ts program

TS PROGRAM

C O M P R E H E N S I V E AN N U AL F I N AN C I AL R E P O R T

I s s u e d B y

C i t y O f B o w i e , P r i n c e G e o r g e ' s C o u n t y

M a r y l a n d

F o r F i s c a l Y e a r

J u l y 1 , 2 0 1 6 t h r u J u n e 3 0 , 2 0 1 7

P r e p a r e d B y D e p a r t m e n t o f F i n a n c e

H . B y r o n M a t t h e w s , C P A , C G F M , F i n a n c e D i r e c t o r

S h a h n a z A r i f f , A c c o u n t a n t

V e r n a K . B a l l , A c c o u n t a n t

“Growth, Unity, Progress”

Official Roster……………………………………………………………………………………………………………...………..… 1

Letter of Transmittal……………………………………………………………………………………………………….……..…… 2

Certificate of Achievement for Excellence in Financial Reporting………………………………………………………….….…. 9

Organization Chart………………………………………………………………………………………………………………….… 10

Independent Auditor's Report…………………………………………………………………………………………….………….. 14

Management's Discussion and Analysis……………………………………………………………………………………...….… 16

Statement of Net Position……………………………………………………………………………………………….…….…...… 31

Statement of Activities……………………………………………………………………………………………………………..… 32

Balance Sheet - Governmental Funds…………………………………………………………………………………..……..…… 34

Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds………………………...…..… 35

Reconciliation of the Statement of Revenues, Expenditures, and Changes in

Fund Balances of Governmental Funds to the Statement of Activities……………………………………………….....…… 36

Statement of Net Position - Proprietary Fund…………………………………………………………………………………....… 38

Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Fund………………………………..…..…..… 39

Statement of Cash Flows - Proprietary Fund………………………………………………………………………………….....… 40

Notes to Basic Financial Statements…………………………………………………………………………………………..…… 44

Schedule of Funding Progress for the Retiree Health Plan……………………………………..…………………………....…… 80

Schedule of Required Pension Related Supplementary Information………………………………………………………….….. 81

Schedule of the City's Proportionate Share of the Net Pension Liability………………………………………………………… 82

Budgetary Comparison Schedule - General Fund…………………………………………………………………………...…..… 83

Notes to Required Supplementary Information………………………………………………………………………………...…… 85

Fund Descriptions…………………………………………………………………………………………………………….…..….. 87

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CITY OF BOWIE, MARYLAND

COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE FISCAL YEAR ENDED JUNE 30, 2017

Table of Contents

FINANCIAL SECTION

Basic Financial Statements

Government-wide Financial Statements

Fund Financial Statements

Required Supplementary Information

Other Supplementary Information

Schedule of Revenues, Expenditures and Encumbrances and Changes in Fund Balance - Budget (Non-GAAP

Budgetary Basis) and Actual - Equipment Acquisition and Replacement Fund…………………………………...……..… 88

Schedule of Revenues, Expenditures and Encumbrances and Changes in Fund Balance - Budget (Non-GAAP

Budgetary Basis) and Actual - Capital Projects Fund……………………………………………………………..……..…… 89

Schedule of Revenues, Expenses and Other Financing Sources (Uses) -

Budget (Non-GAAP Budgetary Basis) and Actual - Water and Sewer Fund…………………………………………..…… 90

Net Position by Component………………...………………………………………………………………………………..…….… 93

Changes in Net Position…………………………………..………………………………………………………………….…....… 94

Fund Balances of Governmental Funds…………………………...…………………………………………………………..….… 96

Changes in Fund Balances of Governmental Funds…………………………...………………………………………………..… 97

Assessed Value and Estimated Actual Value of Taxable Property…………………………...……………………………….…. 98

Real Property Tax Rates - Direct and Overlapping Governments……………………………..……………………………..…... 99

Principal Property Taxpayers………………………………………………………………..………………………………………. 100

Property Tax Levies and Collections………………………………………………………..………………………….…………… 101

Ratios of Outstanding Debt by Type-Total Net Bonded Debt……………………………………………………….………………… 102

Direct and Overlapping Governmental Activities Debt…………………………………….………………………………...…….. 103

Legal Debt Margin Information……………………………………………………………...……………………………………..… 104

Demographic and Economic Statistics……………………………………………………...…………………………….…..….... 105

Principal Employers…………………………………………………………………………………..…………………….…....…... 106

Full-time Equivalent City Government Employees by Function……………………………….……………………………….….. 107

Operating Indicators by Function………………………………………………………………...…………………………..….…... 109

Capital Asset Statistics by Function……………………………………………………………….………………………………... 111

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STATISTICAL SECTION


Individual Fund Schedules

Table of Contents (continued)

SECTION I – INTRODUCTORY

CITY COUNCIL

G. FREDERICK ROBINSON, MAYOR

HENRI GARDNER, MAYOR PRO TEM

MICHAEL P. ESTEVE ISAAC C. TROUTH

JAMES L. MARCOSDIANE M. POLANGIN COURTNEY D. GLASS

==================================

CITY MANAGER ALFRED D. LOTT, CPM

CITY ATTORNEY ELISSA D. LEVAN

FINANCE DIRECTOR H. BYRON MATTHEWS, CPA, CGFM

CITY OF BOWIE

November 30, 2017

Honorable Members of the Bowie City Council:

State law requires that all municipalities publish within four months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a certified public accountant. Pursuant to that requirement and the provisions of the City's Charter, Section 40, we hereby issue the comprehensive annual financial report (CAFR) for the City of Bowie, Maryland, for the year ended June 30, 2017.

This report consists of management's representations concerning the finances of the City of Bowie, Maryland. Consequently, management assumes full responsibility for the completeness and reliability of all the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Bowie, Maryland has established a comprehensive internal control framework that is designed both to protect the government's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Bowie, Maryland statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Bowie, Maryland's comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

CliftonlarsonAllen, LLP, a firm of licensed certified public accountants, has audited the City of Bowie, Maryland's financial statements. The goal of the independent audit was to provide reasonable assurance that the basic financial statements of the City of Bowie, Maryland for the fiscal year ended June 30, 2017, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the basic financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Bowie, Maryland financial statements for the fiscal year ended June 30, 2017, are fairly presented in conformity with GAAP. The independent auditor's report is presented as the first component of the Financial Section of the CAFR.

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GAAP requires that management provide a narrative introduction. overview. and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). This letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Bowie, Maryland's MD&A can be found immediately following the report of the independent auditor in the Financial Section of the CAFR.

PROFILE OF THE GOVERNMENT

The City of Bowie is 19 square miles in size and located halfway between Washington. DC. and Baltimore, Maryland. Founded in 1870 and incorporated as a town in 1916, Bowie has grown from a small railroad stop to the largest municipality in Prince George's County, and the fifth largest city in the State of Maryland, with an estimated population of 56,148. The town was first called Huntington City, though its train station was named in honor of local resident, Governor Oden Bowie, president of the Baltimore and Potomac Railroad. The town was subsequently rechartered as Bowie. In the ear1y days the land was subdivided by developers into more than 500 residential building lots to create a large town site at a junction of the Baltimore and Potomac's main line to southern Maryland, and the branch line to Washington, DC.

In 1957, the firm of Levitt and Sons acquired the nearby Belair Estate, the original colonial plantation of Governor Samuel Ogle, where it developed the residential community of ·selair at Bowie". Two years later the Town of Bowie annexed the Levitt properties, and it re-incorporated as a city in 1963.

Today, the City of Bowie represents 7.7 percent of the total Prince George's County assessable base and 30 percent of the total municipal assessable base within the county.

The City of Bowie operates under a CounciVManager form of government. Policy-making and legislative authority are vested in a governing Council consisting of seven members (Mayor and six Council members). The governing Council is responsible, among other things, for passing ordinances, adopting the budget, appointing committees, and hiring both the government's manager and attorney. The government's manager is responsible for carrying out the policies and ordinances of the governing Council, for overseeing the day-to-day operations of the government, and for appointing the heads of the various departments. The Council is elected on a non-partisan basis. All seven members serve four-year terms. Four of the Council members are elected by district. The Mayor and the two remaining Council members are elected at large.

The City provides a range of municipal services including, but not limited to, the following: housing and property inspections; solid waste and recycling collection; police; storm drainage; street and bike trail maintenance; snow removal and street lighting; parks and recreation; youth counseling; senior services and animal control. In addition, the City also provides water and sewer services to approximately 7,900 customers, of which 97% are residential households.

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ECONOMIC CONDITION AND OUTLOOK

The City is located in the northern part of Prince George's County at the crossroads of Highways 3/301 and 50. Although considered to be in the Washington. DC metropolitan area. the City's location also gives it easy access to Baltimore and Annapolis. The greater Washington, DC area continues to outperform many of the other major metropolitan areas across the country. Proximity to the Baltimore/Washington area. a large and diverse tax base, strong wealth and income levels, very strong reserves. and low debt burden are all factors contributing to the City's stable outlook. The City's financial position is strong, as demonstrated by the recent affirmation of the City's AAA rating from Moody's.

The Maryland Department of labor, Licensing and Regulation reported the unemployment rate in Bowie at 3. 7 percent. Prince George's County and the State at 4.3 percent and 4.2 percent, respectively, on June 30, 2017. The median household income for the City of Bowie for the period of 2011 - 2015 was $105,959 according to the United States Census Bureau. This income level exceeds the State of Maryland at $74,551 and the United States at $53,669 (United States Census Bureau, State and County QuickFacts). According to the Federal Housing Financing Agency, Maryland ranked forty third in the nation for home price appreciation during the last year.

The City's total assessed value increased by 3.6 percent in FY2017. New home developments were flat in FY2017. The majority of homes in the City are owner-occupied single-family homes that the 2011 - 2015 American Community Survey of the United States Census Bureau placed in the price range of $300,000 to $499,999 with a median value of $292,900.

State-administered income tax proceeds, the City's largest source of intergovernmental revenue, increased by 22.5 percent in FY2017. The increase reflects 2016 third quarter withholdings, estimated payments and the fourth reconciling distribution for tax year 2015. The expected growth in FY2016 is projected at 2.5 percent. Uncertainty surrounding the State of Maryland's budget stresses the need for the City to maintain its fiscally conservative policy.

The City prepares long-term financial forecasts which are used in the development of the annual operating budget and six-year capital improvements program. The assumptions used in the financial forecasts are reviewed with the City Council as background for decisions about revenue projections and estimated costs. As a result of years of conservative budgeting and the City Council's implementation of fiscal policies, which include maintaining healthy unrestricted fund balance levels of no less than 25 percent of expenditures, the City should be able to maintain its strong economic position.

LONG-TERM FINANCIAL PLANNING

Users of this document as well as others interested in the programs and services offered by the City are encouraged to read the City's Adopted Fiscal Year 2017-2016 Budget. The document details the City's long-term goals and financial policies, describes the various activities, accomplishments and initiatives. and outlines the City's capital improvement program. The City's budget

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also includes a five-year forecast of revenues and expenditures. The budget can be obtained from the City of Bowie's Finance Department. The budget can also be found on the City's web site at www.cityofbowie.org.

RELEVANT FINANCIAL POLICIES

Over the years, the City Council has adopted many fiscal and debt policies that have assisted in maintaining the City's strong financial position. The City adopted a policy to maintain the General Fund balance at a level of at least 25 percent of expenditures. The City strives to maintain a high reliance on pay-as-you-go financing for its equipment acquisition and capital improvements to minimize debt levels. Whenever possible, the City will first attempt to fund capital projects with general revenues before considering issuing debt. The City does not use long-term borrowing to finance current operations or normal maintenance expenses. In recognition of the City's significant capital investment in its public facilities and structures, the City established a facility preventive maintenance account to set aside funds annually for major maintenance items. The concept of setting aside funds annually first began with the Equipment Acquisition and Replacement Fund and has proven to be very successful. Other fiscal and debt policies are described in the City's budget.

MAJOR INITIATIVES

The following activities highlight some of the City's major accomplishments during FY2017:

» Completion of a 1,036-square-foot addition to the existing Knights of St. John meeting hall in Old Town Bowie

» Completion of a 12,500-square-foot child care center (Children of America) as part of a redevelopment of aportion of Free State shopping center.

;.. Review of a Tax Increment Financing District for Southlake (aka Karington). an approved, mixed-use development on 381.5297 acres of land located on the south side of MO 214 and west side of US 301, which will include 475,000 square feet of retail use, 200,000 square feet of office use, approximately 390 hotel rooms and 1,294 dwelling units, including 390 multi-family apartments, 104 two-family attached units, 664 townhouse units and 136 single-family detached units.

» Approval of a Detailed Site Plan and ground broken for a multi-story, 110,000-square-foot/140-unit assisted livingfacility, with 47 on-site parking spaces on a 3.14-acre site at Melford.

> Approval of a Detailed Site Plan for a 225-unit luxury rental apartment proposal at Bowie Marketplace shoppingcenter.

» The Bowie Senior Center Won Maryland Association of Senior Centers Program of Excellence Award for"Express Learning Programs·.

:> Water Distribution System Improvement Project was adopted by City Council.

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>" B9% of youth who were served in formal counseling by Bowie Youth & Family Services showed significant improvement in overall functioning, as indicated on the Child & Adolescent Functional Assessment Scale (CAFAS).

>" MD 214/CSX Improvements initiated by State Highway Administration

>" Completion of an 11, 09B- square-foot car wash facility on the west side of US 301, north of Mitchellville Road.

>" Completion of a redevelopment of an existing office property in the Bowie Gateway Center, including a 2,228 square foot, 66--seat Taco Bell restaurant , 1,600 square feet of office space and 11,000 square feet of retail space.

;.:,. New City Manager hired December 2016.

>" Approval of a Detailed Site Plan for a one-story/4, 175-square•foot financial institution (Navy Federal Credit Union) with 36 parking spaces on a 2.23 acre site within the Bowie Gateway Center.

);>. Maintained Property Tax Rate at $.40 per $100 of assessed value for the 8th consecutive year.

Future developments include:

}> Expand use of social media for sharing City news and initiatives

;.:,. Construction of a new park/playground at 1ot11 Street in Old Town Bowie.

>" Completion of renovation to existing building and a 15,000-square-foot addition to Tulip Grove Elementary School.

;.:,. Construction of 225 multi-family apartment units at Bowie Marketplace Shopping Center.

>" Meetings with community stakeholders on the Race Track Road pedestrian safety project.

}> Completion of Marriott Courtyard hotel at Melford.

>" Annexation of 400.9921 acres of land located off of Ballpark Road, including the Bowie Baysox Stadium.

);>. Reorganize the Public Information function into a new Communications Division and hire a Communications Analyst

}> Approval of a Detailed Site Plan for 150-200 attached residential dwelling units and approximately 20,000 square feet of commercial/retail space at the Amber Ridge mixed use development.

;.:,. Approval of building permits for an 1 B7,000-square-foot Wal-Mart at Mill Branch Crossing shopping center.

);>. Increase outreach to hard-to-reach segments of the population.

» Implement a new Communications Plan for the City.

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).. Completion of engineering design and construction of a new sidewalk along Hall Road, between Hall Station Road and the CSX railroad tracks, as part of a new pedestrian system connecting Pointer Ridge Drive to the new County library.

;;.. Completion of annexation and approval of Tax Increment Financing District for Southlake (aka Karington)

,.. Completion of the final residential dwelling unit at Woodmore Estates (132 units)

,.. Occupancy of 25,000 square feet of vacant office space at Melford (FTI).

» Review of Special Exception application for gas pump islands at Bowie Marketplace shopping center.

>- Construction of a 19,982-square-foot flex space building on 1.3 acres located on Woodcliff Road in West BowieVillage.

> A walking tour/history brochure for Old Bowie will be designed and published.

;.> A permanent exhibit, "Belair at Bowie,· covering the initial development at Belair will be installed at Ken hill Center.

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CERTIFICATE OF ACHIEVEMENT FOR EXCELLENCE IN FINANCIAL REPORTING

The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Bowie, Maryland, for its comprehensive annual financial report for the fiscal year ended June 30, 2016. This was the forty third consecutive year that the government has achieved this prestigious award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

A Certificate of Achievement is valid for a period of one year only. We believe that our current comprehensive annual financial report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA, pursuant to an approved e><tension request, to determine its eligibility for another certificate.

DISTINGUISHED BUDGET PRESENTATION

The Government Finance Officers Association of the United States and Canada (GFOA) presented an award of Distinguished Budget Presentation to the City of Bowie for its annual budget for the fiscal year beginning July 1, 2016. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan and as a communication device.

This award is valid for a period of one year only. We believe our current budget continues to conform to program requirements, and we are submitting it to the GFOA to determine its eligibility for another award.

ACKNOWLEDGMENTS

Our sincere appreciation is e><tended to the staff of the Finance Department, whose efficient and dedicated support throughout the year has culminated in the completion of this report. A word of thanks also goes to the City staff for their continuing cooperation. We thank the City Council for its interest and support in the planning and implementing of the financial operations of the City. A special acknowledgment is given to all members of the department for their efforts in the completion of this report.

Alfred D Lott, ICMA-CM, CPMCity Manager

H. Byron Matthews, CPA, CFGMFinance Director

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G~ Government Finance Officers Association

Certificate of Achievement for Excellence in Financial Reporting

Presented to

City of Bowie

Maryland

For its Comprehensive Annual Financial Report

for the Fiscal Year Ended

June 30, 2016

~/.~ Executive Director/CEO

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CITIZENS OF BOWIE

CITY COUNCIL

CITY COMMITTEES

CITY MANAGER

ASSISTANT CITY MANAGER

INFORMATION TECHNOLOGY

FINANCE COMMUNITY SERVICES

PLANNING AND ECONOMIC

DEVELOPMENT PUBLIC WORKS

CITY MANAGER’S OFFICE

City Manager Human Resources

Elections Legal Services

Public Information City Clerk Emergency

Management Risk Management Grants

Network Services Voice Services Data

Services Internet Services GIS Services

Financial Reporting Budgeting

Payroll Accounting Tax Billing

Water and Sewer Billing Debt

Administration

Public Buildings Code Compliance Senior Services

Youth Services Animal Control

Ice Arena Gymnasium Recreation

and Parks Parks and Grounds Stormwater Management Historic

Properties Bowie Playhouse

Planning Economic

Development

Equipment Maintenance Solid Waste Collection

Street Maintenance Street Lighting Snow Removal

Water and Sewer Engineering

Project Management

POLICE DEPARTMENT

Patrol Community Services Investigative Division Traffic Division Safe

Speed Program

CITY ATTORNEY

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SECTION II – FINANCIAL


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CliftonLarsonAllen LLP CLAconnect.com

INDEPENDENT AUDITORS' REPORT

The Honorable Mayor, Members of the City Council, and City Manager City of Bowie, Maryland

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Bowie, as of and for the year ended June 30, 2017, and the related notes to the financial statements, which collectively comprise the entity’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.

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

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

Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, business-type activities, each major fund, and the aggregate remaining fund information of the City of Bowie as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

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Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the required supplementary information, as identified in the accompanying table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Bowie’s basic financial statements. The supplementary information, as identified in the accompanying table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements.

The combining and individual nonmajor fund financial statements are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

The introductory section and statistical tables, as listed in accompanying table of contents, have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it.

Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 30, 2017, on our consideration of the City of Bowie's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is solely to describe the scope of our testing of internal control over financial reporting and compliance and the result of that testing, and not to provide an opinion on the effectiveness of internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Bowie’s internal control over financial reporting and compliance.

CliftonLarsonAllen LLP

Greenbelt, Maryland November 30, 2017

MANAGEMENT’S DISCUSSION AND ANALYSIS The Management’s Discussion and Analysis (MD&A) of the City of Bowie’s Comprehensive Annual Financial Report (CAFR) presents a narrative overview and analysis of the financial activities for the fiscal year ended June 30, 2017. The information presented here should be considered in conjunction with additional information provided in the letter of transmittal.

Financial Highlights The assets and deferred outflows of the City exceeded its liabilities and deferred inflows at June 30, 2017, by $157.6 million (net position). The vast majority of the City’s net positions of $101.6 million are capital assets that generally do not directly generate revenue; nor can they be sold to generate liquid capital. The remaining $56 million is unrestricted and may be used to meet the City’s future obligations. Of the $56 million of unrestricted assets, $29.3 million is unassigned and available for future General Fund expenditures. The unrestricted fund balance, the total of committed, assigned and unassigned fund balances for the general fund, was $40.4 million and represents 85.2 percent of total General Fund expenditures compared to the Council-adopted target of 25 percent. In comparison with the prior fiscal year, the City’s total net position increased $3 million from $154.6 million. Net position of governmental activities increased $3 million from $132.2 million and net position of business-type activities increased by approximately $0.03 million from $22.4 million. The growth in general fund revenues are mostly attributed to an increase of $1.2 million in general property taxes and a $2.1 million increase in local income tax revenue. The City’s Water and Sewer Fund issued a single general obligation installment bond for $140,009, the “City of Bowie Maryland Water Quality Bond, Series 2016”, bearing interest at a rate of 1.40% from the State of Maryland’s Revolving Loan Fund to provide additional funding for the interior improvements to the administrative building at the Waste Water Treatment Plant. During the current fiscal year, the City’s total long-term debt increased by $3.6 million, during fiscal year 2017.

Overview of the Financial Statements The financial section of the CAFR consists of three parts: management’s discussion and analysis (this section), the basic financial statements and required supplementary information. This discussion and analysis are intended to serve as an introduction to the City of Bowie’s basic financial statements. The City of Bowie’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. The basic financial statements include two kinds of statements that present different views of the City:

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• The first two statements are government-wide financial statements that provide both short-term and long-term information about the City’s overall financial status.

• The remaining statements are fund financial statements that focus on individual parts of the City government, reporting the City’s operations in more detail than the government-wide statements.

