ofaustell, geor · ofaustell, geor comprehensive annual financial report forthe fiscal year ended...

of Austell, Geor

Comprehensive Annual Financial ReportFor the

Fiscal Year EndedJune 30, 2016

Prepared by

Department of Finance2716 Broad Street, SWAustell, Georgia 30106

CITY OF AUSTELL, GEORGIA

COMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE YEAR ENDED

JUNE 30, 2016

TABLE OF CONTENTSPAGE

INTRODUCTORY SECTION (Unaudited)Letter of TransmittalGFOA Certificate of AchievementPrincipal OfficialsOrganizational Structure

i-vviVII

viii

FINANCIAL SECTIONIndependent Auditor's ReportManagement's Discussion and AnalysisBasic Financial Statements:

Government-wide Financial Statements:Statement of Net PositionStatement of Activities

Fund Financial Statements:Balance Sheet - Governmental FundsReconciliation of the Balance Sheet of Governmental Funds

to the Statement of Net PositionStatement of Revenues, Expenditures, and Changes in Fund

Balances - Governmental FundsReconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of ActivitiesGeneral Fund - Statement of Revenues, Expenditures, and Changes in

Fund Balance - Budget and ActualMultiple Grants Fund - Statement of Revenues, Expenditures, and Changes in

Fund Balance - Budget and ActualStatement of Net Position - Proprietary FundsStatement of Revenues, Expenses, and Changes in Fund Net

Position - Proprietary FundsStatement of Cash Flows - Proprietary Funds

Notes to Financial StatementsRequired Supplementary Information:

Schedule of Changes in the Net Pension Liability and Related RatiosSchedule of ContributionsNotes to Required Supplementary Pension Information

Combining and Individual Fund Statements and Schedules:Combining and Individual Nonmajor Fund Statements and Schedules:Combining Balance Sheet - Nonmajor Governmental FundsCombining Statement of Revenues, Expenditures, and Changes in Fund

Balances - Nonmajor Governmental FundsSchedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Confiscated Assets Fund

1-34-12

13-1415

16

17

18

19

20

2122

2324-2526-49

505152

53

54

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COMPREHENSIVE ANNUAL FINANCIAL REPORTFOR THE YEAR ENDED

JUNE 30, 2016

FINANCIAL SECTION (CONTINUED)Combining and Individual Fund Statements and Schedules (Continued):Schedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Emergency Telephone System FundSchedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Hotel/Motel Tax FundSchedule of Revenues, Expenditures, and Changes in Fund

Balance - Budget and Actual - Austell Area Community Council FundSchedule of Projects Financed with Cobb County

Special Purpose Local Option Sales Tax 2005Schedule of Projects Financed with Cobb County

Special Purpose Local Option Sales Tax 2011Schedule of Projects Financed with Cobb County

Special Purpose Local Option Sales Tax 2016Schedule of Projects Financed with Douglas County

Special Purpose Local Option Sales Tax

TABLE OF CONTENTS

56

57

58

59

60

61

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STATISTICAL SECTION (Unaudited)Schedule 1 - Net Position by ComponentSchedule 2 - Change in Net PositionSchedule 3 - Government - wide ExpensesSchedule 4 - Government - wide Program RevenuesSchedule 5 - General Revenue and Other RevenuesSchedule 6 - Fund Balance of Governmental FundsSchedule 7-Schedule 8-Schedule 9-Schedule 10 -Schedule 11 -Schedule 12 -Schedule 13 -Schedule 14 -Schedule 15-Schedule 16 -Schedule 17 -Schedule 18 -Schedule 19 -Schedule 20 -Schedule 21 -Schedule 22 -Schedule 23 -

Changes in Fund Balances of Governmental FundsGeneral Governmental Revenues by SourceAssessed Value and Estimated Actual Value - All Taxable PropertyProperty Tax Rates - All Overlapping GovernmentsPrincipal Property Tax PayersProperty Tax Levies and CollectionsGeneral Governmental Franchise Tax and Ownership Fee PercentagesRatio of Outstanding Debt by TypeDirect and Overlapping DebtLegal Debt MarginPledged Revenue Coverage - Water & Sewer FundPledged Revenue Coverage - Threadmill Complex FundDemographic and Economic StatisticsPrincipal EmployersFull-Time Equivalent City Government Employees by Function/ProgramOperating Indicators by Function/ProgramCapital Asset Statistics by Function/Program

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2716 BROAD STREET, SW • AUSTELL, GEORGIA 30106-3206 • (770) 944-4300 • FAX (770) 944-2282

June 22,2017

To the Honorable Mayor and City Councilof the City of Austell, Georgia

The Comprehensive Annual Financial Report of the City of Austell, Georgia ("City"), for the fiscalyear ended June 30, 2016 is submitted herewith. The accuracy of the presented data; as well as, thecompleteness and fairness of the presentation, including all disclosures, is the sole responsibility ofthe management of the Finance Department.

We believe the data, as presented, is accurate in all material aspects; that it is presented in a mannerdesigned to fairly set forth the financial position and results of operations of the City. These aremeasured by the financial activity of its various funds. We also believe that all disclosures necessaryto enable the reader to gain the maximum understanding of the City's financial activity has beenincluded.

The financial report for the City of Austell includes all the funds of the primary government, the Cityof Austell, as well as its component unit, the Austell Natural Gas System. Since this component unitis a legally separate entity for which the primary government is financially accountable, the GasSystem's financial statements are reported in a separate column. This emphasizes that the AustellNatural Gas System is legally a separate entity from the City and differentiates its financial position,results of operations and cash flow from those of the City.

Government Structure

The City of Austell is governed by a Mayor and six (6) Council Members who are elected to four (4)year terms in office. Under a Mayor type of government, there are six (6) departments that overseethe management of the City: General Administration, Finance Department, Community Affairs,Parks and Recreation, Streets and Maintenance, Fire and Police Department. Each department has adirector who is responsible to the Mayor and Council for the day-to-day management of his/herrespective departments.

The Council operates within a committee framework. The Mayor appoints each of the CouncilMembers to chair one committee and serve as a member of the other committees. These committeesserve in an oversight capacity for each of the departments and work closely with individual directors.Although authorization for expenditures of all funds is the ultimate responsibility of the entireCouncil, requests and recommendations for projects and funding are first discussed by theCommittee for approval prior to being presented to the Council for official action.

Economic Condition and Overlook

The City is recovering from a substantial economic decline over the previous years. Increases infranchise fees, cost control measures and new downtown developments have given the City apositive overall outlook for the future.

Major Initiatives

The City is continuously upgrading and improving its road and water/sewer systems to meet theneeds of its current population. Continuing projects include sidewalks and street improvementsfunded by SPLOSTmoney through Cobb County. With the passage of the 2016 SPLOST, the Cityhas been able to complete park renovations and purchase newpublic safety equipment. Thesefundswill be used for transportation, parks and public safetyprojects. These improvements will greatlyenhance the City's ability to meet the needs of its citizens well into the twenty-first century. TheCity is striving to provide an infrastructure and public safety technology that will pave the way forthe next generation. Conservation efforts are underway to ensure that the youth in the communitywill be able to enjoy local parks with their children and grandchildren. Austell is on the right trackdue to its leaders, high moral standards and willingness to get involved.

Sanitation

The City has prepared a Capital Improvements Program, which summarizes the City's long-termcapital needs. These are capital requests that will enable the City to continue its commitments toimproving both the quality and quantity of services offered to its citizens. The plan addressesproposed facility improvements,computerenhancements,road improvements,sidewalkconnectivityimprovements, parks improvements and operating equipment needs.

As of October 1, 2014, the City provides residential sanitation service to it's citizens for whichcustomers are billed through the water and sewer bills. The City has contracted with RepublicServices to collect garbage at a rate of$9.15 per month. This contract is for three years. In additionto this, the City sponsors a city-wideclean-up twice a year for themonths ofApril andOctober. TheCity provides recycling services, also contracted through Republic Services.

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Financial Highlights

The estimated total value of the 2015 City's tax digest was virtually unchanged from the 2014 digest.The 2016 digest is expected to increase due to changes in the economic conditions. Also, propertytax millage rates have remained at 3.06 mils. Franchise revenues have decreased dramaticallycausing a substantial loss in the General Fund. These revenues are anticipated to increase beginningAugust, 2016 due to a franchise fee rate increase.

Financial Information Accounting System and Budgetary Control

Management ofthe City is responsible for establishing and maintaining an internal control structuredesigned to ensure that the assets of the City are protected from loss, theft or misuse and to ensurethat adequate accounting data is compiled to allow for the preparation of financial statements inaccordance with Generally Accepted Accounting Principles. The internal control structure isdesigned to provide a reasonable but not absolute assurance that these objectives are met. Theconcept of reasonable assurance recognizes that: (1) the cost of a control should not exceed thebenefits likely to be derived; and (2) the evaluation of costs and benefits requires estimates andjudgment by management.

In addition, the City maintains budgetary controls. The objective of these budgetary controls is toensure compliance with legal provisions embodied in the annual appropriated budget approved bythe City Council. Activities of the General Fund, Emergency Telephone System Fund, ConfiscatedAssets Fund, Hotel/Motel Tax Fund, Multiple Grants Fund, Austell Area Community ImprovementCouncil, and proprietary funds are included in the annual appropriated budget. The level ofbudgetary control (that is, the level at which expenditures cannot legally exceed the appropriateamount) is established by department within an individual fund.

Cash Management and Investment

The intention of the cash management system is to limit the amount of funds placed in accountswhere low or no interest is paid. Idle cash is invested in various instruments with various maturitydates, depending on the anticipated cash requirements during the period.

The overall strategy of holding deposits and making investments is to limit exposure ofthe City to aminimum amount of credit risk and market risk. For the 2016 Fiscal year the City's deposits werefully collateralized.

Risk Management

The City is exposed to a variety of accidental losses and has established a risk management strategythat attempts to minimize losses.

Risk control techniques have been established to reasonably ensure that the City's employees areaware of their responsibilities regarding loss exposures related to their duties. In a similar manner,risk control techniques have been established to reduce possible losses to property owned by or undercontrol of the City. Furthermore, supervisory personnel are held responsible for monitoring riskcontrol techniques on an operational basis.

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The primary technique used for risk financing is the purchase of insurance policies from commercialinsurers that include a large deductible amount. The use of a $2,500 deductible reduces the cost ofinsurance, but should losses occur, the portion of the uninsured loss is not expected to be significantwith respect to the financial position of the City.

Long-Term Planning

The City is continually looking toward the future to accommodate maintenance and expansion of itsinfrastructure, as well as upgrading technical services to provide more effective services. Forexample, over the next 10 years, the City hopes to eliminate all pump stations connected to its sewersystem, which will be funded by operating fees and fund balance. Secondly, the City is continuing touse SPLOST funds to improve its parks and public works infrastructure as well as enhance publicsafety technology with new vehicles and equipment. Finally, during fiscal year 2016 the City hasrenovated and enhanced parks and public safety equipment.

Other Information

Management Discussion and Analysis

Generally Accepted Accounting Principles require that management provide a narrative introduction,overview, and analysis to accompany the basic financial statements in the form of Management'sDiscussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&Aand should be read in conjunction with it. The City's MD&A can be found immediately followingthe report of the independent auditor.

Independent Audit

State statute requires an annual audit by independent certified public accountants. The firm of JamesL.Whitaker, P.e. was selected by the City'S audit committee. Accounting principles generallyaccepted in the United States of America and the standards set forth in the General AccountingOffice's GovernmentAuditing Standardswere used by the auditors in conducting the engagement.The auditor's report on the basic financial statements is included in the financial section of thisreport. As a recipient of federal and state financial assistance, the City also is responsible forensuring that an adequate internal control structure is in place to ensure compliance with applicablelaws and regulations related to those programs. This internal control structure is subject to periodicevaluation for weaknesses by management and internal staff.

Acknowledgments

TheGovernment FinanceOfficersAssociation (GFOA) awardeda "CertificateofAchievement"forExcellence in Financial Report" to the City of Austell for its comprehensive financial report forfiscal year ended June 30, 2015. This represents the eighteenth year the City has received thisprestigious award. In order to be awarded a Certificate of Achievement in Financial Reportingfromthe Government Finance Officers Association (GFOA), a government unit must publish an easilyreadable and efficientlyorganizedcomprehensiveannualfmancialreport,whosecontentsconformtoprogram standards. Such reports must satisfy Generally Accepted Accounting Principles and

iv

applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. I believe our currentcomprehensive financial report continues to meet the Certificate of Achievement Programrequirements, and I am submitting it to GFOA to determine its eligibility for another certificate.

