The URL can be used to link to this page

Home My WebLink AboutACFR 2022 - Full ram' 1.. t ,0 F tr'/ ti /• T yt ' r• • i '1_ 3 " T•` r "t/, r% q' r 'w. °d ♦ .4 f r ` - +� '`, j 4i} tom, k. ley, i ?, i t3, ."• '• • +A1�. r tit_" . ♦ r • • ll rri e- v YC • •• # •.L a.ey, ' .,L " • • �.A t 411. , r 'Id * •r- I i� • I • t. w •' A ' ,#4.„. ,,,,,,,1,,., Ali ' fl `` - E' �' t �. tic :.,, f` °. f.` r,..,„ l4• l Y .., 'f a.:A' ilk + A_ • sm '. am` at R — . .,,, ,,t, . .... ...., ., ..„ :. ,......,. . _„,,..,. ,_ __!•,..... L. 1�f . ,.. ......... ._____ ,.. , .4.„, s 11- - ?., , , ...,,_„t ,..., .._ . . , , • t r I r- d .. F 11,,,,,spis- d`.' ye4 r, '14. , r7d''- 4 LIIf ,< 'z�,e _ _y e 1. ;�, -_--sr,:.--s�,!':f/////%/// C�rI$'!4a m e ., i•a' h 4 Gib WWII.f t - < .f ! "�'4 ,Y, : _ 1 . ..•• W.,' � .., 2022 ANNUAL COMPREHENSIVE FINANCIAL REPORT *CtTYOF FOR THE YEAR ENDED DECEMBER 31, 2022 x � " WJ �� WASHINGTON CITY OF AUBURN WASHINGTON ANNUAL COMPREHENSIVE FINANCIAL REPORT Fiscal Year January 1, 2022 through December 31, 2022 CITY OF AUBURN WASHINGTON Prepared by City of Auburn Finance Department Jamie Thomas, Finance Director ACITY OF AUBUIttCT WASHINGTON City of Auburn: 2022 Annual Comprehensive Financial Report Table of Contents ANNUAL COMPREHENSIVE FINANCIAL REPORT For the Year Ended December 31, 2022 TABLE OF CONTENTS I. INTRODUCTORY SECTION Page Title Page Table of Contents City Officials 1 Organizational Chart 2 Letter of Transmittal 3 Certificate of Achievement 9 II. FINANCIAL SECTION Auditor's Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 33 Statement of Activities 34 Fund Financial Statements: Governmental Funds Balance Sheet 38 Reconciliation of Balance Sheet of Government Funds to the Statement of Net Position 39 Statement of Revenues, Expenses and Changes in Fund Balances 40 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Government Funds to the Statement of Activities 41 Statement of Revenues, Expenses and Changes in Fund Balances— Budget and Actual: General Fund 42 Arterial Street Fund 43 American Rescue Plan Act (ARPA) Fund 44 Mitigation Fees Fund 45 Proprietary Funds: Statement of Net Position 48 Statement of Revenues, Expenses, and Changes in Fund Net Position 49 Statement of Cash Flows 50 Fiduciary Funds: Statement of Fiduciary Net Position 54 Statement of Changes in Fiduciary Net Position 55 Notes to the Financial Statements 57 Required Supplemental Information Schedule of Proportionate Share of the Net Pension Liability PERS 1 113 Schedule of Proportionate Share of the Net Pension Liability PERS 2/3 113 Schedule of Proportionate Share of the Net Pension Liability LEOFF 1 113 Schedule of Proportionate Share of the Net Pension Liability LEOFF 2 113 Schedule of Employer Contributions PERS 1 115 Schedule of Employer Contributions PERS 2/3 115 Schedule of Employer Contributions LEOFF 2 115 Schedule of Changes in Total Pension Liability and Related Ratios 116 Schedule of Changes in Total OPEB Liability and Related Ratios 117 City of Auburn: 2022 Annual Comprehensive Financial Report Table of Contents Page Combining and Individual Fund Financial Statements and Schedules Non-Major Government Funds: Combining Balance Sheet 120 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 121 Non-Major Special Revenue Funds: Combining Balance Sheet 124 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 126 Schedule of Revenues, Expenditures, and Changes in Fund Balances— Budget and Actual: Local Street Special Revenue Fund 128 Hotel/Motel Tax Special Revenue Fund 129 Arterial Street Preservation Special Revenue Fund 130 Drug Forfeiture Special Revenue Fund 131 Housing &Community Development Special Revenue Fund 132 Recreation Trails Special Revenue Fund 133 Business Improvement Area Special Revenue Fund 134 Non-Major Debt Service Funds: Combining Balance Sheet 137 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances 138 Capital Project Funds: Combining Balance Sheet 141 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance 142 Permanent Fund: Balance Sheet 144 Statement of Revenues, Expenditures and Changes in Fund Balance 145 Non-Major Enterprise Funds: Combining Statement of Net Position 148 Combining Statement of Revenues, Expenses, and Changes in Net Position 149 Combining Statement of Cash Flows 150 Internal Service Funds: Combining Statement of Net Position 154 Combining Statement of Revenues, Expenses, and Changes in Net Position 155 Combining Statement of Cash Flows 156 Other Supplementary Information Managerial Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balances— Budget and Actual: Cumulative Reserve Fund 160 Fire Pension Fund 161 ii City of Auburn: 2022 Annual Comprehensive Financial Report Table of Contents Ili. STATISTICAL SECTION Schedule Page Net Position by Components 1 164 Changes in Net Positions 2 165 Fund Balances, Government Funds 3 166 Changes in Fund Balances, Government Funds 4 167 Tax Revenues by Source, Government Funds 5 168 Assessed Value by Type 6 169 Property Tax Data 7 170 Property Tax Levies and Collections 8 172 Principal Taxpayers— Property Taxes 9 173 Retail Tax Collections by Sector 10 174 Ratios of Outstanding Debt by Type 11 175 Computation of Legal Debt Margin 12 176 Legal Debt Margin Ratios 13 176 Computation of Net Direct and Estimated Overlapping Debt 14 177 Ratios of Net General Bonded Debt to Assessed Value 15 178 Pledged Revenue Bond Coverages 16 179 Population, Income and Housing Trends 17 180 Major Employers 18 181 Staffing Levels by Department 19 182 Operating Indicators by Department 20 183 Capital Asset Indicators by Department 21 184 Utility Customers by Customer Class 22 185 iii City of Auburn: 2022 Annual Comprehensive Financial Report Table of Contents * CITY OF UBURN WASHINGTON iv CITY OF AUBURN , .. * t . WAS H I N GTO N Mayor Nancy Backus Serving as Mayor since 2014 viz a City Council 2004-2014 AUBURN CITY COUNCIL , ilk ir 17 01P- it .•'''' .. L---k . ie.. . ,4, , ..., ..„,„ _.; , - , ,, , \ ,,:, James Jeyaraj Bob Baggett Larry Brown Kate Baldwin Deputy Mayor Serving since 2016 Serving since 2018 Serving since 2021 Serving since 2019 ....! ilk 'N...` _ / Robyn Mulenga Cheryl Rakes Yolanda Trout-Manuel Serving since 2019 Serving since 2023 Serving since 2014 DEPARTMENT DIRECTORS Administration 1 Dana Hinman Human Resources 1 Candis Martinson Anti-Homelessness 1 Kent Hay Innovation and Technology 1 David Travis Chief Equity Office 1 Brenda Goodson-Moore Parks,Arts&Recreation Daryl Faber City Attorney 1 Kendra Comeau Police 1 Mark Caillier Community Development 1 Jeff Tate Public Works 1 Ingrid Gaub Finance 1 Jamie Thomas 1 Citizens City Council Executive Assistant Mayor Outreach Program Nancy Backus Administrator I Council Administrative Assistant Director of Administration Director of Community Development Dana Hinman Jeff Tate Director of Human Resources and Risk Management Director of Public Works Candis Martinson Ingrid Gaub Finance Director Police Chief Jamie Thomas Mark Caillier City Attorney Parks,Arts and Recreation Director Kendra Comeau Daryl Faber Director of Anti-Homelessness Director of Innovation and Kent Hay Technology David Travis Chief Equity Office Brenda Goodson-Moore 2 * AUBCITY OF *T TlR �T* U JLj.L Nancy Backus,Mayor WASHINGTON 25 West Main Street*Auburn WA 98001-4998*www.auburnwa.gov*253-931-3000 November 30, 2023 Honorable Nancy Backus, Mayor Members of the Auburn City Council Citizens of the City of Auburn 25 W Main Street Auburn,WA 98001 We are pleased to present the City's Annual Comprehensive Financial Report for the year ended December 31,2022. We publish this financial statement in conformity with generally accepted accounting principles (GAAP). It has been audited in accordance with generally accepted auditing standards by the Washington State Auditor's Office. Therefore,we issue and transmit to you the City of Auburn's Annual Comprehensive Financial Report for the fiscal year ended December 31, 2022. This transmittal letter provides an overview of the report and the financial condition of the City. It also provides insight into the history of the City and the economic conditions affecting it, and describes the systems and controls employed by the Finance department. The Annual Comprehensive Financial Report has several significant uses. First, it provides a general overview of the City's finances to the general public and taxpayers. Second, it is referenced by bond buyers and rating agencies to evaluate the City's fiscal stability and creditworthiness. Finally, the Annual Comprehensive Financial Report is a series of financial statements that have been audited by the State Auditor's Office and provides assurances that assets are safeguarded, and funds are expended as they were legally appropriated in the biennial budget. I. INTRODUCTION A. Management Representation The Auburn Finance Department prepared the report and accepts complete responsibility for the accuracy, completeness, and fairness of presentation of the information included. The data is believed to be accurate in all material respects, and it is believed that all significant information necessary for an understanding of the affairs and financial condition of the City has been disclosed. The report has been prepared in conformance with generally accepted accounting principles and in conformance with financial reporting standards issued by the Governmental Accounting Standards Board (GASB). City management has developed and evaluated a comprehensive internal control structure that is designed to protect the City's assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City's financial statements in conformity with generally accepted accounting principles. Because the cost of internal controls should not outweigh the benefits, the City's internal control structure is designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we attest that, to the best of our knowledge and belief, this financial report is complete and reliable in all material aspects. 3 AUBURN * MORE THAN YOU IMAGINED City of Auburn: 2022 ACFR Letter of Transmittal 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 the MD&A and should be read in conjunction with it. Auburn's MD&A can be found immediately following the independent auditor's report. B. Organization of the Report The report is divided into three sections: the Introductory Section,the Financial Section, and the Statistical Section. The Introductory Section contains the table of contents, a list of the City's principal officials, an organizational chart, this letter of transmittal, and the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers' Association of the United States and Canada for the 2021 Annual Comprehensive Financial Report. The Financial Section contains the Washington State Auditor's Report, completed by the Washington State Auditor, Management's Discussion and Analysis, Government-Wide Financial Statements, the Fund Financial Statements, Notes to the Financial Statements and Other Required Combining and Supplemental Information. The Statistical Section,which is unaudited, contains a range of statistical tables and charts that present various financial, economic, social, and demographic data about the City. This information depicts various trends that have affected the fiscal condition of the City over the last ten years. The data presented in this section complies with the requirements of GASB Statement No. 44, Economic Condition Reporting:• The Statistical Section. C. Reporting Entity The City of Auburn was incorporated in 1891 and currently operates as a non-charter Code City under the laws of the State of Washington. Code City status in Washington provides "home rule" authority to cities. Auburn has a Mayor/Council form of government; the Mayor is elected and is the full-time Chief Administrator. The seven-member City Council is elected at large, rather than by district. Members of the City Council are responsible for establishing the general direction and policies for the City and for providing the resources necessary to carry out those policies. As the City's chief administrator,the Mayor is responsible for carrying out the policy and direction set by the City Council. This includes the enforcement of laws and ordinances, the execution of contracts and agreements, and maintenance of peace and order in the city.The City is located primarily in southern King County and a small northeastern portion of Pierce County. These are the two most populous counties in the State of Washington, comprising over 41% of the state-wide population. The City is strategically located in relation to the labor and consumer markets of the two largest cities in the area: Seattle in King County and Tacoma in Pierce County. Auburn currently serves approximately 88,750 people within its incorporated limits. The City provides a wide range of services, both beneficial and necessary to its residents as well as to the adjacent area. These services include police protection; parks and recreational facilities that include a senior center, gymnasium, community and teen center, golf course and museum; land use management and development regulation; infrastructure construction and maintenance; water, sanitary sewage collection, storm drainage, and solid waste services; a general aviation airport; and a municipal cemetery. The City is a member/owner of Valley Communications providing emergency 911 services and South Correctional Entity (SCORE) providing jail facilities. Both these organizations provide services to other owner/member governments and other non-owner/member governments as well through interlocal agreements. 4 City of Auburn: 2022 ACFR Letter of Transmittal II. ECONOMIC CONDITION A. Summary of Local Economy Auburn began as a small rural community founded on agriculture and the railroad, which maintained a significant switching and repair facility. The City has grown significantly since World War II, both as a residential community and as a commercial and industrial location. Auburn has become a significant area for automobile sales and has also developed a substantial manufacturing and distribution base with the largest employer being The Boeing Co.,which employs approximately 3,600 people at its Auburn facility. Boeing is a worldwide supplier of aircraft and related products. At the start of 2022, Auburn was providing approximately 42,799 jobs with an unemployment rate of 5.3%. By the end of 2022 the unemployment rate had subsided to 3.6%, which is below both the national and state figures. Auburn has enjoyed steady residential and industrial growth over the years as development has moved outward from the major cities. Auburn is currently home to about 6,000 businesses and is the center of the largest industrial complex in the Pacific Northwest. The City has a growing array of manufacturing facilities, as well as distribution, wholesale, and retail operations. Auburn's transit-oriented district is home to the MultiCare Auburn Medical Center, with a Trauma Level III emergency facility. This location serves the local geographic area and employs approximately 1,700 people. The City's total assessed property valuation has increased by 150% in 10 years from $6.9 billion in 2012 to $17.5 billion in 2022. However, in the State of Washington property tax is limited to 1% growth year over year, despite the rising assessed valuations. The total property tax rate has decreased from $2.10 per 1,000 in assessed valuation in 2012 to $1.66 per 1,000 in assessed valuation in 2022. Sales tax revenue, excluding criminal justice and annexation sales tax credits, increased by $1.0 million (4.5%) from 2021 to 2022, making 2022 the second year in a row for strong sales tax collections, largely due to pent up demand and inflationary costs. Sales tax revenue constitutes about 24% of total General Fund revenue.While the local economy is generally favorable,the City remains vigilant in its management of expenses to ensure it lives within its means, particularly with the uncertainties related to concerns of an impending recession. Despite economic cycles, the City has continually focused on enhancing the quality of life in the community and focusing on maintaining and redeveloping its aging infrastructure. For example, the City's Arterial Street program is partially funded by dedicating 2.5% of utility taxes toward arterial roadway improvements. The City's budgeting process is based on financial policies directed at conserving fiscal resources while supporting programmatic strategies. Budget recommendations reflect a long-range analysis of fiscal trends. These policies and practices have not only averted serious funding problems in the past but have enabled the General Fund to remain on a firm financial footing during the most recent recession. The City maintains a stable financial condition by managing expenditure budgets to available revenue streams. All funds contain adequate balances, and the City's debt is manageable. The General fund contains a satisfactory balance along with a reserve fund for stabilization, a significant Insurance fund has been set aside for contingencies, and the Equipment Rental fund is adequate for vehicle replacement. The Proprietary and Fiduciary funds are in satisfactory condition. The City completed a review of the City's water, sewer, and stormwater utility rates in 2019 and established rates to fund operating and capital needs through 2022. This will cover increased debt service associated with new revenue bonds being 5 City of Auburn: 2022 ACFR Letter of Transmittal issued in 2020 to support significant new utility construction projects. Utility rates will be reviewed in 2022 as part of the 2023-2024 Biennial Budget process. B. Future Economic Outlook Auburn is in a continuous process of both short-term and long-term financial planning. Short-term financial planning is inherent in the development of the City's biennial budget. Concurrent with the biennial budget is the review of the City's long-term capital needs. Funding sources are assessed with the development of the six-year Capital Facilities Plan. The capital facility plan is a component of the Comprehensive Master Plan, which outlines how the City should look and function in twenty years and creates a vision that can be realistically implemented. An integral part of this vision is determining how to allocate the City's financial resources to achieve the desired goals. The City has several long-term municipal planning and capital projects underway. These include reconstruction of aged utility infrastructure and street improvements that include rehabilitation of local neighborhood streets. These projects will improve mobility, will contribute to the restoration of a North/South arterial corridor, and provide for greater recreational opportunities for the community. These municipal projects, coupled with the new private sector developments described earlier, will help ensure local economic growth continues, albeit not at the rate experienced in the late 1990s. The challenge is to control costs that grow at a faster rate than revenue. Areas of concern are health care costs, pension costs, other post-employment benefits (OPEB), and public safety costs related to incarceration and labor contracts. Continuing to maintain service level in these sectors will draw valuable resources from other areas such as infrastructure replacement and capital programs. As Auburn moves forward, economic conditions will be continually monitored and adjustments to city spending, and services made to maintain the