The financial statements also include notes that explain some of the information in the financial statements and provide more detailed data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Bowie’s finances, in a manner similar to a private-sector business. These statements are prepared using the accrual basis of accounting. The statement of net position presents information on all of the City’s assets and liabilities, and deferred outflows/inflows of resources, with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial health of the City is improving or deteriorating. The statement of activities presents information showing how the City’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Bowie include general government, economic development, public safety, social services, public works, parks, culture and recreation, and interest expense. Business-type activities are limited to the City’s water and sewer system. Fund financial statements. Traditional readers of government financial statements will find the fund financial statement presentation more familiar. The focus is now on the City’s most significant funds. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City uses fund accounting to ensure and demonstrate fiscal accountability. The City uses governmental and proprietary fund financial statements to provide more detailed information about the City’s most significant funds rather than the City as a whole. Governmental funds. Most of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental fund statements focus on near-term outflow and inflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in

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the near future to finance the City’s programs. We describe the relationship (or differences) between governmental activities (reported in the Statement of Net Position and the Statement of Activities) and governmental funds in a reconciliation at the bottom of the fund financial statements. Proprietary funds. Proprietary funds are used to account for operations that are financed and operated in a manner similar to private business enterprises in which costs are recovered primarily through user charges. Proprietary fund financial statements, like government-wide financial statements, provide both short-term and long-term financial information. The fund financial statements provide more detail and additional information, such as cash flows, for the City’s enterprise fund (one type of proprietary fund). The enterprise fund is used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses an enterprise fund to account for its water and sewer operations.

Notes to the Basic Financial Statements. The notes to the basic financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Required Supplementary Information. In addition to the basic financial statements and accompanying notes, this report presents certain required supplementary information concerning the City’s progress in funding its obligations to provide pension and OPEB benefits to its employees. A budgetary comparison schedule has been provided for the General Fund. Other Supplementary Information. Budgetary comparison schedules have been provided for the following funds to demonstrate compliance with their budgets:

• Equipment Acquisition and Replacement Fund

• Capital Projects Fund

• Water and Sewer Fund Statistical Section The statistical section provides supplemental financial and statistical information intended to provide a broader understanding of the City’s financial and economic environment. Much of the data presented is multi-year and some of it is derived from records external to the City’s accounting records; therefore, the statistical section is unaudited.

Financial Analysis of the City as a Whole Government-wide Financial Analysis The City’s financial statements are prepared in conformity with the reporting model required by Governmental Accounting Standards Board Statement No. 34 (GASB 34), Basic Financial Statements – and Management’s Discussion and Analysis (MD&A) – for State and Local Governments. MD&A includes prior fiscal year results for the purpose of providing comparative information.

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2017 2016 2017 2016 2017 2016

Current and other assets 65,113,564$ 63,191,042$ 4,313,934$ 4,089,452$ 69,427,498$ 67,280,494$

Capital assets, net 93,180,801 93,017,939 21,629,542 21,891,404 114,810,343 114,909,343

Total assets 158,294,365 156,208,981 25,943,476 25,980,856 184,237,841 182,189,837

Deferred outflows of recourses 7,713,381 3,675,752 - - 7,713,381 3,675,752

Long-term liabilities outstanding 25,688,054 22,142,128 1,456,595 2,254,641 27,144,649 24,396,769

Other liabilities 4,329,112 4,662,185 2,065,114 1,330,256 6,394,226 5,992,441

Total liabilities 30,017,166 26,804,313 3,521,709 3,584,897 33,538,875 30,389,210

Deferred inflows of recourses 756,234 855,156 - - 756,264 855,156

Net Position

Net Investment in capital assets 82,259,270 81,228,451 19,302,530 19,385,613 101,561,800 100,614,064

Unrestricted 52,975,076 50,996,813 3,119,237 3,010,346 56,094,313 54,007,159

Total net position 135,234,346$ 132,225,264$ 22,421,767$ 22,395,959$ 157,656,113$ 154,621,223$

Net Position

Governmental activities Business-type activities Total

City of Bowie, Maryland

As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. At June 30, 2017, the City’s assets exceeded liabilities by $157.6 million.

By far the largest portion of the City’s net position (64 percent) reflects its investment in capital assets, less any related debt used to acquire those assets that is still outstanding. Capital assets are used to provide services to residents; consequently, these assets are not available for future spending. Although the investment in capital assets are reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, both for the government as a whole as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year.

The governmental activities investment in capital assets increased by $1 million or 1.3 percent. The increase in capital assets accounts for the purchase of machinery and equipment of public works and public safety.

The business-type activities investment in capital assets decreased by $0.08 million or 0.4 percent. The decrease in capital assets accounts for the retirement of machinery and equipment of the Water and Wastewater Treatment Plants.

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The following table summarizes the City’s change in net position for the year ended June 30, 2017:

2017 2016 2017 2016 2017 2016

Revenues:

Program revenues:

Charges for service 2,745,737$ 2,990,613$ 6,170,176$ 5,865,997$ 8,915,913$ 8,856,610$

Operating grants and contributions 1,399,990 1,641,357 1,399,990 1,641,357

Capital grants and contributions 241,512 418,561 - 68,248 241,512 486,809

General revenues:

Property taxes 28,141,512 26,970,200 - - 28,141,512 26,970,200

State shared revenues 13,618,223 11,329,052 - - 13,618,223 11,329,052

Other taxes 431,399 447,009 - - 431,399 447,009

Other general revenues 2,919,181 2,436,466 260,669 355,083 3,179,850 2,791,549

Total revenues 49,497,554 46,233,258 6,430,845 6,289,328 55,928,399 52,522,586

Expenses:

General government 9,833,597 9,490,121 - - 9,833,597 9,490,121

Economic development 470,872 1,070,721 - - 470,872 1,070,721

Public safety 12,973,566 11,824,734 - - 12,973,566 11,824,734

Social services 2,306,710 2,194,089 - - 2,306,710 2,194,089

Public works 13,133,417 12,736,177 - - 13,133,417 12,736,177

Parks, culture and recreation 7,870,539 7,664,732 - - 7,870,539 7,664,732

Interest on long-term debt 336,771 109,224 - - 336,771 109,224

Water and wastewater - - 5,968,037 5,466,933 5,968,037 5,466,933

Total expenses 46,925,472 45,089,798 5,968,037 5,466,933 52,893,509 50,556,731

Increase (Decrease) in net position

before transfers 2,572,082 1,143,460 462,808 822,395 3,034,890 1,965,855

Transfers 437,000 406,800 (437,000) (406,800) - -

Increase (Decrease) in net position 3,009,082 1,550,260 25,808 415,595 3,034,890 1,965,855

Net position - beginning 132,225,264 130,675,004 22,395,959 21,980,364 154,621,223 152,655,368

Net position - ending 135,234,346$ 132,225,264$ 22,421,767$ 22,395,959$ 157,656,113$ 154,621,223$

Governmental activities Business-type activities Total

Changes in Net Position

The overall increase in the City’s net position amounted to $3 million during the fiscal year. These increases are explained in the governmental and business-type activities discussion that follows.

Governmental Activities

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Governmental activities increased the City’s net position by $3 million. Total revenues and transfers of $49.9 million are comprised of program revenues totaling $4.4 million, or 9 percent, and general revenues and transfers of $45.5 million, or 91 percent. General revenues are the principal source of funding for the major activities of the City. During the year general revenues and transferred increased by $3.9 million, while program revenues declined by $0.6 million, compared to last fiscal year. The increase in revenues were mostly attributed to the increase in the taxable base, yielding $1.2 million and income tax revenue increasing by $2.1 million. Sources of revenue are comprised of the following items:

A more detailed discussion of the City’s revenue results for FY2017 as compared to what was budgeted can be found in the General Fund Budgetary Highlights section of this MD&A.

Property taxes56.4%

Operating grants and contributions

2.8%

State shared revenues

27.3%

Other taxes0.8%

Other general revenues

6.7%

Charges for service 5.5%

Capital grants and contributions

0.5%

Revenues by Source - Governmental ActivitiesFor the Year Ended June 30, 2017

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The cost of all governmental activities for FY2017 was $46.9 million. As the following chart indicates, Public Works constitutes the City’s largest program, totaling $13.1 million. Public Safety expenses totaled $13 million, while General Government, the third largest expense for the City, totaled $9.8 million. Total expense increased by $1.8 million or 4 percent over last fiscal year. All governmental activities increase during the current fiscal year, except for Economic Development, whose increase in expenditures were reduced by a one-time only subsidy of $0.7 million in construction cost for the Bowie Marketplace Shopping Center during the last fiscal year.

Public works27.9%

Social services5.0%

General government21.0%

Economic development

1.0%

Parks, culture and recreation

16.8%

Interest on long-term debt0.7%

Public safety27.6%

Expenses by Function - Governmental ActivitiesFor the Year Ended June 30, 2017

The following table presents the cost and program revenues of each of the City’s programs – general government, public safety, social services public works and parks, culture and recreation – as well as each program’s net cost (total cost less fees generated by the activities and program-specific grants and contributions). The tables also includes interest on long-term debt and other expenses not directly associated with a specific program.

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2017 2016 2017 2016 2017 2016

Public works 13,133,417$ 12,736,177$ 439,682$ 723,518$ 12,693,735$ 12,012,659$

Public safety 12,973,566 11,824,734 1,637,898 1,749,268 11,335,668 10,075,466

General government 9,833,597 9,490,121 669,270 572,771 9,164,327 8,917,350

Parks, culture and recreation 7,870,539 7,664,732 1,286,510 1,722,368 6,584,029 5,942,364

Social services 2,306,710 2,194,089 353,879 282,606 1,952,831 1,911,483

Economic development 470,872 1,070,721 - - 470,872 1,070,721

Interest on long-term debt 336,771 109,224 - - 336,771 109,224

Total 46,925,472$ 45,089,798$ 4,387,239$ 5,050,531$ 42,538,233$ 40,039,267$

Net Cost of City's Governmental Activities

Expenses Program Revenues Net Cost of Services

Business-type Activities

The City’s water and sewer operation is reported here. Charges for services represent the principal revenue source for the City’s business-typeactivities. During the current fiscal year, revenue from business-type activities totaled $6.43 million. Expenses and transfers for these activitiestotaled $6.40 million and resulted in an increase in net position of $0.03 million.

$-

$2,000,000

$4,000,000

$6,000,000

$8,000,000

$10,000,000

$12,000,000

$14,000,000

Generalgovernment

Economicdevelopment

Public safety Social services Public works Parks, cultureand recreation

interest onlong-term debt

Expenses and Program Revenues - Governmental Activities

Expenses Revenue

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Financial Analysis of the City’s Funds

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements.

Governmental funds

The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is valuable in assessing the City’s financing requirements. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. Unassigned fund balance provides a reserve for emergencies, enables the City Council to stabilize tax rates, and provides working capital from which to pay City bills between tax collection due dates. Types of major governmental funds reported by the City include the General Fund, Equipment Acquisition and Replacement Fund and the Capital Projects Fund.

At the end of FY2017, the City’s governmental funds reported combined ending fund balances of $61.2 million. Of the total ending fund balances, $29.3 million constitutes the unassigned fund balance, which is available for spending at the City’s discretion.

The General Fund is the primary operating fund of the City. At the end of FY2017 unassigned fund balance of the General Fund was $29.3 million, while the total fund balance totaled $41.2 million. As a measure of the General Fund’s liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total fund expenditures. Unassigned fund balance represents 61.8 percent of the total General Fund expenditures and transfers out, while total fund balance represents 86.7 percent of the same amount.

The fund balance of the City’s General Fund increased by $1.8 million during the current fiscal year. Revenues increased by $3.1 million due to the increase in general property taxes of $1.2 million and increases in intergovernmental revenue $1.9 million.

Expenditures increased by $0.8 million as a result of the following:

• General Government increased by $0.3 million.

• Economic Development decreased by $0.6 million in redevelopment support of Bowie Shopping Center.

• Public Safety Division increased by $1.2 million, reflecting a fully staffed police department with 65 sworn officers.

• Parks, Culture and Recreation increased by $0.3 million in personal services and operating costs.

• Public Works increased by $0.7 million in personal service and operating costs.

• Transfers to Capital Projects Fund and the Equipment Acquisition and Replacement Fund decreased by $1.1 million.

The Equipment Acquisition and Replacement Fund has a total fund balance of $7.5 million, which is predominantly assigned by the City Council for future years’ expenditures. The net decrease in fund balance during the current year was $0.8 million. The required transfer from the General Fund was $0.6 million less than the previous year. Expenditures increased by $1.2 million. Purchases included back up storage server, O/S virtualization update, 7 fully-equipped police vehicles, body cameras, 2 refuse trucks, 2 dump trucks, 1 skid loader, 8 pickup trucks, 1 backhoe/loader, 1 mower and 2 senior buses.

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The Capital Projects Fund is used to account for the overall financing and expenditures of uncompleted projects. Of the total ending fund balance of $12.6 million, $7.3 million is either committed to liquidate contracts of the prior period or to account for the fund balances of each stormwater special taxing district enacted by the City Council, and is not available for new spending. The remaining assigned fund balance of $5.3 million is for the subsequent year’s expenditures and other uses. The net increase in fund balance during the current year was $1.4 million. The transfer from the General Fund was $0.5 less than the previous year. In fiscal year 2017 expenditures decreased by $8.0 million as compared to fiscal year 2016. Capital outlay decrease by $1.0 million compared to this time last year and the cost of refunding a portion of the City’s 2009 Public Improvement Bonds totaled $7.0 million.

Proprietary funds

The City’s proprietary funds provide the same type of information found in the government-wide statements, but include more detail.

The Water and Sewer Fund had no restricted net position at the end of the year. After a transfer to the General Fund of $0.4 million, the fund ended FY2017 with an increase in net position of $0.03 million.

A discussion of enterprise fund long-term debt can be found in the Debt Administration section presented later in this MD&A. Other factors concerning the finances of the enterprise fund are addressed in the discussion of the City’s business-type activities.

General Fund Budgetary Highlights

The City’s final budget differs from the original budget in that it contains City Council approved supplemental appropriations and transfers between activities. The amount of appropriations and transfers between the major expenditure functions was relatively minor.

Actual expenditures and other financing uses were $5.5 million less than the final amended budget. The more significant differences are briefly summarized as follows:

• Decreases the Senior Citizen “Green” Housing Rehabilitation Grant Program and lower than expected personal services cost reducedexpenditures in the City Manager’s department by $0.3 million.

• Public Information expenditures were $1.3 million less than expected, primarily due project delays. The Intergovernmental Network (I-NET and the installation of citywide security cameras were postponed due to personnel retirements.

• Information Technology expenditures were $0.6 million less than expected, due to vacancies as well as lower operating cost throughoutthe department.

• Police Department expenditures were $0.4 million less than expected due to resignations and vacancies and reduced operating costs.

• Public Works expenditures were $1.2 million less, primarily due to lower than anticipated costs in all departments. $0.2 million inAdministration, $0.2 million in Equipment Maintenance and Garage and $0.5 million in the Solid Waste division and $0.3 in StreetMaintenance division due to lower than anticipated costs for personal services and repair and maintenance.

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• Parks, Culture and Recreation were $0.4 million lower due to retirements, vacancies and lower than expected repair and maintenancecosts.

• Nondepartmental expenses were less than anticipated by $0.4 million due to lower use of the contingency reserves.

• The remaining differences were spread across the various other activities of the General Fund and were relatively minor within eachactivity.

Revenues and other financing sources amounted to $49.2 million in fiscal year 2017 an increase of 6.5 percent from fiscal year 2016.

General property taxes produced $1.2 million more revenue than in fiscal year 2016, an increase of 4.3 percent. The assessable tax base increased to $6.7 billion, an increase of 3.8 percent.

Intergovernmental revenues increased by $1.8 million. An increase of $2.1 million in State Income Taxes offset by $0.1 million decrease in federal grants and $0.2 million decrease in State and County grants.

Expenditures and transfers amounted to $47.3 million, an increase of $.7 million, or 1.5 percent from fiscal year 2016.

Transfers decreased by $1.1 million due to a decrease of $0.5 million to the Capital Projects Fund and $0.6 million decrease to the Equipment Acquisition and Replacement Fund.

Capital Assets and Debt Administration

Capital Assets

The City’s capital assets for its governmental and business-type activities as of June 30, 2017 amounted to $114.8 million (net of accumulated depreciation). Capital assets include land, historical treasures, building and improvements, improvements other than buildings, machinery and equipment, infrastructure and other capital assets (intangible assets). The total net decrease in the City’s capital assets for the current fiscal year was $0.1 million (a $0.2 million increase for governmental activities and a $0.3 million decrease for business-type activities) as shown in

the following table.

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2017 2016 2017 2016 2017 2016

Nondepreciable assets:

Land 14,969,472$ 14,892,172$ 1,489,192$ 1,489,192$ 16,458,664$ 16,381,364$

Historical treasures 434,298 425,298 - - 434,298 425,298

Construction in progress 1,469,329 1,144,067 522,166 662,194 1,991,495 1,806,261

Depreciable assets:

Buildings and improvements 37,886,505 39,192,406 11,844,782 11,797,346 49,731,287 50,989,752

Improvements other than buildings 6,109,884 6,543,688 1,593,002 1,869,657 7,702,886 8,413,345

Machinery and equipment 7,429,350 6,890,080 2,170,610 1,858,993 9,599,960 8,749,073

Infrastructure 24,553,704 23,866,085 3,999,790 4,214,022 28,553,494 28,080,107

Other capital assets 328,259 64,143 - - 328,259 64,143

Total 93,180,801$ 93,017,939$ 21,619,542$ 21,891,404$ 114,800,343$ 114,909,343$

TotalBusiness-type activitiesGovernmental activities

The City’s capital assets for its governmental and business-type activities as of June 30, 2017 amounted to $114.8 million (net of accumulated depreciation). Capital assets include land, historical treasures, building and improvements, improvements other than buildings, machinery and equipment, infrastructure and other capital assets (intangible assets). The total net decrease in the City’s capital assets for the current fiscal year was $0.1 million. An increase of $0.1 million in governmental activities and a decrease of $0.3 million for business-type activities) as shown in the following table.

Under the Governmental Activities Capital Assets, the balance of $1,469,329 for Construction in Progress includes: $432,632 for continued development of the Indoor Sports Facility, $378,274 for improvements to the Bowie Heritage Trail, $354,508 for design and engineering of a new concession and restroom facility at Whitemarsh Park, $151,591 for design and engineering improvements at Allen Pond Park, $ 46,250 for improvements to the Jericho Park Trail, $29,285 for design and engineering of Salt and Vehicle Storage Bay, $23,708 for CCTV project and $53,081 for various other projects.

The other significant additions to Governmental Activities Capital Assets included $1,089,900 for one rubber tire loader, two refuse trucks and two dump trucks and various other equipment and vehicles for Public Works, $289,314 for one refuse truck, one mower, two pick up tucks and various other equipment for Parks and Grounds, $260,880 for a chiller system and two buses for Senior center, $221,995 for five fully equipped police vehicles, one vehicle for Animal Control and $209,679 for Backup storage Server.

Under Business-type Activities Capital Assets, the most significant additions included a submersible pump at well # 2 for $104,970, one sewer vacuum truck for $357,686.

More detailed information about the City’s capital assets is presented in Note 3D to the basic financial statements

Debt Administration

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Capital Assets, Net of Depreciation

At fiscal year-end, the City had $13.2 million in bonds outstanding verus $14.2 million last year, a decrease of 7 percent, as shown in the following table:

Outstanding Debt

2017 2016 2017 2016 2017 2016

General obligation bonds (backed by the City) 10,921,530$ 11,724,348$ -$ -$ 10,921,530$ 11,724,348$

Long-term financing w ith State of Maryland - - 2,327,012 2,505,792 2,327,012 2,505,792

OPEB liability 888,073 791,073 63,530 60,530 951,603 851,603

Pension liability 14,561,337 10,143,071 - - 14,561,337 10,143,071

Compensated absences 1,357,179 1,281,403 102,504 93,698 1,459,683 1,375,101

Total outstanding debt 27,728,119$ 23,939,895$ 2,493,046$ 2,660,020$ 30,221,165$ 26,599,915$

TotalsBusiness-type ActivitiesGovernmental Activities

Neither Maryland State law nor the City Charter mandates a limit on municipal debt. The City Council adopted a policy to limit debt, exclusive of amounts being repaid by the Water and Sewer System, to 0.8 percent of assessed value of taxable property. At June 30, 2017, assessed value of such property totaled $6,681,707,501, the debt limit was $53,453,660 and the amount of debt applicable to the limit was $10,912,530, or approximately 20 percent of the debt limit. The debt policy also states that the ratio of debt service expenditures as a percentage of General Fund revenues, exclusive of debt repaid by the Water and Sewer Fund, shall not exceed 10 percent. In FY2017, the ratio of debt service expenditures, totaling $1,102,459, as a percentage of General Fund revenues, totaling $49,261,648, was 2.2 percent. The City’s general obligation bond rating is AAA from Standard and Poor’s, Aaa from Moody’s Investor Service, and AAA from Fitch Ratings. Other obligations include accrued vacation leave and other post-employment benefit liabilities. More detailed information about the City’s long-term liabilities is presented in Note 3R to the basic financial statements.

Economic Factors and Next Year’s Budget and Rates

The City is located in the northern part of Prince George’s County at the crossroads of Highways 3/301 and 50. Although considered to be in the Washington, DC metropolitan area, the City’s location also gives it easy access to Baltimore and Annapolis. Despite the slowdown in the national economy, the greater Washington, DC area continues to outperform many of the other major metropolitan areas across the country. Proximity to the Baltimore/Washington area generally contributes to the City’s stability.

As a result of the State of Maryland’s triennial reassessment of properties, the City’s total assessed value increased by 3.8 percent in FY2017. Home development remained flat during FY2017. The majority of homes in the City are owner-occupied, single-family homes that the 2011-2015 American Community Survey of the United States Census Bureau placed in the price range of $300,000 to $499,999 with a median value of $292,900.