The preparation of this report could not have been accomplished without the efficient and dedicatedservices of the entire staff of the City and all its departments. We would like to express ourappreciation to all members of the City who assisted and contributed to the preparation of this report.Due credit should also be given to the Mayor and Governing Council for their interest and support inplanning and conducting the operations ofthe government in a responsible and progressive maimer.

l;;:UbDenise SoesbeeFinance Director

v

Government Finance Officers Association

Certificate ofAchievementfor Excellencein FinancialReporting

Presented to

City of AustellGeorgia

June 30, 2015

For its Comprehensive AnnualFinancial Report

for the Fiscal Year Ended

Executive Director/CEO

vi

City of Austell, GeorgiaPrincipal Officials

MAYORJoe JerkinsCITY COUNCIL

Kirsten AndersonWard 1

Randy GreenWard 3

Scott S. ThomasWard 2

Sandra LeveretteWard 4

Ollie Clemons, Jr.At-Large, Post 1

Valerie AndersonAt-Large, Post 2

DEPARTMENT DIRECTORS

Carolyn DuncanGeneral AdministrationCourt Clerk

Denise SoesbeeFinance Director

Randy L. BowensPublic Works Director

Jimmy R. GrahamCommunity Development/Parks Director

Robert G. StarrettPolice Chief

Patrick MaxwellFire Chief

vii


Organizational Structure

CityMayor Council

I I I I I IGeneral Community

Administration Finance Police Fire AffairsIParks Public WorksConunittee Conunittee Committee Conunittee Conunittee Conunittee

I I J I I lGeneral Community

Administration Finance Police Fire AffairslParks Public WorksDirector Director Chief Chief Director Director

I I I I I IGeneral Community

Administration Finance Police Fire AffairslParks Public WorksDepartment Department Department Department Department Department

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THIS PAGE INTENTIONALLY LEFT BLANK

FINANCIAL SECTION

Member ofThe American Institute of

Certified PublicAccountants

JAMES L. WHITAKER, P.C.Certified Public Accountant

2295 Henry Clower Blvd., Suite 205SnelMlle, Georgia 30078Telephone: 678-205-4438

Fax: 678-205-4449Member of

Georgia Society ofCertified Public Accountants

INDEPENDENT AUDITOR'S REPORT

To the HonorableMayor and Members of City CouncilCity of Austell, Georgia

Report on Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-typeactivities, the discretely presented componentunit, each major fund and the aggregate remaining fund information ofCity of Austell, Georgia (the City) as of and for the year ended June 30, 2016, and the related notes to the financialstatements, which collectively comprise the City's basic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements in accordancewith accounting principles generally accepted in the United States of America; this includes the design,implementation, and maintenance of internal control relevant to the preparation and fair presentation of financialstatements that are free frommaterial misstatement,whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did not audit thefinancial statements of the Austell Natural Gas System, which statements reflect 100% of the assets and deferredoutflows of resources, liabilities and deferred inflows of resources, net position, revenues and expenses of theaggregate discretely presented component unit. Those statements were audited by other auditors whose reports havebeen furnished to us, and our opinion, insofaras it relates to the amounts included for the Austell Natural Gas System,is based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standardsgenerally accepted in the United States of America and the standards applicable to financial audits contained inGovernmentAuditing Standards, issuedby the ComptrollerGeneral of the United States. Those standards require thatwe plan and perform the audit to obtain reasonable assurance about whether the financial statements are free ofmaterialmisstatement. .

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in thefinancial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risksof material misstatement of the financial statements,whether due to fraud or error, Inmaking those risk assessments,the auditor considers internal control relevant to the entity's preparation and fair presentation of the financialstatements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose ofexpressing an opinion on the effectiveness of the entity's internal control. Accordingly,we express no such opinion.An audit also includes evaluating the appropriatenessof accountingpolicies used and the reasonablenessof significantaccounting estimatesmade by management,as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our auditopinions.

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respectivefinancial position of the governmental activities, the business-type activities, the discretely presented component unit,each major fund and the aggregate remaining fund information of the City of Austell, Georgia, as of June 30, 2016and the respective changes in financial position and, where applicable, cash flows, thereof, and the respectivebudgetary comparisons for the General Fundand the Multiple Grants Fund for the year then ended in conformity withaccounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the Management'sDiscussionand Analysis on pages 4 through 12and the Schedule of Changes in TheNet Pension Liability and RelatedRatios on pages 51 through 53 be presented to supplement the basic financial statements. Such information, althoughnot a part of the basic financial statements, is required by the Governmental Accounting Standards Board, whoconsiders it to be an essential part of financial reporting for placing the basic financial statements in an appropriateoperational, economic, or historical context.We have applied certain limitedprocedures to the required supplementaryinformationin accordancewith auditing standards generally accepted in the United States of America, which consistedof inquiries of management about the methods of preparing the information and comparing the information forconsistency with management's responses to our inquiries, the basic financial statements, and other knowledge weobtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance onthe information because the limited procedures do not provide us with sufficient evidence to express an opinion orprovide any assurance.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectivelycomprise the City of Austell, Georgia's basic financial statements. The introductorysection, combining nonmajor andindividual fund financial statements and budget schedules, and statistical section are presented for purposes ofadditional analysis and are not a required part of the basic financial statements.

The combining nonmajor fund financial statements and the individual fund financial statements and budgetaryschedules are the responsibility of management and were derived from and relate directly to the underlying accountingand other records used to prepare the basic financial statements. Such information has been subjected to the auditingprocedures applied in the audit of the basic financial statement and certain additional procedures, including comparingand reconciling such information directly to the underlying accounting and other records used to prepare the basicfinancial statements or to the basic financial statements themselves, and other additional procedures in accordancewith auditing standards generally accepted in the United States of America. In our opinion, the combining nonmajorfund financial statements and the individual fund financial statements and budgetary schedules are fairly stated in allmaterial respects in relation to the basic financial statements taken as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the auditof the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

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Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued a report dated June 22, 2017 on ourconsideration of City of Austell, Georgia's internal control over financial reporting and our tests of its compliancewith certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of thatreport is to describe the scope of our testing of internal control over fmancial reporting and compliance and the resultsof that testing, and not to provide an opinion on the internal control over fmancial reporting or on compliance. Thatreport is an integral part of an audit performed in accordance with Government Auditing Standards in consideringCity of Austell, Georgia's internal control over fmancial reporting and compliance.

Snellville, GeorgiaJune 22, 2017

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City of Austell, GeorgiaManagement's Discussion and AnalysisFor the Fiscal Year Ended June 30, 2016

Management's discussion and analysis provides an objective and easily readable analysis of the City of Austell,Georgia's (the City) financial activities based on currently known facts, decisions or conditions. The analysisprovides current fiscal year summary financial information for the City of Austell, Georgia and should be read inconjunction with the City's financial statements and transmittal letter.

Financial Highlights• The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at the close of the

most recent fiscal yearby $26,626,912 (net position). Of this amount, $738,743 (unrestricted net position)may be used to meet the City's ongoing obligations to its citizens and creditors.

• The City had a decrease in net positions of ($284,402) compared to an increase of $703,298 in the priorfiscal year. Decreases in franchise revenues and court fines had the greatest impact on this change.

• As of the close of the current fiscal year, the City's governmental funds reported combined ending fundbalances of $11,447,887. This represents a decrease from the prior fiscal year of approximately($1,833,448) due primarily to the decrease in franchise fees.

• At the end of the current fiscal year, unassigned fund balance of the General Fund was $3,897,217 or 56%of total current fiscal year General Fund expenditures. In the prior year, unassigned fund balance was$5,156,013 or 80% of General Fund expenditures.

Overview of the Financial StatementsThe City's basic financial statements include three components; 1) Government-wide financial statements, 2) Fundfinancial statements, and 3) Notes to financial statements. This report also contains other supplementaryinformation in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements and fund financialstatements provide different pictures of the City of Austell, Georgia. The government-wide financial statementsprovide an overall picture of the government's financial standing, split between governmental activities andproprietary fund activities.

The Stalement of Net Position presents information on all of the City's assets and deferred outflows and liabilitiesand deferred inflows, with the difference between the two reported as net position. Over time, increases ordecreases in net position may serve as a useful indicator of whether the financial position of the City is improving ordeteriorating.

The Statement of Activities reports how the City's net position changed during the current fiscal year. All currentfiscal year revenues and expenses are included regardless of when the cash is received or paid. An importantpurpose of the design of the statement of activities is to show the financial reliance of the City's distinct activities orfunctions on revenues provided by the City's taxpayers.

In the Statement of Net Position and the Statement of Activities, the City is divided into three kinds of activities:• Governmental activities - Most of the City's basic services are reported here, including the police, fire,

community development, and general administration. The majority of these activities are financed byproperty taxes, occupational taxes, intergovernmental revenue (SPLOST), franchise taxes, and ownershipfees.

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City of Austell, GeorgiaManagement's Discussion and AnalysisFor the Fiscal Year Ended June 30,2016

• Business-type activities - The City charges a fee to customers to help cover all or most of the cost ofcertain services it provides. The City's water and sewer system, stormwater system, solid waste, and theThreadmill Complex are reported here.

• Component units - The City has one legally separate entity, Austell Natural Gas System. Although legallyseparate, this "component unit" is important because the City is financially accountable for it.

The government-wide financial statements are presented on pages 13-15of this report.

Fund Financial StatementsA fund is an accountability unit used to maintain control over resources segregated for specific activities orobjectives. Within the basic financial statements, fund financial statements focus on the City's most significantfunds rather than the City as a whole. Major funds are separately reported while all others are combined into asingle, aggregated presentation. Individual fund data for non-major funds is provided in the form of combiningstatements in a later section of this report.

The City of Austell has two kinds of funds:• Governmental funds - The majority of the City's basic services are reported in governmental funds, which

focus on how money flows in and out of those funds and the balances left at fiscal year-end that areavailable for spending. These funds are reported using an accounting method identified as the modifiedaccrual basis of accounting, which measures cash and all other financial assets that can readily beconverted into cash. Governmental fund information assists in determiningwhether there are more or fewerfinancial resources that can be spent in the near future to finance the City's programs. The relationship ordifferences between governmental activities (reported in the Statement of Net Position and the Statementof Activities) and governmental funds are detailed in a reconciliation following the fund financial statements.

The basic governmental fund financials are presented on pages 16-21 of this report.

The City maintains one (1) General Fund, four (4) special revenue funds and five (5) capital projects funds. TheCity's General Fund is used for normal recurring activities of the City (i.e., police, fire, recreation, public works, andgeneral government). The City's special revenue funds are: Confiscated Assets, Emergency Telephone System,MultipleGrants, and Hotel/Motel Tax funds. The capital projects funds are: 2005 Cobb County SPLOST, 2011Cobb County SPLOST, 2016 Cobb County SPLOST, AACIC and Douglas County SPLOST. Of these funds, theGeneral Fund, Multiple Grants Fund, 2005 Cobb County SPLOST Fund, 2011 Cobb County SPLOST Fund, 2016Cobb County SPLOST, and the Austell Area Community Council Fund are considered major funds and arepresented separately in the Governmental Fund Balance Sheet and in the Governmental Fund Statement ofRevenues, Expenditures, and Changes in Fund Balances. Data from the remaining governmental funds arecombined into a single, aggregate presentation. Individual fund data for each of these nonmajor governmentalfunds is provided in the form of combining statements elsewhere in this report.

• Proprietary Funds - The City of Austell, Georgia charges customers for the services it provides, whetherto outside customers or to other units within the City. These services are generally reported in proprietaryfunds. Proprietary funds are reported in the same way that all activities are reported in the Statement of NetPosition and the Statement of Activities. In fact, the City's enterprise funds (a component of proprietaryfunds) are identical to the business-typeactivities that are reported in the government-wide statements, butprovide more detail and additional information, such as cash flows, for proprietary funds. These arereported in the fund financial statements and generally report services for which the City charges a fee. TheCity of Austell reports four proprietary funds which are classified as enterprise funds. The enterprise fundsare Water and Sewer, Stormwater, Solid Waste, and the Threadmill Complex funds. Of these funds, theWater and Sewer Fund, Stormwater and Threadmill Complex Fund are considered major funds.

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The basic enterprise fund financial statements are presented on pages 22-25 of this report.

Notes to the Basic Financial StatementsThe financial statements include notes that explain some of the information in the financial statements and provideinformation that is more detailed. The notes are essential for a better understanding of the government-wide andfund financial statements.

The notes are presented on pages 26-49 of this report.

Other InformationIn addition to the basic financial statements and accompanying notes, this report also presents certain requiredsupplementary information concerning an analysis of pension plan funding progress. Required supplementalinformation can be found following the basic financial statements. The combining statements referred to earlier inconnection with non-major governmental funds are presented immediately following the required supplementaryinformation along with other individual fund budgetary information.

Government-wide Financial AnalysisAs noted earlier, net position may serve over time as a useful indicator of a government's financial position. In thecase of the City, assets and deferred outflows exceeded liabilities and deferred inflows by $26,626,912 at the closeof the most recent fiscal year.

A portion of the City's net position (69%) reflects its investment in capital assets such as land, buildings,infrastructure, machinery and equipment, less any related debt used to acquire those assets that is still outstanding.The City uses these capital assets to provide services to citizens; consequently, these assets are not available forfuture spending. Although the City's investment in capital assets is reported net of related debt, it should be notedthat the resources needed to repay this debt must be provided from other sources, since the capital assetsthemselves cannot be used to liquidate these liabilities.

The City has restricted net position of $7,434,064 which is restricted for capital construction, law enforcementactivities, public safety activities, tourism and development, and community enhancements as compared to$7,861,341 of restricted net position of the prior fiscal year. The remaining balance of unrestricted net position$738,743 may be used to meet the City's ongoing obligations to citizens and creditors.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position,governmental activities, business-type activities, and the City's discretely presented component unit.

