUNITY AFFAIRS LOAN PAYABLE


Decreased by:

Paid by Budget Appropriation 20,000

Balance, December 31, 20 !6 $ 20,000

EXHIBIT C-!4

STATEMENT OF NEW JERSEY REDEVELOPMENT AUTHORITY LOAN PAYABLE

Balance, December 31,2015 $ 187,500

Balance, December 31, 20 16 $ !87,500

EXHIBIT C-15

STATEMENT OF CAPITAL IMPROVEMENT FUND

Balance, December 3!, 20!5 $ 2!8,034

Increased by: Current Fund Budget Appropriation !60,000

378,034

Decreased by: Appropriated to Finance Improvement Authorizations 1!7,859

Balance, December 3!, 2016 $ 260,!75

!23

CITY OF RAHWAY STATEMENT OF DUE FROM RAHWAY REDEVELOPMENT AGENCY


Increased by:

Redevelopment Agency Expenditures Paid by General Capital Fund


STATEMENT OF CONTRACTS PAYABLE


Increased by: Charged to Improvement Authorizations

Decreased by:

Cash Disbursements Cancellations


$ 1,500,415

236,836

STATEMENT OF RESERVE FOR PRELIMINARY EXPENSES



124

EXHIBIT C-16

$ 39,544

772,449

$ 811,993

EXHIBIT C-1 7

$ 1,902,433

l,l31,032

3,033,465

1,737,251

$ 1,296,214

EXHIBIT C-18

$ 8,257

$ 8,257

CITY OF RAHWAY STATEMENT OF RESERVE FOR PAYMENT OF DEBT

Increased by: Grant Proceeds on Funded Ordinances General Capital Fund Receipts Deposited in Current Fund


$ 32,523 59,455

STATEMENT OF DEFERRED CHARGES- CANCELLED GRANTS RECEIVABLE



125

EXHIBIT C-19

$ 91,978

$ 91,978

EXHIBIT C-20

$ 140,279

$ 140,279

EXHIBIT C-21

CITY OF RAHWAY

STATEMENT OF BONDS AND NOTES AUTHORIZED BUT NOT ISSUED

Balance, Balance,

Or d. December 31, 2016 Notes Issued Grant December 31,

No. Improvement Description 2015 Authorizations for Cash Proceeds 2016

13-15 Acquisition and Installation of Police Body Cameras $ 94,430 $ 94,430

14-15 2015 Road Improvements 551,595 551,595

19-I5 Various 2015 Improvements 904,760 904,760

27-15 Improvements to Crosswalk - East Milton and Lenox 47,500 47,500

35-15 2015 Basketball :3nd Tennis Court Improvements 104,760 $ 104,760

9-16 Environmental Remediation of Various Properties $ 214,285 214,285

18-16 2016 Road Reconstruction and Resurfacing 1,190,476 $ 250,000 940,476

30-16 Various 2016 Capital Improvements 952,380 952,380

$ 1,703,045 $ 2,357,141 $ 1,812,570 $ 250,000 $ 1,997,616

126

WATER UTILITY FUND

CITY OF RAHWAY WATER UTILITY CASH

STATEMENT OF CASH- COLLECTOR/TREASURER


Increased by Receipts: Consumer Accounts Receivable Water Connection Fees Interest on Investments Capital Improvement Fund Bond Anticipation Notes Premium on Bond Anticipation Notes Receipts from Current Fund Receipts ti·mn Water Utility Capital Fund Receipts from Sewer Utility Operating Fund

Decreased by Disbursements: 2016 Budget Appropriations 2015 Appropriation Reserves Encumbrances Payable Contracts Payable Improvement Authorizations Interest on Bonds and Notes Payments to Current Fund Payments to General Capital Fund Water Utility Capital Fund Expenditures

Paid by Water Utility Operating Fund Payments to Water Utility Operating Fund


Analysis of Balance

Cash Cash with Fiscal Agents

Operating

$ 6,368,360 118,600

4,381

450,939 2,109,910

4,138,267 34,737 45,263

279,547 2,699,470

580,673

127

$ 443,536

9,052,190

9,495,726

7,777,957

$ 1,717,769

$ 1,717,769

$ 1,717,769

$

EXHIBIT D-5

Capital

2,662 50,000

146,469 55,071

320,418

719,670 2,760,327

1,000,000

450,939

$ 14,426,331

574,620

15,000,951

4,930,936

$ 10,070,015

$ (22,849) 10,092,864

$ 10,070,015

Fund Balance

CITY OF RAHWAY WATER UTILITY CAPITAL FUND

ANALYSIS OF CASH

Capital Improvement Fund Due to Current Fund Due to Water Utility Operating Fund Contracts Payable

Improvement Authorizations

Ord. No.

30-12 28-14 2-15/14-16

10-15

Replacement of Hamilton St. Water Main Various 2014 Water Utility Capital Improvements Improvements to Water Treatment Plant and

Construction of New Interconnection Pipeline Various 2015 Water Utility Improvements

128

EXHIBIT D-6


2016

$ 345,016 106,472 320,418 902,261

8,098,924

190,893 142,086

(739,526) 703,471

$ 10,070,015



Account

Filtration Plant Improvements Wells and Distribution System General Equipment

CITY OF RAHWAY STATEMENT OF CHANGE FUND

WATER UTILITY OPERATING FUND

STATEMENT OF FIXED CAPITAL WATER UTILITY CAPITAL FUND

Increased by: Transferred from

Balance, Fixed Capital December 31 Authorized and

2015 Uncompleted

$ 18,091,708 8,786,803

573,836 Various Water System Improvements 5,571,112 Water Treatment Plant Upgrade $ 2,700,000 Land 25,000

$ 33,048,459 $ 2,700,000

129

EXHIBITD-7

$ 200

$ 200

EXHIBIT D-8


2016

$ 18,091,708 8,786,803

573,836 5,571,112 2,700,000

25,000

$ 35,748,459

CITY OF RAHWAY STATEMENT OF FIXED CAPITAL AUTHORIZED AND UNCOMPLETED

WATER UTILITY CAPITAL FUND

Balance, Increased by:

Or d. Ordinance December 31 2016

No. Imorovement Description Date Amount 2015 Authorizations

30~12/23MI3 Replacement of Hamilton St. Water Main 2012 $ 1,375,000 $ 1,375,000

34M 13/39-14 Preliminary Costs - Water Treatment Plant Upgrade 2013/2014 2,700,000 2,700,000

28-14 Various 2014 Water Utility Capital Improvements 2014 300,000 300,000

2-15 Improvements to Water Treatment Plant and Construction of New Interconnection Pipeline 2015 19,785,000 19,785,000

10-15 Various 2015 Water Utility Improvements 2015 925,000 925,000

28-16 Various Improvements to Water Treatment Plant 7/811905 400,000 $ 400,000

$ 25,085,000 $ 400,000

130

EXHIBIT D-9

Decreased by: Balance,

Transferred to December 31 Fixed Capital 2016

$ 1,375,000

$ 2,700,000

300,000

19,785,000

925,000

400,000

$ 2,700,000 $ 22,785,000


Increased by: Water Rents Levied

Decreased by: Collections


Emergency Authorizations

CITY OF RAHWAY STATEMENT OF CONSUMER ACCOUNTS RECEIVABLE


STATEMENT OF DEFERRED CHARGES WATER UTILITY OPERATING FUND


2015

$ 360,000

Increased by: Results from

2016

Overexpenditure of Appropriations 29,!54 Overexpenditure of Appropriation Reserve $ 34,105

$ 389,!54 $ 34,105

131

EXHIBIT D-10

$ 828,397

6,408,072

7,236,469

6,368,360

$ 868,109

EXHIBIT D-11

2016 Balance, Budget December 31,

Appropriation 2016

$ 360,000 29,154

$ 34,105

$ 389,154 $ 34,105

Operating Other Expenses




2015

$

Cancelled Encumbrances

$

$

$

Adjusted Cash Balance Disbursements

20,528 $ 54,633

20,528 $ 54,633

20,528

Cash Disbursements $ 34,737 Accounts Payable 19,896

$ 54,633

132

$

$

Balance Lapsed

EXHIBIT D-12

$

$

OverExpended

34, I 05

34,105


Increased by:

CITY OF RAHWAY STATEMENT OF ENCUMBRANCES PAYABLE


Charged to 2016 Budget Appropriations

Decreased by:

Cash Disbursements

Cancelled to Appropriation Reserves


STATEMENT OF ACCOUNTS PAYABLE


Increased by: Transferred from Appropriation Reserves

Decreased by:

Cancelled to Operations


$ 45,263

20,528

STATEMENT OF DUE FROM WATER UTILITY CAPITAL FUND WATER UTILITY OPERATING FUND


Increased by: Interest Earned $ 2,662 Water Utility Capital Fund Expenditure Paid by Water Utility Operating Fund 580,673

Decreased by: Cash Receipts from Water Utility Capital Fund 450,939 Budget Appropriation - Bonds and Notes Authorized but not Issued I 0,401

Balance, December 31, 20 16 133

EXHIBIT D-13

$ 65,791

32,483

98,274

65,791

$ 32,483

EXHIBIT D-14

$ 800

19,896

20,696

800

$ 19,896

EXHIBIT D-15

$ 780,266

583,335

1,363,601

461,340

$ 902,261

CITY OF RAHWAY STATEMENT OF DUE FROM/TO CURRENT FUND


Balance, December 31, 2015 (Due to)

Increased by:

Water Utility Operating Fund Expenditures Paid by Current Fund

Decreased by:

Payments to Current Fund

Balance, December 31, 2016 (Due from)

STATEMENT OF DUE TO GENERAL CAPITAL FUND WATER UTILITY CAPITAL FUND


Decreased by: Payments to General Capital Fund

Increased by: Receipts from Current Fund


STATEMENT OF DUE TO CURRENT FUND WATER UTILITY CAPITAL FUND

134

EXHIBIT D-16

$ 928,520

1,083,225

2,011,745

2,699,470

$ 687,725

EXHIBIT D-17

$ 1,000,000

$ 1,000,000

EXHIBIT D-18

$ 320,418

$ 320,418

Ordinance Number lmorovement Description

30-12/23-13 Replacement of Hamilton St. Water Main

34-13/ 39-14 Preliminary Costs - Water Treatment Plant Upgrade

28-14 Various 2014 Water Utility Capital Improvements

2-15/14-16 Improvements to Water Treatment Plant and

Construction of New Interconnection Pipeline

10-15 Various 2015 Water Utility Improvements

28-16 Various Improvements to Water Treatment Plant

$



Balance, December 31 2015 2016

Amount Funded Unfunded Authorizations

1,375,000 $ 190,893

2,700,000 24,402

300,000 108,571

19,785,000 16,359,240

925,000 721,728

400,000 $ 400,000

$ $ 17,404,834 $ 400,000

Debt Authorizations $ 400,000

Cash Disbursements Due to Water Utility Operating Fund Contracts Payable

135

EXHIBIT D-19

Balance Paid or Cancelled December 31 2016 Charged Contracts Funded Unfunded

$ 190,893

$ 24,402

$ 33,515 142,086

10,802,666 5,556,574

18,257 703,471

400,000

$ 10,845,325 $ 33,515 $ $ 6,993,024

$ 2,760,327 580,673

7,504,325

$ 10,264,652


Increased by:

CITY OF RAHWAY STATEMENT OF CONTRACTS PAYABLE


Charges to Improvement Authorizations

Decreased by:

Cash Disbursements

Cancellations


$ 719,670

33,515

STATEMENT OF RESERVE FOR AMORTIZATION WATER UTILITY CAPITAL FUND


Increased by: Serial Bonds Paid by Operating Budget

Bond Anticipation Note Principal Paid by Operating Budget


$ 800,000

203,222

STATEMENT OF RESERVE FOR DEFERRED AMORTIZATION WATER UTILITY CAPITAL FUND

Balance, December 31, 2015 .

Increased by:

Budget Appropriation -Deferred Charges Unti.mded


136

EXHIBIT D-20

$ 1,347,784

7,504,325

8,852,109

753,185

$ 8,098,924

EXHIBIT D-21

$ 24,860,710

1,003,222

$ 25,863,932

EXHIBIT D-22

$ 293,528

I 0,401

$ 303,929

Purpose Date of Issue

Original Issue

Improvement of Water System 6/15/2006 $ 2,775,000

Refunding Water Utility 12/1/2009 5,190,000

2014 Refunding Bonds 9/29/2014 1,670,000

CITY OF RAHWAY STATEMENT OF WATER SERIAL BONDS


Maturities of Bonds Outstanding

December 31, 2016 Date Amount

12/1/2017 $ 655,000 12/1/2018 680,000

6/15/2017-2018 225,000 6/15/2019 225,000

6/15/2020-2021 245,000 6/15/2022 240,000 6/15/2023 265,000

Interest Rate

3.00% 3.50%

3.00% 4.00% 4.00% 4.00% 4.00%


2015

$ 165,000

1,970,000

1,670,000

$ 3,805,000

Paid by Budget Appropriation

137

Increased

$

EXHIBIT D-23


Decreased 2016

$ 165,000

635,000 $ I ,335,000

1,670,000

$ 800,000 $ 3,005,000

$ 800,000

EXHIBIT D-24


STATEMENT OF BOND ANTICIPATION NOTES


Original Date of Date of Interest December 31 December 31 Ord. No. 1m movement Description Issue Issue Maturitv Rate 2015 Increased Decreased 2016

24-06 Various Water Capital Imprvts. 4/30/2008 6/29/2016 6/29/2017 2.00% s 886,180 886,180

9/29/2015 6/29/2016 2.00% $ 916,253 $ 916,253

34-07 Various Water System Improvements 4/30/2008 6/29/2016 6/29/2017 2.00% 1,108,031 1,108,031

9/29/2015 6/29/2016 2.00% 1,123,221 1,123,221

36-09/13-10 Various Water System Imprvts. 8/11/2011 8/4/2016 8/3/2017 1.50% 1,370,886 1,370,886

8/6/2015 8/5/2016 2.00% 1,388,924 1,388,924

42-09 Water System lmprvts. Relating

to The Monroe Street Bridge 8/11/2011 8/4/2016 8/3/2017 1.50% 144,303 144,303 8/6/2015 8/5/2016 2.00% 146,202 146,202

15-12 2012 Various Water Improvements 8/10/2012 8/4/2016 8/3/2017 1.50% 705,868 705,868

8/6/2015 8/5/2016 2.00% 757,694 757,694

30-12/23-13 Replacement of Water Main on Hamilton St. 8/9/2013 8/4/2016 8/3/2017 1.50% 1,275,436 1,275,436

8/6/2015 8/5/2016 2.00% 1,309,000 1,309,000

34-13 Water Treatment Plant Improvements 9/30/2013 6/29/2016 6/29/2017 2.00% 1,280,242 1,280,242

9/29/2015 6/29/2016 2.00% 1,332,874 1,332,874

28-14 Water System Improvements 9/29/2014 6/29/2016 6/29/2017 2.00% 285,700 285,700

9/29/2015 6/29/2016 2.00% 285,700 285,700

10-15 Various 2015 Water Utility Improvements 9/29/2015 6/29/2016 6/29/2017 2.00% 880,952 880,952 9/29/2015 6/29/2016 2.00% 880,952 880,952

39-14 Water System Plant Improvements 6/30/2015 1,238,000 1,238,000 6/30/2015 6/29/2016 0.0775% 1,238,000 1,238,000

2-15 Improvements to Water Treatment Plant and

Construction of New Interconnection Pipeline 6/30/2015 6/29/2016 6/29/2017 0.0000% 13,488,900 13,488,900 6/30/2015 6/29/2016 0.0775% 13,342,431 13,34?,431

$ 22,721,251 $ 22,664,498 $ 22,721,251 s 22,664,498

Renewals $ 22,518,029 $ 22,518,029

Issued for Cash 146,469 Paid by Budget Appropriation 203,222

$ 22,664,498 s 22,721,251

138

Balance, December 3 1, 2015

Increased by:

CITY OF RAHWAY STATEMENT OF CAPITAL IMPROVEMENT FUND


Water Utility Operating Budget Appropriation

Decreased by:

Appropriated to Finance Improvement Authorizations


EXHIBIT D-25

$ 56,472

50,000

106,472

$ 106,472

EXHIBIT D-26

STATEMENT OF ACCRUED INTEREST PAY ABLE ON BONDS AND NOTES WATER UTILITY OPERATING FUND


Increased by: Budget Appropriations

I nteres! on Bonds

Decreased by: Interest Paid


$

$

139

65,362

285,000

350,362

279,547

70,815

Ordinance Number

45-97

3-04

24-06

34-13

2-15/4-16

28-16



Balance, December 31, 2016 Budget

Improvement Description 2015 Authorizations Apnronriation

Water Main Replacement $ 783 $ 783

Rehabilitation and Reconstruction of Water System Interconnections 8,572 8,572

Various Water Capital Improvements 620 620

Upgrade to Water Treatment Plant 426 426

Improvements to Water Treatment Plant and Construction of New Interconnection Pipeline 6,442,569

Various Improvements to Water Treatment Plant $ 400,000

$ 6,452,970 $ 400,000 $ 10,401

140

EXHIBIT D-27

Balance, Notes Issued December 31,

for Cash 2016

$ 146,469 $ 6,296,100

400,000

$ 146,469 $ 6,696,100

SEWER UTILITY FUND

EXHIBIT E-5

CITY OF RAHWAY SEWER UTILITY CASH

STATE ME NT OF CASH - COLLECTORrfREASURER

Operating Capital

Balance, December 31, 2015 $ 1,671,637 $ 910,924

Increased by Receipts: Consumer Accounts Receivable $ 4,488,364 Industrial Sewer Flow Charges 302,070 Miscellaneous Revenue 63,445 Interest on Investments 1,835 $ 1,296

Receipts from Current Fund 351,434 Receipts from General Capital Fund 198,566 Receipts from Sewer Utility Capital Fund 800,507 Capital Improvement Fund 21,200

5,656,221 572,496

7,327,858 1,483,420

Decreased by Disbursements: 2016 Budget Appropriations 4,766,868 2015 Appropriation Reserves 14,863 Encumbrances Payable 25,712 Improvement Authorizations 458,708 Contracts Payable 128,581 Accrued Interest on Bonds and Loans 79,344 Payments to Current Fund 56,440 Payments to Water Utility Operating Fund 2,109,910 Payments to Sewer Utility Operating Fund 800,507

7,053,137 1,387,796

Balance, December 31, 2016 $ 274,721 $ 95,624

141

Fund Balance Capital Improvement Fund Contracts Payable Reserve for Payment of Debt

CITY OF RAHWAY SEWER UTILITY CAPITAL FUND

ANALYSIS OF CASH

Due from Sewer Utility Operating Fund

Improvement Authorizations

Ord. No.

11-09/21-09 Wastewater Improvements 34-12 Improvements to Donald A venue Storm Sewer

36-13/25-14 Emergency Sinkhole Repair 45-13 Flood Control Mitigation 29-14 Kline Place Storm Sewer 6-16 Inflow and Infiltration Project (Phase III) 19-16 Improvements to Witherspoon St Outfall and Monroe St Sewer Lines

142

EXHIBITE-6


2016

$ 49,060 374,500

52,398 111,892

(798,916)

185,645 54,240 43,510

231,911 185,427

(389,692) (4,351)

$ 95,624

EXHIBIT E-7

CITY OF RAHWAY STATEMENT OF CONSUMER ACCOUNTS RECEIVABLE

SEWER UTILITY OPERATING FUND


Increased by: Sewer Rents Levied

Decreased by: Cash Receipts


STATEMENT OF DEFERRED CHARGES SEWER UTILITY OPERATING FUND

Balance, December 3 1,

2015 Increases

Overexpenditure of Appropriations $ 20,745 ~$~~~

143

$

$ 349,806

4,506,511

4,856,317

4,488,364

$ 367,953

EXHIBIT E-8


Decreases 2016

20,745 ~$~~~

Account

CITY OF RAHWAY STATEMENT OF FIXED CAPITAL SEWER UTILITY CAPITAL FUND

Increased by: Transfers from

Balance, Fixed Capital December 31, Authorized and

2015 Uncompleted

Various Sewer System Improvements $ 3,655,428 $

$ 3,655,428 $

144

EXHIBIT E-9


2016

$ 3,655,428

$ 3,655,428

Ord. No.

11-09/21-09

34-12

36-13/25-14

45-13

29-14

6-16

19-16

CITY OF RAHWAY STATEMENT OF FIXED CAPITAL AUTHORIZED AND UNCOMPLETED

SEWER UTILITY CAPITAL FUND

Ordinance Improvement Description Date Amount

Wastewater Improvements 2009 $ 550,000

Improvements to Donald Avenue Stann Sewer 2012 140,000

Emergency Sinkhole Repair 2013 300,000

Flood Control Mitigation 2013 300,000

Improvement of the Stonn Sewer on Kline Place 2014 350,000

Inflow and Infiltration Project (Phase III) 2016 425,000

Improvements_ to Witherspoon St Outfall and Monroe St Sewer Lines 2016 325,000

145

$

$


2015

550,000

140,000

500,000

300,000

350,000

1,840,000

Increased by: 2016

Authorizations

$ 425,000

325,000

$ 750,000 $

Decreased bv: Transfers to

Fixed Capital

$

$

EXHIBIT E-10


2016

550,000

140,000

500,000

300,000

350,000

425,000

325,000

2,590,000

CITY OF RAHWAY STATEMENT OF DUE FROMffO CURRENT FUND



Increased by: Payments to Current Fund

Decreased by: Sewer Utility Operating Fund Expenditures Paid by Current Fund



Decreased by:

Receipts from Current Fund

STATEMENT OF DUE FROM CURRENT FUND SEWER UTILITY CAPITAL FUND

146

EXHIBIT E-ll

$ 8,172

56,440

64,612

207,601

$ 142,989

EXHIBIT E-12

$ 351,434

$ 351,434

CITY OF RAHWAY STATEMENT OF DUE FROM WATER UTILITY OPERATING FUND



Increased by: Payments to Water Utility Operating Fund


STATEMENT OF DUE FROM/TO SEWER UTILITY OPERATING FUND SEWER UTILITY CAPITAL FUND


Increased by:

Interest Earned

Decreased by:

Payments to Sewer Utility Operating Fund


STATEMENT OF DUE FROM GENERAL CAPITAL FUND SEWER UTILITY CAPITAL FUND


Decrease by:

Receipts from General Capital Fund

147

EXHIBIT E-13

$ 385,852

2,109,910

$ 2,495,762

EXHIBIT E-14

$ 295

1,296

1,591

800,507

$ 798,916

EXHIBIT E-15

$ 198,566

$ 198,566



Balance Balance Paid December 3 I , After or

2015 Transfers Charged

Operating Salaries and Wages $ 717 $ 17 Other Expenses 16,628 17,328 $ Sewer Treatment Expense Rahway Valley Sewer Authority 1 Sewer Permit Fees 847 847

Statutory Expenditures Social Security 22 22

$ 18,215 $ 18,215 $

STATEMENT OF ENCUMBRANCES PAYABLE SEWER UTILITY OPERATING FUND


Increased by: Charged to Budget Appropriations



148

14,863

14,863

EXHIBIT E-16

Balance Lapsed

$ 17 2,465

847

22

$ 3,352

EXHIBIT E-1 7

$ 25,712

3,021

28,733

25,712

$ 3,021

EXIDBITE-18




Date of Original December 31. 2016 Interest December 31, December 31, Pumose Issue Issue Date Amount Rate 2015 Increased Decreased 2016

2006 Refunding Bonds 1/4/2007 $ 410,828 $ 297,068 $ 297,068

2012 Refi.mding Bonds 5124/2012 980,462 12/1/2017 $ 88,611 3.000 %

121112018 95,995 3.000

121112019 95,175 2.000

12/1/2020 100,097 2.125

12/1/2021 100,097 2.375

121112022 98,456 2.500

121112023 96,815 2.625 764,678 89,431 $ 675,247

2015 Refunding Bonds 812812015 76,944 10/1/2017 8,898 3.00 101112018 8,728 4.00 10/1/2019 8,643 4.00 10/I/2020 8,474 4.00 10/1/2021 8,389 4.00 10/1/2022 8,220 4.00 101112023 8,389 4.00 101112024 8,220 4.00 76,181 8,220 67,961