The Maryland Department of Labor, Licensing and Regulation reported the unemployment rate in Bowie at 3.7 percent, Prince George’s County at 4.3 percent and the State at 4.1 percent on June 30, 2017. The median household income for the City of Bowie for the period of 2011 – 2015 was $105,959 according to the United States Census Bureau. This income level exceeds the State of Maryland at $74,551 and the United

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States at $53,889 (United States Census Bureau, State and County QuickFacts). According to the Federal Housing Financing Agency, Maryland ranked forty-third in the nation for home price appreciation during the last year. The City prepares a financial forecast as a component in the process of developing the annual operating budget and the six-year capital improvements program. The assumptions in the forecast are reviewed with the City Council as background for decisions about revenue projections and estimated costs. For the eighth consecutive year, real and personal property tax rates remain at $0.40 and $1.00 per $100 of assessed valuation, respectively, in the FY2018 adopted budget. General Fund revenues and transfers from other funds in FY2018 are budgeted to increase by 5.2 percent from the FY2017 budget year. General property taxes make up approximately 59 percent of budgeted General Fund revenues and transfers from other funds. State-administered income tax proceeds, the City’s largest source of intergovernmental revenue, are expected to increase by 2.5 in FY2018. General Fund expenditures and transfers to other funds are budgeted to increase by 4.4 percent from the FY2017 budget year. As for the City’s business-type activities, water and sewer rates increased to $11.95 per 1,000 gallons in FY2018 as compared to $11.38 in FY2017. In FY2018, the City adopted a new water and sewer fee, “Renewal and Replacement”. This quarterly fee of $22.75 will provide a source of revenue to fund the capital improvements to the water distribution system. The water and sewer system was constructed in the early 1960’s and purchased by the City in 1971. Tuberculation in City water pipes caused by iron deposits, discolors the water and reducing the water flow throughout the pipes.

Requests for Information The financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the City’s finances. If you have questions about this report or need any additional information, contact the Finance Department, Attn: Finance Director, at 15901 Excalibur Road, Bowie, Maryland 20716 or call (301) 809-3025.

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BASIC FINANCIAL STATEMENTS


Statement of Net Position

June 30, 2017

Governmental Business-type Total

activities activities

Assets:

Cash and equivalents 59,421,244$ 2,987,243$ 62,408,487$

Investments 131,498 - 131,498

Property taxes receivable, net 153,934 - 153,934

Other receivables, net 1,034,940 1,310,859 2,345,799

Due from other governments 3,626,555 - 3,626,555

Other assets 745,393 15,832 761,225

Capital assets:

Land, historical treasures and construction in progress 16,873,099 2,011,358 18,884,457

Other capital assets, net of accumulated depreciation 76,307,702 19,618,184 95,925,886

Total assets 158,294,365 25,943,476 184,237,841

Deferred Outflows of Resources:

Deferred amount on pension related 7,038,879 - 7,038,879

Deferred charge on advance refunding 674,502 - 674,502

Total deferred outflow of resources 7,713,381 - 7,713,381

Liabilities:

Accounts payable and accrued liabilities 1,284,855 407,259 1,692,114

Accrued interest payable 151,352 37,023 188,375

Deposits and customer advances 321,931 440,990 762,921

Due to other governments 530,909 143,391 674,300

Noncurrent liabilities:

Due within one year:

Long-term debt payable 795,000 325,428 1,120,428

Compensated absences 1,245,065 102,504 1,347,569

Due in more than one year:

Long-term debt payable 10,126,530 2,001,584 12,128,114

Net other postemployment benefits 888,073 63,530 951,603

Net pension liability 14,561,337 - 14,561,337

Compensated absences 112,114 - 112,114

Total liabilities 30,017,166 3,521,709 33,538,875

Deferred Inflows of Resources

Deferred amount on pension related 756,234 - 756,234

Total deferred inflow of resources 756,234 - 756,234

Net Position:

Net investment in capital assets 82,259,270 19,302,530 101,561,800

Unrestricted 52,975,076 3,119,237 56,094,313

Total net position 135,234,346$ 22,421,767$ 157,656,113$

The notes to the basic financial statements are an integral part of this statement.

Primary Government

31


Statement of Activities

For the Year Ended June 30, 2017

Charges Operating Capital Business-

for Grants and Grants and Governmental type

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total

Primary Government:

Governmental activities:

General government 9,833,597$ 408,845$ 260,425$ -$ (9,164,327)$ -$ (9,164,327)$

Economic development 470,872 - - - (470,872) - (470,872)

Public safety 12,973,566 1,017,062 620,836 - (11,335,668) - (11,335,668)

Social services 2,306,710 29,953 246,852 77,074 (1,952,831) - (1,952,831)

Public works 13,133,417 118,189 157,055 164,438 (12,693,735) - (12,693,735)

Parks, culture and recreation 7,870,539 1,171,688 114,822 - (6,584,029) - (6,584,029)

Interest on long-term debt 336,771 - - - (336,771) - (336,771)

Total governmental activities 46,925,472 2,745,737 1,399,990 241,512 (42,538,233) - (42,538,233)

Business-type activities:

Water and wastewater 5,968,037 6,170,176 - - - 202,139 202,139

Total primary government 52,893,509$ 8,915,913$ 1,399,990$ 241,512$ (42,538,233) 202,139 (42,336,094)

General revenues:

Property taxes 28,141,512 - 28,141,512

Unrestricted state shared revenues 13,618,223 - 13,618,223

Other taxes 431,399 - 431,399

Franchise fees (gross receipts) 1,991,248 - 1,991,248

Unrestricted investment income 440,540 14,740 455,280

Miscellaneous 487,393 245,929 733,322

Transfers 437,000 (437,000) -

Total general revenues and transfers 45,547,315 (176,331) 45,370,984

Change in net position 3,009,082 25,808 3,034,890

Net position - beginning, as previously reported 132,225,264 22,395,959 154,621,223

Net position - ending 135,234,346$ 22,421,767$ 157,656,113$

The notes to the basic financial statements are an integral part of this statement.

Primary Government

in Net Position

Program Revenues

Net (Expense) Revenue and Changes

32

FUND FINANCIAL STATEMENTS


Balance Sheet

Governmental Funds

June 30, 2017

Equipment

Acquisition and

General Fund Replacement Fund Total

Assets:

Cash and cash equivalents 39,353,846$ 7,443,586$ 12,623,812$ 59,421,244$

Other investments 131,498 - - 131,498

Property taxes receivable, net 153,934 - - 153,934

Other receivables 987,994 38,223 8,723 1,034,940

Due from other governments 3,603,577 - 22,978 3,626,555

Other assets 745,393 - - 745,393

Total assets 44,976,242$ 7,481,809$ 12,655,513$ 65,113,564$

Liabilities and Fund Balances:

Liabilities:

Accounts payable and accrued liabilities 1,177,299$ 13,625$ 93,931$ 1,284,855$

Deposits 321,931 - - 321,931

Due to other governments 530,909 - - 530,909

Total liabilities 2,030,139 13,625 93,931 2,137,695

Deferred Inflows of Resources:

Unavailable revenue-income taxes 1,780,783 - - 1,780,783

Unavailable revenue-rental income 3,819 - - 3,819

Unavailable revenue-senior housing 8,756 - - 8,756

Total deferred inflows of resources 1,793,358 - - 1,793,358

Fund Balances:

Nonspendable 734,793 - - 734,793

Committed 5,285,765 - 7,262,201 12,547,966

Assigned 5,801,875 7,468,184 5,299,381 18,569,440

Unassigned 29,330,312 - - 29,330,312

Total fund balances 41,152,745 7,468,184 12,561,582 61,182,511

Total liabilities, deferred inflows of resources and fund balances 44,976,242$ 7,481,809$ 12,655,513$

Amounts reported for governmental activities in the statement of

net position are different because:

Capital assets used in governmental activities are not financial

resources and, therefore, are not reported in the funds 93,180,801

Other long-term assets are not available to pay for current period

expenditures and, therefore, are deferred in the funds 8,750,505

Long-term liabilities, including bonds payable, are not due and

payable in the current period and, therefore, are not reported

in the funds (27,879,471)

Net position of governmental activities 135,234,346$

Capital

Projects

Fund

34


Statement of Revenues, Expenditures and Changes in Fund Balances

Governmental Funds


Equipment

General Acquisition and

Fund Replacement Fund Total

Revenues:

Taxes 28,141,512$ -$ -$ 28,141,512$

Licenses and permits 439,242 - - 439,242

Intergovernmental revenues 15,100,181 - 241,512 15,341,693

Fees and fines 3,730,367 - - 3,730,367

Contributions 157,406 - 45,000 202,406

Interest income 329,203 47,220 64,117 440,540

Rental income 537,955 - - 537,955

Other revenues 376,561 - - 376,561

Total Revenues 48,812,427 47,220 350,629 49,210,276

Expenditures:

Current:

General government 7,890,178 - - 7,890,178

Economic development 469,823 - - 469,823

Public safety 11,837,921 - - 11,837,921

Social services 2,226,011 - - 2,226,011

Public works 13,156,740 - - 13,156,740

Parks, culture and recreation 6,531,677 - - 6,531,677

Other - unclassified 342,859 - - 342,859

Debt service:

Principal 785,000 - - 785,000

Interest 314,439 - - 314,439

Paying and fiscal agent fees 3,020 - - 3,020

Capital outlay 259,014 2,297,840 1,373,904 3,930,758

Total Expenditures 43,816,682 2,297,840 1,373,904 47,488,426

Excess (deficiency) of revenues

over (under) expenditures 4,995,745 (2,250,620) (1,023,275) 1,721,850

Other financing sources (uses):

Sale of capital assets 1,221 184,159 - 185,380

Transfers in 437,000 1,247,600 2,395,600 4,080,200

Transfers out (3,643,200) - - (3,643,200)

Total other financing sources (uses) (3,204,979) 1,431,759 2,395,600 622,380

Net change in fund balance 1,790,766 (818,861) 1,372,325 2,344,230

Fund balances - beginning 39,361,979 8,287,045 11,189,257 58,838,281

Fund balances - ending 41,152,745$ 7,468,184$ 12,561,582$ 61,182,511$

Capital

Projects

Fund

35


Reconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balances of Governmental Funds to the


For the Year Ended June 30, 2017(Page 1 of 2)

$ 2,344,230

5,363,778

(5,160,886)

202,892

(185,380)

145,350

(40,030)

141,928

(229,830)

(97,000)

785,000

(51,885)

17,818 750,933

(Continued)

Book value of assets sold

Principal payment on general obligation debt

Amortization of bond premium

Pension Benefits reported in the statement of activities require the use of current financial resources, and therefore, are

reported as expenditures in governmental funds.

Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the

funds.

The issuance of long-term debt provides current financial resources to governmental

funds, while the repayment of the principal of long term debt consumes the current

financial resources of governmental funds. Neither transaction has any effect on net

position. Also, governmental funds report the effect of premiums,

discounts, and similar items when debt is first issued, whereas these amounts are

deferred and amortized in the statement of activities. This amount is the net effect of

these differences in the treatment of long-term debt and related items.

Other Post-Employment Benefits reported in the statement of activities do not require the use of current financial

resources, and therefore, are not reported as expenditures in governmental funds.

Net change in fund balance - total governmental funds

Amounts reported for governmental activities in the statement of activities are different because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those

assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which

capital outlays exceeded depreciation in the current period.

Capital Outlay

Depreciation expense

Capital outlay exceeded depreciation expense in the current period by:

In the statement of activities, the loss on the disposition of capital assets is reported, whereas in the governmental

funds, the entire proceeds from the sale increase financial resources. Thus, the change in net position differs from the

change in fund balances by costs of the capital assets sold less any accumulated depreciation.

Proceeds on sale of capital assets

Gain on sale of capital assets

Less deferred amount refunding

36


Reconciliation of the Statement of Revenues, Expenditures, and

Changes in Fund Balances of Governmental Funds to the



11,735

(75,776)

$ 3,009,082

Interest on long-term debt in the statement of activities differs from the amount reported in the governmental funds

because interest is recognized as an expenditure in the governmental funds when it is due and thus requires the use of

current financial resources. In the statement of activities, however, interest expense is recognized as the interest

accrues, regardless of when it is due. The additional interest reported in the statement of activities is the result of

accrued interest on the long-term debt.

In the statement of activities, compensated absences are measured by the amounts earned during the year. In

governmental funds, however, expenditures are measured by the amount of financial resources used (essentially, the

amounts actually paid). This year, compensated absences earned exceeded amounts used.

Change in Net Position of governmental activities

37


Statement of Net Position

Proprietary Fund

June 30, 2017

Water and Sewer

Fund

Assets:

Current assets:

Cash, cash equivalents and investments 2,987,243$

Accounts receivable, net 460,083

Unbilled accounts receivable 850,776

Accrued interest receivable 1,073

Prepaid Expenses 14,759

Total current assets 4,313,934

Noncurrent assets:

Capital assets:

Land and construction in progress 2,011,358

Other capital assets, net of accumulated depreciation 19,618,184

Total noncurrent assets 21,629,542

Total assets 25,943,476

Liabilities:

Current liabilities:

Accounts payable and accrued liabilities 407,259

Intergovernmental payable 143,391

Accrued interest payable 37,023

Escrow deposits 55,316

Customer advances for service 385,674

Long-term debt payable - current 325,428

Compensated absences - current 102,504

Total current liabilities 1,456,595

Noncurrent liabilities:

Long-term debt payable 2,001,584

Other post-employment benefits 63,530

Total noncurrent liabilities 2,065,114

Total liabilities 3,521,709

Net position:

Net investment in capital assets 19,302,530

Unrestricted 3,119,237

Total net position 22,421,767$

Enterprise Fund

38


Statement of Revenues, Expenses, and Changes in Net Position

Proprietary Fund


Water and Sewer

Fund

Operating revenues:

Water sales and sewerage surcharges 4,984,344$

Minimum charges 1,011,790

Forfeited discounts and penalties 20,964

Processing fees 15,300

Other operating income 137,778

Total operating revenues 6,170,176

Operating expenses:

Water supply 1,896,244

Sewage treatment 2,275,291

Administrative and general 442,029

Miscellaneous 89,726

Depreciation 1,206,116

Total operating expenses 5,909,406

Operating Income 260,770

Nonoperating revenues (expenses):

Interest income 14,740

Rental income - tower leases 245,929

Interest expense and fiscal agent charges (58,631)

Total nonoperating revenues (expenses) 202,038

Income before contributions and transfers 462,808

Transfers out (437,000)

Change in net position 25,808

Net position - beginning 22,395,959

Net position - ending 22,421,767$

Enterprise Fund

39


Statement of Cash Flows

Proprietary Fund


Water and Sewer

Fund

Cash flows from operating activities:

Receipts from customers 6,046,555$

Other operating revenues 363,065

Payments to suppliers (2,180,326)

Payments to employees (2,519,214)

Net cash provided by operating activities 1,710,080

Cash flows from noncapital financing activities:

Transfers to other funds (437,000)

Cash flows from capital and related financing activities:

Proceeds from capital debt 140,099

Purchases and construction of capital assets (841,419)

Principal paid on capital debt (318,879)

Interest paid on capital debt (60,770)

Net cash used in capital and related financing activities (1,080,969)

Cash flows from investing activities:

Interest income 14,551

Net decrease in cash and cash equivalents 206,662

Cash and cash equivalents - beginning 2,780,581

Cash and cash equivalents - ending 2,987,243$

(Continued)

Enterprise Fund

40


Statement of Cash Flows

Proprietary Fund


Reconciliation of operating income to net cash provided

by operating activities:

Operating income 260,770$

Adjustments to reconcile operating income to net cash provided by

(used in) operating activities:

Rental income - tower leases 245,929

Depreciation 1,206,116

Provision for uncollectible accounts 2,418

Change in assets and liabilities:

(Increase) in accounts receivable (18,307)

(Increase in prepaid expenses (1,742)

Increase in accounts payable 12,143

(Decrease) in intergovernmental payable (10,318)

(Decrease) in accrued liabilities (2,555)

Increase in compensated absences 8,806

Increase in OPEB liability 3,000

Increase in customer advances 3,820

Total adjustments 1,449,310

Net cash provided by operating activities 1,710,080$

Noncash investing, capital and financing activities:

Included in additions to Business-type capital assests are construction payables of $102,835.

41


42

NOTES TO BASIC FINANCIAL STATEMENTS

CITY OF BOWIE, MARYLAND NOTES TO BASIC FINANCIAL STATEMENTS

JUNE 30, 2017

1. Summary of Significant Accounting Policies

The City of Bowie, Maryland is a municipal corporation governed by an elected mayor and six-member council. The Citywas incorporated in 1916 and adopted its present Charter in 1963. The City operates under a Council-Manager form ofgovernment, and although not a full-service City, provides the following services: public works, social services, police,culture and recreation, community development, code enforcement, and planning and economic development. Inaddition, the City owns and operates a water and sewer system that services approximately forty percent of its residents.The Washington Suburban Sanitary Commission provides water and sewer services to residents outside the City’s franchise area. Prince George’s County provides a number of services to City residents that include: police and fire protection,public library and emergency health care. The Prince George’s County Board of Education provides for elementary andsecondary education within the City. The Maryland - National Capital Park and Planning Commission contributes additional parks and recreational services within the City.

The City’s financial statements are prepared in accordance with generally accepted accounting principles (GAAP)recognized in the United States of America as applicable to governmental units. The Governmental Accounting StandardsBoard (GASB) is responsible for establishing GAAP for state and local governments through its pronouncements(Statements and Interpretations).

A. Reporting Entity

Using the criteria of GASB Statement No. 14, as amended by Statement No. 39, management has determined that thefinancial statements should only include the various departments governed directly by the City Council.

B. Government-wide and Fund Financial Statements

The City’s basic financial statements include both government-wide (reporting the City as a whole) and fund financialstatements (reporting the City’s major funds). Both the government-wide and fund financial statements categorize primaryactivities as either governmental or business type. The City’s public works, parks and recreation, general administrativeservices, public safety, economic development, and social services are classified as governmental activities. The City’swater and sewer services are classified as business-type activities.

In the government-wide Statement of Net Position, both the governmental and business-type activities columns are: (a)presented on a consolidated basis by column; and (b) reported on a full accrual, economic resource basis, which recognizes all long-term assets and receivables as well as long-term debt and obligations. The City’s net position is reported in threeparts: net investment in capital assets, restricted net position, and unrestricted net positions. The City generally first usesrestricted assets for expenses incurred for which both restricted and unrestricted assets are available.

The government-wide Statement of Activities reports both the gross and net cost of each of the City’s functions andbusiness-type activities (public works, parks and recreation, general administrative services, etc.) that are otherwise being

44


JUNE 30, 2017

supported by general government revenues (general property taxes, certain intergovernmental revenues, fines, permits and charges, etc.). The Statement of Activities reduces gross expenses (including depreciation) by related program revenues, operating and capital grants, and contributions. The program revenues must be directly associated with the function (public works, parks and recreation, etc.) or a business-type activity. Program revenues include: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function and (2) grants and contributions that are restricted to meeting the operation or capital requirements of a particular function or activity. Taxes and other items not properly included among program revenues are reported as general revenues. The City does not allocate indirect expenses. Operating grants include operating-specific and discretionary (either operating or capital) grants while the capital grants column reflects capital-specific grants. The net costs (by function or business-type activity) are normally covered by general revenue (general property taxes, intergovernmental revenues, interest income, etc.).

As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are overhead charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the costs and revenues reported for the various functions concerned.

In the fund financial statements, financial transactions and accounts of the City are organized on the basis of funds. The operation of each fund is considered to be an independent fiscal and separate accounting entity, with a self-balancing set of accounts recording cash and/or other financing resources together with all related liabilities and residual equities or balances, and changes therein, which are segregated for the purpose of carrying on specific activities or attaining certain objectives in accordance with special regulations, restrictions, or limitations. The fund statements are presented on a current financial resource and modified accrual basis of accounting. This is the manner in which these funds are normally budgeted. Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental column, a reconciliation is presented which briefly explains the adjustment necessary to reconcile the fund financial statements to the governmental column of the government-wide financial statements.

The following is a brief description of the specific funds used by the City in FY2017.

Governmental Funds – Governmental funds are those through which most governmental functions typically are financed.

General Fund – The General Fund is the primary operating fund of the City. It is used to account for all financial resources except those properly accounted for in another fund. The principal sources of revenues for this fund are property taxes, intergovernmental grants and state shared revenues.

Equipment Acquisition and Replacement Fund – The Equipment Acquisition and Replacement Fund receives amounts transferred from other funds, not only to acquire and replace equipment during the current year, but to accumulate amounts appropriated each year to replace equipment scheduled for replacement in future years.

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JUNE 30, 2017

The Equipment Acquisition and Replacement Fund is considered a major fund for government-wide reporting purposes.

Capital Projects Fund – The Capital Projects Fund accounts for all financial resources used for the acquisition or construction of major capital facilities not being financed by proprietary funds. The Capital Projects Fund is considered a major fund for government-wide reporting purposes.

Proprietary Funds – Proprietary Funds are used to account for activities that are similar to those often found in the private sector. All assets, liabilities, equities, revenues, expenses, and payments relating to the government’s business activities are accounted for through proprietary funds. The measurement focus is on determination of net position, changes in net position and cash flows. Operating revenues include charges for services. Operating expenses include costs of services as well as materials, contracts, personnel, and depreciation. All revenues and expenses not meeting these definitions are reported as nonoperating revenues and expenses.

Enterprise Fund – The Enterprise Fund accounts for operations that are financed in a manner similar to private business enterprises, where the intent is that costs of providing goods or services to the general public on a continuing basis be financed or recovered entirely or predominantly through user charges. The City’s Enterprise Fund accounts for the operations of the City’s water and sewer system.