Net PositionAs noted earlier the City's combined net position totals $26,626,912 (excluding the City's component unit).

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Governmental ActivitiesGovernmental activities decreased the City's net assets by ($705,072). This can be attributed to overall franchiserevenue decreasing substantially.

Revenues for Governmental Activities decreased by 22% compared to 2015.

Governmental ActivitiesProgram Revenues and Expenses

For the Fiscal Years Ended June 30, 2016 and June 30, 2015

2016

RevenuesGeneral governmentPublic safety & courtsPublicworksCulture and recreationHousing and developmentTourism and economic developmentInterest on long-term debt

$ 264,137763,969927,530432,66540,274

Totals $ 2,428,575

2016 2015 2015

Expenses Revenues Expenses$ 940,163

4,755,0401,380,310847,871200,804

1,8049,117

$ $ 1,027,4664,398,6243,172,065,844,92687,5234,44814,995

964,2192,585,651413,21736,261

$ 8,135,109 $ 3,999,348 $ 9,550,047

Governmental ActivitiesRevenues by Source

For the Fiscal Years Ended June 30, 2016 and June 30, 2015

2016 2015

Charges for Service $ 696,528 8% $ 824,619 8%Operating grants and contributions 265,947 3% 10,509 0%Capital grants and contributions 1,466,100 18% 3,164,220 29%Property taxes 632,335 8% 547,923 5%Other taxes and ownership fees 5,008,858 60% 5,993,739 56%Unrestricted investment earnings 110,209 1% 116,931 1%Miscellaneous 73,241 1% 81,830 1%Penalties& Interest 10,490 0% 1,536 0%Intergovernmental 107,624 1% 103,665 0%

Totals $ 8,371,332 100% $ 10,754,972 100%

Business-Type ActivitiesMajor revenue sources for the proprietary funds were charges for services of $5,074,967. This is a 7% increasefrom the previous fiscal year. Expenses for the proprietary funds are $5,672,317 which is a 7% increase from theprevious fiscal year. This increase is mostly the result of water usage for the fiscal year 2016, as well as theaddition of garbage services provided to all citizens within the City limits.

9


Revenues Expenses RevenuesThreadmill Complex $ 1,208,874 $ 1,259,062 $ 1,234,876Water and Sewer 3,191,148 3,508,458 2,861,531Stormwater 399,486 455,082 399,617SolidWaste 352,184 449,715 301,257

Totals $ 5,151,692 $ 5,672,317 $ 4,797,281

Business-type ActivitiesProgram Revenues and Expenses

For the Fiscal Years Ended June 30,2016 and June 30,20152016 2016 2015 2015

Expenses$ 1,324,380

3,180,705412,974380,966

$ 5,299,025

Business-type ActivitiesRevenues by Source

For the Fiscal Years Ended June 30,2016 and June 30,2015

2016 2015Charges for Service $5,074,967 99% $ 4,770,286 99%Capital Grants and Contributions 76,725 1% 26,995 1%Unrestricted investment earnings 0 0% 117 0%

Totals $5,151,692 100% $ 4,797,398 100%

Financial Analysis of the City's Individual FundsThe City uses fund accounting to ensure and demonstrate compliancewith finance-related legal requirements.

Governmental FundsThe focus of the City's governmental funds is to provide information on near-term inflows, outflows, and balances ofavailable resources. Such information is useful in assessing the City's financing requirements. In particular,unassigned fund balance may serve as a useful measure of the City's net resources available for spending at theend of the fiscal year.

As of June 30, 2016, the City's governmental funds reported a combined ending fund balance of approximately$11.4 million. Of this total, approximately 3.7 million or 32% constitutes unassigned fund balance, which isavailable for spending in the next fiscal year. The remainder of fund balance is either nonspendable, restricted,committed, or assigned as to indicate that it is not available for new spending because it has already beencommitted for a variety of restricted purposes.

The General Fund is the primary operating fund of the City. For the fiscal year ended June 30, 2016, unassignedfund balance was approximately $3.8 million, while total fund balance was approximately $4.1 million. As ameasure of the General Fund's liquidity, it may be useful to compare both unassigned fund balance and total fundbalance to total fund expenditures. Unassigned fund balance represents 56% of total General Fund expenditures,while total fund balance represents 59% of that same amount.

10

City of Austell, GeorgiaManagement's Discussion and AnalysisFor the Fiscal Year Ended June 30,2016

The fund balance of the General Fund decreased dramatically by ($1,406,273) during the fiscal year due tofranchise taxes decreasing substantially as a result of a decline in gas sales for Austell Gas system.

The fund balance of the 2005 Cobb County SPLOST Fund decreased ($324,311) during the fiscal year. Keyfactors in this decrease is that the City completed resurfacing projects. The fund is no longer receiving revenue asthis tax has expired. Fund balancewill continue to decrease until all funds are spent.

The fund balance of the 2011 Cobb County SPLOST Fund decreased ($344,438) during the fiscal year. Keyfactors in this decrease is that the City purchased additional public safety equipment. The fund received revenue forthe first six months of the fiscal year. Fund balancewill continue to decrease until all funds are spent.

The fund balance of the 2016 Cobb County SPLOST Fund increased by $486,957 during the fiscal year. This isnew SPLOST referendum that passed in March, 2015 beginning January 2016. Six months of revenue have beencollected in the 2016 fiscal year.

The fund balance of the Multiple Grants Fund decreased ($14,395) during the fiscal year as a result of the matchingfunds for LCI Streetscapes grants.

Enterprise FundsThe City's enterprise funds provide the same type of information found in the government-wide financialstatements, but in more detail.

Net assets for the Water and Sewer fund increased by $309,190 due to increases in capital contributions. TheThreadmill, Stormwater, and Solid Waste Funds change in net assets was a combined increase of $111,480,resulting in total net asset increase of $420,670.

Budgetary HighlightsThe legal level of control (the level at which expenditures may not legally exceed appropriations) for each legallyadopted annual operating budget is at the department level. The most significant budgeted fund is the GeneralFund. The City Council amended the General Fund budget at various times throughout the fiscal year. Theamendments to total expenditures were offset by amendments to total revenues and did not affect the overallbudget.

Capital AssetsThe City's investment in capital assets, net of accumulated depreciation, for governmental and business-typeactivities for the current fiscal year ended June 30, 2016, was $10,757,475 and $7,989,818 respectively. Thisinvestment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructure andconstruction in progress. The major additions and deletions to capital for the fiscal year were:

• Added newvehicles and equipment for public safety.• Added new infrastructure and equipment purchasedwith SPLOST funds.

At June 30, 2016, the depreciable capital assets for governmental activities were 47% depreciated. The businesstype activities are 53% depreciated.

Additional information on the City's capital assets can be found in Note 5 of the Basic Financial Statements of thisreport.

Long-Term DebtDuring the current fiscal year, the City retired $212,918 of outstanding capital lease obligations. At the end of thecurrent fiscal year, the City of Austell had total debt outstanding of $1,922,814 in which the majority of the debtincluded $1,453,987 in pension liability.

Additional information on the City's long-term debt can be found in Note 7 of the Basic Financial Statements sectionof this report.

11


Economic Conditions Affecting the CityKey assumptions for fiscal year 2017 are summarized as follows:

• The Gas System ownership fees were budgeted to be approximately $3.7 million. Anticipated revenue atthe current rate of 9% gross sales is expected to be slightly less for 2017.

• On September 18,2009, the City of Austell, Georgia was flooded and almost 700 of its approximately 2,500homes were severely affected. The HMGP Grant program continues impacting the City as it prepares tomaintain and repair the properties of the land that was purchased.

• 2016 SPLOST referendum was passed allowing the City to continue to improve transportation, enhanceparks and purchase needed public safety equipment.

Request for InformationThis financial report is designed to provide a general overview of the City's finances, compliance with financerelated laws, and regulations and demonstrate the City's commitment to public accountability.Questions concerningany of the information provided in this report or request for additional information should be addressed to DeniseSoesbee, Finance Director, City of Austell, 2716 Broad Street, SW, Austell, Georgia 30106.

A complete set of financial statements for the City's component unit, Austell Natural Gas System, may be obtainedat the entity's administrative offices at 2838 Joe Jerkins Blvd; P.O. Box 685, Austell, Georgia 30106.

12

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CITY OF AUSTELL, GEORGIASTATEMENT OF ACTIVITIES

FOR THE YEAR ENDED JUNE 30, 2016

Prol[am RevenuesCharges Operating Capital

for Grants and Grants andFunctions/Programs EXEenses Services Contributions ContributionsPrimary government:

Governmental activities:General government $ 940,163 $ $ 264,137 $Public safety and courts 4,755,040 554,763 209,206Public works 1,380,310 927,530Culture and recreation 847,871 101,491 1,810 329,364Housing and development 200,804 40,274Tourism and economic development 1,804Interest on long-term debt 9,117 -----

Total governmental activities 8,135,109 696,528 265,947 1,466,100Business-type activities:

Threadmill 1,259,062 1,208,874Water and sewer 3,508,458 3,114,423 76,725Stormwater 455,082 399,486Solid waste 449,715 352,184

Total business-type activities 5,672,317 5,074,967 76,725Total primary government $ 13,807,426 $ 5,771,495 $ 265,947 $ 1,542,825Component unit:

Austell Natural Gas System $ 39,483,836 $ 42,310,274 $ $

General revenues:Taxes:PropertyFranchiseOccupationalInsurance PremiumSales and exciseOtherPenalties & interestIntergovernmentalUnrestricted investment earningsMiscellaneousTotal general revenuesTransfersTotal general revenues and transfersChange in net positionNet position - beginning of year, adjusted

Net position - end of year

See accompanying notes to the basic financial statements.

15

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CITY OF AUSTELL, GEORGIABALANCE SHEET

GOVERNMENTAL FUNDSJUNE 30, 2016

2005 2011Cobb County Cobb County

General SPLOST SPLOSTFund Fund Fund

AssetsCash and cash equivalents $ 100,658 $ 600,000 $ 1,751,858InvestmentsReceivables (net of allowance for

uncollectibles)Taxes 187,225Accounts 18,188Other 250,000

Due from other governmentsDue from other funds 1,468,385 44,165 485,569Due from component unit 3,067,585Prepaid items 206,603Advances to other funds

Total assets 5,298,644 644,165 2,237,427

LiabilitiesAccounts payable 358,149 21,300Accrued liabilities

Salaries and wages 90,746Customer Deposits 1,900

Due to other funds 368,221 1,429,618Due to other governmentsUnearned revenues

Total liabilities 819,016 1,450,918

Deferred InflowsUnavailable revenues 375,808

Total liabilities and deferred inflows 1,194,824 1,450,918

Fund balancesNonsepndable -

Prepaid items 206,603Resticted -

Capital projects 644,165 786,509Law enforcement activitiesPublic safety activitiesTourism and economic developmentCommunity enhancements

Unassigned 3,897,217Total fund balances 4,103,820 644,165 786,509

Total liabilities, deferred inflows

and fund balance $ 5,298,644 $ 644,165 $ 2,237,427


16

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CITY OF AUSTELL, GEORGIARECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS

TO THE STATEMENT OF NET POSITIONJUNE 30, 2016

Amounts reported for governmental activities in the statement of net position aredifferent because:

Total fund balances -- total governmental funds

Capital assets used in governmental activities are not financialresources and, therefore, are not reported in the funds.

Other long-term assets are not available to pay for current-periodexpenditures and, therefore, are deferred in the funds:

Unavailable revenues

Deferred inflows and outflowsrelated to the net pension obligationis not a current asset or liability:

Deferred outflowsDeferred inflows

Long-term liabilities are not due in the current period and thereforeare not reported in the funds:

Capital leasesAccrued interestCompensated absencesNet pension obligation

Net position of governmental activities

See accompanyingnotes to the basic [mancial statements

17

$ 11,447,887

10,757,475

375,808

589,210(304,335)

(293,187)(2,315)

(125,077)(1,161,736)

$ 21,283,730

CITY OF AUSTELL, GEORGIASTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE

GOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2016

2005 2011Cobb County Cobb County

General SPLOST SPLOSTFund Fund Fund

Revenues:Taxes $ 5,631,325 $ $Licenses and permits 40,274Intergovernmental 107,624 678,668Charges for services 17,616Fines and Forfeitures 399,999Contributions and donations 14,137Investment income 40Miscellaneous 103,301

Total revenues 6,314,316 678,668Expenditures:

CurrentGeneral government 721,551Judicial 203,573Public safety 3,834,617Public works 854,184Culture and recreation 681,730Housing and development 199,035Tourism and economic development

Capital outlay 415,247 324,311 815,351Debt service

Principal 202,226Interest 5,529

Total expenditures 6,909,937 324,311 1,023,106

Excess (deficiency) of revenuesover (under) expenditures (595,621) (324,311) (344,438)

Other Financing Sources (Uses):Transfers (882,741)Capital lease proceedsSale of capital assets 72,089

Total other financing sources (uses) (810,652)

Net change in fund balances (1,406,273) (324,311) (344,438)

Fund balance - beginning of the year 5,510,093 968,476 1,130,947

Fund balance - end of year $ 4,103,820 $ 644,165 $ 786,509


18

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CITY OF AUSTELL, GEORGIARECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL ACTIVITIES

TO THE STATEMENT OF ACTIVITIESFOR THE YEAR ENDED JUNE 30, 2016

Net change in fund balances - total governmental funds

Governmental funds report capital outlays as expenditures. However, in thestatement of activities the cost of those assets is allocated over theirestimated useful lives and reported as depreciation expense

Capital outlayDepreciation expense

The net effect of other miscellaneous transactions involving capital assets(i.e., sales, trade-ins, and donations) is to decrease net position. This isthe amount of net book value of assets sold during the current period.