2016 Refunding Bonds 9115/2016 $ 251,822 411512017 26,889 2.00 4/15/2018 26,372 3.00 4/15/2019 25,854 3.00 411512020 25,596 3.00 4/15/2021 25,079 4.00 4/1512022 24,820 4.00 4/15/2023 24,820 4.00 4/15/2024 24,820 4.00 411512025 24,303 4.000 4/15/2026 23,269 2.000 $ 251,822 $ $ 251,822

$ 1,137,927 $ 251,822 $ 394,719 $ 995,030

Paid by Budget Appropriation $ 125,315

Refunded 269.1.404

$ 394,719

149

CITY OF RAHWAY STATEMENT OF ENVIRONMENTAL INFRASTRUCTURE LOAN PAYABLE



Decreased by:

Principal Paid by Budget Appropriation


ISO

EXHIBIT E-19

$ 859,252

113,785

$ 745,467

EXHIBIT E-20


STATEMENT OF BOND ANTICIPATION NOTES


Original Date of Date of Interest December 31 December 31

Ord. No. Imorovement Description Issue Issue Maturitv Rate 2015 Increased Decreased 2016

11-09 /21-09 Wastewater Improvements 811112011 8/4/2016 8/3/2017 1.50% $ 529,074 $ 529,074 8/6/2015 8/5/2016 2.00% $ 536,037 $ 536,037

41-11 Sewer System Improvements 8/10/2012 8/4/2016 8/3/2017 1.50% 36,912 36,912

8/6/2015 8/5/2016 2.00% 37,456 37,456

34-12 Improvements to Donald A venue Storm Sewer 8/9/2013 8/4/2016 8/3/2017 1.50% 129,882 129,882

8/6/2015 8/5/2016 2.00% 133,300 133,300

45-13 Flood Control Mitigation 8/8/2014 8/4/2016 8/3/2017 1.50% 300,000 300,000 8/6/2015 8/5/2016 2.00% 300,000 300,000

36-13/25-14 Emergency Sinkhole Repair 8/6/2015 8/4/2016 8/3/2017 1.50% 500,000 500,000 8/6/2015 8/5/2016 2.00% 500,000 500,000

29-14 Storm Sewer- Kline Place 8/6/2015 8/4/2016 8/3/2017 1.50% 350,000 350,000 8/6/2015 8/5/2016 2.00% 350,000 350,000

$ 1,856,793 $ 1,845,868 $ 1,856,793 $ 1,845,868

Renewals $ 1,845,868 $ 1,845,868 Paid by Budget Appropriation 10,925

$ 1,845,868 $ 1,856,793

151

Ordinance



Balance, December31.2015 2016

Number Improvement Description Amount Funded Unfunded Authorizations Expended

11-09/21-09 Wastewater Improvements 34-12 Improvements to Donald A venue Storm Sewer

36-13/ 25-14 Emergency Sinkhole Repair 45-13 Flood Control Mitigation Project

29-14 6-16

19-16

Improvement of the Storm Sewer on Kline Place Inflow and Infiltration Project (Phase ill)

Improvements to Witherspoon St Outfall and Monroe St Sewer Lines

$ 550,000 140,000 200,000

350,000 425,000

325,000

152

$ 185,645 54,240 76,172

185,055

254,492 $

$ 755,604 $

Cash Disbursements Contracts Payable

$

425,000

325,000

750,000 $

$

32,662 $

69,065 389,692

4,351

495,770 $

458,708 37,062

$ 495,770

Cancelled Contracts

46,856

EXlllBIT E-21

Balance, December 31 2016

Funded Unfunded

$ 185,645 54,240 43,510

231,911

185,427 35,308

320,649

46,856 ;:.$ ___ _ $ 1,056,690


Increased by:

CITY OF RAHWAY STATEMENT OF CONTRACTS PAYABLE


Charges to Improvement Authorizations

Decreased by: Cash Disbursements Cancellations


$ 128,58 I 46,856

STATEMENT OF CAPITAL IMPROVEMENT FUND SEWER UTILITY CAPITAL FUND

Balance, December 3 I, 20 !5

Increased by: Budget Appropriation


STATEMENT OF ACCRUED INTEREST ON BONDS AND LOANS SEWER UTILITY OPERATING FUND

Balance, December 3 l, 2015

Increased by: Budget Appropriations

Interest on Bonds and Loans

Decreased by: Interest Paid


!53

EXHIBIT E-22

$ !90,773

37,062

227,835

I 75,437

$ 52,398

EXHIBIT E-23

$ 353,300

2!,200

$ 374,500

EXHIBIT E-24

$ 26,578

77,713

!04,29!

79,344

$ 24,947

CITY OF RAHWAY STATEMENT OF RESERVE FOR AMORTIZATION



Increased by: Serial Bonds Refunded Principal Paid by Budget Appropriation

Serial Bonds Loans Bond Anticipation Notes

Decreased by:

Refunding Bonds Issued


$ 269,404

125,315 113,785

10,925

STATEMENT OF RESERVE FOR DEFERRED AMORTIZATION



STATEMENT OF RESERVE FOR PAYMENT OF DEBT SEWER UTILITY CAPITAL FUND



154

EXHIBIT E-25

$ 1,634,756

519,429

2, 154,185

251,822

$ 1,902,363

EXHIBIT E-26

$ 6,700

$ 6,700

EXHIBIT E-27

$ 111,892

$ 111,892



Ordinance Number Imorovement Description

6-16 Inflow and Infiltration Project (Phase III)


2015

19-16 Improvements to Witherspoon St Outfall and Monroe St 8< _______ _

$

!55

2016 Authorizations

$ 425,000

325,000

$ 750,000 $

EXHIBIT E-28

Balance, Notes Issued December 31,

for Cash 2016

$ 425,000

325,000

$ 750,000

CITY OF RAHWAY

PART II

GOVERNMENT AUDITING STANDARDS

AND SINGLE AUDIT

LERCH, VINCI & HIGGINS,LLP

DIETER P. LERCH. CPA. RMA. PSA

GARY J. VINCI, CPA. RMA, PSA

GARY W. HIGGINS. CPA, RMA, PSA

JEr l'REY C. BLISS, CPA, RMA, PSA

PAUl. J. LERCII, CPA, RMA, PSA

DONNA L. JAPHET. CPA, PSA

JULIUS B. CONSONT. CPA. PSA

ANDREW D. PARENTE, CPA, RMA, PSA

CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS

ELIZABETH A. SHICK, CPA, RMA, PSA

ROBERT W. HAAG. CPA. PSA

DEBORAHK.LERCH, CPA, PSA

RALPH M. PICONE, CPA, RMA, PSA

DEBRA GOLLE, CPA


MARK SACO, CPA

SHERYL M. NICOLOSI, CPA, PSA

REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL

STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS




We have audited, in accordance with the auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, and audit requirements prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, the financial statements -regulatory basis of the City of Rahway, as of and for the year ended December 31, 2016, and the related notes to the financial statements, and have issued our report thereon dated June 20, 201 7. Our report on the financial statements - regulatory basis indicated that the financial statements were not prepared in accordance with accounting principles generally accepted in the United States of America but rather prepared in accordance with the regulatory basis of accounting prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey, which is a basis of accounting other than accounting principles generally accepted in the United States, to meet the financial reporting requirements of the State ofNew Jersey for municipal government entities as described in Note I.

Internal Control over Financial Reporting

In planning and performing our audit of the financial statements, we considered the City of Rahway's internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements but not for the purpose of expressing an opinion on the effectiveness of the City of Rahway's internal control. Accordingly, we do not express an opinion on the effectiveness ofthe City of Rahway' s internal control.

17-17 ROUTE 208 • FAIR LAWN, NJ 074 10 • TELEPHONE (201) 791-7100 • FACSIMILE (201) 791-3035

WWW.LVHCPA.COM

156

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the City's financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identity all deficiencies in intemal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identity any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

Compliance and Other Matters

As part of obtaining reasonable assurance about whether the City of Rahway's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed an instance of noncompliance or other matter that is required to be reported under Government Auditing Standards and audit requirements as prescribed by the Division of Local Govemment Services, Department of Community Affairs, State of New Jersey and which is described in the accompanying schedule of findings and questioned costs as item 2016-00 I.

However, we noted certain matters that are not required to be reported under Government Auditing Standards that we reported to management of the City of Rahway in Part III of this report of audit entitled, "Letter of Comments and Recommendations".