City's financial health. Long-term plans will be focused on ensuring the City continues to be an economically strong and viable city. III. FINANCIAL INFORMATION A. Cash Management The City invests in U.S. Treasury and Agency Issues, Prime Bankers Acceptances, Time Deposits, and Repurchase Agreements. Investment policies and procedures, established by the Mayor and adopted by the City Council, require the City to establish a trustee to take delivery of all investment transactions at time of payment. The City has contracted with the Bank of New York to provide delivery versus payment trustee services on all government agency investments. The State of Washington maintains an investment pool to provide economies of scale in investing to smaller-and medium-sized cities in the State. The City uses this service for all funds not invested in longer-term securities. The pool operates under the same legal restrictions that apply to all municipalities in the State and, consequently, uses the same instruments as listed above. The State also takes delivery of all investment transactions. The City has adopted a comprehensive investment policy statement to guide City investment practices. These policies are closely patterned after the recommendations in Investing Public Funds published by the Government Finance Officers Association (GFOA). Investments are restricted to less than five years in order to maintain liquidity on all investments in all funds yet enable the City to take advantage of the yield curve. Fiduciary funds,which involve long-term reserves and require minimal liquidity, are invested for longer time periods. The City undertakes repurchase agreements only with financial institutions that offer the City full protection in the event of default, by providing the delivery of the underlying security to the City. 6 City of Auburn: 2022 ACFR Letter of Transmittal B. Risk Management The City participates in the Washington Cities' Insurance Authority (an insurance pool of over 160 members) and the City actively pursues risk reduction in the operation of its programs. The Washington Cities' Insurance Authority not only provides a sharing of risk by pooling of losses, it also provides an extensive array of professional services in risk management. The pool monitors the City's management practices and damage claims. The City follows the guidelines provided by the pool in an effort to minimize risk exposure in the day-to-day operations of the City's programs. The City also maintains an extensive employee safety program managed by the Human Resources department. The City purchases, with employee participation, most of its health insurance for its employees through commercial policies administered by Brown and Brown. Employees represented by the outside Teamsters Union have insurance through the Teamsters organization and employees represented by the inside Teamsters Union have insurance policies administered by the Association of Washington Cities. Beginning in 2014, the City created its own worker's compensation program and pool. Prior, the City participated in the Washington State Workers' Compensation program. To keep its long-term options open and to provide for any uninsured losses that might occur, the City has elected to build an insurance reserve (the Insurance fund). The Insurance fund supplements various insurance coverages maintained by the City. This fund is also used to self-insure some limited exposures, the most significant of which is accidental loss to City-owned vehicles. IV. OTHER RELEVANT INFORMATION A. Independent Audit State law requires an annual audit of all City books of accounts and financial records by the Office of the State Auditor, which is headed by an independently elected State official, the State Auditor. The Auditor has broad legal authority to inquire into all financial and legal compliance matters and such audits are considered equal to audits by certified public accounting firms. The 2022 financial audit of the City is complete and was conducted in conformance with Generally Accepted Auditing Standards. The financial statements of all City funds have been included in this audit. The City has been given an unmodified opinion for 2022. Please see the Auditor's Report. The State Auditor's Office also audits the City's administration of its federal grants under the single audit concept. B. Awards 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 Auburn for its Annual Comprehensive Financial Report for the fiscal year ended December 31, 2021. This was the thirty-fifth consecutive year that the City has achieved this prestigious award. 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. 7 City of Auburn: 2022 ACFR Letter of Transmittal A Certificate of Achievement is valid for a period of one year only. We believe that our current Annual Comprehensive Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. C. Acknowledgments Preparation of this report could not have been accomplished without the professional, efficient, and dedicated staff of the Finance department and various other City employees who assisted in its production. Further appreciation is extended to the Mayor and City Council for their encouragement, interest, and support in conducting the financial affairs of the City in a sound and progressive manner. The assistance of the auditors from the Washington State Auditor's Office is also greatly appreciated. Respectfully submitted, dit °I 1k t4 Jamie Thomas Finance Director 8 ,( 3 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting presented to City of Auburn Washington For its Annual Comprehensive Financial Report For the Fiscal Year Ended Decemb-er 31.2021 P Atrwide Executive Direcior'CED 9 CITYOF * * AUBURN* WASHINGTON J��Q oaes 9J. 9sN1NG� 4411 Office of the Washington State Auditor Pat McCarthy INDEPENDENT AUDITOR'S REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Mayor and City Council City of Auburn Auburn, Washington REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS Opinions We have audited the accompanying financial statements of the governmental activities, the business- type activities, each major fund and the aggregate remaining fund information of the City of Auburn as of and for the year then ended December 31, 2022, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Auburn,as of December 31, 2022, and the respective changes in financial position and,where applicable, cash flows thereof, and the respective budgetary comparison for the General, Arterial Street, American Rescue Plan Act (ARPA) Special Revenue and Mitigation Special Revenue funds for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 11 Matters of Emphasis As discussed in Note 19 to the financial statements, in 2022,the City adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 87,Leases. Our opinion is not modified with respect to this matter. Responsibilities of Management 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, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. Performing an audit in accordance with GAAS and Government Auditing Standards includes the following responsibilities: • Exercise professional judgment and maintain professional skepticism throughout the audit; • Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements; • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, no such opinion is expressed; 12 • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements; • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City's ability to continue as a going concern for a reasonable period of time; and • Communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and required supplementary information as listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. This information has been subjected to auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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. 13 Other Information The other information comprises Introductory and Statistical sections but does not include the basic financial statements and our auditor's report thereon. Management is responsible for the other information included in the financial statements. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or provide any assurance thereon. In connection with the audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we will also issue our report dated November 30, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. That report will be issued under separate cover in the City's Single Audit Report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. Sincerely, Pat McCarthy, State Auditor Olympia, WA November 30, 2023 14 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis MANAGEMENT'S DISCUSSION AND ANALYSIS The City of Auburn's (the "City") discussion and analysis is designed to: • Assist the reader in focusing on significant financial issues. • Provide an overview of the City's financial activity. • Identify changes in the City's financial position (its ability to meet future years' challenges) • Identify any material deviations from the approved budget. • Identify individual fund issues or concerns. Management's Discussion and Analysis is designed to focus on the current year's activities, resulting changes and currently known facts. Therefore, it should be read in conjunction with the Transmittal Letter and the City's financial statements. Financial Highlights • Total government-wide net position — the difference between assets plus deferred outflows and liabilities plus deferred inflows — equals $823.8 million, an increase of $23.6 million or 3.0%. Of this, a total of $602.2 million, or 73.1% of total net position, represents net investment in capital assets and includes assets such as utility systems, streets, buildings, land, vehicles and equipment. An additional $6.7 million of net position is restricted for purposes of endowment and debt service. Of the remaining $215.0 million of net position, $61.0 million is legally restricted, restricted by City policy for specific purposes, or is restricted for use by the City's utilities. $21.2 million in net pension assets are restricted, as required by GASB 68, and the remaining $154.0 million is unrestricted. • The net increase in government-wide net position during 2023 was $23.6 million. City-owned net investment in capital assets increased by $0.1 million, restricted net position increased by $27.8 million, and unrestricted net position decreased by $4.3 million. • Business-type net position increased by $7.5 million to $306.8 million during 2022 as a result of net pension asset increases and amounts restricted for debt service. • Governmental fund balances at year-end totaled $105.6 million. Of this amount, $46.1 million, or 43.7%, is unassigned and available to fund ongoing activities. Compared to 2021, total governmental fund balances increased by $12.7 million, most of which is accounted for in unassigned fund balance. This increase reflects the net effect of a general improvement in the regional economy, particularly the collection of sales and use taxes and a newly adopted business and occupation tax. • Total City debt payments during the year, less compensated absences, lease liabilities, pension liabilities, and other post-employment benefits, were $3.8 million. Total long-term liabilities, including bonds and loans, totaled $103.6 million at December 31,2022. The ending long-term liabilities saw a decrease of $0.3 million from 2021. While the City retired $3.8 million of bond principal, and a net reduction of post-employment liabilities of $2.4 million, the City also added $2.8 million of net pension liability. New in 2022, the City recognized $4.6 million of lease liability payable as required by GASB Statement No. 87, further offsetting the net decrease in ending long-term liabilities. See note 7 for further information on long-term liability activity during the year. 15 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis Overview of the Financial Statements The City's basic financial statements are presented in three parts: 1) Government-wide financial statements 2) Fund financial statements 3) Notes to the financial statements These statements report on the City's net position and changes during the reporting year. The net position is the difference between assets plus deferred outflows of resources and liabilities plus deferred inflows of resources. Other supplementary information, in addition to the basic financial statements, is also contained in this report. This section of the management's discussion and analysis is intended to introduce and explain the basic financial statements. Government-wide Financial Statements The government-wide financial statements are designed to be corporate-like in that all governmental and business-type activities are consolidated into columns which add to a total for the City. The focus of the Statement of Net Position is designed to be similar to bottom-line results for the City and its governmental and business-type activities. This statement combines and consolidates governmental funds' current financial resources (short-term spendable resources) with capital assets, deferred outflows of resources, long-term obligations and deferred inflows of resources. Over time, increases or decreases in net position may be one indicator of improvement or deterioration in the City's overall financial health. The Statement of Activities is focused on both the gross and net cost of various functions, including both governmental and business-type activities, which are supported by the City's general tax and other revenues. This is intended to summarize and simplify the user's analysis of cost of various governmental services and/or subsidy to various business- type activities. The revenue generated by the specific functions (charges for services, grants, and contributions) is compared to the expenditures for those functions to show how much each function either supports itself or relies on taxes and other general funding sources for support. All activity on this statement is reported on the accrual basis of accounting, requiring that revenues are reported when they are earned and expenditures are reported when they are incurred, regardless of when cash is received or disbursed. Governmental activities of the City include general government (executive, finance, legal, human resources, and contracted court), public safety (police), physical environment, economic environment, transportation, health and human services, and culture and recreation. The City's business-type activities include water, sanitary sewer, storm water and solid waste utilities as well as the operations of an airport and cemetery. Governmental activities are primarily supported by taxes, charges for services, and grants, while business-type activities are self-supporting through user fees and charges. Fund Financial Statements The Fund Financial Statements are the traditional reporting format for governments. A fund is a fiscal and accounting entity with a self-balancing set of accounts used to account for specific activities or meet certain objectives. While the government-wide statements present the City's finances based on the type of activity (general government vs. business type), the Fund Financial Statements are presented by fund type, such as the general fund, special revenue funds and proprietary funds, with the focus on major funds. Governmental Funds are used to account for essentially the same functions that are reported as governmental activities in the government-wide financial statements. The government major fund is presented utilizing the "sources and uses of liquid resources" basis. This is the manner in which the budget is typically developed. The basis of accounting is different between the governmental fund statements and the government-wide financial statements. The governmental 16 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis fund statements focus on the near-term revenues/financial resources and expenditures while the government-wide financial statements include both near-term and long-term revenues/financial resources and expenditures. The information in the governmental fund statements can be used to evaluate the City's near-term financing requirements and immediate fiscal health. Comparing the governmental fund statements with the government-wide statements can help the reader better understand the long-term impact of the City's current-year financing decisions. Because the basis of accounting is different between the governmental fund statements and the government-wide financial statements, reconciliations are provided. The reconciliation between the governmental fund Balance Sheets and the government-wide Statement of Net Position is found directly following the governmental funds' Balance Sheet; the reconciliation between the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balance and the government-wide Statement of Activities is found directly following the governmental funds' Statement of Revenues, Expenditures, and Changes in Fund Balances. The City maintains nineteen individual governmental funds. Of these, five are considered major (the general fund, the arterial street fund, the capital improvement projects fund, the American Rescue Plan Act fund, and the mitigation fees fund) and are presented separately in the governmental fund Balance Sheet and the governmental fund Statement of Revenues, Expenditures and Changes in Fund Balances. The remaining governmental funds are combined into a single column labeled "Other Governmental Funds". Individual fund data for each of the other governmental funds can be found in the combining statements later in this report. The City maintains budgetary control over its operating funds through the adoption of a biennial budget. Budgets are adopted at the fund level according to state law. Budgetary comparison statements are presented for the general, arterial street, American Rescue Plan Act and mitigation fees funds as part of the basic financial statements. Other budgetary comparison statements are included following the other government funds' combining statements. Proprietary funds are used by governments to account for their business-type activities and use the same basis of accounting utilized in private industry. Business-type activities provide specific goods or services to a group of customers that are paid for by fees charged to those customers. There is a direct relationship between the fees paid and the services rendered. The City has two types of proprietary funds: enterprise funds and internal service funds. Enterprise funds are used to account for goods and services provided to citizens, while internal service funds are used to account for goods and services provided internally to various City departments. Enterprise funds report the same functions presented as business-type activities in the government-wide statements, but in greater detail. The City's enterprise fund statements provide information on the City's four utilities (water, sanitary sewer, storm water, and solid waste) as well as the City-owned airport and cemetery. Internal service funds are an essential accounting tool used to accumulate and allocate costs internally among the City's various functions. The City uses internal service funds to account for its fleet of vehicles, maintenance and operation of facilities, computer hardware and software services, employee costs related to occupational injury or illness, and insurance premiums. Internal service funds benefit both governmental and business-type activities and are allocated accordingly in the government-wide statement of activities. Fiduciary funds account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments or other funds. Fiduciary funds are not included in the government-wide financial statements because their assets are not available to support the City's activities. 