Revenues in the statement of activities that do not provide current fmancialresources are not reported as revenues in the funds. This is the differencebetween the beginning and ending unavailable revenue balances in thecurrent period.

The issuance oflong-term debt (e.g., bonds, leases) provides current fmancialresources to governmental funds, while the repayment of the principal oflong-termdebt consumes the current fmancial resources of governmental funds. Neithertransaction, however, has any effect on net position. Also, governmental fundsreport the effect of issuance costs, premiums, discounts, and similar items whendebt is first issued, whereas these amounts are deferred and amortized in thestatement of activities. This amount is the net effect of these differences in thetreatment oflong-term debt and related items.

Repayment of long term debtDebt issuance

Some expenses reported in the statement of activities do not requre theuse of current fmancial resources and therefore are not reported asexpenditures in governmental funds.

Change in net pension obligation and related deferred itemsChange in accrued interest payableChange in compensated absences

Change in net position of governmental activities

See accompanying notes to the basic fmancial statements

19

$ (1,833,448)

1,931,624(735,876)

(249,590)

249,271

212,918(303,888)

25,120(2,316)1,113

$ (705,072)

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CITY OF AUSTELL, GEORGIAMULTIPLE GRANTS FUND

STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL


ORIGINAL FINALBUDGET BUDGET ACTUAL VARIANCE

REVENUESIntergovernmental $ 1,895,000 $ 1,895,000 $ 195,138 $ (1,699,862)Contributions 2,482 2,482

Total Revenues 1,895,000 1,895,000 197,620 (1,697,380)EXPENDITURES

Public Works 1,875,000 1,875,000 212,015 1,662,985Culture and Recreation 20,000 20,000 20,000

Total Expenditures 1,895,000 1,895,000 212,015 1,682,985Excess (Deficiency) of Revenues

Over Expenditures {14,395) (14,395)Other Financing Sources (Uses):

TransfersTotal Other FinancingSources (Uses)

Net Change in Fund Balances (14,395) (14,395)

Fund balance - beginning of year (115,818) (115,818) (115,818)

Fund balance- end of year $ (115,818) $ {115,818) $ {130,213) $ {14,395)


21

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TIDS PAGE INTENTIONALLY LEFT BLANK

NOTES TO FINANCIAL STATEMENTS

CITY OF AUSTELL, GEORGIANOTES TO FINANCIAL STATEMENTS

JUNE 30, 2016

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

A. Basis of Presentation

The fmancial statements of the City of Austell, Georgia (the "City") have been prepared in conformity withaccounting principles generally accepted in the United States ofAmerica (GAAP) as applied to governmentalunits. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body forestablishing governmental accounting and fmancial reporting principles. The more significant of the City'saccounting policies are described below.

B. The Reporting Entity

The City of Austell, which was founded in 1885,operates under the mayor-Council form of government andprovides the following services to its citizens: public safety (police and fire); highways and streets; water,sewer, stormwater, and sanitation; public improvements; planning and zoning; and general administrativeservices.

Based upon criteria set forth by Governmental Accounting Standards Board (GASB) 61 "The FinancialReportingEntity: Omnibus an Amendment of GASB StatementsNo. 14and 34," the accompanying financialstatements present the City and its component unit, for which the City is considered to be fmanciallyaccountable. The discretely presented component unit is reported in a separate column in the governmentwide fmancial statements to emphasize that it is legally separate from the City.

Discretely Presented Component UnitThe Austell Natural Gas System (the "System") is shown as a discretely presented component unit in theaccompanying financial statements. The purpose of the System is to provide natural gas and related servicesthroughout the City of Austell. The System currently serves customers in the City of Austell and residentsof Cobb County and Douglas County, Georgia. The Mayor appoints all members to the System's Board andthe City is financially responsible for the payment of the debt issued by the System. The System has a July31 fiscal year-end. Amounts shown as due from component unit and due to primary governmentmay differdue to the Cityhaving a June 30 fiscal year-end, whereas the Systemhas a July 31 fiscal year-end. Completefinancial statements for the System can be obtained at the System's administrative offices at 2838 Joe JerkinsBoulevard, Austell, Georgia 30106.

C. Government-Wide Statements and Fund Financial Statements

The government-wide fmancial statements (i.e. the statement of net position and the statement of activities)report information on all of the activities of the primary government and its component unit. (For the mostpart, the effect of interfund activity has been removed from the government-wide fmancial statements).Government-wide fmancial statements do not provide information by fund, but distinguish between theCity's governmental activities and business-type activities. Governmental activities, which are normallysupported by taxes and intergovernmental revenues, are reported separately from business-type activities,which rely to a significant extent on fees and charges for support. Likewise, the primary government isreported separately fromthe legally separate componentunit for which the primary government is financiallyaccountable. The statement of net position will include non-current assets and non-current liabilities. Inaddition, the government-wide statement of activities reflects depreciation expense on the City's capitalassets.

The statement of activities demonstrates the degree to which the direct expenses of a given function orsegment are offsetby program revenues. Direct expenses are those that are clearly identifiablewith a specificfunction or segment. Program revenues include 1)charges to customers or applicants who purchase, use, ordirectly benefit from goods, services, or privileges provided by a given function or segment, and 2) grantsand contributionsthat are restricted to meeting the operational or capital requirements of a particular functionor segment. Taxes and other itemsnot consideredprogram revenues are reported instead as general revenues.

(See Independent Auditor's Report)26

CITY OF AUSTELL, GEORGIANOTES TO FINANCIAL STATEMENTS - (Continued)

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (Continued):

C. Government-Wide Statements and Fund Financial Statements - (Continued):

Separate financial statements are provided for governmental funds and proprietary funds. Major individualgovernmental funds and major individual enterprise funds are reported as separate columns in the fund fmancialstatements.

A. Measurement Focus, Basis of Accounting, and Basis of Presentation

The government-wide fmancial statements are reported using the economic resource measurement focus and theaccrual basis of accounting, as are the proprietary fund fmancial statements. Revenues are recorded when earnedand expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Propertytaxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items arerecognized as soon as all eligibility requirements imposed by the provider have been met. Governmental fundfmancial statements are reported using the current financial resources measurement focus and the modifiedaccrual basis of accounting. Revenues are recognized as soon as they are both measurable and available.Revenues are considered to be available when they are collectible within the current period or soon enoughthereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available ifthey are collected within 60 days of the end of the current fiscal period.

Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debtservice expenditures, as well as expenditures related to compensated absences and claims and judgements, arerecorded only when payment is due.

Property taxes, sales taxes, franchise taxes, licenses and permits, charges for services, and interest associatedwiththe current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenuesof the current fiscal period. All other revenue items are considered to be measurable and available only whencash is received by the City.

In accordance with GASB Statement No. 33, "Accounting and Financial Reporting for Non-exchangeTransactions," the corresponding assets (receivables) in non-exchange transactions are recognized in the periodin which the underlying exchange occurs, when an enforceable legal claim has arisen, when all eligibilityrequirements have been met, or when resources are received, depending on the revenue source.

In accordance with GASB Statement No. 34, major individual governmental funds and major individualenterprise funds are reported as separate columns in the fund fmancial statements.

The City reports the following major governmental funds:

The General Fund is the City's primary operating fund. It accounts for all financial resources of the generalgovernment, except those required to be accounted for in another fund.

The 2005, 2011 and 2016 Cobb County SPLOST Capital Projects Funds accounts for the acquisition andconstruction of major capital facilities and improvements that were approved by the voters of Cobb County,Georgia through the special purpose local option sales tax referendum. The amounts collected in these fundsare restricted to be spent on capital projects throughout the City.

The Austell Area Community Council Capital Projects accounts for monies contributed by the NorfolkSouthern Company for the purpose of constructing public facilities throughout the City or for otherbetterments of the community. The amounts collected in this fund including interest revenue earned arecommitted for certain items as approved by the Austell Area Community Council Board for the bettermentof the community which may include capital projects.

(See Independent Auditor's Report)

27



D. Measurement Focus, Basis of Accounting, and Basis of Presentation - (Continued):

The Multiple Grants Special Revenue Fund accounts for grant monies received from a variety of Federaland State agencies. These specific revenue sources are either restricted or committed to expenditures forspecified purposes other than debt services or capital projects.

Additionally, the City reports the following fund types within the nonmajor governmental funds:

The special revenue funds account for revenue sources that are legally restricted and committed toexpenditures for specific purposes.

The capital projects fund account for acquisition and construction of major capital facilities other thanthose fmanced by proprietary funds.

The City reports the following major proprietary funds:

The Threadmill Complex Fund accounts for the operations of the Threadmill Complex which is usedfor City offices and spaces rented to private businesses and other governmental agencies.

The Water and Sewer Fund accounts for the activity of the City's utility system.

The Stormwater Fund accounts for the activity ofthe City's stormwater system.

Additionally, the City reports the following fund as a nonmajor proprietary fund:

The Solid Waste Fund is used to account for the City's solid waste collection, recycling, and disposalactivities. The City does contract with a private corporation for these services.

In accounting and reporting for its proprietary operations, the City applies all Governmental AccountingStandards Board (GAS B) pronouncements. The City applies GASB Statement No. 62, Codification ofAccounting and Financial Reporting Guidance Contained in Pre-November 30, 1989 FASB and A1CPAPronouncements. StatementNo. 62 incorporated into the GASB's authoritative literature certain accountingand financial reporting guidance issued on or before November 30, 1989.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with a proprietary fund's principal ongoing operations. The principal operating revenues of theenterprise funds are charges for goods and services provided. Operating expenses of the enterprise fundsinclude the cost of these goods and services, administrative expenses, and depreciation on capital assets. Allrevenues and expenses not meeting this defmition are reported as non-operating revenues and expenses.When both restricted and unrestricted resources are available for use, it is the City's policy to use restrictedresources first, then unrestricted resources as they are needed.

E. Budgets

Annual appropriated budgets are adopted for all fund. Capital Projects Funds have a project length budget.The budgets for the proprietary funds are for management control purposes and are not required to bereported. Budgets are adopted on a modified accrual basis, which is consistent with generally acceptedaccounting principles for governmental funds. All appropriations lapse at fiscal yearend. Encumbranceaccounting - under with purchase orders, contracts and other commitments for the expenditure of resourcesare recorded to reserve that portion of the applicable appropriation- is not employed by the City.


28



F. Deposits and Investments

Georgia Statutes authorize the City to invest in the following: (1) obligations of Georgia or any other States;(2) obligations of the United States; (3) obligations fully insured or guaranteed by the United Statesgovernment or one of its agencies; (4) obligations of any corporation of the United States government; (5)prime banker's acceptances; (6) the State of Georgia local government investment pool; (7) repurchaseagreements; and (8) obligations of any other political subdivision of the State of Georgia. Any investmentor deposit in excess of the federal depository insured amounts must be collateralized by securities equal to atleast 110%of the excess deposits.

For purposes of the statement of cash flows, all highly liquid investments with an original maturity of lessthan 90 days are considered to be cash equivalents. Investments are reported at fair value as determined byquoted market prices.

G. Short-Term and Long-Term Receivables and Payables

Activity between funds that is representative of lendinglborrowing arrangements outstanding at the end ofthe fiscal year, as well as all other outstandingbalances between funds is reported as "due to/from other fundsand advances to/from other funds." Any residual balances outstanding between the governmental activitiesand business-type activities are reported in the government-wide financial statements as "internal balances."Customer accounts receivable include billed but uncollected amounts and unbilled receivables based upon apro rata amount of subsequentmonthly billings. Allowances for doubtful accounts are maintained based onhistorical results adjusted to reflect current conditions.

Advances between funds, as reported in the fund fmancial statements, are offset by a fund balance reserveaccount in applicable governmental funds to indicate that they are not available for appropriation and are notexpendable available fmancial resources.

H. Inventories

Inventories are valued at cost, which approximates market, using the first-inlfirst-out (FIFO) methods.Inventories consist of expendable supplies held for consumption. The cost is recorded as an asset at the timethe individual item is purchased. Inventories (if any) reported in the governmental funds are equally offsetby a nonspendable fund balance, which indicates that they do not constitute "available, spendable resources"even though they are a component of net current assets.

I. Prepaid Items

Paymentsmade to vendors for servicesthat will benefit periods beyondJune 30, 2016, are recorded as prepaiditems in both government-wide and fund financial statements. Prepaid items reported in the governmentalfunds are equally offset by a nonspendable fund balance, which indicates that they do not constitute"available, spendable resources" even though they are a component of net current assets. The city uses theconsumption method to account for prepaid items.