C. Basis of Accounting

The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. Allgovernmental funds are accounted for using the current financial resources measurement focus. With thismeasurement focus, only current assets and current liabilities generally are included on the balance sheet in the funds’statements. Long-term assets and long-term liabilities are included in the government-wide statements. Operatingstatements of the governmental funds present increases (i.e., revenues and other financing sources) and decreases (i.e.,expenditures and other financing uses) in the current net position.

The government-wide statements of net position, statements of activities and proprietary funds are accounted for on aflow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associatedwith the operation of these activities are included on the statement of net position. Proprietary fund-type operatingstatements present increases (e.g., revenues) and decreases (e.g., expenses) in total net position.

The statements of net position, statement of activities, and financial statements of the Proprietary Funds are presentedon the accrual basis of accounting. Under this method of accounting, revenues are recognized when earned andexpenses are recorded when liabilities are incurred without regard to receipt or disbursement of cash.

The fund financial statements of the General, Equipment Acquisition and Replacement, and Capital Projects Funds aremaintained and reported on the modified accrual basis of accounting using the current financial resources

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JUNE 30, 2017

measurement focus. Under this method of accounting, revenues are recognized in the period in which they become measurable and available. The term “available” is limited to collection within sixty days of the fiscal year-end. Property taxes are the primary source of revenues susceptible to accrual. Other revenue of material amounts that are accrued include intergovernmental revenues, interest and rental income. Building permits, fees, fines and miscellaneous revenues are recorded when received, as they are generally not measurable until actually received. Any revenues received in advance are deferred. Federal and State reimbursement-type grants are recorded as revenue when related eligible expenditures are incurred. Expenditures are recorded when the related fund liabilities are incurred. Principal and interest on general long-term debt are recorded as fund liabilities when due or when amounts have been accumulated for payments to be made early in the new fiscal year.

D. Assets, Liabilities and Net Position or Equity

CASH, CASH EQUIVALENTS AND INVESTMENTS Temporary idle cash within the various funds is combined to form a cash and investment pool. Investments and interest earnings are recorded in the individual funds. Funds available for short periods are transferred to an interest-bearing bank account. Funds available for longer periods are invested in certificates of deposit or the Maryland Local Government Investment Pool.

For purposes of statement presentation, all highly liquid investments with an original maturity of three months or less when acquired are considered to be cash equivalents.

TAXES RECEIVABLE Taxes Receivable are comprised of the uncollected taxes for the past five years. The estimated amount of uncollectible taxes of $303,757 is equal to the total of the outstanding receivables of the four oldest years. ACCOUNTS RECEIVABLE The Water and Sewer Fund accounts receivable are comprised of the uncollected water and sewer charges for the past two years. The estimated amount uncollectible of $3,447 is equal to the outstanding receivables of the past two years. UNBILLED ACCOUNTS RECEIVABLE The Water and Sewer Fund unbilled accounts receivable are for services rendered, but not billed for the billing period April 1, 2017, to June 30, 2017. Unbilled revenue for the fiscal year ended June 30, 2017, totals $850,776.

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JUNE 30, 2017

PREPAID ITEMS Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as other assets in both the government-wide and fund financial statements. 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 columns in the government-wide financial statements. Capital assets are defined as assets with an initial, individual cost of more than $5,000 and an estimated useful life of more than one year. Such assets are recorded at historical cost or estimated historical cost if actual historical cost is not available. Donated capital assets are recorded at acquisition value at time of receipt. Interest costs incurred in proprietary funds, related to construction of capital assets, are capitalized, if material. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’ lives are not capitalized. Capital assets are depreciated using the straight-line method over the following estimated useful lives:

Assets Years Buildings and improvements 15-50 Improvements other than buildings 10-50 Machinery and equipment 5-25 Public domain infrastructure 7-100 Water distribution system 10-100 Sewage collection system 10-100

The City has a collection of historical treasures. The true value of the historical treasures are expected to either be maintained at cost or appreciate over time, and thus, the historical treasures are not depreciated. If individual pieces are lost or destroyed, the loss is recorded.

DEFERRED INFLOWS OF RESOURCES In addition to liabilities, the balance sheet will sometimes report a separate section for deferred inflows of resources. It has a negative effect on net position, similar to liabilities. This separate financial statement element, deferred inflows of resources, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an inflow of resources (revenues) until then. At the end of the current fiscal year deferred inflows reported in the governmental funds were as follows: 48


JUNE 30, 2017

Unavailable

Due from other governments (General Fund) $ 1,793,358

COMPENSATED ABSENCES The liability for compensated absences reported in the government-wide and proprietary fund statements consists of unpaid accumulated vacation leave balances. All vacation pay is accrued when incurred in the government-wide and proprietary fund financial statements. The current portion of this debt is estimated based on historical trends. Compensated absences are reported in governmental funds only if they have matured (i.e., unused reimbursable leave still outstanding following an employee’s resignation or retirement), while the proprietary funds report the liability as it is incurred. 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 governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective-interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. EQUITY CLASSIFICATIONS Government-wide statements – Equity is classified as net position and displayed in three components:

• Net investment in capital assets – consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of bonds or other borrowings that are attributable to the acquisition, construction, or improvement of those assets.

• Restricted net position – consists of net position with constraints placed on the use either by (1) external groups

such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. At year-end, the City had no restricted net position to report.

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JUNE 30, 2017

• Unrestricted net position – consists of all other net positions that do not meet the definition of “restricted” or “net investment in capital assets.”

Fund statements – In the fund financial statements, governmental funds report the following classifications of fund balance:

• Nonspendable – Resources that are nonspendable and are not available for appropriation or are legally restricted by outside parties or creditors for use for a specific purpose. The nonspendable fund balance reported in the General Fund consists of prepaid costs totaling $734,793.

• Restricted – Resources that have constraints placed on use by external parties such as creditors, grantors,

contributors, or other levels of government. The City has not reported any restricted fund balance for the year ended June 30, 2017.

• Committed – Resources that can only be used for specific purposes due to formal action of the City’s highest

level of decision-making authority. The City Council is the highest level of decision-making authority for the government that can, by adoption of an ordinance, commit fund balance. Committed also includes resources that are committed by contract, in which existing/current resources have been specifically committed for satisfying the contract.

Committed fund balance for governmental funds is further classified as follows:

Equipment Capital

Acquisition and Projects

Committed for: General Fund Replacement Fund Fund Total

Scholarship Fund 49,114$ -$ -$ 49,114$

Friends of Belair 32,758 - - 32,758

Indoor Sports Facility - - 2,680,828 2,680,828

Heritage Trail - - 479,118 479,118

Kenhill LID - - 113,465 113,465

Midwood Lane SWM - - 979,804 979,804

Allen Pond Park development - - 239,052 239,052

Institutional Network 4,856,852 - - 4,856,852

Special Taxing Districts 47,328 - 2,488,951 2,536,279

Installation of fiber optic cables 33,592 - - 33,592

Facility condition assessments 25,500 - - 25,500

Historical Property exhibit 23,601 - - 23,601

Gardner wall repair 21,790 - - 21,790

Other projects 195,230 - 280,983 476,213

Committed fund balance 5,285,765$ -$ 7,262,201$ 12,547,966$

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JUNE 30, 2017

• Assigned – Resources that can only be used for specific purposes due to the City’s intent, but are not restricted or committed and may be subject to change by the City Council or the City Manager. The City’s charter designates the City Manager as the chief financial officer of the City and states that the financial powers of the City shall be exercised by the City Manager. The City Council may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Assigned fund balance for governmental funds is further classified as follows:

Equipment Capital

Acquisition and Projects

Assigned for: General Fund Replacement Fund Fund Total

Subsequent year's budget 5,564,000$ 7,468,184$ 5,197,931$ 18,230,115$

General Government 61,887 - - 61,887

Economonic Development 1,597 - - 1,597

Public Safety 3,500 - - 3,500

Social Services - - 1,550 1,550

Public Works 4,166 - 17,051 21,217

Park restoration 166,725 - 82,850 249,575

Assigned fund balance 5,801,875$ 7,468,184$ 5,299,382$ 18,569,441$

• Unassigned – A residual classification for the General Fund, and for negative fund balance in a governmental

fund, other than the General Fund. This classification consists of resources that have not been assigned to other funds or restricted, committed or assigned to a specific purpose within the General Fund.

The City has also adopted a minimum fund balance policy for the general fund which instructs management to conduct the business of the City in such a manner that available fund balance is at least equal to or greater than 25% of budgeted expenditures. Any portion of the general fund balance in excess of 25% of budgeted expenditures may be appropriated for one-time expenditures and may not be used for any purpose that would obligate the City in a future budget.

The City generally considers committed amounts to be used first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications could be used.

E. Revenues, Expenditures and Expenses

PROPERTY TAX REVENUE RECOGNITION Property tax revenue is recognized in the year in which taxes have been levied and become available to meet current expenditures. Recognized revenues are expected to be collected within the current period.

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JUNE 30, 2017

COMPENSATED ABSENCES Employees are permitted to accumulate earned but unused vacation leave. All vacation leave is accrued when incurred in the government-wide and proprietary fund financial statements. Annual leave is adjusted to current salary cost at June 30, plus salary-related payments associated with the payment of compensated absences. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements. Annual leave payable at termination of employment is limited to 30 days. As part of a flexible benefit plan, all employees receive six personal days each year. The personal days are not accrued and unused days that exceed eighty (80) hours are forfeited. The employees hired prior to July 1, 1988, who elected not to participate in the flexible benefit plan, accumulate sick leave at the rate of 1 1/4 days per month or 15 days a year. There is no restriction on the accumulation of sick leave. However, no payment is made for the accumulated amount upon separation and no accrued liability is recorded. STATEMENT PRESENTATION The Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds is prepared on a basis consistent with generally accepted accounting principles under which method encumbrances are considered a reservation of fund balance and charged to operations in the year liquidated. All intergovernmental revenues applicable to these encumbrances are recorded as unearned for the current period, and earned for the subsequent period in which the reservation of fund balance is liquidated.

2. Reconciliation of Government-wide and Fund Financial Statements

A. A summary reconciliation of the difference between total fund balances as reflected on the governmental funds balance sheet and the net position for governmental activities as shown on the government-wide statement of net position is presented on the face of the governmental funds balance sheet. The asset and liability elements which comprise the reconciliation difference stem from governmental funds using the current financial resources measurement focus and the modified accrual basis of accounting while the government-wide financial statements use the economic resources measurement focus and accrual basis of accounting.

Explanation of certain differences between the governmental fund balance sheet and the government-wide statement of net position:

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JUNE 30, 2017

Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds:

Capital assets 150,971,486$

Less: Accumulated depreciation (57,790,685)

Total 93,180,801$

Other long-term assets are not available to pay for current period expenditures and, therefore, are

deferred in the funds:

Unavailable revenue - Income taxes 1,780,783$

Unavailable revenue - senior housing taxes 8,756

Unavailable revenue - rental income 3,819

Deferred outflows - refunding bonds 674,502

Deferred outflows - pension expense 7,038,879

Deferred inflows - pension expense (756,234)

Total 8,750,505$

Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not

reported in the funds:

Long-term debt 10,921,530$

Pension liability 14,561,337

Compensated absences 1,357,179

Other Post Employment Benefits 888,073

Acrrued interest payable 151,352

Total 27,879,471$

3. Detailed Notes on All Funds

ASSETS, LIABILITIES AND FUND EQUITY

A. Cash, Cash Equivalents and Investments - The State of Maryland Code allows municipalities to invest surplus funds in financial institutions within the State of Maryland if the financial institution provides collateral with a market value that equals or exceeds the amount by which a deposit exceeds the deposit insurance. Collateral is limited to obligations of or guarantees by the United States government; State, County or Municipal Obligation; obligations of the Inter-American Development Bank; or obligations of the World Bank. Municipalities may also invest in federal obligations or repurchase agreements those obligations secure. The State of Maryland Code requires municipalities to have an investment policy. By resolution passed by the City Council, an investment policy has been adopted. Management has decided to restrict investments to the use of an interest-bearing cash account for readily available funds, and the Maryland Local

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JUNE 30, 2017

Government Investment Pool (MLGIP) or certificates of deposit on a pooled basis for cash amounts that are available for longer periods. Only financial institutions covered by the Federal Deposit Insurance Corporation (FDIC) are used.

Investments are stated at fair value, in accordance with GASB Statement No. 31, except for MLGIP which is valued at amortized cost. All accrued interest is recorded as a receivable for the period earned and reported separately on the balance sheet. For purposes of this note disclosure, cash and cash equivalents are classified as either deposits or investments. Deposits include cash in checking accounts, savings accounts, certificates of deposit and undeposited cash. Investments consist of amounts invested in the MLGIP.

Deposits - At fiscal year-end, the carrying amount of the City’s deposits was $4,913,986, and the bank balances were $5,399,360. Custodial credit risk is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. As of June 30, 2017, the City’s bank balances were not exposed to any custodial credit risk since all deposits were fully collateralized. Of the bank balances, $3,200,000 was covered by federal depository insurance, and $3,367,536 covered by collateral pledged to the City and held in the City’s name by the pledging bank’s trust department. The City had undeposited cash and checks in the amount of $3,083. Investments - Statutes authorize the City to invest in obligations of the United States government, federal government agency obligations, repurchase agreements, certificates of deposit or time deposits insured by the FDIC, and the MLGIP, which invests in United States Treasuries. The City holds investments that are measured at fair value on a recurring basis. Because investing is not a core part of the city’s mission, the disclosures related to these investments only need to be disaggregated by major type. The City of Bowie categorizes its fair value measurements within the fair value hierarchy established by general accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the assets. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City has the following recurring fair value measurement, which are level 1 inputs as of June 30, 2017:

Certificates of Deposits 2,705,000$ Equity 131,498

The City’s investments are pooled in the State-created MLGIP. The City’s investment in the pool is carried at amortized cost. These funds are part of an external investment pool. The investments at June 30, 2017, are shown below:

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35,947,273$ 7,443,586

12,623,812 1,479,830

Investments carried at amortized cost

Mutual Funds:General Fund Equipment Acquisition and Replacement Fund Capital Projects FundWater and Sewer Fund

Total investments carried at amortized cost 57,494,501$

There is no custodial credit risk for these investments as the amounts are fully collateralized. In addition, there is no interest rate risk as the interest rates are adjusted periodically. It should also be noted that the City does not have any foreign currency risk associated with any investments.

The City follows Government Accounting Standards Board Statement No. 79, "Certain External Investment Pools and Pool Participants", which requires disclosure of specific criteria regarding external investment pools. The City maintains a cash and investment pool that is available for use by all funds. The City is governed by the deposit and investment limitations of Maryland Law. Article 95 §22G of the Annotated Code of Maryland established the Maryland Local Government Investment Pool. The pool has an “AAAm” rating from Standard and Poor’s and maintains a $1.00 per share value. An MLGIP Advisory Committee of current participants was formed to review, on a quarterly basis, the activities of the pool and to provide suggestions to enhance the pool. The Pool, under the administrative control of the State Treasurer, is managed in a "Rule 2(a)-7 like" manner and is reported at amortized cost pursuant to Rule 2(a)-7 under the Investment Company Act of 1940, as amended, and is managed by PNC Institutional Investments. As of June 30, 2017, all pool holdings are in cash and cash equivalents with a weighted average maturity of 37 days. Financial statements and required supplemental information for the MLGIP are available from:

Maryland Local Government Investment Pool C/O PNC Institutional Investments Group

One East Pratt Street Baltimore, Maryland 21202

www.mlgip.com

B. Property Taxes - Real and personal property taxes are levied at a rate consistent with State law requiring that the StateDepartment of Assessments and Taxation’s constant yield tax rate cannot be exceeded without notice to the public ofsuch an intent, and then, only after public hearings are held. The City Council levies the rate, adopted in theappropriations ordinance, based on the assessed value of the property as determined by the State Department ofAssessments and Taxation.

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JUNE 30, 2017

By action of the Maryland General Assembly, triennial assessment in the State became effective in fiscal years after 1980. This act provides that only 1/3 of all property be reassessed every year with all property being reassessed every three years. The assessment increase is phased in over the three-year period. Taxable assessment increases were limited to 5 percent this fiscal year.

Taxes are levied as of July 1, become a lien on that date, and are due and payable by October 1, except principal residences, which are due and payable in semiannual installments at July 1 and December 31. Semiannual installments due on December 31 become delinquent January 1. Monthly interest at the rate of 2/3 of 1 percent and a penalty of 1 percent is added to all unpaid taxes. Sale of property for delinquent taxes or tax liens is conducted by the County during the month of May. Delinquent taxes at June 30, 2017 amounting to $303,757 are 1.07 percent of levy. The City’s tax rates for fiscal year 201 were $0.40 per $100 of assessed valuation for real property and $1.00 per $100 of assessed valuation for business personal property.

C. Due from/to Other Governments - The following represent amounts due as of June 30, 2017, from/to other governmental units to the City of Bowie:

1. General Fund - Due from Other GovernmentsUnited States Government -- US Treasury 2,587$ State of Maryland - Admissions and Amusement Tax 109,131 State of Maryland - State Aid for Police Protection 124,595 State of Maryland - Income Tax 2,828,939 State of Maryland - Motor Vehicle and Highway User Revenues 125,618 State of Maryland - Traders and Peddlers License Fees 4,972 Prince George’s County - Property Taxes 5,716 Prince George’s County - Youth Program 73,876 Prince George’s County - School Resource Officer 120,000 Prince George’s County - Hotel/Motel Tax 106,443 Maryland-National Capital Park and Planning Commission 101,700

Total 3,603,577$

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JUNE 30, 2017

2. General Fund - Due to Other GovernmentsUnited States Government -- US Treasury 198,112$ State of Maryland - State Withholding Tax 44,157 State of Maryland - Environmental Services 39,684 State of Maryland - other 9,541 Prince George’s County - Landfill Tipping Fees 216,719 Prince George’s County - Bowie Volunteer Fire Department 21,836 Prince George’s County - other 860

Total 530,909$

3. Water and Sewer Fund – Due to Other GovernmentsUnited States Government -- US Treasury 19,147$ State of Maryland - Bay Restoration Fund 119,725 State of Maryland - State Withholding Tax 4,373 State of Maryland - other 66 Prince George’s County - other 80

Total 143,391$

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JUNE 30, 2017

D. Capital Assets

Capital asset activity for the year ended June 30, 2017, was as follows:

Governmental Activities Capital Assets:

Balance Balance

June 30, 2016 Additions Deductions Transfers June 30, 2017

Capital assets, not being depreciated:

Land 14,892,172$ 77,300$ -$ -$ 14,969,472$

Construction in Progress 1,144,067 540,475 - (215,213) 1,469,329

Historical Treasures 425,298 9,000 - - 434,298

Total capital assets, not being depreciated 16,461,537 626,775 - (215,213) 16,873,099

Capital assets, being depreciated:

Building & improvements 57,295,333 268,431 - 3,602 57,567,366

Improvements other than buildings 14,054,161 150,260 - - 14,204,421

Machinery & equipment 16,492,085 2,226,178 (1,058,356) - 17,659,907

Infrastructure 41,601,158 1,998,921 - - 43,600,079

Other Capital Assets 761,790 93,213 - 211,611 1,066,614

Total capital assets, being depreciated 130,204,527 4,737,003 (1,058,356) 215,213 134,098,387

Less: accumulated depreciation for:

Building & improvements (18,102,927) (1,577,934) - - (19,680,861)

Improvements other than buildings (7,510,473) (584,064) - - (8,094,537)

Machinery & equipment (9,602,005) (1,646,878) 1,018,326 - (10,230,557)

Infrastructure (17,735,073) (1,311,302) - - (19,046,375)

Other Capital Assets (697,647) (40,708) - - (738,355)

Total accumulated depreciation (53,648,125) (5,160,886) 1,018,326 - (57,790,685)

Total capital assets, being depreciated, net 76,556,402 (423,883) (40,030) 215,213 76,307,702

Governmental activities capital assets, net 93,017,939$ 202,892$ (40,030)$ -$ 93,180,801$

Class

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Capital Assets (continued)

Business-type Activities Capital Assets:

Balance Balance

Class June 30, 2016 Additions Deductions Transfers June 30, 2017

Capital assets, not being depreciated:

Land 1,489,192$ -$ -$ -$ 1,489,192

Construction in Progress 662,194 385,145 - (525,173) 522,166

Total capital assets, not being depreciated 2,151,386 385,145 - (525,173) 2,011,358

Capital assets, being depreciated:

Building & improvements 20,751,654 80,953 - 525,173 21,357,780

Improvements other than buildings 6,240,234 3 - 6,240,237

Machinery & equipment 4,352,053 373,183 (243,732) - 4,481,504

Infrastructure 9,688,740 104,970 - - 9,793,710

Other Capital Assets - - - - -

Total capital assets, being depreciated 41,032,681 559,109 (243,732) 525,173 41,873,231

Less: accumulated depreciation for:

Building & improvements (8,962,674) (550,324) - - (9,512,998)

Improvements other than buildings (4,374,395) (272,840) - - (4,647,235)

Machinery & equipment (2,325,857) (228,769) 243,732 - (2,310,894)

Infrastructure (5,629,737) (154,183) - - (5,783,920)

Other Capital Assets - - - - -

Total accumulated depreciation (21,292,663) (1,206,116) 243,732 - (22,255,047)

Total capital assets, being depreciated, net 19,740,018 (647,007) - 525,173 - 19,618,184

Business-type activities capital assets, net 21,891,404$ (261,862)$ -$ -$ 21,629,542$

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Depreciation expense was charged to functions/programs of the City for the fiscal year ended June 30, 2017:


General government 1,416,568$

Public works 1,795,948

Public safety 573,463

Social services 52,132

Parks, culture & recreation 1,322,775

Total 5,160,886$


Water 401,830$

Waste water 804,286

Total 1,206,116$

E. Construction and Other Significant Commitments - As of June 30, 2017, the City had outstanding construction and other commitments in excess of $100,000 as follows:

Original Remaining Contract Contract

Project Amounts Amounts Indoor Sports Facility $ 2,825,282 $ 2,680,828 Heritage Trail 770,493 484,152 Kenhill Center and Midwood Storm Water Management 1,211,603 1,093,269 Allen Pond Park 381,147 239,052 Whitemarsh Park 422,302 109,694 Total $ 5,610,827 $ 4,606,995

Encumbrances – Encumbrance accounting is utilized to the extent necessary to assure effective budgetary control and accountability and to facilitate effective cash planning and control. At year-end the amount of encumbrances expected to be honored upon performance by the vendor in the next year were as follows:

General Fund $ 537,588 Equipment Acquisition and Replacement Fund 44,480 Capital Projects Fund 4,874,701 Total $ 5,456,769

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F. Retirement Plans - The City provides coverage for all its employees under the Federal Social Security System. In addition, the City established a defined contribution employees savings plan in accordance with Section 401(k) of the Internal Revenue Code (IRC). The City has the authority to establish and amend the benefit provisions of the savings plan, including contribution requirements of the employees and employer. The trustee for the plan is the ICMA Retirement Corporation. Plan investments are reported at fair value. The fair value of investments is based on quoted market prices.