17 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the government- wide and fund financial statements. The notes to the financial statements can be found at the end of the Basic Financial Statements section. Other Information In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the budget vs. actual reports of the City's general fund and major special revenue funds. The budget vs. actual required supplementary information can be found on pages 42 through 45, and the pension benefit and other postemployment benefit required supplementary information is found in the required supplemental information section. The combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor enterprise funds, and internal service funds are presented in the section titled "Fund Financial Statements and Schedules". Government-wide Financial Analysis The statement of net position may serve as a useful indicator of the City's financial position. The overall financial position has improved for the City of Auburn over the prior year. Changes in Net Position from 2021 to 2022 show an increase in total net position of $23.6 million or 3.0%. Following is a condensed version of the government-wide statement of net position with a comparison to 2021: STATEMENT OF NET POSITION Comparative Analysis of 2022 and 2021 Governmental Activities Business-type Activities Total As of 12/31/22 As of 12/31/21 As of 12/31/22 As of 12/31/21 As of 12/31/22 As of 12/31/21 Current and other assets $ 203,344,989 $ 203,873,518 $ 97,171,469 $ 96,223,698 $ 300,516,458 $ 300,097,216 Capital assets,net of accumulated depreciation 399,916,214 398,848,062 265,455,402 259,271,277 665,371,616 658,119,339 Total assets 603,261,203 602,721,580 362,626,871 355,494,975 965,888,074 958,216,555 Deferred Outflows of Resources 12,388,774 3,968,330 2,633,739 1,032,794 15,022,513 5,001,124 Long-term liabilities 59,281,203 58,677,979 35,491,591 37,618,063 94,772,794 96,296,042 Other liabilities 26,258,122 17,407,034 12,887,458 12,790,834 39,145,580 30,197,868 Total liabilities 85,539,325 76,085,013 48,379,049 50,408,897 133,918,374 126,493,910 Deferred Inflows of Resources 13,149,679 29,760,671 10,043,516 6,800,333 23,193,195 36,561,004 Net position Net investment in capital assets 371,760,693 373,890,921 230,412,106 228,161,102 602,172,799 602,052,023 Restricted for: Capital Projects 37,643,124 34,399,207 - - 37,643,124 34,399,207 Nonexpendable Permanent Endowment 2,070,670 2,010,357 - - 2,070,670 2,010,357 Debt Service 1,702 3,828 4,587,016 1,201,412 4,588,718 1,205,240 Tourist Promotion 464,299 433,129 - - 464,299 433,129 Drug Investigation&Enforce 1,116,248 1,058,013 - - 1,116,248 1,058,013 Comm Dev Block Grant 42,904 42,842 - - 42,904 42,842 Central Business Distr Dev 133,695 186,016 - - 133,695 186,016 Rate Stabilization - - 438,483 438,483 438,483 438,483 Pension Asset 18,676,810 2,532,355 21,209,165 - Unrestricted 85,050,827 88,819,913 68,868,085 69,517,542 153,918,912 158,337,455 Total net position $ 516,960,973 500,844,225 $ 306,838,045 $ 299,318,539 $ 823,799,018 $ 800,162,764 The largest component of the City's net position, $602.2 million or 73.1%, is its net investment in capital assets. This balance is broken down by governmental activities ($371.8 million) and business type activities ($230.4 million). 18 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis Governmental capital assets, such as streets, parks, trails, and vehicles and equipment related to police and public works, are used to provide services to the citizens; business-type capital assets account for the utility systems infrastructure (water and sewer transmission/distribution lines, wells, pump stations, lift stations, storm retention ponds, etc.). As a result, these assets are necessary for providing existing levels of service and are not for sale and are therefore not available to fund current and future City obligations. Total net investment in capital assets increased by $0.1 million over 2021. The City elected the GASB 34 reporting option to include all general infrastructure of the City acquired or substantially renovated since 1980. The second largest component of the City's net position is unrestricted net position, $154.0 million. This balance is broken down by: governmental activities ($85.1 million),which may be used for functions such as public safety employee salaries and supplies, parks and road maintenance, and other general governmental services; and business-type activities ($68.9 million) which may only be spent on activities related to one of the four City utilities (water, sanitary sewer, storm water and solid waste) or to the City-owned ventures (airport and cemetery). Examples of utility activities include maintenance of water/sewer mains, pump and lift stations, storm drain flushing, water meter reading, and garbage collection. Activities related to the other City-owned ventures include maintenance of hangars and runways at the airport and grooming and landscaping at the cemetery. Restricted governmental fund net position is $60.0 million and is restricted for purposes such as contractual obligations on capital project construction, debt service, drug investigation and enforcement, pension assets and the cemetery endowment fund. Changes in Net Position The change in net position represents the increase or decrease in City net position resulting from its various activities. The City's total net position increased by $23.6 million over 2021. • Governmental activities contributed $16.1 million to the total increase in City net position. The largest factor in this increase was the introduction of the City's Business and Occupation tax in 2022, which produced $4.7 million in revenue that was not present in 2021. However, decreases in certain revenue sources, particularly charges for service related to transportation, as well as capital grants and contributions, resulted in a net revenue increase of only $0.6 million over 2021. Governmental expenditures increased by $12.1 million over the same period. • Governmental activity expenses had a net increase of $12.1 million compared to 2021. A significant factor in this increase is the required recognition of net pension liabilities: in 2021, a $5.0 million reduction in the City's net pension liability was recognized, whereas in 2022 an increase of $1.9 million was recognized, contributing a $6.9 million in year-over-year expenditure increase. Another contributing factor was increases in regular operations and services, most of which were attributed to salary and benefit costs. Also, there was a reduction of services in 2021 due to COVID, so many of the operating increases were related to the annual operation of parks and recreation services, some of which were closed until mid-2021. • Business-type net position totaled $306.8 million, an increase of $7.5 million (2.5%) over 2021. Business-type revenue increased by $3.6 million; charges for services saw an increase of$11.2 million, largely due to higher service fees related to a renewed contract with the City's solid waste hauler. Conversely, capital grants and contributions declined $9.6 million from 2021 as a result of lower contributions from external developers. Business-type expenses increased by $11.7 million, with approximately $8.1 million attributable to increased costs related to solid waste as previously mentioned. The following table on the next page is a condensed version of the City's changes in net position. The table shows the revenues, expenditures and related changes in net position for both governmental-type and business-type activities: 19 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis CHANGES IN NET POSITION Comparative Analysis of 2022 and 2021 Governmental Activities Business-type Activities Total 2022 2021 2022 2021 2022 2021 Revenues: Program revenues Charges for services $ 12,467,659 $ 18,776,026 $ 84,871,076 $ 73,687,356 $ 97,338,735 $ 92,463,382 Operating grants and contributions 7,398,845 4,877,951 - - 7,398,845 4,877,951 Capital grants and contributions 8,644,981 11,838,148 3,847,367 13,400,812 12,492,348 25,238,961 General revenues Property taxes 24,635,089 23,458,850 - - 24,635,089 23,458,850 Sales taxes 26,295,124 25,289,050 - - 26,295,124 25,289,050 Interfund utility taxes 6,396,937 7,101,829 - - 6,396,937 7,101,829 Admission&utility taxes 9,532,991 9,521,243 - - 9,532,991 9,521,243 Excise taxes 6,110,151 6,463,047 - - 6,110,151 6,463,047 Business and Occupation 4,664,551 4,664,551 Other taxes 4,635,655 5,031,185 - - 4,635,655 5,031,185 Investment earnings 815,061 (114,738) 1,068,685 17,401 1,883,746 (97,337) Miscellaneous revenue 1,789,159 572,013 1,194,771 277,871 2,983,930 849,883 Total revenues 113,386,203 112,814,604 90,981,899 87,383,440 204,368,102 200,198,044 Expenses: General government 14,735,664 12,837,356 - - 14,735,664 12,837,356 Public safety 38,402,492 32,440,701 - - 38,402,492 32,440,701 Transportation 18,517,806 18,469,045 - - 18,517,806 18,469,045 Physical environment 3,597,960 2,992,107 - - 3,597,960 2,992,107 Culture and recreation 14,800,322 12,332,974 - - 14,800,322 12,332,974 Economic environment 4,662,845 3,664,340 - - 4,662,845 3,664,340 Health and human services 2,179,401 2,107,798 - - 2,179,401 2,107,798 Interest on long-term debt 677,414 651,329 - - 677,414 651,329 Water - - 14,094,553 13,624,963 14,094,553 13,624,963 Sanitary sewer - - 28,481,203 26,829,991 28,481,203 26,829,991 Storm drainage - - 10,370,729 9,545,696 10,370,729 9,545,696 Solid waste - - 26,457,098 18,383,884 26,457,098 18,383,884 Golf course - - - - - - Other business-type activities - - 3,754,361 3,081,240 3,754,361 3,081,240 Total expenses 97,573,904 85,495,650 83,157,944 71,465,774 180,731,848 156,961,424 Increase in net position before transfers 15,812,299 27,318,954 7,823,955 15,917,666 23,636,254 43,236,620 Transfers 304,449 395,869 (304,449) (395,869) - - Change in net position 16,116,748 27,714,823 7,519,506 15,521,797 23,636,254 43,236,620 Net Position,January 1,as Previously Reported 500,844,225 473,129,402 299,318,539 283,796,742 800,162,764 756,926,144 Change in Accounting Principle - - - - - - Net Position,January 1,as Restated 500,844,225 466,638,817 299,318,539 271,101,966 800,162,764 649,349,553 Net position,December 31 $ 516,960,973 $ 500,844,225 $ 306,838,045 $ 299,318,539 $ 823,799,018 $ 800,162,764 20 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis Governmental Activities The chart below summarizes the governmental activity revenue, by source. Revenues by Source—Governmental Activities Operating Grants and Contributions ,7% Capital Grants and Contributions ,8% Property Taxes,22% Charges for Services, 11% Other Revenue ,3% Other Taxes, 9% Sales Taxes,23% Business and Occupation Tax,4% Utility Tax,14% The City's most significant Governmental Revenue sources are taxes (72%), grants and contributions (14%), and charges for services (11%). Overall, the City's governmental revenue remained consistent, exhibiting an increase of $0.6 million or 0.5% over 2021. Governmental charges for service revenue decreased by $6.3 million, due primarily to reductions in impact fee collections related to construction,and building permits and related fees. Offsetting these revenue decreases was a tax revenue increase of $5.4 million, primarily driven by the implementation of a business and occupation tax in 2022. General tax revenues increased by 7.0%to $82.3 million between 2021 and 2022: • Property tax revenue increased $1.2 million or 5.0%. Property tax increases are limited, by State law, to 1% each year. Any increase that exceeds 1% is related to the "catch-up" collection due to new construction and the collection of delinquent taxes. • Sales tax collections increased $1.0 million or 4.0%,due largely to increased economic activity from post-COVID demand for goods and services, inflation, and a strong construction sector. • Utility and admission tax revenue decreased by $0.7 million or 4.2% due mainly to a change in accounting related to interfund utility tax charged on the pass-through revenues for the King County Metro Sewer fund, which was offset by an increase in Solid Waste Utility tax collections. • Excise tax revenue decreased by $0.4 million or 5.5%. The majority of this is Real Estate Excise Tax (REET), which is an excise tax that the City receives on the sale of real property within the City limits of Auburn. With the value and volume of home sales experiencing rapid growth in 2021, the City collected higher than normal amounts of REET. Going into 2022, home prices continued to increase, but the number of transactions decreased, leading to a slight decrease in the collection of REET revenue. 21 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis The chart below identifies the specific programs' revenues and related expenses for the various activities of the City. Gaps between specific programs' revenues and their related expenses are funded through general tax revenues. Program Expenses and Revenues—Governmental Activities $45 $40 $35 $30 $25 0 E $20 2 $15 $10 $5 $ ■ _ _ ■_ . ■_ General Public Safety Transportation Physical Culture and Economic Government Environment Recreation Environment •Expenses •Program Revenue Business-Type Activities The following chart shows the funding sources for the for business-type activities, broken down by source: Business Type Activity Revenues- By Source Investment Earnings,1% Capital Grants and Other Revenue,1% Contributions,4%� - --- Charges for Service, 94% The most significant revenue source is charges for services ($84.9 million in 2022). Revenue is collected into these funds via user fees and consumption charges. Rates for these fees are established taking into consideration the ongoing maintenance and operating costs for the systems they support, as well as the long-term capital investments and 22 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis improvements that are necessary in the short and long term. These activities also rely on capital grants and contributions ($3.8 million in 2022) to help fund infrastructure projects. Following are two charts that contrast the total net position to the spendable portion of net position for each enterprise fund: Comparison of Total Net Position to Spendable Net Position—Utility Funds $120.0 $100.0 $80.0 U, o $60.0 2 $40.0 $20.0 I Water Sewer Storm Drainage Solid Waste ■Spendable Net Position ■Total Net Position Comparison of Total Net Position to Spendable Net Position—Airport and Cemetery $16.0 $14.0 $12.0 $10.0 0 $8.0 2 $6.0 $4.0 $2.0 Airport Cemetery •Spendable Net Position •Total Net Position 23 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis The following chart shows how each utility fund program revenue and expenses compare: Business Type Activity Revenues and Expenses (Before Capital Contributions and Transfers) $35.0 $30.0 $25.0 c $20.0 $15.0 2 II II $10.0 $5.0 $ . ■ Water Sanitary Sewer Storm Drainage Solid Waste Nonmajor Business-Type Activities •Expenses •Charges for Service Generally, revenue collected from user fees of the City's utility systems exceed expenses. In 2022 there was one exception which was the Solid Waste fund. In order to mitigate rate increases for solid waste services in 2022 and 2023, a portion of the accumulated fund balance was used. Therefore, an full cost recovery model was intentionally not in effect for 2022. The following chart shows the relative net position balances for each business-type fund: Business Type Net Position—By Fund Airport,4% Cemetery,1% Solid Waste,1% Water,34% Storm Drainage, 27% Sewer,32% 24 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis The majority of the City's enterprise net position in enterprise funds relates to capital asset infrastructure, such as water and sewer mains and the airport runway. As such, most of the net position is not available to support the ongoing expenditures of the funds. Additionally, some activities such as water, sewer, and storm serve a greater number of customers and have significantly more expensive infrastructure needs, therefore their net position typically remains higher to properly fund future investments. Financial Analysis of Governmental Funds The purpose of the City's governmental funds is to report on near-term revenues/financial resources and expenditures. This information will help determine the City's financial requirements in the near future. Specifically, fund balance is a good indicator of the City's financial resources. As of December 31, 2022, the City's governmental funds had combined fund balances of $105.6 million, an increase of $12.7 million or 13.6% over the previous year. This change was primarily a result of changes in fund balances in the City's general fund ($10.3 million) and capital improvement fund ($2.1 million). The following table shows the changes in fund balance between 2021 and 2022: Changes in Fund Balance - By Fund 2022 2021 Difference General fund $ 58,171,881 $ 47,900,705 $ 10,271,176 Arterial street fund 2,350,156 2,710,488 (360,332) Capital improvement fund 16,134,370 14,082,918 2,051,452 Mitigation fund 15,849,622 16,041,880 (192,258) Cemetery endowment fund 2,201,305 2,106,447 94,858 All other government funds 10,858,179 10,054,106 804,073 Total $ 105,565,513 $ 92,896,544 $ 12,668,969 Of the government funds' total fund balances, $46.1 million is unassigned. Nonspendable, restricted, committed and assigned fund balances account for the remaining $59.5 million. Of this, $18.5 million is either committed or assigned for capital projects, $26.7 million is in special revenue funds that are restricted for specific purposes and $2.1 million is nonspendable principal balances in endowment fund (permanent fund). 