Purpose of this Report

The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Rahway's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Rahway's internal control and compliance. Accordingly, this communication is not suitable for any other purpose.


!57

r / /~4', ~·~(' ;,_; 1 Jr ~~~ ~HJGGIN , LLP

Certified Public Accountan

X' Registered Municipal A ountant RMA Number CR003

LERCH, VINCI & HIGGINS,LLP

mETER P. LERCH. CPA. RMA. PSA

GARY J. VINCI. C PA, RMA. PSA

GARY W. HIGGINS. CPA. RMA. I'SA

JEFFREY C. BLISS, CPA, RMA, PSA

PAUL J. LERCH, CPA, RMA, PSA

DONNA L. JAI'HET, CPA. PSA

JULIUS B. CON SON I. CPA, PSA

ANDREW D. PARENTE, CPA, RMA, PSA

CERTIFIED PUBLIC ACCOUNTANTS REGISTERED MUNICIPAL ACCOUNTANTS

ELIZABETH A. SHICK. CI'A. RMA, PSA

ROBERTW. HAAG, CPA. PSA

DEBORAH K. LERCH, CPA, PSA

RALPH M. PICONE. CPA, RMA, PSA

DEBRA GOLLE, CPA


MARK SACO, C PA

SHERYL M. NICOLOSI, CPA, PSA

REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT

ON THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY U.S. UNIFORM GUIDANCE




Report on Compliance for Each Major Federal Program

We have audited the City of Rahway's compliance with the types of compliance requirements described in the U.S. Office of Management and Budget COMB) Compliance Supplement that could have a direct and material effect on each of the City of Rahway's major federal programs for the year ended December 31 , 2016. The City of Rahway' s major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs.

Management's Responsibility

Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs.

Auditor's Responsibility

Our responsibility is to express an opinion on compliance for each of the City of Rahway's major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to fmancial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; audit requirements as prescribed by the Division of Local Government Services, Department of Community Affairs, State of New Jersey; and Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and U.S. Uniform Guidance, require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Rahway' s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances.

17-17 ROUTE 208 • FAlR LAWN, NJ 074 10 •TELEPHONE (201) 791-7100 • FACSIMILE (201) 791-3035

WWW.LVHCPA.COM

!58

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City of Rahway's compliance.

Opinion on Each Major Federal Program

In our opinion, the City of Rahway complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended December 31, 2016.

Report on Internal Control Over Compliance

Management of the City of Rahway is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City of Rahway's internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with U.S. Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Rahway's internal control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of perfonning their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identifY all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identifY any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of U.S. Unifonn Guidance. Accordingly, this report is not suitable for any other purpose.

159

Report on Schedule of Expenditures of Federal Awards Required by U.S. Uniform Guidance

We have audited the financial statements - regulatory basis of the City of Rahway as of and for the year ended December 31, 2016, and the related notes to the financial statements and have issued our report thereon dated June 20, 2017, which contained a modified opinion on those financial statements because they were not prepared in accordance with accounting principles generally accepted in the United States of America and also contained an unmodified opinion on those financial statements prepared in accordance with the regulatory basis of accounting. Our audit was conducted for the purpose of forming an opinion on the financial statements as a whole. The accompanying schedule of expenditures of federal awards as required by U.S. Uniform Guidance is presented for purposes of additional analysis and is not a required part of the financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the financial statements. The information has been subjected to the auditing procedures applied in the audit of the financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the financial statements as a whole.


160

' :ZL t:J;l '.~'4/"/2f LERCH, VINCI & HIGGINi, LLP Certified Public Accountants

. erch Registered Muni ipal Accountant RMA Number CR00398

Schedule A

CITY OF RAHWAY SCHEDULE OF EXPENDITURES OF FEDERAL A WARDS


State Original Balance, Balance, Cumulative

CFDA Gum "'~' 2016 December 31, Revenue Adjustment/ December 31, Total Number Number Award Receipts 2015 ~ J;;m~nditure~ Transfer.J: ~1.Mim.J. 2016 ~enditures

U.S. Department of Housing and Urban Ikvelopment (Passed Through Union County Dept. of Community Development)

Community Development Block Grants 14.218 NIA Program Year 40 (Fiscal Year 2014-2015) Roadway Rehabilitation s 213,700 $ 36,692 $ 25,271 $ n,421 I $ 202,279

Program Year 41 (Fiscal Year 2015-2016) Senior Citizen Social Services Program 13,880 $ 13,880 12,880 12,880 13,880

Home Improvement Program 285,000 285,000 259,663 259,663 285,000

Policy & Planning 100,000 72,742 95,467 95,126 341 1

99,659

Code Enforcement Program 47,000 47,000 47,000 36,872 10,128 36,872

Program Year 42 (Fiscal Year 2016-2017) Senior Citizen Social Services Program 13,380 $ 13,380 5,574 7,806 5,574 Home Improvement Program 275,000 275,000 96,810 178,190 96,810

Policy & Planning 76,000 76,000 41,926 $ 24,000 58,074 17,926

Code Enforcement Program 34,000 34,000 18,790 15,210 18,790 Roadway Rehabilitation 250,000 250,000 250,000 (250,000) 250,000

Program Income !3,234 255,805 (24,000) $ (127,000) 118,039

2012 Road Program (Ord. 16-12) 140,000 6,000 (6,000)

I !34,000

2016 Road Program (Ord. 18-16) 255,000 250,000 250,000 250,000

U.S. Department of Transportation (Passed Through New Jersey Department of Law

and Public Safety) Drunk Driving Enforcement Fund 20.601 1160-100-057 s 6,722 5,090 5,09o I 1,632

Drunk Driving Enforcement Fund 20.601 1160-100-057 6,702 6,702 6,702

U.S. Department of Homeland Security (Passed Through New Jersey Department of Law and Public Safety)

Public Assistance Grants 97.036 Hurricane Sandy 1200-100-A92 199,102 199,102 199,102 I 199,102

Emergency Management Program 97.042 1200-100-726 5,000 5,000 5,000



U.S. Department of Health and Human Services (Passed Through New Jersey Department of Health) HlNI Public Health Emergency Response 93.069 4230-100-4SO 195,788 35,127 35,127 1 160,661

U.S. Department of Justice

(Passed Through New Jersey Department of Law

and Pllblic Safety)

Edward Byrne Justice Grant 16.738 N/A 48,721 12,502 12,502

26.270 I 48,721

Edward Byrne Justice Grant 27,221 27,221 951 951

Edward Byrne Justice Grant 9,915 9,915 9,915

Local Law Enforcement Block Grant- FY 2004 17,548 17,548 17 548

$ 591,581 $ 1,109,989 $ 1,055,467 $ $ (133,000) s 513,103

See Accompanying Notes to Schedule of Expenditures of Federal Awards 161

SCHEDULE B Page 1

CITY OF RAHWAY SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE

FOR THE YEAR ENDED DECEMBER 31, 2016 Balance. Balance. Cumulative

Award Cash December3l. December31. Total

State Grant Pro<>ram Account Number Amou~ Received 2015 Revenue Expended Adjustment 2016 Expenditure~

Deuartment of Community Affairs Statewide Livable Communities Grant &030-100-655 s 60.000 $ 12.396 s 12.396 $ 47.604

Statewide Livable Communities Grant-Essex Street 60.000 60.000 60.000

Cooperative Housing Inspection 8010-100-023-2010 12.653 5.213 $ 5.213 12.653 13.760 13.760 5.395 8.365 5.395 11.094 s 11.094 11.094

Clean Communities Grant NIA 38.132 25.651 25.651 38.132 44.770 44.770 5.193 39.577 5.193 41.990 41.990 41.990

51.064 51.064 51.064

Brown fields NIA 27.271 27.271 27.271

Denartment of Environmental Protection Clean Energy Program 49.071 32.571 32.571 16.500

12.268 12.268 12.268

Recycling Tonnage Grant 4900-752-001 30.404 13.262 13.262 30.404 4900-752-001 26.956 26.956 12.000 14.956 12.000

14,791 14.791 14.791 62.670 62.670 62.670

Department of Health Public Heal!h Priority Funding 4230-100-307 75.530 282 282 I 75.248

Economic Develo[!ment Anthoritv Hazardous Discharge Site Remediation- FY 2009 313.170 30.180 10.299 19.881 I 293.289