J. Restricted Assets

Certain proceeds of revenue bonds, as well as certain resources set aside for their repayment, are classifiedas restricted assets on the statement of net position because their use is limited by applicable bond covenants,if applicable. Other restricted assets exist due to enabling legislation, grant agreements or other contractualrequirement.


29



K. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, bridges,sidewalks, and similar items), are reported in the applicable governmental or business-type activities columnin the governmental-wide fmancial statements. Capital assets are defmedby the City as assets with an initial,individual cost of more than $1,000 and an estimated useful life in excess of one year. Such assets arerecorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets arerecorded at estimated fair market value at the date of donation. Infrastructure (e.g. roads, bridges, sidewalks,and similar items) prior to July 1, 2003 have not been reported.

The cost of normal maintenance and repairs that do not add to the value of the asset or materially extendassets lives are not capitalized.

Capital assets of the primary government, as well as the component unit, are depreciated using the straightline methods over the following estimated useful lives:

Asset Years

InfrastructureBuildings and improvementsVehiclesFurniture and fixturesMachinery and equipmentComputer equipment

25-50305-77-103-103-5

L. Compensated Absences

It is the City's policy to permit employees to accumulate earned but unused vacation and sick pay benefits.There is no liability for non-vesting accumulated rights to receive sick pay benefits since the City does nothave a policy to pay any amounts when employees separate from service with the City. All vacation pay isaccrued when incurred in the government-wide and proprietary fund financial statements. A liability forthese amounts is reported in the governmental funds only if they have matured, for example, as a result ofemployee resignations and retirements.

M. Long-Term Obligations

In the government-wide financial statements and proprietary fund types in the fund financial statements,long-term debt and other long-term obligations are reported as liabilities in the applicable governmentalactivities, business-type activities or proprietary fund type statement of net position. Bond premiums anddiscounts are accrued and amortized over the term of the bonds using the effective interest method. Bondspayable are reported net of the applicable discount or premium. Issuance costs are expensed 'inthe period inwhich they are incurred.

In the fund financial statements, governmental fund types recognize bond premiums and discounts, as wellas bond issuance costs in the currentperiod. The face amount of the debt issued is reported as other fmancingsources. Premiums received on debt issuance are reported as other financing sources while discounts on debtissuance are reported as other fmancing uses. Issuance costs, whether or not withheld from the actual debtproceeds, are reported as debt service expenditures.


30



N. Fund Equity and Net Position

Fund equity at the governmental fund financial reporting level is classified as "fund balance." Fund equityfor all other reporting is classified as "net position."

Fund Balance -Generally, fund balance represents the difference between the assets, deferred inflows ofresources, and liabilities under the current financial resources management focus of accounting. In the fundfinancial statements, governmental funds report fund balance classifications that comprise a hierarchy basedprimarily on the extent to which the City is bound to honor constraints on the specific purpose for whichamounts in those funds can be spent.

Fund balances are classified as follows:

Nonspendable - Fund balances are reported as nonspendable when amounts cannot be spent becausethey are either (a) not in spendable form (i.e. items that are not expected to be converted to cash) or (b)legally or contractually required to be maintained intact.

Restricted - Fund balances are reported as restricted when there are limitations imposed on their useeither through enabling legislation adopted by the City or through external restrictions imposed bycreditors, grantors, laws or regulations of other governments.

Committed - Fund balances are reported as committedwhen they can be used only for specific purposespursuant to constraints imposed by a formal vote and passage of an ordinance of the City Council. Onlythe City Council may modify or rescind the commitment by passage of a subsequent ordinance.

Assigned - Fund balances are reported as assigned when amounts are constrained by the City's intent tobe used for specific purposes, but are neither restricted nor committed. The fundbalance policy approvedby an Ordinance of the City Council expressly delegates the authority to assign fundbalance to the City'sFinance Director.

Unassigned - Fund balances are reported as unassigned as the residual amount when the balances do notmeet any of the above criterion. The City reports positive unassigned fund balance only in the GeneralFund. Only deficits in fund balances may be reported as unassigned fund balance in other governmentalfunds.

Flow Assumptions - when both restricted and unrestricted amounts of fund balance are available for use forexpenditures incurred, it is the City's policy to use restricted amounts first and then unrestricted amounts asthey are needed. For unrestricted amounts of fund balance, it is the City's policy to use fund balance in thefollowing order: (1) Committed, (2) Assigned, and (3) Unassigned.

Net Position - Net position represents the difference between assets, deferred outflows of resources,liabilities, and deferred inflows of resources in reporting, which utilizes the economic resources measurementfocus. Amounts shown as net investment in capital assets are made up of capital asset costs, net ofaccumulated depreciation, reduced by the outstanding balances of any borrowing used (i.e. the amount thatthe City has spent) for the acquisition, construction or improvement of those assets. Net position is reportedas restricted using the same definition as used for restricted fund balance as described in the section above.All other net position is reported as unrestricted. The City applies restricted resources first when an expenseis incurred for purposes for which both restricted and unrestricted net position is available. The City'sgovernment-wide statement of net position reports $7,434,064 of restricted net position of which $1,991,676is restricted by enabling legislation.


31



O. Management Estimates

The preparation of fmancial statements in conformity with accounting principles generally accepted in theUnited States of America requires management to make estimates and assumptions that affect the reportedamount of assets and liabilities and disclosure of contingent assets and liabilities at the date of the fmancialstatements and the reported amount of revenues and expenditures/expensesduring the period. Actual resultscould differ from those estimates.

P. Interfund Transactions

Interfund services provided and used in the fund financial statements are accounted for as revenue,expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expensesinitially made from it that are properly applicable to another fund, are recorded as expenditures/expenses inthe reimbursing fund and as a reduction of expenditures/expenses in the fund that is reimbursed.

Q. Deferred Outflows / Inflows of Resources

In addition to assets, the statement of financial position will sometimes report a separate section for deferredoutflows of resources. This separate fmancial statement element, deferred outflows of resources, representsconsumption of net position that applies to a future period(s) and so will not be recognized as an outflow ofresources (expense / expenditures) until then. The City has one item that qualifies for reporting in thiscategory as of June 30, 2016which is deferred pension outflows recognized in the Statements ofNet Position.

In addition to liabilities, the statement of financial position will sometimes report a separate section fordeferred inflows of resources. This separate fmancial statement element, deferred inflows of resources,represents an acquisition of net position that applies to a future period(s) and so will not be recognized as aninflow of resources (revenue) until that time. The City recognizes deferred pension inflows in its Statementsof Net Position and also recognizes unavailable revenue, which is reported only in the governmental fundsbalance sheet. The governmental funds report unavailable revenues from property taxes and grants.

R. Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows ofresources related to pension, and pension expense, information about the fiduciary net position of the City ofAustell Retirement Plan (ARP) and additions to / deductions fromARP's fiduciarynet position, all have beendetermined on the same basis as they are reported in the ARP. For this purpose, benefit payments (includingrefunds of employee contributions, if applicable) are recognized when due and payable in accordance withthe benefit terms. Investments are reported at fair value.


32


2. LEGAL COMPLIANCE - BUDGETS

The City of Austell, Georgia employs the following procedures in establishing its annual budget:

1. The administration of the City submits a proposed operating budget to the Mayor and City Council. Theoperating budget includes proposed expenditures and the means for fmancing them.

2. Prior to any action by the Mayor and City Council, the City publishes the proposed budget and makes copiesavailable to the residents of the City.

3. Public meetings are held to obtain taxpayer comments.4. The budget is then legally enacted through passage of a resolution by the Mayor and City council.5. Budgetary control is exercised at the department level. The City administration is authorized to transfer

budget amounts within a department; any revisions that alter the total expenditures of a department require abudget amendment by the Mayor and City Council. The City did not significantly amend the budgets forany of its funds during the fiscal year ended June 30,2016.

6. Budgets are prepared on the GAAP basis.

The following funds and General Fund departments had excesses of actual expenditures over appropriations forthe fiscal year ended June 30, 2016:

General Fund -Housing and Development -

Planning & ZoningAustell Area Council Capital Projects Fund -

General Government

$ 567

$ 297

These over expenditures were funded by available fund balance.


33


3. DEPOSITS

Total reported cash and cash equivalents as of June 30, 2016 are summarized as follows:

Cash and cash equiwlents AmountCash and Cash EquivalentsCertificates of Deposit

s 4,832,329490,000

$ 5,322,329

Interest rate risk - The City has a formal investment policy that limits investment maturities as a means ofmanaging its exposure to fair value losses arising from increasing interest rates.

Custodial Credit Risk - Deposits: Custodial credit risk for deposits is the risk that, in the event of the failure ofa depository fmancial institution, a government will not be able to recover deposits or will not be able to recovercollateral securities that are in the possession of an outside party. State statutes and City policy require all depositsand investments (other than Federal or State government instruments) to be collateralized by depository insurance,obligations of the U.S. government, or bonds of public authorities, counties, or municipalities. As of June 30,2016, $4,655,079 of the City's bank balance of$5,322,329 was exposed to custodial credit risk as follows:

Uninsured and uncollateralizedCollateralized with securities held by thepledging financial institution or its agent

$

4,655,079

Total $ 4,655,079

4. RECEIVABLES

Property taxes are levied on property values assessed as of January 1. The tax bills are levied on July 1. Taxbillings are mailed in the month of November and considered due upon receipt by the taxpayer, however, theactual due date is December 31 st. After this date, the bill becomes delinquent and penalties and interest may beassessed by the City. Property taxes are recorded as receivables and deferred inflows of resources when levied.Revenues are recognized when available.

For the City's Stormwater Enterprise Fund, residential stormwater fees are billed annually on the same date asthe property tax bill as noted above and is attached to the property tax bill.


34

CITY OF AUSTELL1 GEORGIANOTES TO FINANCIAL STATEMENTS - (Continued)

4. RECEIVABLES - (Continued)

Receivables at June 30, 2016, for the City's individualmajor funds and nonmajor funds in the aggregate, includingthe applicable allowances for uncollectible accounts, are as follows:

2016 Cobb OtherCounty SPLOST Multiple Grants Nonmajor

General Fund Fund Fund Funds

ReceivablesTaxes $ 229,488 $ $ $ 442Acounts 20,663 18,461Due from othergovernments 211,883 75,395

Other 250,000

Gross Receivables 500,151 211,883 75,395 18,903Less: Allowance forUncollectibles (44,738)

Net Total Receivables $ 455,413 $ 211,883 $ 75,395 $ 18,903

Proprietary FundsThreadmill Water and StormwaterComplex Sewer Management Solid Waste

Accounts $ 238 $ 637,055 $ 347,599 $ 50,510Intergovernmental

Gross Receivable 238 637,055 347,599 50,510Less: Allowance forUncollectibles (250,000) (19,000)

Net Total Receivable $ 238 $ 387,055 $ 347,599 $ 31,510


35

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CITY OF AUSTELLl GEORGIANOTES TO FINANCIAL STATEMENTS - (Continued)

5. PROPERTYl PLANT AND EQUIPMENT - (Continued)

Beginning EndingBalance Increases Decreases Balance

Business-Type ActivitiesCapital assets, not being depreciated:Land $ 545,640 $ $ $ 545,640Construction in progress 24,327 (24,327)Total 569,967 (24,327) 545,640

Capital assets being depreciated:Infrastructure 6,689,992 273,823 6,963,815Buildings and improvements 8,223,268 8,223,268Machinery and equipment 428,065 428,065Vehicles 333,047 333,047Computer equipment 31,785 2,303 34,088Total capital assets being depreciated 15,706,157 276,126 15,982,283

Less accumulated depreciation for:Infrastructure 3,505,084 147,609 3,652,693Buildings and improvements 3,910,388 236,540 4,146,928Machinery and equipment 344,160 34,003 378,163Vehicles 333,047 333,047Computer equipment 19,454 7,820 27,274Total capital assets being depreciated 8,112,133 425,972 8,538,105

Total capital assets being depreciated, net 7,594,024 (149,846) 7,444,178

Business-Type Activities capital assets, net $ 8,163,991 $ (149,846) $ (24,327) $ 7,989,818

Depreciation expense was charged to functions/programs as follows:

Threadmill complexWater and sewerStormwater

$ 260,69765,42799,848

Total depreciation expense $ 425,972


37


5. PROPERTY, PLANT AND EQUIPMENT - (Continued)

Beginning EndingBalance Increases Decreases Balance

Austell Natural Gas SystemCapital assets, not beingdepreciated:Land $ 422,463 $ $ $ 422,463Construction in progress 279,175 458,075 737,250

Total 701,638 458,075 1,159,713

Capital assets beingdepreciated:Infrastructure 77,661,865 3,507,598 (313,864) 80,855,599Furniture, fixtures, and equipment 2,756,054 573,454 (415,618) 2,913,890Vehicles 1,182,118 202,390 (115,333) 1,269,175

Total capital assets beingdepreciated 81,600,037 4,283,442 (844,815) 85,038,664

Less accumulateddepreciation: 61,525,138 3,169,162 (687,766) 64,006,534

Total capital assets beingdepreciated, net 20,074,899 1,114,280 (157,049) 21,032,130

Austell Natural Gas System capital assets, net $ 20,776,537 $ 1,572,355 $ (157,049) $ 22,191,843

Depreciation of the originalcost of depreciableassets is calculatedusing the composite straight-linemethod at thefollowingrates:

Gas utility systemFurniture, fixtures, and equipmentElectronicdata procession equipmentTransportation vehicles

3.25%10.0016.6725.00

This composite method of depreciation as allowed by GASB No. 34 refers to the depreciation of a grouping ofdissimilar assets of the same class using a uniform rate of depreciation as noted above. GASB 34 allows the rateof depreciation to be calculated in different ways. The method chosen by the Gas System is to base the rate ofdepreciation on its assessment of the life of the group of assets as a whole.