25 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis The following chart shows how the total $105.6 million governmental fund balances are allocated, by relative fund: Governmental Funds—Fund Balances All other government funds, Cemetery 10% endowment fund, 2% Mitigation fund, 15% General fund,55% Capital improvement fund,I 15% I Arterial street fund,2% The General Fund is the primary operating fund of the City,which accounts for 55%of all governmental fund balances. All receipts and payments of ordinary City operations are processed through it unless they are required to be accounted for in another fund. At the end of 2022, the general fund had a fund balance of $58.2 million, $12.1 million of which is assigned or committed, and $46.0 million is unassigned. This increase of $10.3 million over 2021 is attributed to revenue increases by approximately $14.1 million; at the same time, expenditures only increased by about $9.7 million over 2021. The most significant contributors to the increase in the City's general fund growth between 2021 and 2022 were: • Increased Property Tax $ 1.1 million • Increased sales and use tax revenue 1.0 million • Business and Occupation tax 4.7 million Other funds that had significant fund balances include: • $2.4 million in the Arterial Street fund, used specifically for major street improvement projects. Most of these projects are funded with state and federal grants, motor vehicle excise tax, and impact mitigation fees. • $16.1 million in the Capital Improvement fund, used for various governmental capital asset projects. The fund balance increased by $2.1 million due to the collection of Real Estate Excise Tax that exceeds capital spending. • $28.9 million in all other government funds, increased by $0.7 million over 2021: o $15.8 million of this fund balance is in the mitigation fund, which accounts for the collection of park and traffic impact and mitigation fees that are ultimately used for capital projects. The fund decreased 26 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis by $0.2 million between 2021 and 2022 due to lower collections of developer impact fees, but consistent levels of capital spending compared to 2021. o The remaining $13.1 million of this fund balance is comprised of the City's arterial and local street preservation funds, cemetery maintenance, hotel/motel tax, and municipal parks construction fund. These funds — in aggregate — increased by about $0.9 million largely due to lower-than-expected spending on street projects. • General fund revenue increased by $6.0 million, sources of which are shown in the chart below. Property taxes increased by $1.1 million while sales taxes increased by $1.0 million from 2021. Over the same period, utility and other taxes decreased by a net of $0.9 million, licenses and permits decreased by $0.7 million, charges for services decreased by $0.1 million, fines & forfeitures decreased by $0.04 million, intergovernmental revenues increased by $0.1 million, and miscellaneous revenues increased by $0.7 million. 2022 General Fund Revenue Changes- By Source Miscellaneous Investment Earnings ■ Fines and Forfeitures Charges for Services Intergovernmental ■ Licenses and Permits Business and Occupation Tax =._. Excise Tax Utility Tax M Interfund Utility Tax Retail Sales &Use Tax Property Tax (1,000,000) 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 Financial Analysis of Proprietary Funds The City's proprietary funds provide the same type of information as found in the government-wide financial statements, but in greater detail. Factors affecting the finances of the City's proprietary funds have already been addressed in the discussion of the City's business-type activities. General Fund Budgetary Highlights The City budgets biennially by adopting two single-year budgets at the end of each even-numbered year and then making adjustments as necessary via budget amendments throughout the biennium. Major amendments to the 2022 budget included: • Budgeted general fund expenditures and transfers out increased from $85.6 million to $113.8 million. Significant changes include expenditures associated with new grants and ARPA funding, a one-time transfer to the City's cumulative reserve fund. Reasons for the variances in the general fund between the final budget and actual results include: 27 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis • Actual General Fund revenues totaled $99.2 million, or 10.5% above budget. Significant areas of favorable variance include business and occupation tax,which exceeded budget by $3.9 million; sales and use taxes,which exceeded budget by $2.2 million; property tax, which exceeded budget by $1.2 million; and interfund solid waste taxes, which were $890,000 above budget. All areas of favorable variance are a factor of stronger than expected economic activity. Areas of unfavorable variance include interfund sewer taxes, which were $1.9 million below budget due to the City no longer applying this tax to the pass-through King County Metro sewerage charges, and traffic infraction revenues, which were $260,000 under budget. • Actual general fund expenditures, including transfers out, totaled $88.9 million and were under budget by $1.0 million. Departments experienced savings due to lower than anticipated salary and benefit payments due to continued vigilance in monitoring city-wide expenditures, as well as large amounts of employee attrition. Significant areas of under-expenditure include reduced personnel costs—largely due to vacancies—and reduced professional services contracts and other miscellaneous expenditures. Capital Asset and Debt Administration Capital Assets The City's investment in capital assets for both its governmental and business-type activities as of December 31, 2022 totaled $665.4 million (net of accumulated depreciation), an increase of $2.6 million from 2021. This investment in capital assets includes land, buildings, improvements, machinery and equipment, construction in progress, utility transmission/distribution systems, roads, bridges, and other infrastructure. Major capital asset changes during the year include: • Developer contributions resulted in an increase of $2.5 million in utility infrastructure assets and $1.8 million in governmental infrastructure assets. • $11.8 million was spent by proprietary funds on construction projects during the year. A substantial portion of this was funded with bond proceeds which were collected in a bond issued in mid-2020. $13.5 million was spent by governmental funds on construction projects during the year. Some of the larger projects in the governmental funds include: $2.0 million for 4th Street SE Preservation, $1.5 million for Auburn Arts and Culture Center Renovation, $1.3 million for Lead Service Line Replacement, $0.8 million for 2nd Street SE Preservation, $0.8 million for Lea Hill-Auburn 19 Bridge Deck Preservation, $0.7 million for High Friction Surface Treatment, and $0.7 million for the 2021 annual Local Street Preservation program. A summary of the City's capital assets follows: Summary of Capital Assets (net of depreciation) Governmental Activities Business-type Activities Total As of 12/31/2022 As of 12/31/2021 As of 12/31/2022 As of 12/31/2021 As of 12/31/2022 As of 12/31/2021 Land 108,373,418 $ 109,092,635 $ 13,177,445 $ 12,938,077 $ 121,550,863 $ 122,030,712 Construction in progress 9,027,389 4,807,230 8,775,229 8,797,449 17,802,618 13,604,679 Buildings 50,411,699 52,139,402 1,481,293 1,581,088 51,892,992 53,720,490 Improvements other than buildings 9,830,266 9,948,293 233,080,013 227,899,878 242,910,279 237,848,171 Machinery and equipment 9,767,967 9,330,562 182,649 230,817 9,950,616 9,561,379 Intangibles 504,458 509,393 8,758,773 7,823,968 9,263,231 8,333,361 Infrastructure 212,001,017 217,715,903 - - 212,001,017 217,715,903 $ 399,916,214 $ 403,543,419 $ 265,455,402 $ 259,271,276 $ 665,371,616 $ 662,814,695 More detailed information on capital assets is provided in Note 6. 28 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis Long-term Debt At the end of the current fiscal year, the City had total net bonded debt outstanding of $61.4 million. Of this amount, $15.9 million is due to other governments, $17.9 million is general obligation bonds, and $26.7 million is revenue bonds for the water, sewer and storm utilities. The City currently maintains a rating of Aa3 with Moody's and a rating of AA+ with Standard & Poor's for its general obligation debt. The following schedule summarizes the City's bonded debt: Governmental Business-type Activities Activities Total General obligation bonds $ 17,931,209 $ - $ 17,931,209 Special assessment bonds - - - Revenue bonds - 27,570,000 27,570,000 Due to other governments $ 15,888,965 - 15,888,965 $ 33,820,174 $ 27,570,000 $ 61,390,174 In addition, the City has an outstanding $5.0 million in non-bonded long-term debt with 8 separate Public Works Trust Fund and Drinking Water Loans. Washington State law limits the amount of general obligation debt a governmental entity may issue to 7.5% of its total assessed value. Of the 7.5% limit, 2.5% is for general purposes, 2.5% is for open spaces/parks, and 2.5% is for utilities. Non-voted (limited tax) general obligation indebtedness is limited to 1.5% of assessed valuation. The combination of unlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of assessed valuation. Additional information can be found in note 9 and in the statistical section of this report. Economic Factors The past year realized modest growth over 2021. Most positive economic impacts were seen in sales and retail taxes, which were much greater than expected. Continued pent up demand for goods and services and inflationary costs of goods results in strong sales and use tax revenue collections. However,decreased building permit activity and developer investments may be indicators of future economic slowing. Real property values, which had finally recovered to pre- recession levels by 2016, continued to grow and assessed valuation grew an additional 9% in 2022. While economic recovery remained stable though 2022 following a strong 2021, there are continued concerns of an impending recession,fueled by high rates of inflation triggered by increasing labor costs, scarcity of goods, and continued increases by the federal reserve. The City is considering the strong revenue activity in 2022 as short-term and will be leveraging the increased revenue towards one-time uses. Prior to experiencing the strong economic conditions of 2021, the City was facing a fiscal imbalance (expenditure growth outpacing revenue growth) in the next two biennium. While 2021 and 2022 have provided a slight reprieve, this imbalance is expected to return if smart fiscal policies and spending are not adhered to and/or new funding sources are not considered. Therefore, the City remains cautious and continues to vigilantly monitor and control its expenditures in order to live within the City's means. Requests for Information This financial report is designed to provide a general overview of the City of Auburn's finances for readers with an interest in the City's finances. Questions concerning this report, or requests for additional information, may be addressed to the Finance Director, City of Auburn, 25 West Main Street, Auburn WA 98001-4998. 29 City of Auburn: 2022 Annual Comprehensive Financial Report Management's Discussion and Analysis * * CITY OF AUBURN * WASHINGTON 30 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements GOVERNMENT-WIDE FINANCIAL STATEMENTS The City presents two government-wide financial statements. The Statement of Net Position This statement provides information all on city assets, liabilities, and deferred outflows/inflows of resources with the net difference reported as net position. The Statement of Activities This statement is focused on both the gross and net cost of various functions, including both governmental and business-type activities. The governmental activities are principally supported by taxes and intergovernmental revenues. The business-type activities are intended to recover all, or a significant portion, of their costs through user fees and charges. 31 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements 11 CITY OF AUBUR WASHINGTON 32 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF NET POSITION December 31,2022 Primary Government Governmental Business-Type Activities Activities Total ASSETS: Cash and Cash Equivalents(Note 2) $ 85,166,484 $ 64,723,010 $ 149,889,494 Investments(Note 2) 19,196,650 4,566,850 23,763,500 Receivables Taxes 615,079 - 615,079 Customer Accounts 1,027,639 9,601,761 10,629,400 Other Receivables 4,884,821 201,652 5,086,473 Due From Other Governmental Units(Note 5) 3,564,801 371,973 3,936,774 Internal Balances 317,641 (317,641) - Materials and Supplies Inventory 452,809 376,526 829,335 Restricted Assets: Temporarily Restricted: Cash and Cash Equivalents(Note 2) 23,559,533 7,410,043 30,969,576 Due From Other Governmental Units(Note 5) 2,842,655 - 2,842,655 Permanently Restricted: Cash and Cash Equivalents(Note 2) 2,070,670 - 2,070,670 Prepaids 95,000 - 95,000 Long-Term Contracts, Leases and Notes 2,044,362 7,704,940 9,749,302 Net Pension Asset(Note 8) 18,676,810 2,532,355 21,209,165 Investment in Joint Ventures(Note 13) 38,830,035 - 38,830,035 Depreciable Assets(Net of Accumulated Depreciation) (Note 6) 282,515,407 234,743,955 517,259,362 Non-Depreciable Assets(Note 6) 117,400,807 30,711,447 148,112,254 Total Assets 603,261,203 362,626,871 965,888,074 DEFERRED OUTFLOWS OF RESOURCES: Deferred Outflows from Bond Refunding 514,431 142,317 656,748 Deferred Outflows related to Pensions(Note 8) 11,874,343 2,491,422 14,365,765 Total Deferred Outflow of Resources 12,388,774 2,633,739 15,022,513 LIABILITIES: Accounts Payable 9,775,919 8,075,451 17,851,370 Other Liabilities Payable 558,196 - 558,196 Payable From Restricted Assets: Accrued Interest 6,577 1,360,843 1,367,420 Deposits - 299,101 299,101 Unearned Revenue 10,265,763 - 10,265,763 Net Penion Liability(Note 8) 2,881,384 2,033,135 4,914,519 Employee Leave Benefits-Compensated Abscences Due Within One Year(Note 7) 2,918,535 609,001 3,527,536 Due in More Than One Year(Note 7) 1,119,599 233,623 1,353,222 Bonds and Other Debt Payable: Due Within One Year(Note 7) 1,320,109 2,543,062 3,863,171 Due in More Than One Year(Note 7) 22,681,104 33,224,833 55,905,937 Lease Payable: Due Within One Year(Note 7) 262,717 - 262,717 Due in More Than One Year(Note 7) 4,406,022 - 4,406,022 Due to Other Governmental Units: Due Within One Year(Note 7) 695,306 - 695,306 Due in More Than One Year(Note 7) 15,193,659 - 15,193,659 OPEB Liability Due Within One Year(Note 9) 455,000 - 455,000 Due in More Than One Year(Note 9) 10,501,157 - 10,501,157 Other Non-Current Liabilities: Total Firemen's Pension Liability(Note 8) 2,498,278 - 2,498,278 Total Liabilities 85,539,325 48,379,049 133,918,374 DEFERRED INFLOWS OF RESOURCES: Deferred Inflows related to Leases(Note 18) 2,162,113 7,266,687 9,428,800 Deferred Inflows related to Pensions(Note 8) 10,987,566 2,776,829 13,764,395 Total Deferred Inflows of Resources 13,149,679 10,043,516 23,193,195 NET POSITION Net Investment in Capital Assets 371,760,693 230,412,106 602,172,799 Restricted: Capital Projects 37,643,124 - 37,643,124 Nonexpendable Permanent Endowment 2,070,670 - 2,070,670 Debt Service 1,702 4,587,016 4,588,718 Tourist Promotion 464,299 - 464,299 Drug Investigation and Enforcement 1,116,248 - 1,116,248 Community Development Block Grant Program 42,904 - 42,904 Central Business District Development 133,695 - 133,695 Rate Stabilization - 438,483 438,483 Pension Asset 18,676,810 2,532,355 21,209,165 Unrestricted 85,050,827 68,868,085 153,918,912 Total Net Position $ 516,960,973 $ 306,838,045 $ 823,799,018 The notes to the basic financial statements are an integral part of this statement. 33 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF ACTIVITIES For the Year Ended December 31, 2022 Pagel of2 Program Revenues Charges Operating Capital for Services Grants and Grants and Expenses and Fines Contributions Contributions FUNCTIONS / PROGRAMS: Primary Government Governmental Activities: General Government $ 14,735,664 $ 4,506,672 $ 3,238,751 $ - Public Safety 38,402,492 1,006,147 3,022,558 20,530 Transportation 18,517,806 1,796,513 340,000 6,628,014 Physical Environment 3,597,960 427,515 - 264,982 Culture and Recreation 14,800,322 2,715,193 154,251 713,519 Economic Environment 4,662,845 2,015,619 643,285 367,994 Health and Human Resources 2,179,401 - - 649,942 Interest on Long-Term Debt 677,414 - - - 97,573,904 12,467,659 7,398,845 8,644,981 Business-Type Activities Water 14,094,553 16,459,868 - 1,772,439 Sanitary Sewer 28,481,203 28,925,941 - 666,761 Storm Drainage 10,370,729 10,985,794 - 1,408,167 Solid Waste 26,457,098 25,099,818 - - Nonmajor Business-Type Activities 3,754,361 3,399,655 - - 83,157,944 84,871,076 - 3,847,367 Total Primary Government $ 180,731,848 $ 97,338,735 $ 7,398,845 $ 12,492,348 General Revenues: Taxes: Property Retail Sales and Use Interfund Utility Utility Excise Business and Occupation Other Investment Earnings Other Revenues Gain on Sale of Capital Assets Contributions to Endowment Funds Transfers (Note 4) Total General Revenues Change in Net Position Net Position, January 1 Net Position, December 31 The notes to the basic financial statements are an integral part of this statement. 34 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements Page 2 of 2 Net(Expense) Revenue and Changes in Net Position Governmental Business-Type Activities Activity Total $ (6,990,241) $ - $ (6,990,241) (34,353,257) - (34,353,257) (9,753,279) - (9,753,279) (2,905,463) - (2,905,463) (11,217,359) - (11,217,359) (1,635,947) - (1,635,947) (1,529,459) - (1,529,459) (677,414) - (677,414) (69,062,419) - (69,062,419) 4,137,754 4,137,754 1,111,499 1,111,499 2,023,232 2,023,232 (1,357,280) (1,357,280) (354,706) (354,706) 5,560,499 5,560,499 $ (69,062,419) $ 5,560,499 $ (63,501,920) $ 24,635,089 $ - $ 24,635,089 26,295,124 - 26,295,124 6,396,937 - 6,396,937 9,532,991 - 9,532,991 6,110,151 - 6,110,151 4,664,551 - 4,664,551 4,635,655 - 4,635,655 815,061 1,068,685 1,883,746 802,501 1,190,521 1,993,022 923,345 4,250 927,595 63,313 - 63,313 304,449 (304,449) - 85,179,167 1,959,007 87,138,174 16,116,748 7,519,506 23,636,254 500,844,225 299,318,539 800,162,764 $ 516,960,973 $ 306,838,045 $ 823,799,018 35 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements * * CITY OF AUBURN WASHINGTON 36 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements MAJOR GOVERNMENTAL FUNDS General Fund The general fund accounts for all of the City's financial resources except those required by statute or generally accepted accounting principles to be accounted for in another fund. As is the case with most municipalities, the general fund is the largest and most important accounting entity of the City. As noted in the statements that follow, the general fund receives the bulk of its revenues from local taxes, followed by State shared revenues, service charges, and other income. The general fund is accounted for on a modified accrual basis. Biennial budgets are adopted with appropriations lapsing at the end of each year of the biennium. Arterial Street Fund This fund is supported by the State of Washington's motor vehicle fuel tax and by various grants and is used for major street construction. Capital Improvement Projects Fund This fund accounts for major capital acquisitions, and streets and parks construction projects. American Rescue Plan Act Fund The fund was created to track Federal funding from the coronavirus rescue package designed to facilitate the recovery from the devasting economic impacts and public health emergency effects of the COVID-19 pandemic. Mitigation Fees Accounts for the receipt of contracted mitigation fees for streets and fire service. 