The defined contribution plan establishes individual accounts for each participant and specifies how the contributions to the participants’ accounts are to be determined. In a defined contribution plan, the benefits a participant receives will depend on the amount contributed to the participant’s account and the earnings from investment of these contributions. All City employees, except for police officers, who work in a full-time status may choose to participate. To receive a City matching contribution, a minimum employee contribution of 1% of gross pay, exclusive of overtime or bonuses, is required by the plan. The City matches employee contributions on a variable percentage scale, based upon years of service, to a maximum of 6%.

A participant is at all times vested in his own contributions to the plan, plus any interest earned on these contributions. A participant’s vested percentage in the City’s contribution amount is determined from the following table based on years of service:

Years of Service Vested Percentage Less than 2 0% 2 25% 3 50% 4 75% 5 or more 100%

An additional employer contribution of 4% of gross pay, exclusive of overtime and bonuses, is made for all employees with one year of service, who complete 1,000 hours of service during the plan year and are employed on the last day of the plan year. No contributions are required by the employees to receive this 4% annual contribution. At the time of making the contribution, the City may, at its discretion, designate that all or a portion of the contribution is fully vested when made. In the absence of such a designation, the vesting schedule for the 4% contribution is as follows:

Years of Service Vested Percentage Less than 2 0% 2 25% 3 50% 4 75% 5 or more 100%

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The plan allows withdrawals for death, disability, retirement and hardship. The plan also has a loan option to enable participants to borrow from their own contributions. Loans may not exceed the lesser of: (1) Fifty thousand dollars ($50,000) reduced by the excess of the highest outstanding loan balance during the one-year period preceding the date of the loan over the outstanding balance of loans on the day the loan is made, or (2) the greater of $10,000 or 50 percent of the participant’s vested interest in the plan. All loans must have a repayment schedule not to exceed five years. The plan year is from January 1 to December 31.

Employee contributions and the City’s matching funds are transferred to the ICMA Retirement Corporation on a bi-weekly basis. The annual 4% City contribution was made in March following the plan year-end. The April 2017 contribution was $531,653. The City’s required and actual matching contributions for fiscal year 2017 amounted to $598,692. Employee contributions totaled $879,034 in fiscal year 2017.

The City also maintains a 401(a) Money Purchase Plan. The trustee for the plan is the ICMA Retirement Corporation. Participation is limited exclusively to the City Manager. Eligibility commences upon employment. Under the plan, the City contributes 10% of gross salary, exclusive of bonuses. Employer contributions are transferred to the ICMA Retirement Corporation on a bi-weekly basis. Contributions are 100% vested in the participant’s account at all times. The City has the authority to establish and amend the benefit provisions of the money purchase plan, including contribution requirements of the employee and employer.

ICMA Retirement Corporation held no securities of the City on behalf of the retirement plan during or at the close of the fiscal year.

G. Pension Plan

SummaryThe City previously adopted GASB Statement No. 68 – Accounting and Financial Reporting for Pensions (GASB 68). TheCity participates in the Maryland State Retirement and Pension System, (the “System”) and qualifies as a ParticipatingGovernmental Unit (“PGU”). The State Retirement Agency (the “Agency”) is the Plan administrator and fiduciary. GASB68 requires that a PGU recognize its proportionate share of the System’s net pension liability (i.e. unfunded pensionliability) and pension expense. The System is comprised of the Teachers’ Retirement and Pension Systems, Employees’Retirement and Pension Systems, State Police Retirement Pension System, Judges’ Retirement System, and the LawEnforcement Officers’ Pension System (the LEOPS). The City’s proportionate share for employees participating in theLEOPS approximates 0.0617 percent as of the measurement date of June 30, 2016.

The City also previously adopted GASB No. 71 – Pension Transition for Contribution Made Subsequent to theMeasurement Date-An amendment of GASB Statement No. 68 (“GASB 71”), requires that contributions to the pensionplan subsequent to the measurement date be recognized as a deferred outflow of resources. The City’s FY2017contribution in December 2016 for employees participating in the LEOPS, of $1,262,660, is therefore recognized as apension-related deferred outflow of resources.

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The City’s employees participate in the System and contributed 7 percent of their compensation during FY2017 as stipulated by the System. For the employees participating in the LEOPS, the City contributed $1,262,660 to the System for FY2017 which was actuarially determined based on statutory provisions. In relation to these employees, the City has also recognized in Pension Expense its proportionate share of the net difference between projected and actual investment earnings on pension plan assets and its proportionate share of the System’s deferred outflows of resources (a decrease in Pension Expense) attributable to changes in assumptions.

Basis of presentation and basis of accounting

1. Employers participating in the System’s cost-sharing multiple-employer defined benefit plans are required to reportpension information in their financial statements for fiscal periods beginning on or after June 15, 2014, in accordancewith GASB Statement No.68. The Schedule of Employer Allocations and Schedule of Pension Amounts by Employer(pension allocation schedules) provide employers with the required information for financial reporting. The System’sfinancial statements are prepared on the accrual basis of accounting and are prepared in accordance with accountingprinciples generally accepted in the United States of America (GAAP) that apply to governmental accounting for fiduciaryfunds.

2. Actual employer contributions billed to participating government units for the years ended June 30, 2016 and 2015,are used as the basis for determining each employer’s proportionate share of the collective pension amounts reportedin the Schedule of Employer allocations. The contributions were adjusted by increasing contributions by approximately$77 and 251 million to adjust for differences between actuarial determined contributions and actual contributions by theState of Maryland for the years ended June 30, 2016 and 2015, respectively.

3. The components of the calculation of the net pension liability for the System as of June 30, 2016, calculated inaccordance with GASB Statement No. 67, are shown in the following table:

Total Pension Liability 68,959,954,000$ Plan Fiduciary Net Position 45,365,927,000$ Net Pension Liability 23,594,027,000$ Plan fiduciary net position as a percentage of total pension liability 65.79%

Actuarial Assumptions • Actuarial – Entry Age Normal• Amortization Method – Level Percentage of Payroll, Closed• Asset Valuation Method – 5-year smoothed market; 20% collar• Inflation – 2.70% general, 3.20% wage• Salary Increase – 3.30% to 9.20% including inflation

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• Discount rate – 7.55%• Investment Rate of Return – 7.55%• Retirement Age – Experience-based table of rates that are specific to the type of eligibility condition. Last updated

for the 2015 valuation pursuant to an experience study of the period 2010-2014.• Mortality – RP-2014 Mortality Tables with generational mortality projections using scale MP-2014, calibrated to

Maryland State Retirement Pension System experience.

Note: There were no benefit changes during the year. Adjustments to the roll-forward liabilities were made to reflect the following assumption changes in the 2016 valuation:

• Inflation assumption changed from 2.95% to 2.70%

Investments

The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of geometric real rates of return were adopted by the Pension system’s Board after considering input from the investment consultant(s) and actuary(s). For each major asset class included in the Pension System’s target asset allocation, these best estimates are summarized in the following table:

Asset Class Target AllocationsLong-Term Expected Real Rate of Return

Public Equity 37% 6.60%Private Equity 10% 7.40%Rate Sensitive 20% 1.30%Credit Opportunity 9% 4.20%Real Assets 15% 4.70%Absolut Return 9% 3.70% Total 100%

The above was the Pension System’s Board of Trustees adopted asset allocation policy and best estimate of geometric real rates of return for each major asset class as of June 30, 2016.

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For the year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments net of the pension plan expense was 1.10 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested.

Discount Rate A single discount rate of 7.55 percent was used to measure the total pension liability. The single discount rate was based on the expected rate of return on pension plan investments of 7.55 percent. The projection of cash flow used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and the employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability.

Sensitivity of the Net Pension Liability

Regarding the sensitivity of the net pension liability to changes in the single discount rate, the following present the System’s net pension liability and the City’s proportionate share of the System’s net pension liability, calculated using a single discount rate that is 1 percentage point lower (i.e. 6.55%) and a single discount rate that is 1 percentage point higher (i.e. 8.55%):

1% Lower - 6.55% Current Rate - 7.55% 1% Higher - 8.55%The system's Net Pension Liabilty 32,408,442,000$ 23,594,027,000$ 16,259,112,000$

The City's Proportionate Share of Net Pension Liabity for LEOPS 20,001,259$ 14,561,337$ 10,034,506$

Pension Plan Description

Organization

The State Retirement Agency (the “Agency”) is the administrator of the System. The System was established by the State Personnel and Pensions article of the Annotated Code of Maryland to provide retirement allowances and other benefits to State employees, teachers, police, judges, legislators, and employees of participating governmental units.

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JUNE 30, 2017

Responsibility for the System’s administration and operation is vested in a 15-member Board of Trustees. The System is made up of two cost-sharing employer pools: the “State Pool” and the “Municipal Pool.” The “State Pool” consists of the State agencies, board of education, community colleges, and libraries. The “Municipal Pool” consists of the participating governmental units that elected to join the System. Neither pool shares in each other’s actuarial liabilities, thus participating governmental units that elect to join the System (the “Municipal Pool”) share in the liabilities of the Municipal Pool only. The State of Maryland is the statutory guarantor for the payment of the System. The Agency is legally authorized to use all assets accumulated for the payment of benefits to pay such obligations to any plan member or beneficiary as defined by the terms of the plan. Consequently, the System is accounted for as a single plan as defined in GASB Statement No. 67, “Financial Reporting for Pension Plans – An Amendment of GASB Statement No. 25.” Additionally, the System is fiscally dependent on the State by virtue of the legislative and executive controls exercised with respect its operation, policies, and administrative budget. Accordingly, the System is included in the State’s reporting entity and disclosed in its financial statements as a pension trust fund. The System is comprised of the Teachers’ Retirement and Pension System, Employees’ Retirement System, and the Law Enforcement Officers’ Pension System. The City’s employees participate in LEOPS.

Covered Members

On July 2, 1990, the LEOPS was established to provide retirement allowances and other benefits for State and local law enforcement officers. The LEOPS includes both retirement plan and pension plan provisions which are applicable to separate portions of the LEOPS’ membership. On July 7, 2006, the City joined the LEOPS to provide a retirement plan for police officers of the City.

Summary of Significant Plan Provisions

All plan benefits are specified by the State Personnel and Pensions Article of the Annotated Code of Maryland. For all individuals who are members of the System on or before June 30, 2011, pension allowances are computed using both the highest three consecutive years Average Final Compensation (AFC) and the actual number of years of accumulated creditable service. For any individual who becomes a member of one of the pension systems on or after July 1, 2011, pension allowances are computed using both the highest five consecutive years AFC and the actual number of years of accumulated creditable service. Various retirement options are available under each system which ultimately determines how a retiree's benefit allowance will be computed. Some of these options require actuarial reductions based on the retiree's and/or designated beneficiary's attained age and similar actuarial factors. Beginning July 1, 2011, the member contribution rate was increased for members of the Employees' Pension System from 5% to 7%, and from 4% to 6%, respectively, in fiscal year 2013. In addition, the benefit attributable to service on or after July 1, 2011 in many of the pension systems now will be subject to different cost-of-living adjustments (COLA) that are based on the increase in the Consumer Price Index (CPI) and capped at 2.5% or 1.0% based on whether the market value investment return for the preceding calendar year was higher or lower than the investment return assumption used in the valuation. A brief summary of the retirement eligibility requirements of and the benefits available under the various systems in effect during FY2017 are as follows:

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Service Retirement Allowances

A member of the Law Enforcement Officers' Pension system is eligible for full retirement benefits upon the earlier of attaining age 50 or accumulating 25 years of eligibility service regardless of age. The annual retirement allowance for a member who is covered under the retirement plan provisions equals 1/50 (2.3%) of the member's AFC multiplied by the number of years of accumulated creditable service up to 30 years, plus 1/100 (1.0%) of the member's AFC multiplied by the number of years of accumulated creditable service in excess of 40 years. For members subject to the pension provisions, full service pension allowances equal 2.0% of AFC up to a maximum benefit of 60% (30 years of credit).

Vested Allowances

Any individual who is a member of the State Retirement and Pension System on or before June 30, 2011 (other than a judge or a legislator) and who terminates employment before attaining retirement age but after accumulating 5 years of eligibility service is eligible for a vested retirement allowance. Any individual who joins the State Retirement and Pension System on or after July 1, 2011 (other than a judge or a legislator) and who terminates employment before attaining retirement age but after accumulating 10 years of eligibility service is eligible for a vested retirement allowance. A member who terminates employment prior to attaining retirement age and before vesting receives a refund of all member contributions and interest.

Early Service Retirement

Members of the LEOPS are not eligible for early service benefits.

Disability and Death Benefits

Generally, a member covered under retirement plan provisions who is permanently disabled after 5 years of service receives a service allowance based on a minimum percentage (usually 25%) of the member's AFC. A member covered under pension plan provisions who is permanently disabled after accumulating 5 years of eligibility service receives a service allowance computed as if service had continued with no change in salary until the retiree attained age 62. A member (other than a member of the Maryland General Assembly or a judge, both of whom are ineligible for accidental disability benefits) who is permanently and totally disabled as the result of an accident occurring in the line of duty receives 2/3 (66.7%) of the member's AFC plus an annuity based on all member contributions and interest. Death benefits are equal to a member's annual salary as of the date of death plus all member contributions and interest.

Adjustment Retirement Allowance (as applicable)

Retirement and pension allowances are increased annually for changes in the cost of living according to a prescribed formula. Such adjustments for retirees are based on the annual charge in the CPI. For the State Police Retirement System

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JUNE 30, 2017

retirees, prior to July 1, 2011, unlimited compounded COLAs are effective July 1 and are applied to all benefits which have been in payment for one year. With certain exceptions, effective July 1, 1998, for Law Enforcement Officers' Pension System retirees, the adjustment is capped at a maximum 4% compounded and is applied to all benefits which have been in payment for one year. The annual increases to pension allowances for Employee's Pension System retirees who were employed by a participating governmental unity that does not provide enhanced pension benefits are limited to 3% of the initial allowance.

Pension Liabilities, Pension Expense, and Deferred Outflow of Resources and Deferred Inflows of Resources Related Pensions

In relation to employees participating in the LEOPS, at June 30, 2017, the City reported a liability of $14,561,337 for its proportionate share of the net pension liability. The net pension liability was measured as of June 30, 2016 and the total pension liability used to calculate the nest pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability was based on a valuation as of that date. The City’s proportion of the net pension liability was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating governmental units, actuarially determined. At June 30, 2016, the City’s proportion was approximately 0.06172 percent. For the year ended June 30, 2017, the City recognized an increase in pension expense of $274,117. At June 30, 2017, the City reported deferred outflows of resources and deferred inflows of resources related to pension from the sources:

Deferred Outflows Deferred InflowsDifference between expected and actual experience -$ 324,612$ Changes of assumptions 460,526 - Change in proportion 2,146,090 -

Net difference between projected and actual earnings on pension plan investments 2,114,426 431,622 Change in proportion 1,055,177 -

Contributions subsequent to the measurement date 1,262,660 -

7,038,879$ 756,234$

The deferred outflow of resources of $460,526 due to changes in assumptions and deferred inflow of resources of $756,234 due to differences in projected and actual investment earnings represent the City’s proportionate share of the unamortized portions of the System’s original amounts, which are being amortized over a five-year period beginning in fiscal 2016. These unamortized amounts will be ratably recognized in pension expense over the next three years. The deferred outflow of

resources of $1,262,660 relating to contributions subsequent to the measurement date will be recognized as a reduction of 68


JUNE 30, 2017

the City’s net pension liability in the year ending June 30, 2017. Deferred financing inflows and outflows are made up of changes in actuarial assumption, differences in actual and expected experience and net difference in the projected and actual investment earnings. The deferred inflows and outflows related to non-investment activity are being amortized over the remaining service life of 5.87 years. These unamortized amounts will be ratably recognized in pension expense over these services’ lives and a closed five-year period. The net difference in investment earnings for 2016, 2015 and 2014 is being amortized over a closed five-year period. The following table shows the amortization of these deferred outflows and inflows:

Year End Deferred outflows Deferred inflows Deferred inflows Deferred outflows Deferred inflows

June 30,

Net Difference in

Investment

Earnings

Actual and

Expected

Experience

Net Difference

in Investment

Earnings

Change in

Assumptions

Actual and

Expected

Experience

Change in

Assumptions

Net Difference in

Investment

Earnings

2018 361,095 (32,796) 223,348 104,259 (42,653) 28,522 (215,811)

2019 361,095 (32,796) 223,348 104,259 (42,653) 28,522 (215,811)

2020 361,095 (32,796) 223,348 104,259 (42,654) - -

2021 361,095 (32,796) - 90,705 (37,108)

2022 - (28,359) - - - - -

1,444,382$ (159,543)$ 670,044$ 403,482$ (165,068)$ 57,044$ (431,622)$

2015 Balance Amortization 2014 Balance Amortization

Deferred outflows

2016 Balance Amortization

Net Pension Liability The components of the City’s proportion share of the Pension System’s net pension liability as of the measurement date

of June 30, 2016 were as follows:

Total Pension Liability 42,562,084 Plan Fiduciary Net Position 27,999,850 Net Pension Liability 14,561,337 Plan fiduciary net position as a percentage of total pension liability 65.79%

The Pension Plan Fiduciary

Plan Information as well as the Comprehensive Annual Financial Report of the year ended June 30, 2016 is available from:

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JUNE 30, 2017

State Retirement & Pension System of Maryland 120 East Baltimore Street Baltimore, MD 21202

www.sra.state.md.us

H. Deferred Compensation Plan - The City offers substantially all its employees a deferred compensation plan created inaccordance with IRC Section 457. The plan permits participating employees to defer a portion of their salaries untilfuture years. The deferred compensation is not available to employees until termination, retirement, death, orunforeseeable emergency.

I. Compensated Absences - Compensated absences at June 30, 2017, totaled $1,357,179 for governmental activities and$102,504 for business-type activities, of which $1,245,065 and $102,504, respectively were due within one year.

As part of the flexible benefit plan, all employees receive six non-accruable personal leave days each year instead ofaccruing sick leave. Current employees were offered the option of a buy-back of accrued sick leave if they transfer tothe personal leave benefit. Employees hired prior to July 1, 1988, and who elected to stay with the original sick leaveoption, accumulate sick leave at the rate of 1 1/4 days per month or 15 days a year. There is no restriction on the amountthat may be accumulated. However, no payment is made for the accumulated amount upon separation and no accruedliability is recorded. The total dollar value of accumulated sick leave at June 30, 2017, was $162,024.computed at the rates of pay as of that date.

J. Other Post-Employment Benefits (OPEB)

Plan Description

The City offers a single-employer post-employment health care plan, including prescription coverage, in addition to theretirement benefits described in Note F. Retirees are not eligible for coverage under the City’s vision and dental plans.All employees who retire from the City at or after age 55, plus have a number of years of service when combined with theage at retirement that equals the number 80, and have been covered under the City’s medical plan offered to activeemployees for at least the 12 months immediately preceding retirement, are eligible to receive post-employment healthcare benefits. The retiree pays 50 percent of the cost of premiums and the City pays 50 percent of the cost. Retireecoverage ends the first day of the month following the date the retiree becomes eligible for Medicare. The retiree’s spouse is also eligible for this coverage. If, at the time of retirement, the retiree has any dependents included in their health carepolicy, the dependents’ coverage will cease, but may be eligible for COBRA to continue health care benefits and mustpay 100% of the cost of the plan.

The City reserves the right to modify, amend, or terminate the plan at any time with or without notice.

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http://www.sra.state.md.us/


JUNE 30, 2017

No stand-alone financial statements are issued for this OPEB Plan. Basis of Accounting

The OPEB Plan’s financial information is prepared on the accrual basis of accounting. Expenditures are recognized on the accrual basis as retirees’ insurance costs are incurred. The total benefit for retirees at June 30, 2017 was $23,523.

Funding Policies and Funded Progress The OPEB Plan’s funding policy provides for the City to contribute to the plan the actuarially determined annual required

contribution (ARC). As of June 30, 2017 the actuarial accrued liability for benefits was $864,000, all of which was unfunded. The covered payroll (annual payroll of active employees covered by the plan) was $19,564,792, and the ratio of the unfunded actuarial accrued liability to the covered payroll was 4.4 percent. The City’s contributions are funded on a pay-as-you-go basis when retirees’ insurance costs are incurred.

The schedule of funding progress presented as required supplementary information (RSI) following the notes to basic

financial statements presents multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liability for benefits. The information presented relates to the plan as a whole and presents information relative to understanding the scale of the information as it relates to the City.