Hazardous Discharge Site Remediation- FY 2011 284.033 177.839 177.839 106.194

Department of Law and Public Safetv Municipal Alliance Program- FY 2009 25.487 $ 26.689 15.207 15.207 I 25,487

Alcohol Education and Rehabilitation 4250-760-050000-63 229 229 229 496 496 496 250 250 250

l 1.097 11.097 11.097

Click It or Ticket Program NIA 3.906 3.599 3.599 8.0061

3.906 9.150 9.131 LJ25 l.l44 3.982

See Accompanying Notes to Schedule of Expenditures of State Financial Assistance 162

SCHEDULE 8 Page2

CITY OF RAHWAY SCHEDULE OF EXPENDITURES OF STATE FINANCIAL ASSISTANCE

FOR THE YEAR ENDED DECEMBER31, 2016 Balance. Balance. Cumulative

Award Cash December 31. December 31. Total State Grant Pro!lram Account Number Amount Received 2015 Revenue Expended ~ustment 2016 Expenditures

Del!artment of Law and Public Safe:D:: {Continued) You Drink. You Drive. You Lose NIA s 7.336 s 7.091 s 7.091 I s 245

Obey the Signs or Pay the Fines N/A 4.000 4.000 4.000

Police Body Annor Grant 1020-718-001 8.605 6.720 s 3.540 3.180 5.425 6.624 s 6.624 6.624

Safe and Secure Communities 1020-100-232 174.150 57.743 57.743 116.407 55.562 55.562 55.562

Drug Free Communities NIA 125.000 26.591 26.591 154.5771

125.000 250.000 s 49.587 250.000 95.423 95.423 125.000 125.000 125.000

Unclassified NJ Child Passenger Safety NIA 7.400 2.375 2.375 5.025

ADA T ASE Grant NIA I 6.320 11.240 11.240 5.080

NJ 911 General Assistance Grant NIA 25.362 301 301 25.061

Senior Services Grant NIA 40.523 8.607 2.168 6.439 34.084 15.000 1.856 1.856 13.144 5.000 5.000 5,000

Local Domestic Preparedness NIA 25.000 2.630 2.630 22.370

Green the Streets Grant NIA 250.000 97.403 97.403 152.597

Smart Gro\~th Program N/A 8.000 8.000 8.000

NJ Health Department Grant N/A 11.731 20 20 11.711

NJ 911 Equipment Grant- FY 2008 NIA 17.637 47 47 17.590

Pandemic Influenza Grant- FY 2008 NIA 13.288 8,987 8.987 4.301

De(!artment ofTransl!ortation 6320-480-60138X-61 2011 Road Resurfacings (Ord. l 0-ll) 190.983 ll5.160 333 114.827 76.156 2014 Road Improvements (Ord. 27-14) 237.820 55.568 37.357 I8.2ll 219.609 2016 Road Improvements (Ord. 18-16) 195.825 195.825 195.825 195.825 Highway Safety Gram 94.544 58.686 24.503 34.183 60.361 Highway Safety Grant 87.041 87.041 87.041

$ 1,351.699 $ 550.415 ~684 s $ 1.419.430

This schedule is not subject to Single Audit in accordance with NJ OMB Circular 15-08.

See Accompanying Notes to Schedule of Expenditures of State Financial Assistance 163

NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL A WARDS AND STATE FINANCIAL ASSISTANCE

CITY OF RAHWAY NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE YEAR ENDED DECEMBER 31, 2016

NOTE 1 GENERAL

The accompanying schedules present the activity of all federal awards and state financial assistance programs of the City of Rahway. The City is defined in Note 1(A) to the City's financial statements. All federal financial assistance received directly from federal agencies, as well as federal awards and state financial assistance passed through other government agencies is included on the schedules of expenditures of federal awards and state financial assistance.

NOTE 2 BASIS OF ACCOUNTING

The accompanying schedules are prepared and presented using the regulatory basis of accounting as prescribed for municipalities by the Division of Local Government Services, Department of Community Affairs, State of New Jersey which differ in certain respects from accounting principles generally accepted in the United States of America (GAAP) applicable to local government units. This basis of accounting is described in Note I to the City's financial statements.

NOTE 3 RELATIONSHIP TO FINANCIAL STATEMENTS

Amounts reported in tl1e accompanying schedules agree with amounts reported in the City's financial statements. Financial assistance revenues are reported in the City's financial statements on a basis of accounting described above as follows:

Federal State Total

Current Fund $ 205,804 $ 354,590 $ 560,394 General Capital Fund 195,825 \95,825 Community Development Grant Fund 904,185 904,185

Total Financial Awards $ 1,109,989 $ 550,415 $ 1,660,404

NOTE 4 RELATIONSHIP TO FEDERAL AND STATE FINANCIAL REPORTS

Amounts reported in tbe accompanying schedules may not necessarily agree with the amounts reported in the related federal and state financial reports due to timing differences between the City's fiscal year and grant program year.

164

CITY OF RAHWAY NOTES TO THE SCHEDULES OF EXPENDITURES OF FEDERAL AWARDS AND STATE FINANCIAL ASSISTANCE YEAR ENDED DECEMBER 31, 2016

NOTE 5 FEDERAL AND STATE LOANS OUTSTANDING

The City's federal and state loans outstanding at December 31,2016, which are not required to be reported on the schedules of expenditures of federal awards and state financial assistance, are as folJows:

Loan Program

Green Acres Loan Program New Jersey Redevelopment Authority Environmental Inftastructure Loan Dept. of Community Affairs

NOTE 6 DE MINIMIS INDIRECT COST RATE

Amount

$ 336,620 187,500 745,467

20,000

$ 1,289,587

The City has not elected to use the I 0 percent de minimis indirect cost rate allowed under the Uniform Guidance.

165

CITY OF RAHWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS


Part I- Summary of Auditor's Results

Financial Statement Section

Type of auditors' report issued:

Internal control over financial repmting:

I) Material weakness( es) identified?

2) Were significant deficiencies identified that are not considered to be material weaknesses?

Noncompliance material to financial statements noted?

Federal Awards Section

Unmodified on Regulatory Basis

_____ yes _ __:.X.:..__ no

_____ yes _ __:.X.:..__ no

_____ yes _ __:.X.:..__ no

Dollar threshold used to determine Type A programs: $ 750,000

Auditee qualified as low-risk auditee?

Type of auditors' report on compliance for major programs:

Internal Control over compliance:

I) Material weakness( es) identified?


Any audit findings disclosed that are required to be reported in accordance with U.S. Unifonn Guidance

(section.SlO(a)

Identification of major programs:

CFDA Number(s)

14.218

_____ yes _ __,X_,__ no

Unmodified

_____ yes ----'X_:;__ no

_____ yes ----'X_:;__ no

_____ yes ----'X_:;__ no

Name of Federal Program or Cluster

Community Development Block Grant Funds

166

CITY OF RAHWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONT'D)


Part I- Summary of Auditor's Results

State Awards Section -Not Applicable

Dollar threshold used to determine Type A programs:

Auditee qualified as low-risk auditee?

Type of auditors' report on compliance for major programs:

Internal Control over compliance:

I) Material weakness(es) identified?


Any audit findings disclosed that are required to be reported in accordance with N.J. OMB Circular 15-08?

Identification of major programs:

GMIS Number(s)

167

$ __________________ _

_____ yes ____ no

_____ yes ____ no

_____ yes ____ no

_____ yes ____ no

Name of State Program

CITY OF RAHWAY SCHEDULE OF FINDINGS AND QUESTIONED COSTS (CONT'D)


Part III- Schedule of Federal and State Award Findings and Questioned Costs

This section identifies the significant deficiencies, material weaknesses, and instances of noncompliance including questioned costs, related to the audit of major federal and state programs, as required by U.S. Uniform Guidance and New Jersey OMB Circular 15-08.

FEDERAL A WARDS

There are none.

STATE AWARDS

Not Applicable.

168

CITY OF RAHWAY SUMMARY SCHEDULE OF PRIOR-YEAR AUDIT FINDINGS

AND QUESTIONED COSTS FOR THE YEAR ENDED DECEMBER 31,2016

This section identifies the status of prior-year findings related to the financial statements and federal and state awards that are required to be reported in accordance with Chapter 6.12 of Government Auditing Standards, U.S. OMB Circular A-133 (section .315(a)(b) and New Jersey OMB's Circular 15-08.