37 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington BALANCE SHEET GOVERNMENTAL FUNDS December 31,2022 American Other Total General Arterial Capital Rescue Plan Mitigation Governmental Governmental Fund Street Improvement Act(ARPA) Fees Funds Funds ASSETS: Cash and Cash Equivalents $ 36,415,687 $ 1,493,163 $ 16,377,443 $ 10,220,763 $ 15,859,731 $ 12,373,620 $ 92,740,407 Investments(Note 2) 19,196,650 - - - - - 19,196,650 Receivables: - Taxes 319,647 - - - - 295,432 615,079 Customer Accounts 889,114 72,198 - - - 282 961,594 Other Receivables 4,523,571 - - - - 296,787 4,820,358 Interfund Receivable(Note 4) 150,000 - - - - - 150,000 Inventories 57,740 - - - - - 57,740 Long-Term Notes,Leases and Contracts 1,671,437 - - - - 372,925 2,044,362 Due From Other Governmental Units(Note 5) 3,408,983 1,542,029 56,093 - - 1,244,533 6,251,638 Prepaids - - - - - 95,000 95,000 Total Assets 66,632,829 3,107,390 16,433,536 10,220,763 15,859,731 14,678,579 126,932,828 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Liabilities: Current Payables 4,614,873 712,234 299,166 - 10,109 909,589 6,545,971 Customer Deposits 188,588 - - - - - 188,588 Interfund Payable(Note 4) - - - - - 150,000 150,000 Other Liabilities Payable 246,798 - - - - - 246,798 Unearned Revenue - 45,000 - 10,220,763 - - 10,265,763 Total Liabilities 5,050,259 757,234 299,166 10,220,763 10,109 1,059,589 17,397,120 Deferred Inflow of Resources: Unavailable Revenue-Other 1,808,082 - - - - - 1,808,082 Deferred Inflows Related to Leases(Note 8) 1,602,607 - - - - 559,506 2,162,113 Total Deferred Inflow of Resources 3,410,689 - - - - 559,506 3,970,195 Fund Balances:(Note 1) Nonspendable 57,740 - - - - 95,000 152,740 Nonspendable Permanent Endowment - - - - - 2,070,670 2,070,670 Restricted - 2,350,156 15,411,665 - 15,750,083 5,695,529 39,207,433 Committed 1,311,450 - - - - 4,219,956 5,531,406 Assigned 10,801,447 - 722,705 - 99,539 978,329 12,602,020 Unassigned 46,001,244 - - - - - 46,001,244 Total Fund Balances: 58,171,881 2,350,156 16,134,370 - 15,849,622 13,059,484 105,565,513 Total Liabilities,Deferred Inflows and Fund Balances $ 66,632,829 $ 3,107,390 $ 16,433,536 $ 10,220,763 $ 15,859,731 $ 14,678,579 $ 126,932,828 The notes to the basic financial statements are an integral part of this statement. 38 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington RECONCILIATION OF BALANCE SHEET OF GOVERNMENT FUNDS TO THE STATEMENT OF NET POSITION December 31,2022 Total governmental fund balances as reported on this statement $ 105,565,513 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 390,512,481 not reported in the governmental funds. Other non-current assets used in governmental activities are not financial resources and therefore are not reported in the governmental funds. Net Investment in Joint Ventures(excess of$38,830,035 of investment over$15,888,965 of due to other governments) 22,941,070 Interest receivable 64,463 Net pension asset(excess of$18,676,810 of total net pension assets over$944,903 of net pension assets for internal service funds) 17,731,907 40,737,440 Other long-term assets are not available to pay for current-period expenditures and therefore are reported as unavailable revenue in the governmental funds. Unavailable revenue beyond the city's 30-day measurable and available period 1,808,082 1,808,082 Internal service funds are used by management to charge the cost of certain activities,such as insurance,fleet maintenance and information technology,to individual funds. The assets and liabilities of these internal service 24,638,899 funds are included in governmental activities in the statement of net position. Some liabilities are not due and payable in the current period and therefore are not reported in the governmental funds. Bonds and loans payable (20,636,375) lease liability (4,467,116) Premium on bonds payable (3,364,838) Deferred amount on bond refunding 514,431 Deferred amounts related to pensions 927,203 Interest payable (128,323) Firemen's pension liability (2,498,278) Net pension liability (1,969,337) Total OPEB liability (10,956,157) Compensated absences payable (3,722,653) (46,301,442) Net position of government activities as reported on the statement of net position $ 516,960,973 The notes to the basic financial statements are an integral part of this statement. 39 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE GOVERNMENTAL FUNDS For the Year Ended December 31,2022 American Other Total General Arterial Capital Rescue Plan Mitigation Governmental Governmental Fund Street Improvement Act(ARPA) Fees Funds Funds REVENUES: Taxes: Property $ 24,358,448 $ - $ - $ - $ - $ 279,460 $ 24,637,908 Retail Sales&Use 26,045,124 - - - - 250,000 26,295,124 Interfund Utility 5,772,912 - - - - 624,025 6,396,937 Utility 7,866,680 - - - - 1,666,311 9,532,991 Excise 875,277 - 5,044,897 - - 189,977 6,110,151 Business and Occupation 4,664,551 - - - - - 4,664,551 Other - - - - - 885 885 Licenses and Permits 2,275,480 - - - - - 2,275,480 Intergovernmental 7,214,230 2,956,741 408,840 2,957,500 - 3,749,477 17,286,788 Charges for Services 8,394,613 - 289,973 - 1,692,835 122,109 10,499,530 Fines and Forfeitures 390,200 - - - - - 390,200 Investment Earnings (111,614) 30,309 227,589 - 232,042 186,198 564,524 Miscellaneous 1,378,714 173,498 - - - 464,683 2,016,895 Total Revenues 89,124,615 3,160,548 5,971,299 2,957,500 1,924,877 7,533,125 110,671,964 EXPENDITURES: Current: General Government 14,517,861 - - - - - 14,517,861 Security of Persons and Property 40,245,089 - - - - 314,648 40,559,737 Physical Environment 4,321,115 - - - - - 4,321,115 Transportation 3,726,729 4,427,730 - - - 6,380,851 14,535,310 Economic Environment 3,841,187 - - - - 1,196,100 5,037,287 Health and Human Services 1,982,524 - - - - - 1,982,524 Culture and Recreation 13,957,709 - - - - 1,251 13,958,960 Debt Service: Principal 218,008 197,376 - - - 1,082,558 1,497,942 Interest and Other Costs 62,097 8,663 - - - 797,682 868,442 Capital Outlay 4,766,297 - 2,994,978 - - 669,917 8,431,192 Total Expenditures 87,638,616 4,633,769 2,994,978 - - 10,443,007 105,710,370 Excess(Deficiency)of Revenues Over(Under) Expenditures 1,485,999 (1,473,221) 2,976,321 2,957,500 1,924,877 (2,909,882) 4,961,594 OTHER FINANCING SOURCES (USES): Sales of Capital Assets 2,226,784 - - - - - 2,226,784 Insurance Recoveries 103,473 - - - - - 103,473 Leases 4,685,125 - - - - - 4,685,125 Transfers In(Note 4) 3,033,653 1,112,889 1,891,028 - - 3,810,966 9,848,536 Transfers Out(Note 4) (1,263,858) - (2,815,897) (2,957,500) (2,117,135) (2,153) (9,156,543) Total Other Financing Sources and Uses 8,785,177 1,112,889 (924,869) (2,957,500) (2,117,135) 3,808,813 7,707,375 Net Change in Fund Balances 10,271,176 (360,332) 2,051,452 - (192,258) 898,931 12,668,969 Fund Balances-January 1,as Previously Reported 47,900,705 2,710,488 14,082,918 - 16,041,880 12,160,553 92,896,544 Fund Balances-Ending $ 58,171,881 $ 2,350,156 $ 16,134,370 $ - $ 15,849,622 $ 13,059,484 $105,565,513 The notes to the basic financial statements are an integral part of this statement. 40 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENT FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31,2022 Net change in fund balances per the Statement of Revenues, Expenditures and Changes in Fund Balance $ 12,668,969 Amount reported as change in net position 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 outlay($8,431,192), transportation($10,214,367), economic environment($12,997), and health&human services($61,019) 90,463 exceeded depreciation ($18,629,112) in the current period. Certain Capital and Joint Venture activities do not use or provide current financial resources but increase net position. 873,725 Governmental funds report sales of assets as other financing sources while the Statement of Activities reports only the gain or loss on sale of capital assets. (1,349,134) Debt proceeds are reported as financing sources in governmental fund and thus contribute to the change in fund balances. In the government-wide statements, however, issuing debt increases long-term liabilities in the statement of net position and does not affect the statement of activities. Lease liability (4,685,125) (4,685,125) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds: Property taxes (2,819) Other unavailable revenue 292,569 Amortization of bond premium 190,426 Investment interest receivable (1,496) 478,680 Developer contributions and annexation of infrastructure assets are reported as revenue in the statement of activities, but do not provide current financial resources and are not reported as fund revenue. 1,808,809 Repayment of the principal of long-term debt consumes the current financial resources of governmental funds but has no effect on the net position. 1,497,942 Internal service funds are used by management to charge the costs of certain activities, such as insurance and fleet maintenance,to individual funds. The net revenue(expense) of certain internal service funds is reported with governmental activities. (313,257) Some expenses 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. Amortization of prepaids (109,354) Change in accrued interest payable 602 Change in net pension liability or asset 3,062,634 Change in total OPEB liability 2,414,154 Change in compensated absences payable (322,360) 5,045,676 Change in net position on the Statement of Activities $ 16,116,748 The notes to the basic financial statements are an integral part of this statement. 41 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL GENERAL FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Property $ 23,198,400 $ 23,198,400 $ 24,358,448 $ 1,160,048 Retail Sales& Use 20,292,300 22,792,300 26,045,124 3,252,824 Interfund Utility 6,779,000 6,779,000 5,772,912 (1,006,088) Utility 7,867,300 7,867,300 7,866,680 (620) Excise 552,100 552,100 875,277 323,177 Business and Occupation 4,800,000 500,000 4,664,551 4,164,551 Licenses and Permits 2,264,300 2,264,300 2,275,480 11,180 Intergovernmental 4,412,320 7,480,195 7,109,569 (370,626) Charges for Services 7,951,430 8,185,520 8,394,613 209,093 Fines and Forfeitures 731,400 885,400 390,200 (495,200) Investment Earnings 91,200 91,200 (60,685) (151,885) Miscellaneous 949,500 1,129,000 1,378,714 249,714 Total Revenues 79,889,250 81,724,715 89,070,883 7,346,168 EXPENDITURES: Current: General Government 15,220,641 17,325,367 14,517,861 2,807,506 Security of Persons and Property 41,773,411 44,104,050 40,020,940 4,083,110 Physical Environment 4,183,506 4,700,506 4,321,115 379,391 Transportation 4,204,404 4,040,654 3,726,729 313,925 Economic Environment 4,712,187 5,279,841 3,841,187 1,438,654 Health and Human Services 1,000,237 3,527,561 1,982,524 1,545,037 Culture and Recreation 14,129,330 15,378,110 13,957,709 1,420,401 Capital Outlay 10,000 10,000 4,766,297 (4,756,297) Total Expenditures 85,233,716 94,366,089 87,414,467 6,951,622 Excess (Deficiency) of Revenues Over (Under) Expenditures (5,344,466) (12,641,374) 1,656,416 14,297,790 OTHER FINANCING SOURCES (USES): Sales of Capital Assets - - 197,000 197,000 Issuance of Debt- Leases - - 4,685,125 4,685,125 Insurance Recoveries 25,000 225,000 103,473 (121,527) Transfers In (Note 4) 2,024,000 4,983,661 3,033,653 (1,950,008) Transfers Out (Note 4) (371,300) (19,428,879) (19,344,127) 84,752 Total Other Financing Sources and Uses 1,677,700 (14,220,218) (11,324,876) 2,895,342 Net Change in Fund Balances (3,666,766) (26,861,592) (9,668,460) 17,193,132 Fund Balances- Beginning 10,524,785 35,357,368 35,357,368 - Fund Balances- Ending $ 6,858,019 $ 8,495,776 $ 25,688,908 $ 17,193,132 RECONCILIATION OF PERSPECTIVE DIFFERENCE BETWEEN BUDGETARY INFORMATION AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP): The Cumulative Reserve Fund is combined with the General Fund for purposes of GASB Statement 54 30,592,441 The Fire, Relief& Pension Fund is combined with the General Fund for purposes of GASB Statement 73 1,890,532 Fund Balance- Ending (GAAP) $ 58,171,881 The notes to the basic financial statements are an integral part of this statement. 42 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ARTERIAL STREET FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Intergovernmental $1,170,000 $4,198,072 $2,956,741 ($1,241,331) Charges for Services 1,500,000 135,000 - (135,000) Investment Earnings 2,100 2,100 30,309 28,209 Miscellaneous 250,000 300,000 173,498 (126,502) Total Revenues 2,922,100 4,635,172 3,160,548 (1,474,624) EXPENDITURES: Current: Transportation 5,686,200 11,746,368 4,427,730 7,318,638 Debt Service Principal 197,400 197,400 197,376 24 Interest and Other Costs 8,800 8,800 8,663 137 Total Expenditures 5,892,400 11,952,568 4,633,769 7,318,799 Excess (Deficiency) of Revenues Over (Under Expenditures (2,970,300) (7,317,396) (1,473,221) 5,844,175 OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 2,856,200 5,615,465 1,112,889 (4,502,576) Total Other Financing Sources and Uses 2,856,200 5,615,465 1,112,889 (4,502,576) Net Change in Fund Balances (114,100) (1,701,931) (360,332) 1,341,599 Fund Balances - Beginning 427,309 2,710,488 2,710,488 - Fund Balances - Ending $ 313,209 $ 1,008,557 $ 2,350,156 $ 1,341,599 The notes to the basic financial statements are an integral part of this statement. 43 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn, Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL AMERICAN RESCUE PLAN ACT (ARPA) SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Intergovernmental $ - $ 6,036,766 $ 2,957,500 $ (3,079,266) Total Revenues - 6,036,766 2,957,500 (3,079,266) EXPENDITURES: Current: General Government - 328,400 - 328,400 Total Expenditures - 328,400 - 328,400 Excess (Deficiency) of Revenues Over (Under) Expenditures - 5,708,366 2,957,500 (2,750,866) OTHER FINANCING SOURCES (USES): Transfers Out (Note 4) - (5,708,366) (2,957,500) 2,750,866 Total Other Financing Sources (Uses) - (5,708,366) (2,957,500) 2,750,866 Net Change in Fund Balances - - - - Fund Balances- Beginning - - - - Fund Balances- Ending $ - $ - $ - $ - The notes to the basic financial statements are an integral part of this statement. 44 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn, Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL MITIGATION SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: TAXES: Charges for Services $ 1,106,400 $ 1,106,400 $ 1,692,835 $ 586,435 Investment Earnings 55,500 55,500 232,042 176,542 Total Revenues 1,161,900 1,161,900 1,924,877 762,977 EXPENDITURES: Current: Security of Person & Property 543,700 68,700 - 68,700 Total Expenditures 543,700 68,700 - 68,700 Excess (Deficiency) of Revenues Over (Under) Expenditures 618,200 1,093,200 1,924,877 831,677 OTHER FINANCING SOURCES (USES): Transfers Out (Note 4) (5,307,750) (7,221,094) (2,117,135) 5,103,959 Total Other Financing Sources (Uses) (5,307,750) (7,221,094) (2,117,135) 5,103,959 Net Change in Fund Balances (4,689,550) (6,127,894) (192,258) 5,935,636 Fund Balances - Beginning 9,372,642 16,041,880 16,041,880 - Fund Balances - Ending $ 4,683,092 $ 9,913,986 $ 15,849,622 $ 5,935,636 The notes to the basic financial statements are an integral part of this statement. 45 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements * * CITY OF AUBURN WASHINGTON 46 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements MAJOR PROPRIETARY FUNDS ENTERPRISE FUNDS The City's enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations. The goods and services these funds provide to the general public are primarily financed by service charges. Enterprise funds are self-supporting and use the accrual method of accounting. Auburn has four major enterprise funds. The Water Fund This fund accounts for all maintenance, construction, and debt service requirements associated with Auburn's water system. The Sanitary Sewer Fund This fund accounts for maintenance, construction, and debt requirements for Auburn's sanitary sewer system. The Storm Drainage Fund This fund accounts for the maintenance, construction and debt service requirements of Auburn's storm drainage system. The Solid Waste Fund Garbage collection services for the City are accounted for in this fund, supported almost entirely by garbage collection fees. Expenses include payment to the City's garbage contractor and other service charges. 47 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF NET POSITION PROPRIETARY FUNDS December 31,2022 Governmental Enterprise Funds Activities Non-Major Total Sanitary Storm Solid Enterprise Enterprise Internal Water Sewer Drainage Waste Funds Funds Service Funds ASSETS: Current Assets Cash and Cash Equivalents $ 13,826,776 $ 22,972,741 $ 16,689,485 $ 7,603,264 $ 3,630,744 $ 64,723,010 $ 18,056,280 Investments - - 4,566,850 - - 4.566.850 - Restricted Cash: Bond Payments 2,183,144 438,395 658,088 - - 3,279,627 - Customer Deposits 104,070 61,527 3,422 - 130,082 299,101 - Other(Reserve for Bonds and Rate Stabilization) 2,448,053 294,444 1,088,818 - - 3,831,315 - Customer Accounts 2,203,858 4.504.623 1,796,825 1,096.237 218 9,601,761 66,045 Other Receivables - - 7,104 - 194,548 201,652 - Due From Other Governmental Units - - 122,276 117,156 132,541 371,973 155,818 Inventories 313,273 12,867 10,414 - 39,972 376,526 395,069 Total Current Assets 21,079,174 28,284,597 24,943,282 8,816,657 4,128,105 87,251,815 18,673,212 Noncurrent Assets Long-Term Contracts,Leases and Notes - 578.400 - - 7,126,540 7,704.940 - Net Pension Asset 920,143 533,150 751,962 - 327,100 2,532,355 944,903 Capital Assets Not Being Depreciated: Land 1,283,524 1,695,023 5,937,014 - 4,261,885 13,177,446 - Intangible-Water Rights 8,758,773 - - - - 8,758,773 - Construction in Progress 6,283,865 883,132 1,135,843 - 472,388 8,775,228 90,807 Capital Assets: Buildings and Equipment 2,509,599 1,304,180 282,111 496,618 4,091,641 8,684,149 30,042,154 Improvements Other Than Buildings 167,888,532 114.548.300 93,201,563 - 15,517,893 391,156,288 512,390 Right of Use(Leases) - - - - - - 226,966 Less: Accumulated Depreciation (72,930,035) (43,318,870) (36,558,389) (496,618) (11,792,570) (165.096,482) (21,468,584) Total Capital Assets(Net of A/D) 113,794,258 75,111,765 63,998,142 - 12,551,237 265,455,402 9,403,733 Total Noncurrent Assets 114,714,401 76,223,315 64,750,104 - 20,004,877 275,692,697 10,348,636 Total Assets 135,793,575 104,507,912 89,693,386 8,816.657 24,132,982 362,944,512 29,021,848 DEFERRED OUTFLOW OF RESOURCES: Deferred Outflow from Bond Refunding 78,146 34,939 29,232 - - 142,317 - Deferred Outflow related to Pensions 866,866 535,880 820,313 70,567 197,796 2,491,422 956,486 Total Deferred Outflow of Resources 945,012 570,819 849,545 70,567 197,796 2,633,739 956,486 LIABILITIES: Current Liabilities: Current Payables 700,718 516,801 496,608 6,114,886 246,438 8,075,451 2,097,948 Claims Payable(Incurred but not Reported) - - - - - - 1,132,000 Loans Payable-Current 224,800 288.262 - - - 513.062 - Employee Leave Benefits-Current 172,114 151,157 246,831 5.254 33,645 609,001 228,012 Leases Payable-Current - - - - - - 40,269 Revenue Bonds Payable-Current 1,327,964 255,320 446,716 - - 2,030.000 - Payable From Restricted Assets: Accrued Interest 998,923 132,796 229,124 - - 1,360,843 1,064 Deposits 104,070 61,527 3,422 - 130,082 299,101 - Total Current Liabilities 3,528,589 1,405.863 1,422,701 6,120,140 410,165 12,887,458 3,499,293 Noncurrent Liabilities Employee Leave Benefits 66,026 57.986 94,689 2.015 12,907 233,623 87,469 Loans Payable 1,883,620 649,098 - - - 2,532,718 - Leases Payable - - - - - - 161,354 Revenue Bonds Payable 22,944,382 2,707,872 5,039,861 - - 30,692,115 - Net Pension Liability 1,478,887 328.393 128,697 97,158 - 2,033,135 912,047 Total Noncurrent Liabilities 26,372,915 3.743.349 5,263,247 99,173 12,907 35,491,591 1,160,870 Total Liabilities 29,901,504 5,149.212 6,685,948 6,219,313 423,072 48,379,049 4,660,163 DEFERRED INFLOW OF RESOURCES: Deferred Inflow related to Leases - - - - 7,266,687 7,266,687 - Deferred Inflow related to Pensions 1,048,485 605.888 829,830 14.456 278,170 2,776,829 996,913 Total Deferred Inflow of Resources 1,048,485 605.888 829,830 14.456 7,544,857 10.043,516 996,913 NET POSITION: Net Investment in Capital Assets: 87,779,897 71,568,397 58,512,575 - 12,551,237 230,412,106 9,202,110 Restricted for: Debt Service 3,265,869 242.859 1,078,288 - - 4.587.016 - Rate Stabilization - - 438,483 - - 438,483 - Pension Asset 920,143 533,150 751,962 - 327,100 2,532,355 944,903 Unrestricted 13,822,689 26,979,225 22,245,845 2,653,455 3,484,512 69,185,726 14,174,245 Total Net Position $105,788,598 $ 99,323,631 $ 83,027,153 $ 2,653,455 $ 16,362,849 $ 307,155,686 $ 24,321,258 Adjustment to reflect the consolidation of internal service funds related to enterprise funds (317,641) Net position of business-type activities $306,838,045 The notes to the basic financial statements are an integral part of this statement. 