(See Independent Auditor'S Report)

38


6. OPERATING LEASES

The City is the lessor of office space at the Threadmill Complex. During fiscal year 2016, the City received$1,208,874 in operating lease revenue. The carrying value of the building and improvements of$4,541,864(costof $8,868,165 less accumulated depreciation of $4,326,301, which includes $260,326 depreciation expense infiscal year 2016) is included in capital assets in the Threadmill Complex Fund. Most leases are year-to-year andexpire at various times throughout the year. However, there are three (3) leases with terms extending beyond theend of the next fiscal year.

Lease revenues from these tenants in future fiscal years are as follows:

Fiscal year ending Total Revenues

20172018201920202021

2022-20262027-2028

$ 773,507780,000588,00012,00012,00060,00021,000

7. LONG-TERM DEBT

Changes in Long-Term Debt

The following is a summary of changes in long-term liabilities reported in the government-wide fmancialstatements for the year ended June 30, 2016:

Beginning Ending CurrentBalance Increases Decreases Balance Portion

Governmental ActivitiesCapital leases $ 202,217 $ 303,888 $ (212,918) $ 293,187 $ 53,707Compensated Absences 126,190 106,427 (107,540) 125,077 35,000Net pension liability 674,357 487,379 1,161,736

Total Governmental-TypeActivity Long-TermDebt $ 1,002,764 $ 410,315 $ (320,458) $ 1,580,000 $ 88,707

Business-Type ActivitiesCompensated Absences $ 48,797 $ 31,287 $ (29,521) $ 50,563 $ 12,640Net pension liability 169,641 122,610 292,251

Total Business-TypeActivityLong-TermDebt $ 218,438 $ 153,897 $ (29,521) $ 342,814 $ 12,640

For governmental funds, compensated absences are liquidated by the General Fund from which employees'salaries are paid. For business-type activities, compensated absences are liquidated by the ThreadmiIIComplexFund, theWater and SewerFund, the Stormwater Fund, and the SolidWaste Fund fromwhich employees' salariesare paid.


39


7. LONG-TERM DEBT - (Continued)

Capital Leases. The City has entered into lease agreements as lessee for fmancing the acquisition of variouspublic safety and public works vehicles. The lease agreements qualify as capital leases for accounting purposes(titles transfer at the end of the lease terms) and, therefore, have been recorded at the present values of the futureminimum lease payments as of the date of their inceptions. As of June 30, 2016, the City had assets with a netbook value of$176,307 (asset value of $179,272 less accumulated depreciation of $2,965) under capital leases.Annual depreciation ($2,965) of these assets under capital leases is included in depreciation expense.

The City's total capital lease debt service requirements to maturity are as follows:

Fiscal Year Ending June 30, Principal Interest Total

2017 $ 53,706 $ 4,839 $ 58,5452018 62,656 7,852 70,5082019 64,770 5,738 70,5082020 66,964 3,544 70,508

2021 45,091 1,491 46,582

Total $ 293,187 $ 23,464 $ 316,651

Interest rates associated with the capital leases range from 3.1% to 3.3%.

Austell Natural Gas System

Long-term liability activity for the fiscal year ended July 31, 2016 is as follows:

Beginning Ending CurrentBalance Increases Decreases Balance Portion

Austell Natural Gas SystemNet pension liability $ 2,939,879 $ 1,650,768 $ (2,346,602) $ 2,244,045 $Net OPEB obligation 178,304 77,615 (14,388) 241,531Compensated absences 403,107 402,526 (403,107) 402,526 402,526

Total Governmental-TypeActivity Long-Term Debt $ 3,521,290 $ 2,130,909 $ (2,764,097) $ 2,888,102 $ 402,526


40

CITY OF AUSTELLl GEORGIANOTES TO FINANCIAL STATEMENTS - (Continued)

8. INTER-FUND TRANSACTIONS

The composition of inter fund receivable and payable balances at June 30, 2016 were as follows:

Pa ableFromCobb AustellArea

Water& Multiple Threadmill County Storm- CommunityPayable Nonmajor Sewer Grants Complex SPLOST water CouncilTo General Funds Fund Fund Fund Funds Fund Fund Total

General $ $ 38,829 $ $ $ $ 1,382,729 $ $ 46,827 $ 1,468,385Nonmajor 4,367 4,367AustellArea

CommunityCouncil 141,501 141,501MultipleGrantsFund 121,945 121,945StormwaterFund 138,489 138,489ThreadmillComplex 2,724 2,724CobbCountySPLOST 103,420 21,628 286,757 217,349 4,000 633,154

Total $ 368,221 $ 38,829 $ 21,628 $ 286,757 $ 141,501 $ 1,602,802 $ 4,000 $ 46,827 $ 2,510,565

All interfund balances resulted from the time lag between the dates that (1) interfund goods and services areprovided or reimbursable expenditures occur, (2) transactions are recorded in the accounting system, and (3)payments between funds are made. Note that the $633,154 interfund receivable to the Cobb County SPLOSTFunds consist mainly from the separation of monies in one bank account to three separate bank accounts.However, $312,385 is due to the various SPLOST Funds for expenditures out of the SPLOST Funds that should.have been paid out of other non-SPLOST funds.

Advances from/to other funds are as follows:

PayableFrom

PayableTo

ThreadmillCo implexFund

Austell AreaCommunity Council $ 3,213,000


41


8. INTER-FUND TRANSACTIONS - (Continued)

During fiscal year 2013, the City authorized an interfund agreement between the Austell Area CommunityCouncil Fund (AACC) and its Threadmill Complex Fund in which the AACC Fund advanced $4,590,000 to theThreadmill Complex Fund in order to payoff its outstanding revenue bonds. The Threadmill Complex Fundbegan repaying the balance (plus interest) over nine (9) years commencing on September 1, 2013 and ending onSeptember 1, 2022. Interest rates range from 3% to 4%. As of June 30, 2016, $459,000 (which representsprincipal due on September 1,2016) has been re-classed as a current liability.

Due to/from primary government and component units:

PayableTo

Payable FromAustellNatural

GasSystem

General $ 3,067,585

At June 30, 2016, Austell Natural Gas System owed the primary government $3,067,585. However, the GasSystem reported a payable of $3,212,519. The difference is a result of the Gas System's fiscal year-end beingJuly 31, 2016 and reporting $144,934 of additional fees due to the primary government.

Interfund transfers for the year ended June 30, 2016 were as follow:

Transfer FromTransfer

To GeneralMultiple

Threadmill Stormwater Grants

$

Total

$190,942241,061

98,061377,004

$ 907,068Total

$ $ $190,942241,061

98,061352,677 24,327

$ 882,741 $ 24,327 $

$GeneralNonrnajorThreadmillStormwaterSolid wasteWater and SewerMultiple grants

Transfer are used to (1) move revenues from the fund that statute or budget requires collecting them to the fundthat statute or budget requires to expend them, (2) use unrestricted revenues collected in the General Fund tofmance various programs accounted for in other funds in accordance with budgetary authorizations, and (3) useunrestricted revenues of the General Fund to cover the operational shortfalls of the other funds.

In the Statement of Changes in Activities, additional transfers were recognized in the amount of $249,496 as aresult of the 2011 SPLOST Fund financing of a waterline. Governmental Funds transferred the water line to theWater and Sewer Fund in which it was recognized as a capital improvement. This increased the total transfers inthe Statement of Activities to $941,295. These transactions were recognized as capital outlay expenditures in thegovemmental funds and as capital contributions in the proprietary funds.


42


9. EMPLOYEE BENEFIT PLANS

Defined Benefit Plan - GMA Administered

Plan Description

The City, as authorized by the City Council, has established a defmed benefit pension plan (The City of AustellRetirement Plan) covering all full-time employees. The City's pension plan is affiliated with the GeorgiaMunicipal Employee Benefit System (GMEBS), an agent multiple-employer pension plan administered by theGeorgia Municipal Association. Contributions made by the City are commingled with contributions made byother members ofGMEBS for investmentpurposes. The City does not own any securities on its own. Investmentincome from the securities is allocated on a pro rata basis. The GeorgiaMunicipal Association issues a publiclyavailable financial report that includes fmancial statements and required supplementary information for GMEBS.That report may be obtained by writing to Georgia Municipal Association, Risk Management and EmployeeBenefit Services, 201 Pryor Street, NW, Atlanta, Georgia 30303 or by calling (404) 688-0472.

As provided by State law, benefit provisions for Participants in GMEBS are established and amended by therespective employers. As authorized by the City Council, the Plan provides pension benefits and death anddisability benefits for Plan members and beneficiaries. All employees, excluding elected officials, who workthirty hours or more per week, are eligible to participate immediately upon hiring. Benefits vest after five yearsof service. A City employee who retires at age 65 with five years of service is entitled to benefits of 2.25% offinal average earnings in excess of covered compensation. An employee may elect early retirement at age 55provided he or she has a minimum of 25 years total credited service to receive full benefits, otherwise earlyretirement may be elected after only 10years of service for reduced benefits. Elected officials are entitled to $41for each year of service after reaching normal retirement age. Ten years of service is required for nonservicerelated disability benefits. Disability benefits are paid out at 20% of an employee's current salary. Death benefitsare calculated using an actuarial reserve.

At January 1,2016, the date of the most recent actuarial valuation, there were 151participants consisting of thefollowing:

Retirees and beneficiaries currently receiving benefitsTerminated vested participants not yet receiving benefitsActive employees - vestedActive employees - nonvested

3534699

Total 147

Contributions

The Plan is subject to minimum funding standards of the Georgia Public Retirement Systems Standard law. TheBoard of Trustees of GMEBS has adopted a recommended actuarial funding policy for the Plan which meetsState minimum requirements and will accumulate sufficient funds to provide the benefits under the Plan. Thefunding policy for the Plan is to contribute an amount equal to or greater than the recommended contributiondescribed below. For fiscal year 2016, the actuarially determined contribution rate was 8.23% of covered payroll.

For fiscal year ended June 30, 2016, the City's recommended and actual contribution was $278,851 which wasactuarially determined and is expected to finance the cost of benefits earned by employees during the year, withan additional amount to fmance any unfunded accrued liability. The amount of employer contributions recognizedin the actuarial report dated January 1, 2016 and included in the government-wide statement of activitiesamounted to $247,414.


43


9. EMPLOYEE BENEFIT PLANS - (Continued)

Defined Benefit Plan - GMA Administered, continued

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

At June 30, 2016, the City reported a liability of$1,453,986 for its net pension liability. The net pension liabilitywas measured as of September 30, 2015 and was determined by an actuarial valuation as of January 1,2016. Thechanges in the Net Pension Liability for the year ended September 30, 2015 (the measurement date) were asfollows:

Changes for the yearService costInterestDifferences between expected andactual experience

Contnbutions - EmployerNet investment incomeBenefit payments, including refunds ofemployee contnbutions

Administrative expenseOther

Total Fiduciary NetPension Net PensionLiability Position Liability

$ 8,911,083 $8,067,085 $ 843,998

167,487 167,487681,983 681,983

121,886 121,886292,687 (292,687)88,656 (88,656)

(222,611) (222,611)(19,975) 19,975

Balances at September 30,2014

Net Changes 748,745 138,757 609,988

Balance at September 30,2015 $ 9,659,828 $8,205,842 $ 1,453,986

Effective January 1, 2015, the Plan was amended to provide for immediate participation for Employees. Thischange has no impact on service credited under the Plan and has no impact on benefits. As a result of this change,all Employees are now included in the valuation. This change has minimal impact on the Plan's liability.


44




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

For the year ended June 30, 2016, the City recognized pension expense and deferred outflows of resources anddeferred inflows of resources related to pensions from the following sources:

Service costInterest on The Pension Liability (TPL)Administrative expensesExpected return on assetsDeferred Inflows -

Expensed portion of current year period differencesbetween expected and actual experience in TPL

Current year recogniztion of deferred inflows andoutflows established in prior years

Expensed portion of current year period differences betweenprojected and actual investment earnings

$ 167,487681,98319,975

(627,141)

24,378

(126,965)

107,697

Total expense $ 247,414

$209,138 reported as deferred outflows of resources related to pensions resulting from the City's contributionsmade subsequent to the measurement date will be recognized as a reduction of the net pension liability in the yearended June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resourcesrelated to pensions will be recognized in pension expense as follows:

FNfE Deferred DeferredJune 30, Outflows Inflows

2017 $ 132,074 $ (126,965)2018 132,074 (126,965)2019 132,074 (126,965)2020 132,074

$ 528,296 $ (380,895)

Outstanding balances of deferred outflows/inflows of resources related to pensions as of June 30, 2016 are asfollows:

Outflows Inflows

Contnbutions subsequent to the measurement date $ 209,138 $Demographic 97,508 (71,880)Investment 430,788 (156,357)Assumption change (152,658)

Total $ 737,434 $ (380,895)


45




Actuarial Assumptions

The total pension liability in the January 1, 2016 actuarial valuation was determined using the following actuarialassumptions, applied to all periods included in the measurement:

Actuarial Assumptions:

Net Investment Rate of ReturnProjected Salary IncreasesCost of Living AdjustmentsMortality Rates -Healthy

7.75%3.25% plus service based merit increases3.25%

DisabledPlan TerminationBasis

RP-2000 CombinedHealthy Mortality Table with sexdistinct rates, set forward 2 years for males and 1yearfor femalesRP-2000 Disabled RetireeMortality Table - unisexrates1994GroupAnnuity Reserving UnisexTable

The actuarial assumptions used in the January 1, 2016 valuation were based on the results of an actuarialexperience study for the period January 1,2010 through June 30, 2014.