The required contribution amount and OPEB expense per the most recent actuarial valuation report with a valuation date

of July 1, 2017, is presented below: Water &

Total Police Other Sewer

Net OPEB Obligation (NOO) - June 30, 2016 851,603$ 377,013$ 414,060$ 60,530$

Annual OPEB Cost (AOC)

ARC 142,000 69,000 66,000 7,000

Adjustment to ARC (39,000) (19,000) (20,000) -

Interest on NOO at beg. of year 27,000 13,000 14,000 -

Total AOC 130,000 63,000 60,000 7,000

Contributions

Estimated pay-as-you-go costs (30,000) - (26,000) (4,000)

Pre-funding - - - -

TOTAL Contributions (30,000) - (26,000) (4,000)

Net OPEB Obligation (NOO) - June 30, 2017 951,603$ 440,013$ 448,060$ 63,530$

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JUNE 30, 2017

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2017 and the seven preceding years were as follows:

Fiscal Net

Year Annual Actual OPEB

Ended OPEB Cost Contribution Obligation

6/30/2010 114,287$ -$ 0.0% 222,603$

6/30/2011 121,000 4,684 3.9% 343,603

6/30/2012 131,000 - 0.0% 474,603

6/30/2013 77,000 - 0.0% 551,603

6/30/2014 80,000 6,491 8.1% 620,603

6/30/2015 139,000 14,977 10.8% 734,603

6/30/2016 149,000 6,486 4.4% 851,603

6/30/2017 130,000 23,523 18.1% 951,603

Annual OPEB

Percentage of

Cost Contributed

Actuarial Assumptions

The actuarial methods and significant assumptions used by the actuary are summarized in this note to conform to the disclosure requirements for GASB statements 43 and 45. Actuarial valuations involve estimates of the value of reported amounts and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates made about the future. The projection of benefits is based on the types of benefits provided under the substantive plan at the time of each valuation and on the pattern of sharing of benefit costs between the employer and plan members to that point. Actuarial calculations reflect a long-term perspective, and consistent with that perspective, actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities. Actuarial valuation date Actuarial cost method Amortization method Election rate Benefits not valued Actuarial trend assumption

October 1, 2016 Projected Unit Credit, with linear proration to assumed benefit commencement Closed. Liabilities amortized over a 22 year period as a level of percentage of payroll for FY2017. 50% of eligible retirees. COBRA, limited to 18 months by law. Medical and drug base trend rate applied to FY2017 is 5.40% and sensitivity trend rate applied to FY2017 is 6.4% These rates

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JUNE 30, 2017

Interest assumption Payroll growth Inflation rate

decrease in subsequent years, reaching a ultimate rate of 4% and 5% for the base trend rate, and the sensitivity trend rate. Discount rate of 3.5% 3.0% 2.4%

K. Long - Term Debt – The City issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds have been issued for governmental activities and are direct obligations and pledge the full faith and credit of the City. General obligation bonds currently outstanding are as follows:

Governmental Activities 1. 2009 Public Improvement Bonds – Original issue $15,500,000, issuance premium

$504,959, equal amounts of principal maturing each year, starting on July 1, 2010 until July 1, 2029, interest rates vary from 2% to 5% per annum payable on July 1 and January 1, total interest payable to maturity is $363,282, unamortized premium $68,531. $ 3,875,000

2. 2015 Public Improvement Refunding Bonds – Original issue $6,988,000, unequal amounts of principal maturing each year, starting on July 1, 2016 until July 1, 2029, interest rate of 2.2% per annum payable on July 1 and January 1, total interest payable to maturity is $1,324,686. 6,978,000 Total general obligation bonds $ 10,853,000

The City has obtained long-term financing with the State of Maryland for its business-type activities. The Water and Sewer enterprise fund entered into the State’s revolving loan program in order to modernize the City’s water and wastewater plants. The long–term loans are direct obligations and pledge the full faith and credit of the City. However, these revolving loans will be retired from revenues of the Water and Sewer enterprise fund.

State revolving loans outstanding as of June 30, 2017, are composed of the following issues: Business-type Activities 1. State Revolving Loan-Water Quality - Amount drawn $2,241,000; matures in twenty

level annual installments starting February 1, 2002; interest rate at 2.5% per annum payable on August 1 and February 1; total interest payable to maturity is $34,217. Administrative fees are 5.0% of total debt service, totaling $127,905 over the total loan period. $ 540,799 73


JUNE 30, 2017

2. State Revolving Loan-Drinking Water - Amount drawn $1,677,500; matures in twenty level annual installments starting February 1, 2002; interest rate at 2.5% per annum payable on August 1 and February 1; total interest payable to maturity is $25,614. Administrative fees are 5.0% of total debt service, totaling $96,784 over the total loan period. 404,814

3. State Revolving Loan-Water Quality – Amount drawn $1,773,466; matures in twenty level annual installments starting February 1, 2012; interest rate at 1% per annum payable on August 1 and February 1; total interest payable to maturity is $89,134. Administrative fees are 5.0% of total debt service, totaling $88,540 over the total loan period. 1,248,498

4. State Revolving Loan-Water Quality – Amount drawn $140,099; matures in twenty level annual installments starting February 1, 2017; interest rate at 1.4% per annum payable on August 1 and February 1; total interest payable to maturity is $16,952. Administrative fees are 5.0% of total debt service, totaling $8,517 over the total loan period. 132,901 Total State revolving loans $2,327,012

Annual debt service requirements to maturity for general obligation bonds and State revolving loans are as follows. Fiscal

Year Principal Interest Principal Interest

2018 795,000 283,109 325,428 38,222

2019 805,000 251,559 332,128 31,288

2020 873,000 224,963 338,980 24,435

2021 875,000 194,691 345,988 17,425

2022 877,000 162,438 101,796 10,258

2023-2027 4,241,000 493,075 524,934 35,335

2028-2032 2,387,000 78,133 345,736 8,743

2033-2034 - - 12,022 211

Total 10,853,000$ 1,687,968$ 2,327,012$ 165,917$

Business-type ActivitiesGovernmental Activities

Bond premiums are amortized over the life of the debt. The annual amortization of bond premiums for Public Improvement Bonds of 2009 is as follows:

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JUNE 30, 2017

Fiscal

Year

Amortized Bond

Premium

2018 16,447

2019 15,076

2020 13,706

2021 12,335

2020 10,966

Total 68,531$

Changes in long-term liabilities – Long-term liability activity for the year ended June 30, 2017, was as follows:

Net Remaining

Amortization Unamortized

Balance as of of Bond Balance as of Bond Premium Due within

June 30, 2016 Increases Decreases Premium June 30, 2017 June 30, 2017 one year


General obligation bonds 11,724,348$ (785,000)$ (17,818)$ 10,921,530$ 68,530$ 795,000$

OPEB liability 791,703 97,000 - - 888,703 - -

Pension liability 10,143,071 4,418,266 - - 14,561,337 - -

Compensated absences 1,281,403 1,232,362 (1,156,586) - 1,357,179 - 1,245,065

Total Governmental activities 23,940,525$ 5,747,628$ (1,941,586)$ (17,818)$ 27,728,749$ 68,530$ 2,040,065$


State revolving loans 2,505,792$ 140,099$ (318,878)$ -$ 2,327,013$ -$ 325,428$

OPEB liability 60,530 3,000 - - 63,530 - -

Compensated absences 93,698 119,264 (110,458) - 102,504 - 102,504

Total Business-type activities 2,660,020$ 262,363$ (429,336)$ -$ 2,493,047$ -$ 427,932$

The liabilities for governmental activities are liquidated by the general fund, while liabilities for business-type activities are liquidated by the water and sewer fund.

L. Legal Debt Margin - Neither Maryland State law nor the City Charter mandate a limit on municipal debt. The City Counciladopted a policy to limit debt, exclusive of amounts being repaid by the Water and Sewer System, to 0.8 percent ofassessed value of taxable property. At June 30, assessed value of such property totaled $6,681,707,501, the debt limitwas $53,453,660 and the amount of debt applicable to the limit was $10,921,530, or approximately 20.4% of the debtlimit. The debt policy also states that the ratio of debt service expenditures as a percentage of general fund revenues,

75


JUNE 30, 2017

exclusive of debt repaid by the Water and Sewer Fund, shall not exceed 10 percent. In FY2017, the ratio of debt service expenditures, totaling $1,102,459, as a percentage of general fund revenues, totaling $49,250,648, was 2.2 percent.

M. Rental Income – The operation of the City’s golf course has been contracted to outside operators since September 30,

1981. The term of the current contract is twenty-eight years, commencing January 15, 1993, and expiring September 30, 2021. Due to years of declining revenue, on March 20, 2017 the City agreed with lessee to forego the remaining 43 months of rent payments for the remaining term of the lease. The financial impact to the City will total $272,000.

N. Rental Income - Tower Leases – The City has entered into water tower lease agreements with various cellular phone

companies commencing on varying dates in which the leases allow for the placement of cellular antennas and panels on the City’s water tower. In addition to the initial five-year lease term for each lease, each lease allows for three five- year renewal periods to be renewed at the discretion of the lessee in which the leasing period, base rent, and annual rent increase varies for each cellular phone company that has an established water tower lease agreement with the City. During fiscal year 2017, the City collected $223,644 from the water tower leases. The following schedule presents a summary of the minimum future tower lease income.

Fiscal Year2018 223,847$ 2019 195,095 2020 144,108 2021 5,876 2022 -

Total 568,926$

Tower Lease Income

4. Risk Management

On July 1, 1987, the City joined the Local Government Insurance Trust (LGIT) sponsored by the Maryland Municipal League (MML) and the Maryland Association of Counties. The LGIT is a self-insurance pool offering General Liability, Excess Liability, Business Auto Liability, Police Legal Liability, and Public Official Liability.

LGIT is capitalized at an actuarially determined level to provide financial stability for its local government members and to reduce the possibility of assessments. The Trust is owned by the participating cities and counties and managed by a Board of Trustees elected by the members. Annual premiums are assessed for the various policy coverages. During fiscal year 2017, the City paid premiums of $380,959 to the trust.

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JUNE 30, 2017

5. Interfund Transfers

Interfund transfers for the year ended June 30, 2017, consisted of the following:

Transfer to General Fund from Water and Sewer Fund $ 437,000 Transfer to Equipment Acquisition and Replacement Fund from General Fund 1,247,600 Transfer to Capital Projects Fund from General Fund 2,395,000

Transfers are used to (1) move revenues from the fund whose budget requires to collect them to the fund whose budget requires to expend them, or (2) move unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations.

6. Summary Disclosure of Significant Contingencies and Commitments

A. The City is party to legal proceedings which normally occur in governmental operations. The legal proceedings are not, in the opinion of the City Attorney, likely to have a material, adverse impact on the financial position of the City as a whole.

B. The City receives financial assistance from the U.S. Government and the State of Maryland in the form of grants. Entitlement to grant resources is generally conditioned upon compliance with terms and conditions of the grant agreements and applicable Federal and State regulations, including the expenditure of the resources for eligible purposes. Some grants are subject to financial and compliance audits in accordance with the grantor’s requirements. Any disallowances as a result of these audits become a liability of the City. As of June 30, 2017, the City estimates that no material liabilities will result from such audits.

7. New Governmental Accounting Standards Board

The Governmental Accounting Standards Board (GASB) has issued several pronouncements prior to the year ended June

30, 2017.

During this fiscal year management implemented the following GASB statements.

77

• GASB Statement No. 75, "Accounting and Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans," will be effective for the City beginning with its year ending June 30, 2017. This Statement replaces the requirements of Statements No. 45, "Accounting and Financial Reporting by Employers for Postemployment Benefits Other Than Pensions," as amended, and No. 57, "OPEB Measurements by Agent Employers and Agent Multiple-Employer Plans," for OPEB.


JUNE 30, 2017

• GASB Statement No. 77 “Tax Abatements Disclosures” is effective for the City beginning with its year ending June 30,2017. This Statement requires governments that enter into tax abatement agreements to disclose information aboutthe agreement. The note disclosure should provide a brief description of the tax being abated, the gross dollar amountand other commitments made by the City related to the tax abatement agreement.

• GASB Statement No. 82, “Pension Issues”, will be effective for the City beginning with the fiscal year ending June 30,2017. This Statement amends certain provisions of GASB Statements No. 67, 68, and 73 as they relate to the disclosureof pension obligations.

8. Subsequent Events

Events that occur after the balance sheet date but before the financial statements were available to be issued must be evaluated for recognition or disclosure. The effects of subsequent events that provide evidence about conditions that existed at the balance sheet date are recognized in the accompanying financial statements. Subsequent events which provide evidence about conditions that existed after the balance sheet date require disclosure in the accompanying notes. Management evaluated the activity of the City through November 30, 2017 (the date the financial statements were available to be issued) and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements.

78

REQUIRED SUPPLEMENTARY INFORMATION


Schedule of Funding Progress

for the Retiree Health Plan

Schedule of funding progress (unaudited) for the City's Post-employment Benefits Plan for the prior nine years (GASBS

Statement No. 45 was implemented in the year ended June 30, 2009):

Actuarial

Actuarial Accrued

Actuarial Value of Liability (AAL) Unfunded AAL Covered

Valuation Assets Projected unit credit (UAAL) Payroll

Date (a) (b) (b - a) (c)

5/15/2009 -$ 568,000$ 568,000$ 0.0% 14,174,381$ 4.0%

5/15/2010 - 589,037 589,037 0.0 14,613,277 4.0

7/1/2010 - 604,000 604,000 0.0 15,379,282 3.9

7/1/2011 - 725,000 725,000 0.0 15,717,911 4.6

7/1/2012 - 463,000 463,000 0.0 16,387,864 2.8

7/1/2013 - 528,000 528,000 0.0 16,334,165 3.2

7/1/2014 - 925,000 925,000 0.0 17,147,148 5.4

7/1/2015 - 1,036,000 1,036,000 0.0 18,476,781 5.6

7/1/2016 - 864,000 864,000 0.0 19,564,729 4.4

Funded

Ratio

(a / b)

UAAL as a

Percentage

of Covered

Payroll

[(b - a)/ c]

80

CITY OF BOWIE, MARYLANDSchedule of Pension Plan Contributions

Last Ten Fiscal Years(amounts expressed in thousands)

Schedule of pension plan contributions (unaudited) for the City's Pension Plan for the prior nine years (GASB 68 was implemented in the year ended June 30, 2015):

Fiscal Year

2017 2016 2015 2014 2013 2012 2011 2010 2009 2008

1,263$ 1,202$ 1,029$ 1,036$ 835$ 851$ 820$ 648$ 510$ 275$

1,263 1,202 1,029 1,036 835 851 820 648 510 275

-$ -$ -$ -$ -$ -$ -$ -$ -$ -$

4,261 4,462 3,540 3,233 3,126 2,696 2,310 2,106 1,614 878

Contractually required contribution

Contribution in relation to the contractually required contribution

Contribution deficiency (excess)

Covered payroll

All other governmental funds

Contributions as a percentage of covered payroll 29.64% 26.94% 29.07% 32.04% 26.71% 31.57% 35.50% 30.77% 31.60% 31.32%

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CITY OF BOWIE, MARYLANDSchedule of the City's Proportionate Share of the Net Pension Liability

FY2017 FY2016 FY2015

0.0617% 0.0488% 0.4440%14,561,335$ 10,143,071$ 7,886,652$

4,260,502$ 4,462,479$ 3,539,627$

29.2590% 43.9953% 44.8812%

City's proportion (%) of collective net pension liabilityCity's proportionate share ($) of collective net pension liabilityCity's covered payroll ($)City's covered payroll as a percentage of city's proportionate share of pension liability.

Pension plan's fiduciary net position as a percentage of the total pension liability 65.79% 68.78% 71.87%

The above schedule is presented to illustrate the requirement for specified information for 10 years. However, until a full 10-year trend is compiled, information is only presented for those years for which information is available.

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Budgetary Comparison Schedule (Non-GAAP Budgetary Basis)

General Fund


(Page 1 of 2)

Variance with

Final Budget

Original Final Positive

Budget Budget Actual (Negative)

Revenues:

Taxes 27,973,600$ 27,973,600$ 28,141,512$ 167,912$

Licenses and permits 418,900 418,900 439,242 20,342

Intergovernmental revenues 13,219,400 13,219,400 15,100,181 1,880,781

Fees and fines 4,052,600 4,052,600 3,730,367 (322,233)

Contributions 140,900 140,900 157,406 16,506

Interest income 129,700 129,700 329,203 199,503

Rental income 498,100 498,100 537,955 39,855

Other revenues 273,300 273,300 376,561 103,261

Total Revenues 46,706,500 46,706,500 48,812,427 2,105,927

Expenditures and encumbrances:

General Government

City Council 308,200 327,500 306,224 21,276

City Manager 1,581,300 1,581,300 1,266,732 314,568

Human Resources 533,200 533,200 480,831 52,369

Elections 1,000 1,000 - 1,000

Legal Services 210,000 210,000 150,461 59,539

Public Information 2,101,900 2,101,900 772,537 1,329,363

City Clerk 133,200 133,200 125,129 8,071

Finance 983,700 983,700 953,065 30,635

Information Technology 2,341,000 2,341,000 1,740,133 600,867

Community Services 596,100 596,100 627,966 (31,866)

Kenhill Center 216,200 216,200 148,420 67,780

Public Buildings and Grounds 876,700 876,700 871,326 5,374

Planning 674,200 674,200 629,140 45,060

Total General Government 10,556,700 10,576,000 8,071,964 2,504,036

Economic Development 499,000 499,000 481,111 17,889

Public Safety

Housing Inspection and Code Compliance 765,300 765,300 679,449 85,851

Emergency Management 433,700 433,700 168,850 264,850

Police Department 11,151,300 11,151,300 10,737,779 413,521

Animal and Disease Control 299,500 299,500 260,190 39,310

Total Public Safety 12,649,800 12,649,800 11,846,268 803,532

Social Services

Senior Citizen Services 1,273,600 1,273,600 1,112,839 160,761

Youth Services Bureau 1,111,500 1,111,500 1,113,172 (1,672)

Total Social Services 2,385,100$ 2,385,100$ 2,226,011$ 159,089$

(Continued)

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Budgetary Comparison Schedule (Non-GAAP Budgetary Basis)

General Fund


(Page 2 of 2)

Variance with

Final Budget



Public Works

Administrative 1,545,900$ 1,545,900$ 1,373,758$ 172,142$

Equipment Maintenance and Garage 968,700 968,700 732,615 236,085

Solid Waste 5,850,900 5,850,900 5,348,978 501,922

Street Maintenance 5,451,500 5,451,500 5,157,145 294,355

Stormwater Management 460,000 463,200 414,724 48,476

Total Public Works 14,277,000 14,280,200 13,027,220 1,252,980

Parks, Culture and Recreation

Recreation 1,256,600 1,256,600 1,106,226 150,374

Bowie Playhouse 164,400 165,400 178,277 (12,877)

Parks and Grounds 3,180,100 3,180,100 3,151,126 28,974

Ice Arena 972,200 972,200 952,878 19,322

Historic Properties and Museums 722,700 722,700 578,020 144,680

Gymnasium 665,800 665,800 624,460 41,340

Total Parks, Culture and Recreation 6,961,800 6,962,800 6,590,987 371,813

Debt Service 1,104,400 1,104,400 1,102,459 1,941

Nondepartmental 739,200 715,700 342,859 372,841

Total expenditures and encumbrances 49,173,000 49,173,000 43,688,879 5,484,121

Excess of revenues over expenditures (2,466,500) (2,466,500) 5,123,548 7,590,048


Sale of capital assets - - 1,221 (1,221)

Transfers in 437,000 437,000 437,000 -

Transfers out (3,643,200) (3,643,200) (3,643,200) -

Total other financing sources (uses) (3,206,200) (3,206,200) (3,204,979) (1,221)

Net change in fund balance (5,672,700) (5,672,700) 1,918,569 7,591,269

Fund balance - beginning 39,361,979 39,361,979 39,361,979 -

Fund balance - ending 33,689,279$ 33,689,279$ 41,280,548 7,591,269$

Adjustments to reconcile to GAAP basis:

Addition of encumbrances outstanding 431,534

Less prior year encumbrances expended in current year (559,337)

Fund balance - June 30, 2017 (GAAP basis) 41,152,745$

84

CITY OF BOWIE, MARYLAND NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2017

A. Budgetary information - The annual operating budgets are plans of current expenditures and the proposed means of financing them. The primary means by which most of the financing, acquisition, spending, and service delivery activities of the governmental unit are legally controlled is through the annual operating budget. The City of Bowie prepares an annual operating budget for each fund. The budgets are prepared on a line-item basis by function, activity and object. The City’s fiscal year begins on July 1 and ends on June 30. The following procedures are followed in establishing the budgetary data reflected in the financial statements:

Prior to April 15, a 6-year Capital Improvements Program is submitted by the City Manager to the City Council for adoption. Public hearings are held regarding the programs and adoption, via resolution, is made by the Council for those programs.

By the fifteenth of April, the City Manager submits to the City Council a proposed operating budget. The operating budget includes proposed expenditures, including those expenditures for the Capital Improvements Program approved for the ensuing year, and the estimated revenues by which the expenditures are to be financed.

Public hearings are conducted for taxpayers’ input regarding the proposed operating budget.

A favorable vote by a majority of the elected members of the Council is necessary to adopt, as an ordinance, the operating budget at the activity level.

Budgetary integration is used as a management control for all funds. Council approval is required, by ordinance, to increase the budgeted appropriations or the transfer of appropriations between activities. One supplemental appropriation ordinance and one transfer ordinance were required this year.

Expenditures may not legally exceed budgeted appropriations at the activity level.

All appropriations, not expended or lawfully encumbered, lapse at the end of the budget year and are available to fund appropriations in the subsequent year.

The making of contracts, or the spending of monies for capital improvements financed in whole or in part by bond proceeds, or the making of contracts for leases or services that extend beyond the budget year in which the contract is made, is expressly authorized.