48 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31,2022 Governmental Enterprise Funds Activities Non-Major Total Sanitary Storm Solid Enterprise Enterprise Internal Water Sewer Drainage Waste Funds Funds Service Funds OPERATING REVENUES: Charges of Services $ 16,459,868 $ 28,925,941 $ 10,985,794 $ 25,099,818 $ 2,429,785 $ 83,901,206 $ 15,473,619 Other Operating Revenue - - - - 969,870 969,870 95,930 Total Operating Revenue 16,459,868 28,925,941 10,985,794 25,099,818 3,399,655 84,871,076 15,569,549 OPERATING EXPENSES: Operations&Maintenance 3,840,391 20,656,344 4,135,306 23,425,569 2,332,327 54,389,937 13,215,579 Administration 6,028,393 4,115,950 3,835,875 3,031,529 779,774 17,791,521 1,535,644 Depreciation/Amortization 3,533,926 2,478,902 1,837,459 - 616,789 8,467,076 1,996,538 Other Operating Expenses - - - - 25,471 25,471 - Total Operating Expenses 13,402,710 27,251,196 9,808,640 26,457,098 3,754,361 80,674,005 16,747,761 Operating Income(Loss) 3,057,158 1,674,745 1,177,154 (1,357,280) (354,706) 4,197,071 (1,178,212) NON-OPERATING REVENUE (EXPENSE): Interest Revenue 278,430 335,524 300,426 100,507 53,798 1,068,685 257,360 Other Non-Operating Revenue 86,333 21,860 132,440 226,395 723,493 1,190,521 19,799 Gain/(Loss)on Sale of Capital Assets - - - - 4,250 4,250 45,695 Interest Expense (601,400) (58,844) (133,330) - - (793,574) (1,076) Other Non-Operating Expenses (90,443) (240,442) (428,759) - - (759,644) - Total Non-Operating Revenue(Expense) (327,080) 58,098 (129,223) 326,902 781,541 710,238 321,778 Income(Loss)Before Contributions&Transfers 2,730,078 1,732,843 1,047,931 (1,030,378) 426,835 4,907,309 (856,434) Capital Contribution 1,772,439 666,761 1,408,167 - - 3,847,367 - Transfers In(Note 4) - - - - - - 410,801 Transfers Out(Note 4) (96,339) (59,555) (133,555) - (15,000) (304,449) (798,345) Change in Net Position 4,406,178 2,340,049 2,322,543 (1,030,378) 411,835 8,450,227 (1,243,978) Net Position,January 1 101,382,420 96,983,582 80,704,610 3,683,833 15,951,014 298,705,459 25,565,236 Net Position,December 31 $105,788,598 $ 99,323,631 $ 83,027,153 $ 2,653,455 $ 16,362,849 $ 307,155,686 $ 24,321,258 Change in net position from this statement 8,450,227 Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds (930,721) Change in net position of business-type activities $ 7,519,506 The notes to the basic financial statements are an integral part of this statement. 49 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Fiscal Year Ended December 31,2022 Page 1 of 2 Government Non Major Activities Sanitary Storm Solid Enterprise Internal Water Sewer Drainage Waste Funds Total Service Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received from Users $ 16,275,458 $ 28,567,541 $ 10,800,320 $ 24,131,029 $ 3,063,590 $ 82,837,938 $ 15,619,403 Cash Paid to Suppliers for Goods&Services (6,545,902) (21,873,609) (3,825,695) (24,770,529) (1,512,222) (58,527,957) (8,057,768) Cash Paid for Taxes - - - - (53,407) (53,407) - Cash Paid to Employees (4,680,593) (3,219,734) (4,556,297) (697,337) (1,333,225) (14,487,186) (5,418,610) Other Cash Received 84,580 22,278 33,512 - 13,510 153,880 (90,334) Other Non-Operating Revenue - - - - 16,272 16,272 - Other Cash Paid (90,443) (240,442) (428,759) - - (759,644) - Net Cash Provided(Used)by Operating Activities 5,043,100 3,256,034 2,023,081 (1,336,837) 194,518 9,179,896 2,052,691 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Grant - - 85,813 1,368,840 574,157 2,028,810 - Transfers In - - - - - - 410,801 Transfers Out (96,339) (59,555) (133,555) - (15,000) (304,449) (798,345) Net Cash Provided(Used)by Noncapital Financing Activities (96,339) (59,555) (47,742) 1,368,840 559,157 1,724,361 (387,544) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from Sale of Equipment - - - - 2,000 2,000 135,666 Purchase of Capital Assets (7,628,610) (1,241,253) (2,572,469) - (678,254) (12,120,586) (2,377,684) Contributed Capital 419,801 531,319 363,631 - - 1,314,751 - Proceeds from Other Governments - 22,500 - - - 22,500 - Proceeds from Insurance Settlement 11,753 - - - - 11,753 110,133 Principal Payment on Debt (1,519,668) (532,535) (426,973) - - (2,479,176) (25,218) Interest Payment on Debt (991,880) (139,742) (232,162) - - (1,363,784) (11) Lease Principal Receipts - - - - 229,619 229,619 - Lease Interest Receipts - - - - 115,578 115,578 - Net Cash Provided(Used)for Capital and Related Financing Activities (9,708,604) (1,359,711) (2,867,972) - (331,057) (14,267,344) (2,157,114) CASH FLOW FROM INVESTING ACTIVITIES: Interest Received 278,430 335,524 684,776 100,507 53,798 1,453,035 257,360 Net Cash Provided(Used)in Investing Activities 278,430 335,524 684,776 100,507 53,798 1,453,035 257,360 Net Increase(Decrease)in Cash and Cash Equivalents (4,483,413) 2,172,292 (207,857) 132,510 476,416 (1,910,052) (234,607) Cash and Cash Equivalents-Beginning of Year 23,045,456 21,594,815 18,647,670 7,470,754 3,284,410 74,043,105 18,290,887 Cash and Cash Equivalents-End of Year $ 18,562,043 $ 23,767,107 $ 18,439,813 $ 7,603,264 $ 3,760,826 $ 72,133,053 $ 18,056280 CASH AT END OF YEAR CONSISTS OF: Cash and Cash Equivalents 13,826,776 22,972,741 16,689,485 7,603,264 3,630,744 64,723,010 18,056,280 Restricted Cash-Bond Payments 2,183,144 438,395 658,088 - - 3,279,627 - Restricted Cash-Customer Deposits 104,070 61,527 3,422 - 130,082 299,101 - Restricted Cash-Other 2,448,053 294,444 1,088,818 - - 3,831,315 - Total Cash $ 18,562,043 $ 23,767,107 $ 18,439,813 $ 7,603,264 $ 3,760,826 $ 72,133,053 $ 18,056,280 The notes to the basic financial statements are an integral part of this statement. 50 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn,Washington STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Fiscal Year Ended December 31,2022 Page 2 of 2 Government Non Major Activities Sanitary Storm Solid Enterprise Internal Water Sewer Drainage Waste Funds Total Service Funds RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES Operating Income(Lost) $ 3,057,158 $ 1,674,745 $ 1,177,154 $ (1,357,280) $ (354,706) $ 4,197,071 $ (1,178,212) ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES: Depreciation 3,533,926 2,478,902 1,837,459 - 616,789 8,467,076 1,996,538 Lease Revenue Classified as Operating Income and Financing Cash Flow - - - - (229,619) (229,619) - Other Non-Operating Revenue 84,580 21,860 33,512 - 29,782 169,734 (91.386) Other Non-Operating Expense (90,443) (240,442) (428,759) - - (759,644) - Asset(Increases)Decreases: Accounts Receivable (196,808) (358,400) (185,474) (968,789) (61,457) (1,770,928) 50,906 Inventory (71,081) 192 (817) - 14,163 (57,543) (26,289) Lease Receivable - - - - (7.312,862) (7,312,862) - Liability Increases(Decreases): Accounts&Vouchers Payable (973,292) (107,639) (136,438) 1,037,091 177,825 (2,453) 1,179,015 Deposits Payable 12,398 - - - 1,186 13,584 - Wages&Benefits Payable (303,783) (203,036) (329,079) (55,128) 56,710 (834,316) 118,663 Compensated Absences Payable (9,555) (10,148) 55,523 7,269 (9,980) 33,109 3.456 Lease Deferred Inflows - - - - 7,266,687 7,266,687 - Total Adjustments 1,985,942 1,581,289 845,927 20,443 549,224 4,982,825 3,230.903 Net Cash Provided(Used)by Operating Activities $ 5,043,100 $ 3,256,034 $ 2,023,081 $ (1,336,837) $ 194,518 $ 9,179,896 $ 2,052,691 SCHEDULE OF NONCASH INVESTING,CAPITAL AND FINANCING ACTIVITIES Capital Assets Acquired by Contributed Capital 1,352,638 135,442 1,044,536 - - 2,532,616 - Increase(Decrease)in Fair Value of Investment - - (384,350) - - (384,350) - Total Non Cash Investing,Capital and Financing Activities $ 1,352,638 $ 135,442 $ 660,186 $ - $ - $ 2,148,266 $ - The notes to the basic financial statements are an integral part of this statement. 51 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements * * CITY OF * AUBURN WASHINGTON 52 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements FIDUCIARY FUNDS Fiduciary funds are used to account for assets held by the City of Auburn as a trustee or agent. Fiduciary funds involve only the receipt, temporary investment, and remittance of fiduciary resources to individuals, private organizations, and other governmental units. FIDUCIARY FUNDS Custodial Fund This fund accounts for the funds over which the City strictly acts in a custodial capacity. 53 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn, Washington STATEMENT OF FIDUCIARY NET POSITION December 31, 2022 Custodial Fund ASSETS: Cash and Cash Equivalents $ 2,451,213 Receivables: Customer Accounts 120,076 Due from Other Governmental Units 24,153 Total Assets 2,595,442 LIABILITIES: Current Payables 29,038 Total Liabilities 29,038 NET POSITION Restricted for Other Governments & Organizations 2,566,404 Total Net Position $ 2,566,404 The notes to the financial statements are an integral part of this statement. 54 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements City of Auburn, Washington STATEMENT OF CHANGES IN FIDUCIARY NET POSITION For the Fiscal Year Ended December 31, 2022 Custodial Funds ADDITIONS: Contributions: Other Governments $ 1,776,160 Tax, Fines, Permits Collection for Other Governments 1,735,911 Amounts collected for other organizations and individuals 58,889 Investment Interest 18,740 Total Additions 3,589,700 DEDUCTIONS: Administrative Expenses $ 28,700 Payment to City for Services 280,350 Tax, Fines, Permits & Misc distributed to other governments 1,530,859 Distributions to other organizations and individuals 54,044 Total Deductions 1,893,953 Change in Net Position 1,695,747 Net Position - Janaury 1 870,657 Net Position - December 31st $ 2,566,404 The notes to the financial statements are an integral part of this statement. 55 City of Auburn: 2022 Annual Comprehensive Financial Report Basic Financial Statements * * oITY OF AUBURN WASHINGTON 56 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements City of Auburn NOTES TO THE FINANCIAL STATEMENTS December 31, 2022 NOTE 1 —SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 58 A. Reporting Entity 58 B. Basic Financial Statements 58 C. Measurement Focus, Basis of Accounting and Basis of Presentation 59 D. Budget and Budgetary Accounting 62 E. Assets, Liabilities, and Fund Balance 63 1. Deposits and Investments 63 2. Receivables 64 3. Interfund Receivables and Payables 64 4. Amounts Due From Other Governmental Units 64 5. Inventories and Prepaid Expenses 64 6. Restricted Assets 64 7. Interfund Transactions 64 8. Capital Assets 64 9. Pensions 65 10. Deferred Outflows/Inflows of Resources 65 11. Compensated Absences 66 12. Unearned Revenues 66 13. Net Position Components— Proprietary Funds 66 14. Fund Balance Components—Governmental Funds 66 F. Revenues, Expenditures and Expenses 68 G. Estimates 69 NOTE 2 — DEPOSITS AND INVESTMENTS 69 A. Deposits 69 B. Investments 69 NOTE 3 — PROPERTY TAXES 72 NOTE 4— INTERFUND ACTIVITY 73 NOTE 5 — DUE FROM OTHER GOVERNMENTAL UNITS 75 NOTE 6—CAPITAL ASSETS AND RIGHT TO USE ASSETS 76 NOTE 7— LONG-TERM LIABILITIES 78 NOTE 8— PENSION PLANS 84 NOTE 9—OTHER POST-EMPLOYMENT BENEFITS 94 NOTE 10—ASSOCIATION OF WASHINGTON CITIES EMPLOYEE BENEFIT TRUST ("Trust") 96 NOTE 11 —CONSTRUCTION COMMITMENTS 98 NOTE 12 —CEMETERY ENDOWED CARE FUND 98 NOTE 13 —JOINT VENTURES/RELATED PARTY 98 NOTE 14—JOINTLY GOVERNED ORGANIZATION / RELATED PARTY 103 NOTE 15 —CONTINGENCIES AND LITIGATIONS 103 NOTE 16— RISK MANAGEMENT& INSURANCE 103 NOTE 17—TAX ABATEMENTS 105 NOTE 18— LEASES (LESSORS) 107 NOTE 19— REPORTING CHANGE 111 57 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 1 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Auburn, King County, Washington, was incorporated in 1891. It operates under the laws of the State of Washington applicable to a Non-Charter Code City under a Mayor/Council form of government. A full-time mayor and seven part-time council members administer Auburn, all elected at-large to four-year terms. The City provides a range of municipal services authorized by state law, including water services, sanitary sewer collection, solid waste collection, storm drainage, a general aviation airport, a municipal cemetery, and a municipal golf course. The accounting and reporting policies of the City of Auburn,which conform to Generally Accepted Accounting Principles (GAAP) for governments, are regulated by the Washington State Auditor's Office. Effective for fiscal year 2022, the City did implement the following new accounting and reporting standards issued by the Governmental Accounting Standards Board (GASB). • GASB Statement No. 87— Leases. This statement establishes standards of accounting and financial reporting for leases by lessees and lessors. A. Reporting Entity In accordance with the criteria set forth in Statement No. 14 of the Governmental Accounting Standards Board (GASB) the City's Annual Comprehensive Financial Report includes all funds controlled by the City. Joint Ventures-Based on the criteria of Governmental Accounting Standards Board (GASB) Statement No. 14 as modified by GASB Statements No. 34 and 61, the Valley Communications Center and South Correctional Entity Facility (SCORE) are included in the accompanying government-wide statement of net position as a joint venture. (Refer to Notes 7 and 13). Jointly Governed Organizations- The cities of Auburn, Algona and Pacific formed the Valley Regional Fire Authority (VRFA) effective January 1, 2007. The VRFA is a separate municipal corporation of the State of Washington, organized as a regional fire protection service authority under RCW 52.26. The VRFA is not financially accountable to the member cities, none of the participating cities has an ongoing financial interest in the VRFA, and the VRFA is not financially dependent upon any member city. The VRFA imposes its own property tax levy and fire benefit charge. As such, the VRFA is not included in the City of Auburn's financial reporting entity. (Refer to Note 14) B. Basic Financial Statements The City's basic financial statements consist of government-wide financial statements and fund financial statements. The government-wide financial statements, which include the statement of net position and the statement of activities, summarize the entire operation of the City. The governmental fund financial statements, which include the balance sheet, statement of revenues, expenditures and changes in fund balance, and statements of revenues, expenditures, and changes in fund balance budget and actual, provide a more detailed level of reporting. The proprietary fund financial statements, which include statement of net position, statement of revenues, expenses, and changes in net position and statement of cash flows, provide a more detailed level of reporting. The government-wide financial statements report information on all of the non-fiduciary activities of the City. For the most part, the effect of interfund activity has been eliminated from these statements. Because governmental activities are normally supported by taxes and intergovernmental revenue, while business-type activities are generally supported through user fees and charges, governmental activities are reported separately from business-type activities on all government-wide financial statements. The Statement of Net Position reports the assets, deferred outflows of resources, deferred inflows, and liabilities of the primary government. The net position section of this statement represents the residual amount of assets and their associated liabilities, deferred outflow, and deferred inflows of resources. The net position section is divided into three categories. The first category is Net Investment in Capita/Assets, which includes all capital assets, net of accumulated 58 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements depreciation, less the outstanding balances of any borrowing (bonds, loans) used for acquisition, construction, or improvement of those assets. Capital assets cannot readily be sold and converted into cash. The second category is Restricted Net Position, which includes those assets, net of their related debt that have a constraint placed on their use. The constraints are either: 1) externally imposed by creditors, such as through debt covenants, grantors, contributors, or laws and regulations of other governments, or 2) imposed by law through constitutional provisions or enabling legislation. The final section is Unrestricted Net Position, and this represents net position that generally can be used for any purpose. However, they are not necessarily in a spendable form, such as cash. The statement of activities demonstrates the degree to which the direct expenses of various functions and activities of the City are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or activity. The City's policy is to allocate indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a function or activity, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or activity. Taxes and other items that are not properly included among function or activity revenues are instead reported as general revenues. Separate financial statements are included for governmental funds, proprietary funds, and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported in separate columns in the fund financial statements. C. Measurement Focus, Basis of Accounting and Basis of Presentation The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of self-balancing accounts that comprise its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund balance/net position, revenue, and expenditures or expenses, as appropriate. The City resources are allocated to, and accounted for in, individual funds according to the purpose for which they are spent and how they are controlled. The basis of accounting refers to the timing of when revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements. The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund financial statements. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. The modified accrual basis of accounting is followed in all governmental and permanent funds of the City. Under the modified accrual basis of accounting, revenues are recognized when measurable and available. Revenues are generally considered available if they are collected within the current period or soon enough thereafter to pay current liabilities. The City considers property taxes as available if they are collected within 30 days after the year end. For derived tax revenues, such as sales tax and utility business and occupation taxes, revenues are recognized in the period when the underlying exchange has occurred. For imposed non-exchange taxes, such as property taxes, revenues are recognized when the use of resources is permitted, or when resources are available. Grant revenue is recognized in the period in which the expenditure occurs, and the eligibility requirements have been met. Non-exchange transactions, such as contributions, are recognized when the donation eligibility requirements have been satisfied. Those specific major revenue sources accrued are: Property Taxes— King County and Pierce County collect property taxes and remit to the City daily or monthly. Sales Tax Revenues—The State of Washington collects all sales taxes. Auburn's portion is remitted to the City by the State monthly. The Sales and Use Tax revenue portion received from the state in January of the following year is accrued in the current year since it is considered a material value and because of when the underlying transaction occurred and the resources are considered to be measurable and available. 