The long-term rate of return on pension plan investments was determinedusing a building-block method in whichbest-estimate ranges of expected future real rates of return (expected returns, net of pension plan investmentexpense and inflation) are developed for each major asset class. These ranges are combined to produce the longterm expected rate of return by weighting the expected future real rates of return by the target asset allocationpercentage and by adding expected inflation. Best estimates of arithmetic real rates of return for eachmajor assetclass included in the pension plan's target asset allocation as of September 30, 2015 are summarized in thefollowing table:

Long-Term Long-TermTarget ExpectedReal Nominal Real

Asset Class Allocation Rate ofReturn Rate ofReturn

Domestic equity 50.00% 5.95% 9.20%International equity 15.00% 6.45% 9.70%Fixed income 25.00% 1.55% 4.80"/0

Real estate 10.00% 3.75% 7.00%

Cash 0.00%Total 100.00%


46




Discount Rate

The discount rate used to measure the total pension liability was 7.75 percent. The projection of cash flows usedto determine the discount rate assumed that contributions from the City will be made at the actuarially determinedcontribution rate. Based on those assumptions, the pension plan's fiduciary net position was projected to beavailable to make all projected future benefit payments of current active and inactive employees. Therefore, thelong-term expected rate of return on pension plan investments was applied to all periods of projected benefitpayments to determine the total pension liability.

Sensitivity of the Net Pension LiabilityTo Changes in theDiscount Rate

The following presents the City's net pension liability calculated using the discount rate of7.75 percent, as wellas what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentagepoint lower or l-percentage-point higher than the current rate:

Net Pension Liability

1% Current 1%Decrease Rate Increase6.75% 7.75% 8.75%

$ 2,899,771 $ 1,453,986 $ 264,691

Pension Plan Net Fiduciary Net Position

Detailed information about the pension plan's fiduciary net position is available in the separately issued City ofAustell Retirement Plan fmancial report.

10. DEFERRED COMPENSATION PLAN

The City of Austell, Georgia offers its employees an Internal Revenue Code Section 457 Plan (the "Plan") whichis a deferred compensation plan that qualifies as a defmed contribution pension plan. The Plan is administeredby a third party administrator, The Hartford. The City has no fiduciary relationship with the Trust. Accordingly,the Plan assets are not reported in the City's fmancial statements. Plan provisions and contribution requirementsare established and may be amended by the City's Mayor and Council. At June 30, 2016, there were 22 planmembers in the plan.

Employees are not required to contribute to the Plan. Employees may contribute a portion of their gross salary,not to exceed the IRS guidelines, into the Plans. The Plan allows employees to increase, decrease, stop and restartdeferrals as often as they wish without penalties or fees. Total employee contributions for the fiscal year endedJune 30, 2016 were $82,655.


47


11. JOINT VENTURE

Under Georgia law, the City, in conjunction with other cities and counties in the Atlanta, Georgia area, is amember of the Atlanta Regional Commission (ARC). Dues to the ARC are assessed at the County level and are,accordingly, paid by Cobb County. Membership in the ARC is required by the Official Code of GeorgiaAnnotated (OCGA) Section 50-8-34 which provides for the organizational structure of the ARC in Georgia. TheARC Board membership includes the chief elected official of each county and various municipalities of the area.OCGA 50-8-39.1 provides that the member governments are liable for any debts or obligations of the ARC.Separate fmancial statements may be obtained fromARC, 40 Courtland Street, NE, Atlanta, Georgia 30303.

12. RISK MANAGEMENT

The City is exposed to various risks of losses related to torts; theft of damage to, and destruction of assets; errorsand omissions; injuries to employees; andnatural disasters. The Cityhasjoined together with other municipalitiesin the State as part of the Georgia Interlock Risk ManagementAgency Property and Liability Insurance Fund andthe Georgia Municipal Association Group Self-InsuranceWorker's Compensation Fund, public entity risk poolscurrently operating as common risk management and insurance programs for member local governments.

As part of these risk pools, the City is obligated to pay all contributions and assessments as prescribed by thepools, to cooperate with the pool's agents and attorneys, to follow loss reduction procedures established by thefunds, and to report as promptly as possible, and in accordancewith any coverage descriptions issued, all incidentswhich could result in the funds being required to pay any claim ofloss. The City is also to allow the pool's agentsand attorneys to represent the City in investigation, settlement discussions and all levels of litigation arising outof any claim made against the City within the scope of loss protection furnished by the funds.

The funds are to defend and protect the members of the funds against liability or loss as prescribed in the membergovernment contract and in accordance with the workers' compensation law of Georgia. The funds are to pay allcost taxed against members in any legal proceeding defended by the members, all interest accruing after entry ofjudgement, and all expenses incurred for investigation, negotiation or defense.

Settled claims have not exceeded the coverages in the past three (3) fiscal years.

The City carries commercial insurance for other risks of losses. For insured programs, there have been nosignificant reductions in insurance coverage. Settlement amounts have not exceeded insurance coverage in thepast three (3) fiscal years.

13. COMMITMENTS AND CONTINGENCIES

Litigation:

Subsequent to June 30, 2016 the City became a defendant in a law suit in which the plaintiff claimed that the Cityhad terminated his employment in violation of the Georgia Whistleblower Act. The plaintiff is asking the Courtto award damages and attorney fees and cost of litigation. After conducting a thorough analysis of the claimsmanagement and legal counsel concluded that the City did not violate the Whistleblower Act. Liability, if any,which might result from these proceedings, would not, in the opinion of management and legal counsel, have amaterial adverse effect on the fmancial position of the City.

Grant Contingencies:

The City has received Federal and State Grants for specific purposes that are subject to review and audit by thegrantor agencies. Such audits could lead to the disallowance of certain expenditures previously reimbursed bythose agencies. Based upon prior experience, management of the City believes such disallowances, if any, willnot be significant.


48


13. COMMITMENTS AND CONTINGENCIES, (Continued)

Stormwater Fees:

At June 30, 2015 the City was in negotiations with a private corporation regarding the propriety of charging theCompany stormwater fees. The Company maintained that they have a federal license to maintain their ownstormwater run-off system and that the City does not participate in any activity related to the Company's systemand therefore the Company should not be charged a fee. Unpaid stormwater fees assessed to the Company for thecalendar years 2013 and 2014 amounted to $176,900 and were reported in the City's Stormwater Fund BalanceSheet as of June 30, 2015. During fiscal year ended June 30, 2016 the Company and the City reached anagreement to solve the issue. Amounts owed as of June 30,2015 were written offby the City and a settlement of$110,000was recorded by the City as a stormwater receivable. The Company also agreed to contribute to the City$25,000 a year for the next ten years which was recorded as a receivable in the City's General Fund.

14. HOTELIMOTEL LODGING TAX

The City imposes a hotel/motel tax on lodging facilities within the City. The tax was assessed at 8%. Revenueswere $2,516 for the fiscal year ended June 30, 2016. Of this amount, 62.5%, or $1,572, was remitted to the CobbMarietta Coliseum and Exhibit Hall Authority as is contractually obligated. The receipts from the City, less37.5% are pledged as a revenue source for debt service requirements ofthe Authority. Of the amount remitted tothe Authority, the City will obtain a reimbursement of 40%

The City expended $1,804, including the amount remitted to the Cobb-Marietta Coliseum and Exhibit HallAuthority, during the current fiscal year to promote tourism as required by O.C.G.A. 48-13-51.

15. OTHER REQUIRED INDIVIDUAL FUND DISCLOSURES

General accepted accounting principles require disclosures, as a part of the basic fmancial statementsoverview, of certain information concerning individual funds including -

A. Deficit fund balances or net position balances of individual funds - As of June 30, 2016, the Multiple GrantFund had a negative fund balance of$130,213. Management expects the deficit to be funded through futurerevenues and transfers from the General Fund, if necessary.

B. Excess expenditures over budget - None of the City's funds incurred material excesses (if over 5 percentand greater than $5,000) of expenditures over appropriations at the department level (the legal level of control)as reported in Note 2 to these financial statements.


49

CITY OF AUSTELL, GEORGIASCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOSLAST 10 FISCAL YEARS

Fiscal Year End2016 2015 2007

Total Pension Liabili!IService cost $ 167,487 $ 186,539Interest 681,983 661,660Differerences between expected and

actual experience 121,886 (119,799)Changes of assumptions (254,428)Benefit payments {222,611) {200,875)Net changes in total pension liability 748,745 273,097Total pension liability - beginning 8,911,083 8,637,986Total pension liability - ending $ 9,659,828 $8,911,083

Plan Fiducia~ Net PositionContributions - employer $ 292,687 $ 345,081Net investment income 88,656 817,473

VI Benefit payments (222,611) (200,875)0Administrative expense (19,975) (16,055)OtherNet cvhange in fiduciary net position 138,757 945,624Plan fiduciary net position - beginning 8,067,085 7,121,461Plan dicuciary net position - ending $ 8,205,842 $8,067,085

Net Pension Liabili!INet pension liability $ 1,453,986 $ 843,998Plan's fiduciary net position as a

percentage of the total pensionliability 84.95% 90.53%

Covered-employee payroll $ 3,458,027 $3,336,441Net pension liability as a percentage

of covered payroll 42.05% 25.30%

2014 2013 2012 2011 2010 2009 2008

(Historical information prior to implementation of GASB 67/68 is not required)



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NOTES TO REQUIRED SUPPLEMENTARY PENSION INFORMATION


Note 1

Significant methods and assumptions used in calculating the actuarially determined calculations are asfollow:

Methods and assumptions used to determine contribution rates:

Actuarial Cost MethodAmortizationMethodRemainingAmortizationPeriodAsset ValuationMethod

Projected Unit CreditClosed level dollar for remaining unfunded liabilityN/ASumof actuarial value at beginning of year and the cashflow during the year plus the assumed investmentreturn, adjusted by 10%of the amount that the valueexceeds or is less than the market value at end of year.The actuarial value is adjusted, if necessary, to bewithin 20% of market value.

Actuarial Assumptions:

Net InvestmentRate of ReturnProjected Salary IncreasesCost of LivingAdjustmentsMortality Rates -Healthy

7.75%3.25% plus service based merit increases3.25%

DisabledPlan Termination Basis

RP-2000 CombinedHealthyMortality Table with sexdistinct rates, set forward 2 years for males and I yearfor femalesRP-2000 Disabled RetireeMortality Table - unisex rates1994Group AnnuityReservingUnisex Table

No significant factors changed that significantly affected trends in the amounts reported such as changesin benefit terms, the size or composition of the population covered by the benefit terms, or assumptionsused.

52

COMBINING AND INDIVIDUALFUND STATEMNTSAND SCHEDULES


NONMAJOR GOVERNMENTAL FUNDS

SPECIAL REYENUE FUNDS

Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restrictedor committed to expenditures for specified purposes other than debt services or capital projects.

Confiscated Assets Fund - To account for the City's share of excess funds received from confiscated capital andequipment. Georgia law allows police agencies to file for seizure of property related to illegal substances oractivities. These fundsmust be used to purchase police equipment.

Emergency Telephone System Fund - Established in compliance with State Law to account for the receipt of the"911" Emergency Telephone Systemcharges by communication firms. This revenue is used to offset the costs ofoperating the "91 1" system.

Hotel/Motel Tax Fund - Establishedto account for the collection of an 8% excise tax on charges for hotel/motelaccommodations in the City. This levy is required by State law to promote tourism, conventions, trade shows, andother related purposes. 62.5% is remitted to the Cobb-MariettaColiseum and Exhibit Hall Authority as iscontractually obligated. The receipts from the City, less 37.5% are pledged as a revenue source for the debt servicerequirements of the Authority. Of the amount remitted to the Authority, the City will obtain a reimbursement of40%.

CAPITAL PROJECTS FUNDS

The Capital Projects Funds are used to account for financial resources restricted, committed, or assigned toexpenditure for the acquisition or constructionof capital assets.

Douglas County SPLOST Fund - To account for the acquisition and construction of major park improvements thatwere approved by the voters of Douglas County, Georgia through the special purpose local option tax referendum.