STATUS OF PRlOR YEAR FINDINGS

Finding 2015-001:

Our audit revealed that overexpenditures were incurred during the period under audit for the Water Utility Operating and Sewer Utility Operating Funds.

Current status:

Corrective action has been taken.

169

CITY OF RAHWAY

PART III

SUPPORTING DATA

LETTER OF COMMENTS AND RECOMMENDATIONS

YEAREND ED DECEMBER31, 2016

CITY OF RAHWAY COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCECURRENT FUND

Year Ended Year Ended

December 31, 2016 December 3 l, 20 l 5

Amount Percent Amount Percent

REVENUE AND OTHER INCOME REALIZED

Fund Balance Anticipated $ 2,300,000 2.07 % $ 2,500,000 2.27 Miscellaneous - From Other Than Local

Property Tax Levies !3,930,!66 !2.5! !3,900,439 !2.65

Collection of Delinquent Taxes

and Tax Title Liens !,809,776 !.63 !,202,752 l.ll

Collection of Current Tax Levy 9!,842,32 [ 82.49 90,496,12! 82.38 Other Credits to Income !,403,983 !.30 !,75!,365 !.59

Total Income [ [ [ ,286,246 !00.00 % !09,850,677 [ 00.00

EXPENDITURES

Budget Expenditures

Municipal Purposes 51,250,625 47.12 % 50,387,878 46.68

County Taxes !3,654,937 !2.55 !3,5!8,577 !2.52

Local School Taxes 42,753,589 39.3 [ 4!,959,236 38.87

Special Improvement Taxes !30,000 0.!2 740,000 0.70

Other Expenditures 924,785 0.90 [ ,328,97! !.23

Total Expenditures 108,7!3,936 !00.00 % !07,934,662 !00.00

Excess in Revenue 2,572,3!0 1,916,0!5

Fund Balance, Beginning of Year 5,758,676 6,342,66!

8,330,986 8,258,676

Less Utilization as Anticipated Revenue 2,300,000 2,500,000

Fund Balance, End of Year $ 6,030,986 $ 5,758,676

170

%

%

%

%

CITY OF RAHWAY COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE-WATER UTILITY OPERATING FUND

Year Ended Year Ended December 31, 2016 December 31, 2015

Amount Percent Amount Percent REVENUE AND OTHER INCOME REALIZED

Collection of Water Rents $ 6,368,360 98.05 % $ 5,721,332 99.40 % Water Connection Fees Miscellaneous - From Other Than

Water Rents 126,443 1.95 34,708 0.60

Totallncome 6 494 803 100.00 % 5 756 040 100.00 %

EXPENDITURES

Budget Expenditures

Operating 3,933,484 69.36 % 4,228,458 72.41 % Capital Improvements 50,000 0.88 50,000 0.86 Deferred Charges 399,555 7.05 335,285 5.74 Debt Service 1,288,222 22.71 l, 179,278 20.19

Other Expenditures

Refund of Prior Year Revenue 46,814 0.80

Total Expenditures 5,671,261 100.00 % 5,839,835 100.00 %

Excess (Deficiency) in Revenues Over

(Under) Expenditures 823,542 (83,795)

Adjustments to Income Before Fund Balance

Expenditures Included Above which by Statute

are Required to be Raised in Subsequent Year 389,154 Surplus to General Budget (334,739) (167,385)

Statutory Excess to Fund Balance 488,803 137,974

Operating Deficit

Fund Balance, Beginning of Year 166,831 28,857

Fund Balance, End of Year $ 655,634 $ 166,831

171

CITY OF RAHWAY COMPARATIVE STATEMENTS OF OPERATIONS AND CHANGES IN FUND BALANCE-SEWER UTILITY OPERATING FUND

Year Ended Year Ended December 31, 2016 December 31, 20 15

Amount Percent Amount Percent REVENUE AND OTHER INCOME REALIZED

Fund Balance Anticipated $ 250,000 4.89 % $ 250,000 4.57 % Rents 4,488,364 87.83 4,954,529 90.50 % Industrial Sewer Flow Charges 302,070 5.91 181,625 3.32 Sewer Connection Fees Miscellaneous - From Olher Than Sewer Rents 66,576 1.30 19,927 0.36

Other Credits to Income 3,352 0.07 68,825 1.25

Total Income 5 110 362 100.00 % 5 474 906 100.00 %

EXPENDITURES

Budget Expenditures

Operating 4,579,000 91.65 % 4,496,386 92.10 % Deferred Charges and Statutory Expenditures 32,745 0.66 11,200 0.23 Capital Improvements 21,200 0.42 25,000 0.51 Debt Service 363,243 7.27 349,542 7.16

Total Expenditures 4,996,188 100.00 % 4,882,128 100.00 %

Excess in Revenue 114,174 592,778

Adjustments to Income Before Fund Balance Expenditures Included Above which by Statute

are Required to be Raised in Subsequent Year 20,745 Surplus to General Budget (114,174) (387,612)

Statutory Excess to Fund Balance 225,911

Fund Balance, Beginning of Year 2,016,196 2,040,285

2,016,196 2,266,196

Less Utilization as Anticipated Revenue (250,000) (250,000)

Fund Balance, End of Year $ 1,766,196 $ 2,016,196

172

CITY OF RAHWAY COMPARATIVE SCHEDULE OF TAX RATE INFORMATION

Tax Rate- Calendar Year

Apportionment of Tax Rate

Municipal (I) County Local School

(1) Includes Library

Assessed Valuation

2016

2015

2.519 .935

2.935

$1.457.454 614

2.490 .931

2.896

$L449.192 757

2.399 .982

2.823

2014 $1 44'1,.~_12 047

COMPARISON OF TAX LEVIES AND COLLECTION CURRENTLY

A study of this tabulation could indicate a possible trend in future tax levies. A decrease in the percentage of current collection could be an indication of a probable increase in future tax levies.

Percentage of

Year Tax Levy Cash Collections Collection

2016 $ 93,350,313 $ 91,842,321 98.38%

2015 92,427,947 90,496,121 97.90%

2014 90,555,835 89,054,640 98.34%

2013 88,206,982 86,556,610 98.12%

2012 85,328,911 84,007,780 98.45%

173

CITY OF RAHWAY DELINQUENT TAXES AND TAX TITLE LIENS

This tabulation includes a comparison, expressed in percentage, of the total of delinquent taxes and tax title liens, in relation to the tax levies of the last five years.

Amount of Amount of Percentage Tax Title Delinquent Total of

Year Liens Taxes Delinquent Tax Levy

2016 $ 422,273 $ 1,431,810 $ 1,854,083 1.99% 2015 395,011 1,786,381 2,181,392 2.36% 2014 224,678 1,400,586 1,625,264 1.79% 2013 196,216 1,511,682 1,707,898 1.93% 2012 133,932 1,323,499 1,457,431 1.71%

PROPERTY ACQUIRED BY TAX TITLE LIEN LIQUIDATION

The value of property acquired by liquidation of tax title liens at year end on the basis of the last assessed valuation of such properties was as follows:

Balance YearEnd

2016 2015 2014 2013 2012

COMPARISON OF WATER UTILITY LEVIES

Year Levy

2016 $6,456,203 2015 5,899,739 2014 5,527,345 2013 5,543,876 2012 5,142,327

*Includes collection of prior year receivables

COMPARISON OF SEWER UTILITY LEVIES

Year 1ro'

2016 $4,506,511 2015 4,943,023 2014 4,634,975 2013 4,689,631 2012 4,490,035

174

Amount

$ 2,644,300 2,644,300 2,644,300 2,644,300 2,644,300

Cash Percentage Collections of Collection*

$6,368,360 $98.64% 5,721,332 96.97 5,638,802 102.02 5,596,506 100.94 5,143,748 100.02

Cash Percentage Collections of Collection

$4,488,364 99.59% 4,954,529 100.23 4,712,956 101.68 4,824,462 102.87 4,640,555 103.35

CITY OF RAHWAY

COMPARATNESCHEDULEOFFUNDBALANCE Utilized in Budget of

Balance Succeeding Year YearEnd Year

Current Fund 2016 $6,030,986 $2,200,000 2015 5,758,676 2,300,000 2014 6,342,661 2,500,000 2013 6,687,249 3,000,000 2012 4,400,604 1,500,000