59 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Grant Revenues—On cost reimbursement grants, grant revenue is recognized when the eligible expenditure is incurred. Under the modified accrual basis, expenditures are recorded when the fund liability is incurred, except for the un- matured interest and principal on general long-term debt,which is recognized when due, and for compensated absences which are recorded as expenditures when liquidated from expendable available fund resources. Purchases of capital assets from governmental funds are reported as expenditures during the year incurred and the asset is capitalized and reported on the government-wide statement of net position. Long-term liabilities, including compensated absences not currently due and payable, are also reported on the government-wide statement of net position. The accruaibasisof accounting is followed in all proprietary and custodial funds. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. The three broad fund categories and nine fund types presented in this report are described below: 1. Governmental Fund Types All governmental funds are accounted for on a spending or "financial flow" measurement focus. This means that only current assets and current liabilities and deferred inflow of resources generally are included on these balance sheets. Reported fund balance is considered a measure of "available spendable resources". Governmental fund operating statements focus on measuring cash flows rather than net income; and present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in net current assets. The City reports the following major governmental funds: General Fund- This is the City's general operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. American Rescue Plan Act Fund-The fund was created to track federal funding from the coronavirus rescue package designed to facilitate the recovery from the devasting economic impacts and public health emergency effects of the COVID-19 pandemic. Arterial Street Fund-This fund is supported by the State of Washington's motor vehicle fuel tax and by various grants and is used for major street construction. Capital Improvement Fund- This fund accounts for major capital acquisitions, and streets and parks construction projects, which are dependent on the real estate excise taxes, state, and federal grant programs. Mitigation Fees Fund-This fund accounts for the receipt of contracted mitigation fees for streets and fire service. The City reports the following fund groups as non-major governmental funds: a. Special Revenue funds—These funds are used to account for the proceeds of specific revenue sources (other than major capital projects) that are legally restricted to expenditures for specified purposes. b. Debt Service funds—These funds account for the accumulation of resources for, and the payment of, general long-term and special assessment debt principal, interest, and related costs. These funds also include the local improvement districts (LID) guarantee fund which provides financial security for outstanding LID bonds. No debt service funds are considered major funds and are reported within the"Other Governmental Funds". c. Capital Projects funds—These funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities other than those financed by proprietary funds. 60 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements d. Permanent funds—These funds are used to account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes of supporting a specific City program. The city has one permanent fund, Cemetery Endowment. 2. Proprietary Fund Types Financial statements for proprietary funds use the economic resources measurement focus and the accrual basis of accounting. This means that all assets and all liabilities (whether current or non-current) associated with proprietary fund activity are included on the Statement of Net Position. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when incurred. The economic resources measurement focus is applied in the determination of financial position, net income, and cash flow. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenue of the City's utility funds, other enterprise funds, and internal service funds are charges to customers for sales and services, vehicle and computer replacement, and insurance. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, taxes, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses, or as capital contributions. Substantially all proprietary fund operating revenues are used as security for revenue bonds. Enterprise funds are used to account for services to the general public where all or most of the costs, including depreciation, are to be financed or recovered from users of such services. Four enterprise funds are considered major funds. Utilities provided to residents are accounted for in the water fund, sanitary sewer fund, storm drainage fund, and the solid waste fund. The City reports the following major enterprise funds: The Water Fund- This fund accounts for all revenues, expenses, maintenance, construction, and debt service requirements associated with Auburn's water system. The Sanitary Sewer Fund- This fund accounts for all revenues, expenses, maintenance, construction, and debt requirements for Auburn's sanitary sewer system. The Storm Drainage Fund- This fund accounts for all revenues, maintenance, construction, and debt service requirements of Auburn's storm drainage system. The Solid Waste Fund- Garbage collection services for the City are accounted for in this fund, supported almost entirely by garbage collection fees. Expenses include payment to the City's garbage contractor and other service charges. The City reports the following funds as non-major enterprise funds: The Airport and Cemetery funds. The Internal Service funds are used to account for the financing of goods and services provided to other funds, departments, or governments on a cost reimbursement basis. The City uses internal service funds to account for its fleet of vehicles, its maintenance and operation of facilities, the City-wide provision of computer hardware and software services, the cost of employees affected by an occupational injury or illness, and its insurance premiums. The City's internal service funds are comprised of the Insurance, Work Compensation Self Insurance, Facilities, Information Services, and Equipment Rental funds. 61 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements 3. Fiduciary Fund Types Fiduciary funds are used to account for assets held by the City in a trustee capacity or as an agent for individuals, private organizations, other governments, and/or other funds. Fiduciary funds are classified for accounting measurement purposes as either a governmental fund or a proprietary fund. The Fiduciary Funds are not included in the government-wide financial statements since they are not assets of the City available to support city programs. The City's custodial funds function primarily as a clearing mechanism for cash resources which are collected by the City, held for a period of time and then disbursed to authorized recipients. D. Budget and Budgetary Accounting The City of Auburn budgets in accordance with the Revised Code of Washington (RCW) 35A.33 for the general fund and special revenue funds. For governmental funds, there are no substantial differences between the budgetary basis and generally accepted accounting principles. Budgetary accounts are integrated in fund ledgers for all budgeted funds, but the financial statements include budgetary comparisons for the biennial budgeted governmental funds only. Budgets established for proprietary and trust funds are "management budgets" and are not legally required to be reported and, as such, are not reported in the Annual Comprehensive Financial Report (ACFR). The biennial budget is proposed by the Mayor and adopted by the City Council with legal budgetary control at the fund level; expenditures and other financing sources may not exceed budgeted appropriations at the fund level. The Mayor may authorize transfers within funds; however, the City Council must approve by ordinance any amendments that increase the total for the fund. At fiscal year-end any unexpended appropriation balances automatically carryforward subject to the rules established in the enabling ordinance. The City prepares the biennial budget on the modified accrual basis, which conforms to Generally Accepted Accounting Principles (GAAP). The Annual Comprehensive Financial Report includes budgetary comparisons for those governmental funds with legally adopted budgets. Budget amounts include the adopted current year budget appropriations and any revisions made during the year. State law establishes the budget process and the time limits under which a budget must be developed. The City follows the procedures outlined below to establish its biennial budget: a. Sixty days prior to each odd numbered fiscal year, the Mayor submits to the City Council a preliminary budget for the biennium commencing the following January lst. The operating budget includes proposed expenditures and funding sources. b. Public hearings are conducted at the Auburn City Council Meetings to obtain taxpayer comments. c. Prior to December 315t, the budget is legally enacted through passage of an ordinance. d. The final operating budget as adopted is published and distributed after adoption. Copies of the budget are made available to the public. 62 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements ORIGINAL AND SUPPLEMENTAL APPROPRIATIONS Original Final Budget Revisions Budget Governmental Funds General Fund $ 85,605,016 $ 28,189,952 $ 113,794,968 Total Governmental Funds 85,605,016 28,189,952 113,794,968 Special Revenue Funds: Local Street $ 1,664,500 $ 2,622,557 $ 4,287,057 Arterial Street 5,892,400 6.060,168 11,952,568 Hotel/Motel Tax 177,110 - 177,110 Arterial Street Preservation 2,135,000 5,707,385 7,842,385 Drug Forfeiture Fund 356.531 97.600 454,131 American Rescue Plan Fund - 6,036,766 6,036,766 Housing and Community Development 600.000 744.900 1,344,900 Business Improvement Area 90,000 - 90,000 Cumulative Reserve 1,950,000 492,200 2,442,200 Mitigation Fees 5,851,450 1.438,344 7,289,794 Total Special Revenue Funds 18,716,991 23,199,920 41,916,911 Total Budgeted Funds $104,322,007 $ 51,389,872 $ 155,711,879 For managerial purposes, the City of Auburn treats the General Fund, Cumulative Reserve Fund, and Fire Pension Fund separately. However, for reporting purposes, these funds are presented in combination with the general fund. The General Fund Statements of Revenues, Expenditures, and Changes in Fund Balance— Budget to Actual compares only the General Fund as adopted in the budget along with the related revenues and expenditures. It does not include the budget or actual data for the Cumulative Reserve Fund and the Fire Pension Fund. The Statements of Revenues, Expenditures, and Changes in Fund Balance — Budget to Actual is also presented for the Cumulative Reserve Fund and Fire Pension Fund under the section Other Supplementary Information. E. Assets, Liabilities, and Fund Balance 1. Deposits and Investments It is the City's policy to invest all temporary cash surplus. At December 31, 2022, the Washington State Local Government Investment Pool (LGIP) was holding $148,256,429 in short-term investments. This amount is classified on the Statement of Net Position as part of the line-item cash and cash equivalents. The interest on these investments is prorated to the various funds based upon ownership of investments. For purposes of the Statement of Cash Flows, cash and cash equivalents includes cash on deposit with financial institutions in both demand and time deposit accounts, and amounts invested in the Local Government Investment Pool, administered by the State Treasurer's Office. The State Finance Committee is the administrator of the statute that created the pool and adopts appropriate rules. The State Treasurer's Office is responsible for establishing the investment policy for the pool and reviews it annually.Any proposed changes are reviewed by the LGIP Advisory Committee.The terms of the policy are designed to ensure the safety and liquidity of the funds deposited in the LGIP. The City, by state law, is authorized to purchase certificates of deposit issued by Washington State depositories that participate in Washington Public Deposit Protection Commission (WPDPC), U.S. Treasury and Agency securities, banker's acceptances, and repurchase agreements. The City purchases repurchase agreements only from institutions that use authorized securities for collateral. The City of Auburn also has signed a "master repurchase agreement" with its primary bank, Key Bank. For purposes of the statement of cash flows, all proprietary fund types and similar trust funds consider all highly liquid investments (including restricted assets) with maturity of three months or less when purchased to be cash equivalents. Investments are recorded at fair value or amortized cost. Adjustments are made to cost for investments amortized over the period to maturity in accordance with GASB Statement No. 31. The investment in the state investment pool is valued at amortized cost. 63 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements 2. Receivables Taxes receivable consist of property taxes (see Note 3). Accrued interest receivable consists of amounts earned on notes and contracts at the end of the year. Customer accounts receivable consist of amounts owed by private individuals or organizations for goods and services provided. Uncollectible amounts are considered immaterial, and the direct write-off method is used. Special assessments are levied against certain property owners and become liens against the property benefited by the improvement. Special assessments receivable consists of current assessments, which are due within one year, delinquent assessments remaining unpaid after the due date, and unearned, uncollected assessments, which have been levied, but are not due within one year. Other receivables include utility taxes due from private organizations and customer accounts receivable, which consist of amounts owed from private individuals or organizations for goods and services, including amounts owed for which billings have not been prepared. Notes and contracts receivable consist of amounts owed on open accounts from private individuals or organizations for goods and services rendered. 3. Interfund Receivables and Payables These accounts include all interfund receivables and payables. A separate schedule of interfund activity is furnished in Note 4. 4. Amounts Due From Other Governmental Units This account includes amounts due from other governments for grants, entitlements, and charges for services. A schedule by fund of amounts due from other governmental units is presented in Note 5. 5. Inventories and Prepaid Expenses Government fund types recognize the cost of inventory items and prepaid expenses (expenses that benefit future periods) as assets at the time of purchase. Once the inventory items have been consumed or goods and services associated with the prepaid items have been received, expenditure is recognized. In enterprise and internal service funds, inventories are valued at cost using the weighted average costing method. 6. Restricted Assets In accordance with the utility bond ordinances, state law, or other agreements, separate restricted assets have been established. These assets are restricted for specific purposes including the establishment of bond reserve funds, utility rate stabilization funds, financing the ongoing capital improvement programs of the various utilities, customer deposits, nonexpendable permanent cemetery endowment and other purposes. 7. Interfund Transactions During normal operations, the City has numerous transactions between City funds. Interfund services provided and used, such as buying goods and services, are recorded as revenues in the internal service funds and expenditures in the paying fund. Transfers between funds are included as "other financing sources or uses" in governmental fund types and as other items in proprietary fund types. 8. Capital Assets Capital assets are recorded at historical cost when known or at estimated historical cost when actual costs are not known. Infrastructure, such as roads, bridges, and water mains, is reported in the applicable government or business- type activities columns in the government-wide statement of net position. All infrastructure costs have been 64 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements calculated and are reported. Government donated capital assets are stated at their acquisition value on the date donated. Major outlays for capital assets and improvements are capitalized as projects are constructed. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. For proprietary funds, interest costs incurred to bring certain assets to the condition and location necessary for their intended use are capitalized as part of the historical cost of acquiring the assets. Capital assets of enterprise and internal service funds are recorded at cost. The capital assets of the airport are carried at cost and include those acquired with capital contributed by the Federal Government. Capital assets of all funds are depreciated, and are calculated on the straight-line method using estimated lives as follows: Capitalization Depreciation Estimated Useful Asset Threshold Method Life Building $5,000 Straight-line 10- 50 years Other Improvements $5,000 Straight-line 10- 50 years Equipment/Machinery $5,000 Straight-line 3 -20 years Infrastructure $5,000 Straight-line 5 - 75 years Utility Plant $5,000 Straight-Line 25 -50 years Depreciation for intangibles is computed on the straight-line method over the estimated useful life of 3 - 50 years. At the inception of leases at the government fund reporting level, the net present value of future minimum lease payments allocable to the capital asset is reflected as expenditures and an "other financing source" of an equal amount. 9. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans' fiduciary net position have been determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. The net pension assets, deferred outflows, net pension liabilities and deferred inflows of the various pension plans are allocated on the proprietary fund statements and government-wide statements based on the number of City employees by fund participating in the plans. Since PERS 1 and LEOFF1 are closed plans, PERS 1 is allocated using the PERS 2/3 allocation percentages. LEOFF 1 is 100percent police. Related restricted net position of the net pension asset is calculated using the GASB preferred method which is equal to the net pension asset balance, excluding deferred inflows and deferred outflows. 10. Deferred Outflows/Inflows of Resources Deferred outflow of resources represents a consumption of net assets that applies to future periods and will not be recognized as an outflow (expense/expenditure) until that reporting period. Deferred inflow of resources represents an acquisition of net assets that applies to future periods. The difference between the carrying amount of redeemed and/or defeased debt and its reacquisition price is the deferred amount on refunding and is amortized over the remaining life of the debt, or the life of the new debt,whichever is shorter. Deferred outflows and deferred inflows 65 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements of resources related to pensions are reported for differences between expected and actual experience, changes of assumptions, and differences between projected and actual returns on pension plan investments. 