85

CITY OF BOWIE, MARYLAND NOTES TO REQUIRED SUPPLEMENTARY INFORMATION

JUNE 30, 2017

B. An encumbrance system is used in the governmental fund type of accounts. This method is employed to reserve the applicable appropriations for those expenditure commitments resulting from approved contracts or purchase orders that have not been performed or received by the end of the budget year. All encumbrances outstanding at year-end are recorded as a reservation of fund balance and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year.

C. For the year ended June 30, 2017, expenditures exceeded appropriations in the following activity (the legal level of budgetary control) of the general fund by the following amounts:

Activity Amount Community Services $31,866 Youth Services 1,672 Bowie Playhouse 12,877

This over-expenditure was funded by unexpended appropriations from the remaining activities within each respective area of the general fund.

D. The City’s financial statements are prepared in accordance with all applicable legal requirements, which, if inconsistent with generally

accepted accounting principles, are shown on separate schedules. There are no known violations of grant assurances or compliance procedures.

E. The City Code requires the adoption of an annual operating budget for each City fund, including the proprietary funds.

F. The Statement of Revenues, Expenditures and Changes in Fund Balances for the Governmental Funds is prepared on a basis consistent with generally accepted accounting principles under which method encumbrances are considered a commitment or assignment of fund balance and charged to operations in the year liquidated. All intergovernmental revenues applicable to these encumbrances are recorded as unearned for the current period and earned for the subsequent period in which the commitment or assignment of fund balance is liquidated.

G. The Budgetary Comparison Schedule for the General Fund and the Schedule of Revenues, Expenditures and Encumbrances and

Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual – for the Equipment Acquisition and Replacement, and Capital Projects Fund were prepared on a basis consistent with the legally adopted budget. Under this method current-year encumbrances outstanding are charged to budgetary appropriations and considered an expenditure of the current period.

86


Fund Descriptions

MAJOR GOVERNMENTAL FUNDS

GENERAL FUND

This fund accounts for all revenues and expenditures that are not accounted for in other funds. It is the largest and most important accounting

activity. It receives a great variety of general revenues and finances a wide range of programs. Most of the City's operation is

financed from this fund.

EQUIPMENT ACQUISITION AND REPLACEMENT FUND

This fund was established by Ordinance Number 5-79, passed by the Council on June 4, 1979. It receives amounts transferred from other funds,

not only to acquire and replace equipment during the current year, but to accumulate amounts appropriated each year to replace equipment

scheduled for replacement in future years.

CAPITAL PROJECTS FUND

The fund was established to account for all resources used for the acquisition of capital facilities by the City except those financed by enterprise

funds. Capital Projects are those capital outlays that involve the acquisition and/or construction of major, permanent facilities having a

relatively long life.

PROPRIETARY FUNDS

WATER AND SEWER

FUND

This fund is operated to account for the activities of the Water and Sewer System. It is classified as an enterprise fund rendering services on a

user-charge basis. The system should be a self-supporting entity and the accounting must make it possible to show whether it operated at a

profit or loss.

87


Schedule of Revenues, Expenditures and Encumbrances

and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual

Equipment Acquisition and Replacement Fund


Variance with

Final Budget



Revenues:

Interest income 19,700$ 19,700$ 47,220$ 27,520$

Total Revenue 19,700 19,700 47,220 27,520


General Government

City Council 41,800 41,800 - 41,800

Information Technology 374,000 374,000 274,899 99,101

Public Buildings and Grounds 25,000 25,000 12,627 12,373

Total General Government 440,800 440,800 287,526 153,274

Public Safety

Police Department 377,700 377,700 365,443 12,257

Total Public Safety 377,700 377,700 365,443 12,257

Social Services

Senior Services 150,000 150,000 149,080 920

Total Senior Services 150,000 150,000 149,080 920

Public Works

Solid Waste Division 354,700 374,200 374,146 54

Street Maintenance Division 688,000 693,500 693,458 42

Total Public Works 1,042,700 1,067,700 1,067,604 96

Parks, Culture and Recreation

Parks and Recreations 44,000 44,000 41,993 2,007

Parks and Grounds 251,800 251,800 247,322 4,478

Total Parks, Culture and Recreation 295,800 295,800 289,315 6,485

Total expenditures and encumbrances 2,307,000 2,332,000 2,158,968 173,032

Excess of revenues over expenditures (2,287,300) (2,312,300) (2,111,748) 200,552


Sale of Capital Assets 75,000 75,000 184,159 109,159

Transfers in 1,247,600 1,247,600 1,247,600 -

Total other financing sources (uses) 1,322,600 1,322,600 1,431,759 109,159

Net change in fund balance (964,700) (989,700) (679,989) 309,711


Fund balance - ending 7,322,345$ 7,297,345$ 7,607,056 309,711$


Addition of encumbrances outstanding 12,627

Less prior-year encumbrances expended in current year (151,499)


88


Schedule of Revenues, Expenditures and Encumbrances

and Changes in Fund Balance - Budget (Non-GAAP Budgetary Basis) and Actual

Capital Projects Fund


Variance with

Final Budget


Budget Actual (Negative)

Revenues:

Intergovernmental revenues 1,499,500$ 1,499,500$ 241,512$ (1,257,988)$

Contributions - - 45,000 45,000

Interest income 37,500 37,500 64,117 26,617

Total revenues 1,537,000 1,537,000 350,629 (1,186,371)


Capital outlay:

Land Acquisition 1,190,700 694,300 77,300 617,000

Public Buildings 4,513,300 4,600,000 3,298,466 1,301,534

Drainage Control 1,010,000 1,393,700 1,180,655 213,045

Recreation Areas Development 2,092,400 2,118,400 913,272 1,205,128

Total expenditures and encumbrances 8,806,400 8,806,400 5,469,693 3,336,707

Deficiency of revenues under expenditures (7,269,400) (7,269,400) (5,119,064) 2,150,336

Other financing sources (uses)

Transfers in 2,395,600 2,395,600 2,395,600 -

Total other financing sources and uses 2,395,600 2,395,600 2,395,600 -

Net change in fund balance (4,873,800) (4,873,800) (2,723,464) 2,150,336


Fund balance - ending 6,315,457$ 6,315,457$ 8,465,793 2,150,336$


Addition of encumbrances outstanding 4,535,132

Less prior-year encumbrances expended in current year (439,343)


89


Schedule of Revenues, Expenses and Other Financing Sources (Uses) - Budget (Non-GAAP Budgetary Basis) and Actual

Water and Sewer Fund

For the Year Ended June 30, 2017Variance with

Final Budget



Revenues:

Water sales and sewerage surcharge 5,246,000$ 5,246,000$ 4,984,344$ (261,656)$

Minimum charges 1,035,500 1,035,500 1,011,790 (23,710)

Forfeited discounts and penalties 20,000 20,000 20,964 964

Processing fees 12,000 12,000 15,300 3,300

Interest income 4,800 4,800 14,740 9,940

Rental income - tower leases 240,900 240,900 245,929 5,029

Intergovernmental 55,000 55,000 - (55,000)

Other income 52,800 52,800 57,778 4,978

Total revenues 6,667,000 6,667,000 6,350,845 (316,155)

Expenses:

Water Supply 2,890,600 2,890,600 2,661,639 228,961

Sewage treatment 3,216,400 3,216,400 2,299,137 917,263

Administrative and general 462,400 468,500 442,029 26,471

Miscellaneous 185,200 179,100 89,726 89,374

Debt service 381,000 381,000 377,509 3,491

Total expenses 7,135,600 7,135,600 5,870,040 1,265,560

Excess (deficiency) of revenues over expenses (468,600) (468,600) 480,805 949,405


Sales of capital assets 5,000 5,000 80,000 75,000

Transfers out (437,000) (437,000) (437,000) -

Total other financing sources (uses) (432,000) (432,000) (357,000) 75,000

Net change in net positon (900,600) (900,600) 123,805 1,024,405

Net Position - beginning 22,395,959 22,395,959 22,395,959 -

Net Position - ending 21,495,359$ 21,495,359$ 22,519,764 1,024,405$


Addition of capital assets acquired in current year 789,241

Addition of principal payments on debt 318,878

Less depreciation expense (1,206,116)

Net Position - June 30, 2017 (GAAP basis) 22,421,767$

90

SECTION III – STATISTICAL SECTION

STATISTICAL SECTION The Statistical Section presents detailed information for the primary government in the following areas, as a context for understanding what the information in the Financial Section says about the City’s overall financial health:

FINANCIAL TRENDS – Information to help the reader understand how the City’s financial performance and well-being have changed over time. REVENUE CAPACITY – Information to help the reader assess the City’s most significant local revenue source, the property tax. DEBT CAPACITY – Information to help the reader assess the affordability of the City’s current levels of outstanding debt and the City’s ability to issue additional debt in the future. DEMOGRAPHIC AND ECONOMIC INFORMATION – Indicators to help the reader understand how the environment within which the city’s financial activities take place. OPERATING INFORMATION – Service and infrastructure data to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs.

Many of the tables cover more than two fiscal years and present data from outside accounting records. Therefore, the Statistical Section is unaudited. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement No. 34 in 2003; schedules presenting government-wide information include information beginning that year.

92


Net Position by Component

Last Ten Fiscal Years

(accrual basis of accounting)

(amounts expressed in thousands)

Restated Restated2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Governmental activities

Net investment in capital assets 67,500$ 70,545$ 72,183$ 74,601$ 77,300$ 1 78,738$ 79,417$ 2 81,372$ 81,228$ 82,259$ Restricted - - 11,866 - - - - - - Unrestricted 37,892 39,712 30,379 48,111 50,371 47,084 47,084 49,303 50,997 52,975

Total Governmental activities net position 105,392$ 110,257$ 114,428$ 122,712$ 127,671$ 125,822$ 126,501$ 130,675$ 132,225$ 135,234$

Business type activities Net investment in capital assets 13,245$ 13,042$ 19,652$ 20,859$ 20,289$ 19,884$ 19,572$ 19,311$ 19,386$ 19,303$ Restricted - - - - - - - - - Unrestricted 1,436 1,263 - 659 1,782 2,293 2,657 2,669 3,010 3,119

Total business type activities net position 14,681$ 14,305$ 19,652$ 21,518$ 22,071$ 22,177$ 22,229$ 21,980$ 22,396$ 22,422$

Primary Government Net investment in capital assets 80,745$ 83,587$ 91,835$ 95,460$ 97,589$ 98,622$ 98,989$ 100,683$ 100,614$ 101,562$ Restricted - - 11,866 - - - - - - - Unrestricted 39,328 40,975 30,379 48,770 52,153 49,377 49,741 51,972 54,007 56,094

Total primary governmental net position 120,073$ 124,562$ 134,080$ 144,230$ 149,742$ 147,999$ 148,730$ 152,655$ 154,621$ 157,656$

1 Restatement of Unrestricted Net Position as per GASB 65, for bond issuance cost previously reported as an asset.

2 Restatement of Net Position as per GASB 68, for pension liability and to correct accounting error for unrecorded depreciation.

93

CITY OF BOWIE, MARYLANDChanges in Net Position

Last Ten Fiscal Years(accrual basis of accounting)


Restated Restated

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017Expenses:Governmental activities: General government 6,441$ 6,887$ 6,968$ 7,899$ 8,490$ 1 8,733$ 8,554$ 9,215$ 9,490$ 9,833$ Economic development 273 327 315 263 315 317 355 367 1,071 471 Public safety 4,218 5,752 7,093 8,637 8,820 9,808 17,236 2 9,820 11,825 12,974 Social services 1,716 1,786 1,882 1,931 1,985 1,972 1,994 2,077 2,194 2,307 Public works 11,107 11,091 12,294 11,496 12,001 10,813 13,267 2 12,021 12,736 13,133 Parks, culture and recreation 5,716 5,970 6,243 6,272 6,192 6,537 6,907 7,085 7,665 7,870 Interest on long term debt - - 502 519 633 477 460 424 109 337 Total government activities expenses 29,471 31,813 35,297 37,017 38,436 38,657 48,773 41,009 45,090 46,925

Business-type activities

Water and wastewater 4,540 4,809 4,940 5,001 5,131 5,068 5,333 5,861 5,467 5,968

Total primary governmental expenses 34,011$ 36,622$ 40,237$ 42,018$ 43,567$ 43,725$ 54,106$ 46,870$ 50,557$ 52,893$

Program RevenuesGovernmental activities Charges for services: General government 110$ 166$ 168$ 190$ 215$ 252$ 292$ 343$ 374$ 409$ Economic development - - - - - - - - - - Public safety 218 254 313 2,881 3,100 1,826 1,362 1,346 1,164 1,017 Social services 3 4 3 5 26 22 24 26 30 30 Public works 172 253 122 125 274 158 161 125 214 118 Park, culture and recreation 1,090 1,025 1,061 1,108 1,180 1,433 1,250 1,204 1,209 1,171 Operating grants and contributions 687 775 1,090 1,286 1,312 1,678 1,037 1,300 1,641 1,400

Capital grants and contributions 412 528 2,312 1,041 236 1,005 289 413 419 242

Total government activities program revenues 2,692 3,005 5,069 6,636 6,343 6,374 4,415 4,757 5,051 4,387

Business-type activities

Charges for services

Water and wastewater 4,530 4,679 4,722 4,910 5,115 5,120 5,411 5,687 5,866 6,170

Capital grants and contributions 726 74 5,669 2,038 656 59 - - 68 -

Total primary governmental program revenues 7,948$ 7,758$ 15,460$ 13,584$ 12,114$ 11,553$ 9,826$ 10,444$ 10,985$ 10,557$

Net (expenses)\revenueGovernmental activities (26,779)$ (28,808)$ (30,228)$ (30,381)$ (32,093)$ (32,283)$ (44,358)$ (36,252)$ (40,039)$ (42,538)$

Business-type activities 716 (56) 5,451 1,947 640 111 78 (174) 467 202

Total primary government net expenses (26,063)$ (28,864)$ (24,777)$ (28,434)$ (31,453)$ (32,172)$ (44,280)$ (36,426)$ (39,572)$ (42,336)$

94

CITY OF BOWIE, MARYLANDChanges in Net Position

Last Ten Fiscal Years(accrual basis of accounting)


Restated Restated

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017General Revenues and Other Changes in Net Position

Governmental activities: Taxes Property taxes 18,948$ 22,498$ 24,243$ 26,689$ 24,911$ 25,122$ 25,657$ 26,254$ 26,970$ 28,142$ Income taxes 6,380 5,379 6,745 8,360 8,015 7,530 8,424 8,992 9,155 11,270 State shared revenues 2,841 2,532 304 229 681 975 2,043 2,033 2,174 2,348 Other taxes 1,054 1,039 971 951 1,039 294 283 321 447 431 Franchise fees 1,059 1,127 1,281 1,428 1,557 1,734 1,805 1,895 1,942 1,991 Grants not restricted to specific programs - - - - - - - - - Unrestricted Investment earnings 1,397 510 146 91 54 105 113 92 200 441 Special Item - Proceeds from land sale easement - - - - - - - - - Miscellaneous 251 248 356 554 434 351 405 482 295 487

Transfers 330 340 353 364 361 296 334 357 407 437

Total government activities 32,260 33,673 34,399 38,666 37,052 36,407 39,064 40,426 41,590 45,547

Business-type activities Unrestricted Investment earnings 59 19 2 1 1 2 1 1 6 15 Miscellaneous - - 247 281 273 289 307 281 349 246

Transfers (330) (340) (353) (364) (361) (296) (334) (356) (407) (437)

Total business-type activities (271) (321) (104) (82) (87) (5) (26) (74) (52) (176)

Total primary government 31,989$ 33,352$ 34,295$ 38,584$ 36,965$ 36,402$ 39,038$ 40,352$ 41,538$ 45,371$

Change in Net PositionGovernmental activities 5,481$ 4,865$ 4,171$ 8,285$ 4,959$ 4,124$ (5,294)$ 4,174$ 1,551$ 3,009$

Business-type activities 445 (377) 5,347 1,865 553 106 52 (248) 415 26

Total primary government 5,926$ 4,488$ 9,518$ 10,150$ 5,512$ 4,230$ (5,242)$ 3,926$ 1,966$ 3,035$


2 Restatement of Net Position as per GASB 68, for pension liability and to correct accounting error for unrecorded depreciation.

95

CITY OF BOWIE

Fund Balances of Governmental Funds

Last Ten Fiscal Years

(modified accrual basis of accounting)


Fiscal Year

Restated Restated

2008 2009 2010 2011 1 2012 2013 2014 2015 2016 2017General fund Reserved 250$ 296$ 495$ -$ -$ -$ -$ -$ -$ -$ Unreserved 21,950 25,985 27,715 - - - - - - -

Nonspendable - - - 413 193 195 220 216 298 735 Committed - - - 1,916 2,745 3,038 3,904 4,658 4,998 5,286 Assigned - - - 1,299 1,656 478 3,283 5,165 5,903 5,802

Unassigned - - - 28,989 31,084 2 34,470 23,042 3 29,739 28,163 29,330 Total general fund 22,200$ 26,281$ 28,210$ 32,617$ 35,678$ 38,181$ 30,449$ 39,778$ 39,362$ 41,153$

All other governmental funds Reserved 3,139$ 2,723$ 13,120$ -$ -$ -$ -$ -$ -$ -$ Unreserved reported in: Equipment Acquisition and Replacement fund 4,712 4,520 5,682 - - - - - - - Capital Projects fund 6,599 6,049 8,005 - - - - - - -

Committed - - - 4,169 2,863 2,213 2,917 2,548 2,914 7,262 Assigned - - - 10,996 11,865 13,734 13,486 15,109 16,562 12,768

Total all other governmental funds 14,450$ 13,292$ 26,807$ 15,165$ 14,728$ 15,947$ 16,403$ 17,657$ 19,476$ 20,030$

1The City of Bowie implemented GASB Statement No. 54 in FY2011. The new classifications of fund balance under GASB Statement No. 54 were not retroactively applied to prior reporting periods.


3Restatement of Net Position as per GASB 68, for pension liability and to correct accounting error for unrecorded depreciation.

96


CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

LAST TEN FISCAL YEARS

(modified accrual basis of accounting)


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

REVENUES

Taxes 19,927$ 23,461$ 25,147$ 27,571$ 25,874$ 25,936$ 26,446$ 26,254$ 26,970$ 28,141$

License and permits 364 474 347 350 482 434 433 431 524 439

Intergovernmental revenues 10,165 10,017 9,989 10,287 10,257 11,160 11,001 12,239 13,648 15,342

Fees and fines 2,036 2,017 2,306 5,040 5,455 4,303 3,946 4,005 3,896 3,730

Contributions 120 123 322 174 159 392 157 153 153 202

Interest income 1,479 609 233 154 123 105 114 92 200 441

Rental income 254 340 302 339 387 438 483 509 537 538

Other revenues 255 182 326 548 373 346 416 448 313 377

TOTAL REVENUES 34,600 37,223 38,972 44,463 43,110 43,114 42,996 44,131 46,241 49,210

EXPENDITURES

Current:

General government 5,497 5,912 5,957 6,682 6,670 6,800 6,689 7,360 7,545 7,890

Economic development 271 327 314 262 315 317 353 370 1,070 470

Public safety 3,882 5,298 6,296 7,854 8,338 8,266 9,007 9,322 10,655 11,838

Social services 1,693 1,747 1,842 1,883 1,938 1,941 1,949 2,011 2,170 2,226

Public works 11,212 11,179 12,003 11,521 11,868 11,865 13,362 12,435 12,480 13,157

Parks, culture and recreation 4,728 4,948 5,112 5,150 5,145 5,419 5,440 5,624 6,212 6,531

Other - unclassified 476 402 370 366 335 363 416 328 376 343

Debt service

Principal - - - 775 775 775 775 775 775 785

Interest - - 252 557 542 526 509 479 342 314

Paying and Fiscal agent fees - - - 1 1 1 1 1 1 3

Refunding Bond Issuance cost - - - - - - - - 61 3,931

Capital outlay 6,062 4,929 7,740 17,021 4,990 3,607 3,298 4,304 3,753 -

TOTAL EXPENDITURES 33,821 34,742 39,886 52,072 40,917 39,880 41,799 43,009 45,440 47,488

Excess (deficiency) of revenues

over (under) expenditures 779 2,481 (914) (7,609) 2,193 3,234 1,197 1,122 801 1,722

OTHER FINANCING SOURCES (USES)

Sale of Capital assets 34 102 - 10 197 64 62 235 133 185

Proceeds from land sale - - - - - - - - - -

Transfers in 6,345 3,249 3,229 4,985 4,457 3,911 3,701 5,013 5,125 4,080

Transfers out (6,015) (2,909) (2,876) (4,621) (4,095) (3,615) (3,366) (4,656) (4,718) (3,643)

Refunding of Bond issued - - 15,500 - - - - - 6,988

Payments to refunded bond escrow agent - - - - - - - - (6,926)

Premium on bond sale - - 505 - - - - - - -

TOTAL OTHER FINANCING

SOURCES (USES) 364 442 16,358 374 559 360 397 592 602 622

NET CHANGE IN FUND BALANCES 1,143$ 2,923$ 15,444$ (7,235)$ 2,752$ 3,594$ 1,594$ 1,714$ 1,403$ 2,344$

Debt service as a percentage

of noncapital expenditures 0.00% 0.00% 0.80% 0.00% 3.80% 3.71% 3.56% 3.39% 2.76% 2.61%

Fiscal Year

97


ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY



Estimated Assessed

Less: Total Taxable Direct Total Value as a

Fiscal Residential Commercial Personal Tax-Exempt Assessed Tax Actual Percentage of

Year Property Property Property (1)

Property Value Rate Value Actual Value

2008 4,487,185$ 524,986$ 180,454$ 164,949$ 5,027,676$ 0.352$ 6,266,257.00$ 80.23

2009 4,918,780 635,358 197,278 174,608 5,576,808 0.380 7,242,266 77.00

2010 5,347,937 697,834 194,158 185,638 6,054,291 0.380 8,139,075 74.39

2011 5,459,996 1,005,825 180,357 267,692 6,378,486 0.400 8,830,171 72.24

2012 5,042,161 928,718 188,294 247,201 5,911,972 0.400 6,255,605 94.51

2013 5,164,167 922,723 180,602 281,574 5,985,918 0.400 6,248,399 95.80

2014 5,258,303 945,435 186,961 288,011 6,102,688 0.400 6,301,168 96.85

2015 5,374,921 935,248 192,712 259,580 6,243,301 0.400 6,373,317 97.96

2016 5,581,464 939,725 181,658 268,281 6,434,566 0.400 6,592,698 97.60

2017 5,745,993 1,017,060 201,303 282,648 6,681,708 0.400 6,818,193 98.00

Notes: Real property is assessed on a triennial basis. Fiscal years 2008 through 2010 have been restated. (1) Assessed value and estimated actual for Personal Property are equal.