Water Utility Operating Fund 2016 $655,364 $ -0-2015 166,831 -0-2014 28,857 -0-2013 28,857 -0-2012 28,857 -0-

Sewer Utility Operating Fund 2016 $1,766,196 $250,000 2015 2,016,196 250,000 2014 2,040,285 250,000 2013 1,952,685 -0-2012 963,604 -0-

175

CITY OF RAHWAY OFFICIALS IN OFFICE AND SURETY BONDS AS OF DECEMBER 31, 2015

Amount of Bond

Samson D. Steinman James E. Baker Joanna Miles Jeremy Mojica Rodney F anar Michael Cox Robert Bresenhan, Jr. David Brown Jennifer Wenson Maier Raymond Giacobbe, Jr. Rayna Harris Cherron Rountree Michael Smalling John Rodger

William R. Young, Jr. Frank Ruggiero Richard Lorentzen

Andrea Zapcic Brian M. Hak Roman Montes Marylene Shepard Thomas Mancuso Richard Watkins

Warren J. Hehl

Mayor Councilmember-at-Large Councilmember-at-Large Councilmember-at-Large Councilmember- Ward I Councilmember- Ward 2 Councilmember- Ward 3, Council President Councilmember- Ward 4 Councilmember - Ward 5 Councilmember- Ward 6 City Clerk Business Administrator Director of Public Works and Engineering Director/Chief of Police/Emergency

Management Coordinator Director/Fire Chief Chief Financial Officer Tax Collector/ Tax Search Officer Director of Parks and Recreation Director of Law Municipal Judge Court Administrator Director of Assessments/Tax Assessor Director of Building, Planning and Economic

Development/Construction Code Official Health Officer

$ 50,000 (A) 50,000 (A)

50,000 (A) 50,000 (A) 50,000 (A)

250,000 (A) 50,000 (A)

50,000 (A) 100,000 (B) 50,000 (A)

50,000 (A) 50,000 (A)

A. Public Employee Dishonesty Blanket coverage as written by the Travelers Casualty and Surety Company of America in the amount of $50,000.

B. Municipal Court bond as written by the Travelers Casualty and Surety Company of America in the amount of $100,000, Bond #105421641.

176

CITY OF RAHWAY GENERAL COMMENTS

Current Year

Finding - Our audit indicated that monthly reconciliations of the Net Payroll, Payroll Agency and Professional Escrow bank accounts were not performed.

Recommendation - Formal bank reconciliations be performed on a monthly basis for the Net Payroll, Payroll Agency and Professional Escrow bank accounts.

Finding - Our audit indicated that old outstanding checks remain on the reconciliations of various City bank accounts.

Recommendation - Old outstanding checks be reviewed and appropriately cleared of record from City bank account reconciliations.

Finding- Our audit indicated that purchase orders were not always issued to vendors prior to goods being received and/or services being rendered. In addition, contracts were not always encumbered upon award.

Recommendation - In all instances, contracts be encumbered upon award and purchase orders be issued prior to the ordering of goods or services.

Prior Year Unresolved

Finding - Our audit of the Office of the Tax Collector revealed the following:

a) Prior year tax overpayments reported in the tax system do not appear to reflect valid balances owed by the City.

b) State tax court judgments and applicable refunds were not reflected in the respective taxpayer account histories.

Recommendation -a) Prior years tax overpayments be cleared of record. b) State tax court judgments be reflected in the taxpayer history.

Contracts and Agreements Required to be Advertised for NJS 40A:ll-4

NJS 40A: 11-4 states "Every contract or agreement, for the performance of any work or the furnishing or hiring of any materials or supplies, the cost or the contract price whereof is to be paid with or out of public funds not included within the terms of Section 3 of this act, shall be made or awarded only by the Governing Body of the contracting unit after public advertising for bids and bidding therefore, except as is provided otherwise in this act or specifically by any other law. No work, materials or supplies shall be undertaken, acquired or furnished for a sum exceeding in the aggregate $40,000, except by contract or agreement."

The Governing Body of the City has the responsibility of determining whether the expenditures in any category will exceed $40,000 within the fiscal year. Where question arises as to whether any contract or agreement might result in violation of the statute, the City Council's opinion should be sought before a commitment is made.

177


Contracts and Agreements Required to be Advertised for NJS 40A:ll-4 (Continued)

The minutes indicate that bids were requested by public advertising for the following item:

Basketball and Tennis Court Renovations Sewer Inflow and Infiltration- Phase Ill

2016 Roadway Resurfacing Project Sinkhole Repairs

The minutes indicate that resolutions were adopted and advertised, authorizing the awarding of contracts or agreements for "Professional Services" per N.J.S.A. 40A: 11-5.

Inasmuch as the system of records did not provide for an accumulation of payments for categories for the performance of any work or the furnishing or hiring of any materials or supplies, the results of such an accumulation could not reasonably be ascertained. Disbursements were reviewed, however, to determine whether any clear-cut violations existed.

Collection of Interest on Delinquent Taxes and Assessments

The statutes provide the method for authorizing interest and the maximum rates to be charged for the nonpayment of taxes or assessments on or before the date when they would become delinquent.

The Governing Body on August II, 1986 adopted the following ordinance authorizing interest to be charged on delinquent taxes:

"NOW BE IT RESOLVED, by the Municipal Council of the City of Rahway that the Tax Collector of said City of Rahway, is hereby authorized and directed to provide for a grace period not exceeding ten (I 0) calendar days within which any installment of taxes or assessments may be hereafter received without any charge for interest provided that such payment is received within the said ten (I 0) calendar day period after the date upon which the installment becomes payable. After such date said taxes shall be considered delinquent and interest shall run against such delinquent taxes at the rate of eight (8%) percent, on the first $1,500 of the delinquent taxes and eighteen (18%) percent of any delinquent sum in excess of$1,500."

It appears from an examination of the Collector's records that interest was collected in accordance with the foregoing ordinance.

Collection oflnterest on Delinquent Water and Sewer Rents

The governing body on December 28, 1981 adopted the following ordinance authorizing interest to be charged on delinquent utility rents:

Grace Period. Bills are due upon receipt. A grace period of thirty (30) calendar days is provided within which a payment of utility charges may be hereafter received without any charge for interest, provided that such payment is received within said thirty calendar-day period after the billing date upon which the amount becomes payable.

Interest Rates. After the above grace period, utility charges shall be considered delinquent, and interest shall run against such delinquent charges at the rate of eight percent (8%) on the first one thousand five hundred dollars ($1 ,500) of the delinquent water utility charges and eighteen percent (18%) on any delinquent sums in excess of one thousand five hundred dollars ($1,500).

178


Collection oflnterest on Delinquent Water Rents (Continued)

It appears from an examination of the Collector's records that interest was collected in accordance with the foregoing ordinance.

The last tax sale was held on December 9, 2016 and was complete.

The following comparison is made of the number of tax title liens receivable of the last five years.

Year Number of Liens

2016 12 2015 16 2014 II 2013 II 2012 8

179

CITY OF RAHWAY RECOMMENDATIONS

It is recommended that:

*

I. Formal bank reconciliations be performed on a monthly basis for the Net Payroll, Payroll Agency and Professional Escrow bank accounts.

2. Old outstanding checks be reviewed and appropriately cleared of record from City bank account reconciliations.

3. In all instances, contracts be encumbered upon award and purchase orders be issued prior to the ordering of goods or services.

4. With respect to the Office of the Tax Collector:

a) Prior years tax overpayments be cleared of record. b) State tax court judgments be reflected in the taxpayer history.

A review was performed on all prior years' recommendations and corrective action was taken with the exception of those recommendations denoted with an asterisk(*).

The findings noted in our audit were not of such magnitude that they would affect our ability to express an opinion on the financial statements taken as a whole.

Should any questions arise as to our comments and recommendations, or should you desire assistance in implementing our recommendations, please do not hesitate to call us. c . ';:;::L£, ·, ~£, //r

180

RCH, VINCI & HIGGI~ Certified Public Accountants Registered Municipal Accountants

· Die er P. Lerch Certified Public A countant RMA Number CR00398

city of rahway union county, new jersey...

Documents