-------- -- - - -

THIS PAGE INTENTIONALLY LEFT BLANK

CITY OF AUSTELL, GEORGIACOMBINING BALANCE SHEET

NONMAJOR GOVERNMENTAL FUNDSJUNE 30, 2016

Sl!ecial Revenue FundsEmergency Hotel/

Confiscated Telephone MotelAsset System TaxFund Fund Fund

AssetsCash $ 58,343 $ 66,324 $ 171InvestmentsReceivables -

Taxes 442Accounts 18,461

Due from other governmentsDue from other funds 4,367Prepaid items 25,276

Total assets 58,343 110,061 4,980

Liabilities and Fund BalancesLiabilities

Accounts payable 1,881Accrued liabilities 7,554Due to other governmentsDue to other funds 36,406Due to othersUnearned revenues

Total liabilities 36,406 9,435

Fund balancesNonspendable -

Prepaid items 25,276Restricted -

Capital projectsLaw enforcement activities 21,937Public safety activities 75,350Tourism and economic development 4,980

UnassignedTotal fund balances 21,937 100,626 4,980

Total liabilities and fund balances $ 58,343 $ 110,061 $ 4,980

53

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CITY OF AUSTELL, GEORGIANONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCE


SPECIAL REVENUE FUNDEmergency Hotel/

Confiscated Telephone MotelAsset System TaxFund Fund Fund

Revenues:Taxes $ $ $ 2,516Charges for services 132,590Fine and forfeitures 4,559Interest incomeMiscellaneous 991

Total revenues 4,559 132,590 3,507

Expenditures:Current

Public safety 25 537,647Public worksCulture and recreationTourism and economic development 1,804

Capital outlayAdministrativePublic safety 555Culture and recreationTourism and economic development

Total expenditures 25 538,202 1,804

Excess (deficiency) of revenuesover expenditures 4,534 (405,612) 1,703

Other Financing Sources (Uses):Transfers 190,942Capital lease proceeds

Total other financing sources (uses) 190,942

Net change in fund balances 4,534 (214,670) 1,703

Fund balance - beginning of year 17,403 315,296 3,277

Fund balance - end of year $ 21,937 $ 100,626 $ 4,980

54

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CITY OF AUSTELL, GEORGIACONFISCA TED ASSETS FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET (GAAP BASIS), AND ACTUALFOR THE YEAR ENDED JUNE 30, 2016

BudgetOriginal Final Acutal Variance

RevenuesFines and forfeitures $ 28,000 $ 28,000 $ 4,559 $ (23,441)Miscellaneous revenue

Total revenues 28,000 28,000 4,559 (23,441)

ExpendituresPublic safety 28,000 28,000 25 27,975

Total expenditures 28,000 28,000 25 27,975

Excess of revenues over (under)expenditures 4,534 4,534

Other Financing Sources (Uses)Transfers

Total other financing sources (uses)

Net change in fund balance 4,534 4,534


Fund balance - end of year $ 17,403 $ 17,403 $ 21,937 $ 4,534

55

CITY OF AUSTELL, GEORGIAEMERGENCY TELEPHONE SYSTEM FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET (GAAP BASIS) AND ACTUALFOR THE YEAR ENDED JUNE 30, 2016


RevenuesCharges for services $ 129,000 $ 129,000 $ 132,590 $ 3,590Miscellaneous revenue 200 200 (200)

Total revenues 129,200 129,200 132,590 3,390

ExpendituresPublic safety 635,959 635,959 538,202 97,757

Total expenditures 635,959 635,959 538,202 97,757

Excess of revenues over (under)expenditures (506,759) (506,759) (405,612) 101,147

Other Financing Sources (Uses)Transfers 506,759 506,759 190,942 (315,817)

Total other financing sources (uses) 506,759 506,759 190,942 (315,817)

Net change in fund balance (214,670) (214,670)


Fund balance - end of year $ 315,296 $ 315,296 $ 100,626 $ (214,670)

56

CITY OF AUSTELL, GEORGIAHOTELfMOTEL TAX FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET (GAAP BASIS) AND ACTUALFOR THE YEAR ENDED JUNE 30,2016


RevenuesTaxes $ 3,200 $ 3,200 $ 2,516 $ (684)Miscellaneous revenue 991 991

Total revenues 3,200 3,200 3,507 307

ExpendituresCurrent

Tourism and economic development 3,200 4,700 1,804 2,896Total expenditures 3,200 4,700 1,804 2,896

Excess of revenues over (under)expenditures (1,500) 1,703 3,203

Other Financing Sources (Uses)Transfers 4,700 (4,700)

Total other fmancing sources (uses) 4,700 (4,700)

Net change in fund balance 3,200 1,703 (1,497)


Fund balance - end of year $ 3,277 $ 6,477 $ 4,980 $ (1,497)

57

CITY OF AUSTELL, GEORGIAAUSTELL AREA COMMUNITY COUNCIL CAPITAL PROJECTS FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCEBUDGET (GAAP BASIS) AND ACTUALFOR THE YEAR ENDED JUNE 30, 2016


RevenuesInterest income $ $ $ 110,011 $ 110,011Miscellaneous revenue

Total revenues 110,011 110,011

ExpendituresGeneral government 130,000 130,000 130,297 (297)Culture and recreationPublic safety

Total expenditures 130,000 130,000 130,297 (297)

Excess of revenues over (under)expenditures (130,000) (130,000) (20,286) 109,714

Other Financing Sources (Uses)Transfers

Total other financing sources (uses)

Net change in fund balance (130,000) (130,000) (20,286) 109,714

Fund balance - beginning of year 5,462,674 5,462,674 5,462,674

Fund balance - end of year $ 5,332,674 $ 5,332,674 $ 5,442,388 $ 109,714

58

CITY OF AUSTELL, GEORGIASCHEDULE OF PROJECTS FINANCED

WITH COBB COUNTY SPECIAL PURPOSE SALES TAX 2005FOR THE YEAR ENDED JUNE 30, 2016

ORIGINAL EXPENDITURES ESTIMATEDESTIMATED BEGINNING CURRENT TO PERCENT

PROJECT COST OF YEAR YEAR DATE COMPLETE

STREETS:Roads, streets, curbs

gutters and sidewalks $ 2,042,132 $ 1,124,157 $ 324,311 $ 1,448,468 71%

PUBLIC SAFETY:Radio system 160,334 156,742 156,742 98%

$ 2,202,466 $ 1,280,899 $ 324,311 $ 1,605,210

59

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------------- - - - - - .


WITH COBB COUNTY SPECIAL PURPOSE SALES TAX 2016FOR THE YEAR ENDED JUNE 30, 2016

ORIGINAL EXPENDITURES ESTIMATEDESTIMATED BEGINNING CURRENT TO PERCENT

PROJECT COST OF YEAR YEAR DATE COMPLETE

STREETS:Resurfacing s 1,113,486 s s s 0%Roadway striping 211,032 0%Curb and gutters 42,693 0%Sidewalks 844,128 0%Roadway drainage systems 193,309 0%Sign replacement and upgrades 126,619 0%Maintenance equipment 801,922 90,574 90,574 11%Public works facility improvements 84,413 0%Information technology upgrades 168,826 16,145 12,054 28,199 17%

PARKS PROJECTS:Threadmill Complex -

Roof replacement 450,000 0%Other improvements 300,000 0%

Parks maintenance facility improvements 200,000 124,717 124,717 62%Upgrades to all city parks 431,345 0%Park equipment 300,000 0%

PUBLIC SAFETY:2 positrons 125,000 0%3 equipped patrol vehicles 222,175 0%Fire engine 420,000 0%Public safety radios 250,000 17,797 17,797 7%Public safety training facility upgrade 56,912 0%

s 6,341,860 $ 16,145 $ 245,142 s 261,287

61

PROJECT


WITH DOUGLAS COUNTY SPECIAL PURPOSE SALES TAXFOR THE YEAR ENDED JUNE 30, 2016

ORIGINAL EXPENDITURES ESTIMATEDPERCENT

COMPLETECOST YEARESTIMATED BEGINNING CURRENT

OF YEAR

PARK PROJECTS:

Park improvements

TODATE

$ 522,094 $ 522,094 ,,-$_--=2::2.,4..:.:2:.:...7$ 524,521

$ 522,094 $ 522,094 ,;,,$==2..;,,4,.;,2;,,;,.7$ 524,521

62

100%

TIDS PAGE INTENTIONALLY LEFT BLANK

---------------------------------------------- - -- ----- -

STATISTICAL SECTION

This part of the City of Austell's comprehensive annual financial report presents detailed information as a contextfor understanding what the information in the financial statements, note disclosures, and required supplementaryinformation says about the City's overall financial health.

Financial Trends ................................•.......••..................................................................• 63

These schedules contain trend information to help the reader understand how the City's financialperformance and well-being have changed over time.

Revenue Capacity .......................................................•.......•............................•..............• 70

These schedules contain information to help the reader assess the City's most significant local revenuesources, property taxes and franchise fees.

Debt Capacity ...................................................•...........................•.................•..•........... 76

These schedules present information to help the reader assess the affordability of the City's current level ofoutstanding debt and the City's ability to issue additional debt in the future.

Demographic and Economic Information 81

These schedules offer demographic and economic indicators to help the reader understand the environmentwithin which the City's financial activities take place.

Operating Information 84

These schedules contain service and infrastructure data to help the reader understand how the information inthe City's financial report relates to the services the City provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annualfinancial report for the relevant fiscal year. GASB Statement number 54 established a hierarchy of fund balanceclassifications based primarily on the extent to which governments are bound by constraints placed on resources.The effective date for implementationof GASB 54 was for periods beginning after June 15,20IO.Presentation forfiscal years 2006-20I0 are prior to the implementationof GASB StatementNo. 54. Fiscal year 20 II was the firstfiscal year of implementation for GASB StatementNo. 54. Fiscal year 2013 was the first fiscal year ofimplementationof GASB 63 and 65 and 2015 was the first fiscal year of implementation of GASB 68.

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SCHEDULE 13CITY OF AUSTELL, GEORGIA

GENERAL GOVERNMENTAL FRANCHISE TAX AND OWNERSHIP FEES PERCENTAGESCURRENT FISCAL YEAR AND FIVE YEARS AGO

Current YearFranchise Tax & Percentage of 2016 2011Ownership Fees Gross Sales Revenue Revenue

Austell Gas System (ownership) 9% $ 3,597,272 $ 3,345,674

Georgia Power 5% 521,380 510,049

Greystone Power 5% 72,374 44,819

Comcast Cable TV 5% 51,568 42,415

AT&T 3% 39,528 59,309

Total $ 4,282,122 $ 4,002,266

Source: City's fmance department

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DIRECT AND OVERLAPPING DEBTAS OF JUNE 30, 2016

DebtOutstanding

EstimatedPercentage

Applicable (1)

EstimatedShare of

OverlappingDebt

Direct General Obligation Debt:

Overlapping General Obligation Debt:

Cobb County General Obligation DebtTotal, General Obligation Debt

$ 10,514,647 1% $ 105,146105,146

Overlapping Guaranteed Revenue Debt:

Cobb County Parking Deck CertificatesCobb County Revenue Anticipation CertificatesCobb-Marietta Coliseum and Exhibit Hall AuthorityCobb County Solid Waste Management Authority

Total, overlapping revenue debt

City Direct Debt:Capital Lease

8,850,000 1% 88,5006,142,637 1% 61,426

40,055,000 1% 400,5501%

$ 65,562,284 1% $ 655,623

$ 293,187$ 293,187

Sources: Assessed value data used to estimate applicable percentages provided by the CobbCounty Finance Department. Debt outstanding data provided by Cobb County Finance Departmentand Cobb County School District.

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundariesof the City. This schedule estimates the portion of the outstanding debt of those overlapping governmentsthat is borne by the residents and businesses of the City of Austell, Georgia. This process recognizesthat, when considering the government's ability to issue and repay long-term debt, the entire debt burdenborne by the residents and businesses should be taken into account. However, this does not imply that everytaxpayer is a resident and, therefore, responsible for repaying the debt, of each overlapping government.

(1) The percentage of overlapping debt applicable is estimated using taxable assessed property values.Applicable percentages were estimated by determining the portion ofthe county's taxable assessesvalue that is within the government's boundaries and dividing it by the Cobb County's total taxable assessesvalue.

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PLEDGED REVENUE COVERAGE-WATER & SEWER FUNDLAST TEN FISCAL YEARS

Utility Less: NetFISCAL YEAR Service Operating Available Debt Service

ENDED JUNE 30, Charges Expenses Revenue Principal Interest Coverage

2007 2,906,312 2,539,265 367,047 175,000 24,975 1.84

2008 2,824,631 2,322,800 501,831 185,000 17,100 2.48

2009 2,993,248 2,847,700 145,548 195,000 8,775 0.71

2010 3,591,952 3,106,552 485,400

2011 3,268,623 3,059,004 209,619

2012 3,679,283 3,405,721 273,562

2013 3,415,860 3,245,302 170,558

2014 3,478,282 3,256,714 221,568

2015 3,732,283 3,974,645 (242,362)

2016 4,341,158 4,413,255 (72,097)

Note: Details regarding the City's outstanding debt can be found in the notes to the fmancial statements.Operating expenses do not include interest, depreciation, or amortization expenses.All revenue bonds matured February, 2009; therefore, no bond payments were paid subsequent to Fiscal Year 2009.

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ofaustell, geor · ofaustell, geor comprehensive annual financial report forthe fiscal year ended...

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