Real Property

98


REAL PROPERTY TAX RATES

DIRECT AND OVERLAPPING GOVERNMENTS


(rate per $100 of assessed value)

Direct

Fiscal Tax Park and Total

Year Rate County State Planning WSSC WSTC Tax Rate

2008 0.3520 0.9460 0.1120 0.2790 0.0012 0.0260 1.7162

2009 0.3800 0.9090 0.1120 0.2790 0.0010 0.0260 1.7070

2010 0.3800 0.8660 0.1120 0.2790 0.0009 0.0260 1.6639

2011 0.4000 0.8190 0.1120 0.2790 - 0.0260 1.6360

2012 0.4000 0.8080 0.1120 0.2790 - 0.0260 1.6250

2013 0.4000 0.8090 0.1120 0.2790 - 0.0260 1.6260

2014 0.4000 0.8200 0.1120 0.2790 - 0.0260 1.6370

2015 0.4000 0.8300 0.1120 0.2790 - 0.0260 1.6470

2016 0.4000 0.8720 0.1120 0.2940 - 0.0260 1.7040

2017 0.4000 0.8680 0.1120 0.2940 - 0.0260 1.7000

Notes: Overlapping rates are those of local and county governments that apply to property owners within the City of Bowie.

Overlapping Tax Rates

99


PRINCIPAL PROPERTY TAXPAYERS

FISCAL YEAR ENDED JUNE 30, 2017 AND NINE YEARS AGO

Type Percent of Percent of

of Assessed Total Assessed Assessed Total Assessed

Business Value Rank Value Value Rank Value

Maryland Science and Technology Commercial Leasing 121,786,500$ 1 1.82 % 62,699,200$ 2 1.25 %

Bowie Mall Co/Bowie Town Ctr Shopping Center 84,646,200 2 1.27 64,244,300 1 1.28

Governor's Green Apartments Apartment Rental 80,738,700 3 1.21 54,311,090 3 1.08

FRG BOWIE LLC Apartment Rental 63,201,600 4 0.95 36,682,900 4 0.73

Harmony Place Associates (The Bowen) Apartment Rental 51,616,944 5 0.77 - -

Heather Ridge Apts Apartment Rental 46,493,800 6 0.70 26,080,350 6 0.52

FLV Freestate Mall Shopping Center 41,713,400 7 0.62 26,932,000 5 0.54

Storch, Hannah(Hilltop Plaza) Shopping Center 35,278,100 8 0.53 - -

Collington Plaza Inc. Shopping Center 29,897,800 9 0.45 - -

Bowie Corporate Center Ltd Ptrshp Shopping Center 24,900,000 10 0.37

Total 580,273,044$ 8.69 % 270,949,840$ 5.40 %

Source: Maryland State Department of Assessments and Taxation

Name

20082017

100


PROPERTY TAX LEVIES AND COLLECTIONS


Fiscal

Year Taxes Levied Collections

Ended for the Total in Subsequent Percent

June 30, Fiscal Year Adjustments Adjusted Levy Amounts Years Amounts of Levy

2008 18,954,105$ 17,253 18,971,358$ 18,814,472$ 99.3 156,886$ 18,971,358$ 100.1 %

2009 22,526,120 (71,523) 22,454,597 22,345,529 99.2 125,535 22,471,064 99.8

2010 24,304,605 93,075 24,397,680 23,844,440 98.1 323,071 24,167,511 99.4

2011 26,855,646 (206,145) 26,649,501 26,588,442 99.0 86,646 26,675,088 99.3

2012 25,030,195 (106,480) 24,923,715 24,857,483 99.3 33,411 24,890,894 99.4

2013 25,350,315 (25,691) 25,324,624 25,064,281 98.9 26,231 25,090,512 99.0

2014 25,736,986 (24,966) 25,712,020 25,572,279 99.4 (1,865) 25,570,414 99.4

2015 26,374,339 (37,361) 26,336,978 26,072,066 98.9 (73,481) 25,998,585 98.6

2016 27,221,9901

(4,289) 27,217,701 26,850,245 98.6 (134,790) 26,715,455 98.1

2017 28,299,858 - 28,299,858 27,982,220 98.9 - 27,982,220 98.9

1Restated to correct errors in fiscal year 2016.

Collected within the

Fiscal Year of the Levy Total Collections to Date

Percent

of Levy

Collected

101


RATIOS OF OUTSTANDING DEBT BY TYPE-TOTAL NET BONDED DEBT


Governmental

Activities Debt as a

Estimated Percentage of

General General Total Actual Value Estimated Actual

Fiscal Obligation Obligation State Primary Per of Taxable Value

Year Bond Bond Loans Government Population Capita Property Taxable Property

2008 -$ -$ 2,760,739$ 2,760,739$ 55,691 49.57$ 6,266,257,031$ 0.04%

2009 - - 2,578,398 2,578,398 55,831 46.18 7,242,266,296 0.04%

2010 15,956,868 - 3,565,225 19,522,093 54,727 356.72 8,139,075,405 0.24%

2011 15,136,181 - 3,866,336 19,002,517 54,787 346.84 8,830,171,246 0.22%

2012 14,317,899 - 3,690,857 18,008,756 54,842 328.38 6,255,605,283 0.29%

2013 13,502,021 - 3,403,564 16,905,585 54,961 307.59 6,248,399,432 0.27%

2014 12,688,548 - 3,110,379 15,798,927 56,014 282.05 6,301,168,317 0.25%

2015 11,877,480 - 2,811,167 14,688,647 55,872 262.90 6,373,316,580 0.23%

2016 11,724,348 - 2,505,792 14,230,140 56,143 253.46 6,592,697,915 0.22%

2017 10,921,530 - 2,327,012 13,248,542 56,148 235.96 6,818,192,973 0.19%

Per Capita for fiscal years 2008 and 2010 have been restated.

Business-Type Activities

102


DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

AS OF JUNE 30, 2017

Net Percentage

Tax-supported Applicable to This

Debt Outstanding Governmental Unit Share of Debt

DIRECT DEBT

City of Bowie 10,921,530$ 100.00% 10,921,530$

OVERLAPPING DEBT1

Prince George's County 1,408,091,809 8.00%2

112,647,345

Maryland-National Capital Park and Planning Commission 61,061,181 8.00%2

4,884,894

Industrial Development Authority of Prince George's County

lease revenue bonds 40,045,000 8.00%2

3,203,600

Total Overlapping Debt 1,509,197,990 120,735,839

Total Direct and Overlapping Debt 1,520,119,520$ 131,657,369$

2. Ratio of Assessed Value in the City of Bowie to the total Assessed Value in Prince George's County.

Governmental Unit

Name

1. Overlapping Debt is not bonded debt of the City of Bowie on either a direct or contingent basis, but represents the share of debt of overlapping governmental units which the residents of the City of Bowie are obligated to pay through the direct tax levies of the respective governmental units.

103


LEGAL DEBT MARGIN INFORMATION



2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Debt Limit 40,262$ 44,614$ 48,434$ 51,028$ 47,296$ 47,887$ 48,822$ 49,946$ 51,477$ 53,454$

Total net debt applicable to limit - - 15,957 15,136 14,318 13,502 12,689 11,877 11,724 10,922

Legal Debt Margin 40,262$ 44,614$ 32,477$ 35,892$ 32,978$ 34,385$ 36,133$ 38,069$ 39,753$ 42,532$

Total net debt applicable to the

limit as a percentage of debt limit 0.00% 0.00% 32.95% 29.66% 30.27% 28.20% 25.99% 23.78% 22.78% 20.43%

Legal Debt Margin Calculation for Fiscal Year 2017

6,681,708$

53,454

10,922

42,532$

49,249$

4,925

1,102

3,823$

Note: The City Council adopted a policy to limit debt, exclusive of amounts being repaid by the Water and Sewer System, to 0.8 percent of assessed value of taxable property. The debt policy further states that the ratio of debt service expenditures as a percentage of general fund revenues, exclusive of debt repaid by the Water and Sewer Fund, shall not exceed 10 percent.

General Fund revenues

2. Debt limit ratio (10% of General

Debt applicable to limit:

Legal debt margin

Debt service expenditures

Fund revenues)

General obligation bonds

Legal debt margin

Fiscal Year

Taxable Assessed value

1. Debt limit (0.8% of assessed value)

Debt applicable to limit:

104


DEMOGRAPHIC AND ECONOMIC STATISTICS


Personal

Fiscal Taxable Per Capita Median Educational Unemployment

Year Population Income6

Income Age Level3

Rate7

2008 55,691 2

1,081,531,015$ 38,895$ 36.3 14.9 8,404 4.2%

2009 55,831 2

1,115,820,128 38,332 36.3 3

14.9 8,441 6.0

2010 54,727 2

1,301,628,974 39,961 40.1 3

14.9 9,130 5.1

2011 54,787 2

1,337,352,689 41,334 40.1 3,4

14.9 8,754 5.3

2012 54,842 2

1,385,451,387 42,010 40.1 3

14.3 8,477 5.9

2013 54,961 2

1,385,433,515 42,747 38.5 3

14.5 8,381 6.3

2014 56,014 2

1,425,223,764 43,164 39.2 3

14.6 8,160 5.5

2015 55,872 2

1,591,735,865 43,242 39.5 3

14.7 7,931 4.6

2016 56,143 2 5

43,692 39.6 3

14.7 8,151 3.7

2017 56,148 2 5

44,400 40.4 3

14.8 7,765 3.7

1. Prince George's County Board of Education.

2. Estimate from City of Bowie Planning Department.

3. Bureau of the Census from 2008 to 2012 5-year Estimate. American Community Survey from 2013 to 2016.

4. Restated to correct error in prior-year totals.

5. 2016 and 2017 information not available.

6. State of Maryland provides Net Taxable Income data.

7. Maryland Department of Labor, Career and Workforce.

School

Enrollment1

105


PRINCIPAL EMPLOYERS

FOR FISCAL YEAR 2017

Percentage

of Total City

Employer Employees Employment

Prince George's County Public Schools 1,350 6.65%

Inovalon (formerly MedAssurant) 755 3.72%

City of Bowie 426 2.10%

Giant Food Inc. 291 1.43%

Prince George's County (911 Call Center) 250 1.23%

US Census Bureau Computer Facility 222 1.09%

Excelis 195 0.96%

Target 189 0.93%

Wal- Mart 178 0.88%

Sport Fit Bowie Racquet 165 0.81%

Totals 4,021 19.80%

Source: City of Bowie Economic Development Office. Percentages of total employment calculated from 2014 US Census Bureau ZIP Code Business Patterns Summary. There are 20,295 total employees for the zip codes describing the City.

106


FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

FUNCTION

GENERAL GOVERNMENT:

City Manager 7.4 7.4 7.4 8.4 8.4 8.4 8.4 8.4 8.4 8.4

Human Resources 3.6 4.0 3.6 3.6 4.0 4.7 4.7 4.7 4.7 4.7

Finance 8.4 8.4 8.4 8.4 8.4 9.4 9.4 9.4 9.4 9.4

Information Technology 12.4 12.7 11.7 10.7 10.7 11.7 12.7 12.7 13.0 13.4

Public Information 5.9 5.9 6.0 6.0 6.0 6.4 6.4 6.1 6.6 6.6

City Clerk 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Community Services 4.5 4.9 4.0 4.0 3.0 3.0 3.0 4.0 4.0 4.0

Kenhill Center - - - - - - - - 1.7 1.7

Public Building and Grounds 4.5 4.5 4.5 5.5 6.9 6.9 6.9 7.9 6.2 7.8

Planning 5.0 5.0 6.1 5.1 5.1 5.0 6.0 5.0 5.0 5.8

Economic Development 2.0 2.0 1.0 1.0 1.0 1.0 1.0 1.4 1.4 1.4

Total General Government 54.7 55.8 53.7 53.7 54.5 57.5 59.5 60.6 61.4 64.2

PUBLIC SAFETY:

Housing Inspection and Code Compliance 7.6 8.1 8.1 8.1 8.1 8.1 9.1 8.9 8.9 8.9

Public Safety/Emergency Management 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0

Police Department 30.6 46.8 52.0 56.6 60.0 62.0 62.7 70.2 78.5 82.5

Animal and Disease Control 3.5 3.5 3.5 3.5 3.3 3.3 3.3 3.5 3.5 3.5

Total Public Safety 42.7 59.4 64.6 69.2 72.4 74.4 76.1 83.6 91.9 95.9

SOCIAL SERVICES:

Senior Citizen Services 13.8 14.3 14.8 14.8 14.4 14.4 14.4 14.8 14.8 15.6

Youth Services Bureau 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 10.9 11.2

Total Social Services 23.4 23.9 24.4 24.4 24.0 24.0 24.0 24.4 25.7 26.8

PUBLIC WORKS:

Administration 8.0 8.0 8.0 8.0 8.0 8.0 8.0 8.0 9.0 12.0

Equipment Maintenance and Garage 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0 4.0

Solid Waste 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0 55.0

Street Maintenance 27.1 27.1 27.1 27.1 27.0 27.0 27.0 27.0 27.0 24.0

Stormwater Management 6.3 6.3 6.3 6.3 6.2 6.2 6.2 6.7 6.7 6.7

Total Public Works 100.4 100.4 100.4 100.4 100.2 100.2 100.2 100.7 101.7 101.7

Full-Time Equivalent Employees as of June 30

107


FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Full-Time Equivalent Employees as of June 30

PARKS, CULTURE & RECREATION:

Special Events and Parks Operations 14.0 13.6 13.9 13.9 13.2 13.2 13.2 12.2 13.5 13.5

Bowie Playhouse 1.2 1.2 1.4 1.4 1.4 1.5 1.6 1.6 1.6 1.6

Parks and Grounds 30.9 31.4 31.4 31.4 31.1 32.1 32.1 33.8 33.8 34.6

Ice Arena 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6 9.6

Historic Properties and Museums 7.1 5.8 5.8 5.9 5.7 5.8 6.1 5.1 5.0 5.0

Gymnasium 6.1 6.1 6.1 6.5 6.5 6.7 7.6 7.6 7.6 7.6

Total Parks, Culture & Recreation 68.9 67.7 68.2 68.7 67.5 68.9 70.2 69.9 71.1 71.9

TOTAL GENERAL FUND 290.1 307.2 311.3 316.4 318.6 325.0 330.0 339.2 351.8 360.5

WATER AND SEWER FUND:

Billing and Accounting 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3 4.3

Water 10.2 10.7 10.7 10.7 10.7 10.7 11.7 11.7 11.7 11.7

Wastewater 14.2 14.7 14.7 15.2 15.7 15.7 16.7 16.7 16.7 16.7

Total Water and Sewer Fund 28.7 29.7 29.7 30.2 30.7 30.7 32.7 32.7 32.7 32.7

GRAND TOTAL - CITY OF BOWIE 318.8 336.9 341.0 346.6 349.3 355.7 362.7 371.9 384.5 393.2

108


OPERATING INDICATORS BY FUNCTION


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

FUNCTION

GENERAL GOVERNMENT

Public Building and Grounds:

Square feet maintained 110,732 110,732 110,732 190,732 190,732 190,732 190,732 190,732 151,534 151,534

Planning and Economic Development:

Subdivision Reviews - Total 4 2 0 1 1 2 2 4 1 3

Zoning Reviews - Total 5 1 3 1 3 6 6 4 6 4

Site Plans - Total 14 6 2 5 5 6 9 9 11 12

PUBLIC SAFETY:

Housing Inspection and Code Compliance:

Number of Code Compliance Warning Notices 6,300 6,300 6,132 5,763 5,656 5,700 6,800 6,100 5,300 5,000

Rental Inspections/reinspections performed 2,100 2,300 1,480 2,354 2,150 2,397 2,600 2,500 3,000 3,000

Number of Building Permits issued 450 450 401 355 419 400 460 580 829 700

Animal Control:

Number of service reports taken1

2,316 2,168 1,799 1,560 1,490 1,395 1,400 1,400 1,300 1,300

Number of running-at-large calls 400 426 480 444 404 444 350 300 270 250

Number of wildlife complaints 566 604 348 306 247 257 220 200 200 180

SOCIAL SERVICES:

Senior Citizen Services:

Number of bus passenger miles 66,000 67,000 69,891 80,098 80,033 80,505 80,812 80,860 80,910 78,000

Number of meals served and delivered 15,225 15,350 18,070 18,074 17,273 16,031 19,056 16,490 13,950 10,400

Average daily attendance1

240 210 245 260 253 237 240 245 275 262

Youth Services Bureau:

Number of adults & youths counseled1

674 699 963 628 569 600 600 784 650 700

Number of alcohol/drug-free events for youth 14 14 55 23 20 20 20 64 25 20

PUBLIC WORKS:

Solid Waste:

Number of households served 20,687 20,700 20,900 20,745 20,776 21,100 21,164 21,500 21,500 2 21,500

Total number of tons collected 33,856 35,000 30,899 28,627 29,409 30,120 29,250 27,700 30,660 31,300

Number of tons recycled 7,656 8,000 9,173 9,068 9,443 10,770 9,700 9,000 9,860 11,000

1 Restated to correct errors in fiscal years 2008 through 2009.

2 Restated to correct Fy 2016

FISCAL YEAR

109


OPERATING INDICATORS BY FUNCTION


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

FISCAL YEAR


Recreation and Parks:

Number of picnics-resident & non-resident 485 485 625 578 542 573 505 407 400 370

Number of special events 11 11 15 15 15 15 15 15 13 16

Number of city concerts 30 29 20 22 24 24 23 24 24 24

Number of days boathouse open 47 47 48 38 38 49 54 48 48 46

Bowie Playhouse:

Bowie Playhouse days in use 196 267 272 233 248 262 247 263 268 231

Ice Arena:

Length of skating season 10 mo. 10 mo. 10 mo. 10 mo. 10 mo. 10 mo. 10 mo. 10 mo. 10 mo. 10 mo.

Total number of all admissions 17,511 17,262 16,812 16,981 18,612 18,000 19,000 19,000 19,000 19,500

Historic Properties and Museums:

Visitors to all properties and museums1

17,242 16,856 14,415 16,045 14,954 15,600 14,125 13,927 12,200 13,000

Gymnasium:

Hours Programmed 5,120 5,150 5,130 5,150 5,150 5,130 5,160 5,140 5,140 5,175

Court rental hours 7,500 7,600 7,720 7,728 8,318 9,050 9,075 10,000 10,250 10,200

Water and Sewer Fund:

Water:

Million gallons treated/delivered 810 743 769 746 650 580 575 595 600 590

Wastewater:

Million gallons of wastewater treated 711 721 761 700 549 543 700 690 680 550

Tons of sludge produced 2,640 3,155 3,025 2,800 2,700 2,400 2,600 2,500 2,400 2,340

1 Restated to correct errors in fiscal years 2008 through 2009.

110


CAPITAL ASSET STATISTICS BY FUNCTION


2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

FUNCTION

PUBLIC WORKS:

Street Maintenance

Miles of Streets and Roads 182 184 185 185 187 187 192 191 191 191

Miles of Sidewalks 124 125 129 128 130 130 131 139 140 140

Miles of Alleys 2 2 2 2 2 2 2 2 2 2

Number of Street Lights2

5,348 5,723 5,914 5,635 5,636 5,724 5,729 5,870 5,840 5,840

Number of Traffic Light Controlled Intersections 24 24 24 24 24 24 24 24 24 24

Stormwater Management

Miles of Storm Sewers 396 396 396 396 396 396 396 396 396 396

Number of SWM ponds and basins maintained 69 69 69 71 73 76 76 77 79 79


Parks and Open Space-Number of Acres 1,360 1,373 1,373 1,373 1,373 1,373 1,373 1,373 1,373 1,373

Number of Community Centers 3 3 3 3 3 3 3 3 3 3

Number of Ball Fields-City, Co. Bd of Ed, MNCPPC1

94 97 97 97 97 97 97 97 97 97

Number of Ice Skating Rinks 1 1 1 1 1 1 1 1 1 1

Number of Theaters 2 2 2 2 2 2 2 2 2 2

Number of Skateboard Parks 1 1 1 1 1 1 1 1 1 1

Number of Museums 5 5 5 5 5 5 5 5 5 5

WATER & SEWER FUND:

Miles of Sanitary Sewers1

85 85 85 85 85 85 85 85 85 85

Number of water/sewer customers-residential1

7,700 7,700 7,700 7,716 7,685 7,699 7,700 7,700 7,700 7,685

Number of water/sewer customers-commercial1

220 220 220 222 223 209 225 209 209 250

Daily Average Water Consumption M.G. 2 2 2 2 2 2 2 2 2 2

Water Plant Capacity M.G.D. 5 5 5 5 5 5 5 5 5 5

Miles of Water Mains 90 90 90 90 90 90 90 90 90 90

Number of Fire Hydrants 560 560 560 560 560 560 560 560 525 525

Water Plant Storage Capacity M.G. 4 4 4 4 4 4 4 4 4 4

1Restated to correct errors in fiscal years 2008 through 2009.

2Restated to correct errors in fiscal years 2008 and 2009.

FISCAL YEAR

111

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