11. Compensated Absences City employees accrue vacation leave at a variable rate based on years of service. In general, employees are allowed to accumulate vacation leave up to what would be earned in two years. Unaffiliated employees accrue sick leave at the rate of eight hours per month up to 960 hours. Sick leave accumulations over 960 hours at year-end are paid at 25%. Sick leave is not paid upon termination except in some instances upon separation in good standing, where employees hired before 12/31/1984 can be reimbursed at their current rate for unused sick leave up to a maximum of 960 hours, at a rate based on years of service. The City's union contracts have varied sick leave accruals and payout options. In general, non-exempt employees can accrue up to 80 hours of compensatory time. The City reports compensated absences as liabilities in the government-wide statement of net position and in proprietary funds. Vacation, compensatory time, and sick leave are calculated separately for each employee using the rules described above. The reporting format is in compliance with GASB statement No. 16. Governmental funds recognize expenditures for vacation, sick, and compensatory time when paid. Proprietary funds recognize the expense and accrue a liability for vacation and sick leave pay as the leave is earned. All compensated absence liabilities include salary-related payments, where applicable. 12. Unearned Revenues This account reflects the amounts of taxes and other long-term receivables for which the revenue recognition criteria have not been met. It also reflects prepayments on accounts and grants received in advance. 13. Net Position Components — Proprietary Funds In proprietary funds, net position is generally restricted in connection with restricted assets or for legal segregation. These restrictions are identified on the statement of net position of each fund type. In order to calculate the amounts to be reported as restricted net position and unrestricted net position a flow assumption is made. It is the City's policy to consider restricted net position to have been depleted before unrestricted net position. The City holds and administers a Utility System Rate Stabilization Fund. The City may, by ordinance, withdraw from the Rate Stabilization Fund for inclusion in the net revenue of the Utility System at any time for any current fiscal year of the Utility System, except that the total amount withdrawn from the Rate Stabilization Fund in any fiscal year may not exceed the total debt service of the Utility System in that year. 14. Fund Balance Components—Governmental Funds Fund balance is presented in the governmental fund financial statements and represents the difference between assets and liabilities reported within the governmental fund. Beginning with the most restrictive constraints, fund balance amounts are reported in the following categories: a. Nonspendable fund balance includes items that cannot be spent. This includes activity that is not in a spendable form (investments, prepaid amounts, long-term portion of loans/notes receivable, or property held for resale unless the proceeds are restricted, committed or assigned) and activity that is legally or contractually required to remain intact. b. Restricted fund balance is externally (outside the City) enforceable limitations imposed by creditors, grantors, contributors, laws and regulations of other governments, or laws through constitutional provisions or enabling legislation. 66 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements c. Committed fund balance is self-imposed limitations imposed at the highest level of decision-making authority, namely, Mayor and City Council. Mayor and City Council approval by ordinance is required to commit, modify, or rescind resources. d. Assigned fund balance includes amounts that are constrained by the City's intent to be used for a specific purpose but are neither restricted nor committed. It is the City's policy that the Finance Director shall have the authority to assign amounts of fund balance to a specific purpose; however, before expenditure, amounts must be appropriated by the City Council which is often adopted by City Council in the biennial budget ordinance. For governmental funds, other than the General Fund, this is the residual amount within the fund that is not restricted or committed. e. Unassigned fund balance is the residual amount of the General Fund not included in the four categories described above. Also, any deficit fund balances within the other governmental fund types are reported as unassigned. When expenditure is incurred for purposes for which both restricted and unrestricted resources are available, it is the City's policy to use restricted resources first. When expenditures are incurred for purposes,for which unrestricted (committed, assigned, and unassigned) resources are available, and amounts in any of these unrestricted classifications could be used, it is the City's policy to spend committed resources first, then assigned and unassigned, in that order. 67 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The following shows the composition of the fund balance of the governmental funds for the fiscal year ended December 31, 2022: Governmental Fund Balances December 31,2022 Major Arterial Capital Mitigation Other Total General Street Improvement Fees Governmental Governmental Fund Fund Fund Fund Funds Funds Nonspendable Inventory and Prepaids $ 57,740 $ - $ - $ - $ 95,000 $ 152,740 Cemetery Endowment - - - - 2,070,670 2,070,670 Total Nonspendable 57,740 - 2,165,670 2,223,410 Restricted Major Street Construction - 2,350,156 - - - 2,350,156 REET 1 Allowable Projects - - 8,548,261 - - 8,548,261 REET 2 Allowable Projects - - 6,863,404 - - 6,863,404 Arterial Street Presevation Fund - - - - 2,566,155 2,566,155 Parks and Trails Construction Projects - - - - 1,369,732 1,369,732 City Tourism Promotion - - - - 464.299 464,299 Drug Investigation and Enforcement - - - - 1,116.248 1,116,248 Community Development Block Grant Program - - - - 42.904 42,904 Recreational Trail Development - - - - 95,794 95,794 Downtown Business Area Improvements - - - - 38,695 38,695 Street and Fire Service Mitigation Fees - - - 15,750,083 - 15,750,083 Debt Service - - - - 1,702 1,702 Total Restricted - 2,350,156 15,411,665 15,750,083 5,695,529 39,207,433 Committed Local Street Improvements(Save our Streets) - - - - 3,320,024 3,320,024 Cumulative Reserve 1,311,450 - - - - 1,311,450 Arterial Street Preservation - - - - 899,932 899,932 Total Committed 1,311,450 - - - 4,219.956 5,531,406 Assigned Appropriations Over Estimated Revenue 10,801,447 - - - - 10,801,447 Arterial Street Preservation Fund - - 722,705 - 46.852 769,557 Drug Investigation and Enforcement - - - - 20,767 20,767 Recreation Trail Development - - - - 1,375 1,375 Downtown Business Area Improvements - - - - 2,246 2,246 Local Street Improvements - - - - 43,472 43,472 School Administration Fees - 99,539 99,539 Cemetery Capital Enhancement and Maintenance - - - - 130,635 130,635 Downtown Infrastructure Improvements - - - 272,819 272,819 Debt Service - - - - 460,163 460,163 Total Assigned 10,801,447 - 722,705 99,539 978,329 12,602,020 Unassigned Unassigned 46,001,244 - - - - 46,001,244 Total Unassigned 46,001,244 - - - - 46,001,244 Total Fund Balances $58,171,881 $2,350,156 $16,134,370 $15,849,622 $13,059,484 $105,565,513 F. Revenues, Expenditures and Expenses Operating revenues and expenses for the proprietary fund are those that result from providing services and producing and delivering goods and/or services in connection with a proprietary fund's principal ongoing operations. For the city, operating expenses for proprietary funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. Contributions of capital in proprietary fund financial statements arise from internal and external contributions of capital assets or from grants or outside contributions of resources restricted to capital acquisition and construction. 68 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Transfers between government and business-type activities on the government-wide statement of activities are reported as general revenues. Transfers between funds reported in the governmental activities' column are eliminated, as are transfers between funds reported in the business-type activities column. G. Estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. NOTE 2 — DEPOSITS AND INVESTMENTS A. Deposits On December 31, 2022, the carrying amount of the City's cash demand deposits with Key Bank totaled $26,413,399 while the bank balance was $26,551,975. In addition, the balance of the City's interest-bearing checking account with Pacific Premier Bank totaled $10,692,324. Furthermore,there was $18,800 in petty cash ($10,000 in the Drug Forfeiture Fund to be used for enforcements purposes, $8,800 in various petty cash and cashier change funds). Custodial Credit Risk Custodial credit risk is the risk associated with the failure of a depository financial institution. In the event of a depository financial institution's failure, it is the risk that the City would not be able to recover its deposits or collateralized securities that are in the possession of the outside parties. The City minimizes custodial credit risk by following the restrictions set forth in state law. The Federal Deposit Insurance Corporation (FDIC) insures the City's deposits up to $250,000. The Washington Public Deposit Protection Commission (WPDPC) (established under Chapter 39.58 of the Revised Code of Washington) constitutes a multiple financial institution collateral pool. Pledged securities under the WPDPC collateral pool are held by the WPDPC's agent in the name of the collateral pool. B. Investments As required by State law, all investments of the City's funds are obligations of the U.S. Government, or deposits with Washington State banks that participate in the WPDPC. Pension and permanent funds are not subject to these limitations. Investments that are not Measured at Fair Value On December 31, 2022, the City had the following investments amortized, at cost: Amortized Investment Type Cost State investment pool (LGIP) $ 148,256,429 $ 148,256,429 The City participates in the Local Government Investment Pool (LGIP). The LGIP meets the maturity, quality, diversification, and liquidity requirements as set forth in GASB Statement 79. The LGIP is an unrated external investment pool, and was authorized by Chapter 294, Laws of 1986, and is managed and operated by the Washington State Treasurer. The LGIP does not have any legally binding guarantees of share values. The LGIP does not impose liquidity fees or redemption gates on participant withdrawals. All temporary investments such as the State Investment Pool are stated at amortized cost. The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report is available from the Office of the State Treasurer, PO Box 40200, Olympia,Washington 98504-0200, online at http://www.tre.wa.gov. 69 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Investments Measured at Fair Value The city measures and reports investments at fair value using the valuation input hierarchy established by generally accepted accounting principles, as follows: • Level 1 —Quoted prices in active markets for identical assets or liabilities. • Level 2 — These are quoted market prices for similar assets or liabilities, quoted prices for identical or similar assets or liabilities in markets that are not active, or other quoted prices that are not observable. • Level 3 — Unobservable inputs for an asset or liability. As of December 31, 2022, the City had the following investments measured at fair value: Fair Value Measurements Using Significant Quoted Prices in Other Significant Active Markets for Observable Unobservable Identical Assets Inputs Inputs Investments by Fair Value Level 12/31/2022 (Level 1) (Level 2) (Level 3) US Agency $ 23,763,500 $ 23,763,500 $ - $ - Total Investments by Fair Value Level $ 23,763,500 $ 23,763,500 $ - $ - The following is a reconciliation of the City's total cash and investments to the Government-Wide Statement of Net Position as of December 31, 2022: Cash and Investments Reconciliation to the Government-Wide Statement of Net Position Cash and Cash Equivalents $ 149,889,494 Investments 23,763,500 Temporarily Restricted: Cash and Cash Equivalents 30,969,576 Permanently Restricted: Cash and Cash Equivalents 2,070,670 Total $ 206,693,240 Bank Deposits $ 37,105,724 Investments not measured at fair value 148,256,429 Investments measured at fair value 23,763,500 Petty Cash Funds 18,800 Less: cash held in custodial funds (2,451,213) Total $ 206,693,240 Interest Rate Risk Interest rate risk is the risk that changes in interest rates of debt investments will adversely affect the fair value of an investment. As a means of limiting its exposure to fair value losses arising from rising interest rates, the City's investment policy limits the maximum maturity of an investment to not greater than five years, unless an investment is matched to an anticipated future cash flow. The segmented time distribution presented in the schedule of investments by maturity above indicates how the City has managed its interest rate risk. 70 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. State law and the City's investment policy limit the instruments in which the City may invest. These include: 1. US Treasury obligations 2. US Government Agency obligations and US Government Sponsored Enterprises (GSE's) which may include, but are not limited to Federal Farm Credit Bank (FFCB), Federal Home Loan Bank (FHLB), Government National Mortgage Association (GNMA), Federal Home Loan Mortgage Corporation (FHLMC), Federal National Mortgage Association (FNMA), Student Loan Marketing Corporation (SLMA), and/or Tennessee Valley Authority (TVA). 3. Non-negotiable Certificates of Deposit of financial institutions which are qualified public depositories as defined by RCW 39.58.010(2) and in accordance with the restrictions therein. 4. Bonds of the State of Washington and any local government in the State of Washington, General Obligation bonds outside the State of Washington; at the time of investment, the bonds must have a rating of AA- from S&P or Aa3 from Moody's, or higher. In the case of a split rating, the lower rating of these two rating agencies will be used. 5. Washington Local Government Investment Pool (LGIP) managed by the Washington State Treasurer's Office. 6. Other investments authorized by law. 7. Time deposits and savings account deposits with Washington State Public Deposit Protection Commission (PDPC) approved banks. The City's municipal bond holding at time of purchase carried a AAA rating from S&P and a Aaa rating from Moody's. Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of an investment in a single issuer. The City diversifies its investments by security type and institution. City investment policy restricts security holdings to 25 -40% of the City's total investment portfolio in a single security type. This restriction excludes US Treasury obligations, US Agency Securities and the Washington State Local Government Investment Pool which may comprise 100% of the total investment portfolio. Other information Effective 2002, the City has established arrangements with Bank of New York for safekeeping of all investments. The following is a schedule of investments by fund type: Schedule of Investments by Fund Category and Investment Type As of December 31, 2022 State Investment U.S. Pool Agency Total Governmental Funds $ - $ 19,196,650 $ 19,196,650 Enterprise Funds - 4,566,850 4,566,850 Local Government Investment Pool 148,256,429 - 148,256,429 Total $ 148,256,429 $ 23,763,500 $ 172,019,929 71 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 3 - PROPERTY TAXES Property taxes received during tax year 2022 were $24,637,908 including collection of prior year delinquent assessments. Property taxes assessed for collection in tax year 2022 were based on a regular tax levy of $1.76739 per $1,000 on a total 2021 assessed value of $14,386,393,795. For levy year 2022, to be received in 2023, the City's regular tax levy is $1.66241 per $1,000 on a 2022 assessed valuation of $17,563,516,672 as of December 31, 2022, for a total regular levy of $24,110,666. State law provides that debt cannot be incurred in excess of the following percentages of the taxable property of the City. 1.50% of assessed value without a vote of the people 2.50% of assessed value with a vote of the people The City has additional authority to incur the following debt as a percentage of total valuation. 2.50% of assessed value with a vote of the people, indebtedness is for utilities 2.50% of assessed value with a vote of the people, indebtedness is for parks, or open space development At December 31, 2022, the debt limits for the City were as follows: With a Vote For Parks or Without General For Open Space a Vote Purposes Utilities Development Total Item 1.50% 1.00% 2.50% 2.50% Capacity Legal Limit $263,452,750 $ 175,635,167 $ 439,087,917 $ 439,087,917 $ 1,317,263,751 Outstanding indebtedness (36,525,340) - - - (36,525,340) Margin available $ 226,927,410 $ 175,635,167 $ 439,087,917 $ 439,087,917 $ 1,280,738,411 The County Treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. Taxes are levied annually on January 1 on property values listed as of the prior August 31. The County assesses property at 100% of fair market value. A revaluation of all property is required every year, and a physical inspection is required at least once every six years. Property taxes levied by the County Assessor and collected by the County Treasurer become a lien on the first day of the levy year and may be paid in two installments if the total amount exceeds $50. The first half of real property taxes is due on April 30 and the balance is due October 31. Delinquent taxes bear interest at the rate of 12% and are subject to additional penalties if not paid as scheduled. No allowance for uncollectable taxes is established because delinquent taxes are considered fully collectable. At year-end, property taxes are recorded as a receivable. During the year, property tax revenues are recognized when cash is received. 1. The Washington State Constitution limits the total regular property taxes to 1% of assessed valuation or $10 per $1,000 of value. If the taxes of all districts exceed this amount, each is proportionately reduced until the total is at or below the 1% limit. 2. Washington State law in RCW 84.55.010 limits the annual growth of regular property taxes to the lesser of 1% or the rate of inflation. With a vote of the majority of the voters within a taxing district, the 1% levy limitation can be "lifted" and additional taxes may be levied. 3. The City may voluntarily levy taxes below the legal limit. 72 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Special levies approved by the voters are not subject to the above limitations. Property taxes are recorded as receivable and offset by an unearned revenue account when levied. Since state law allows for the sale of property for failure to pay taxes, no estimate of uncollectible taxes is made. NOTE 4- INTERFUND ACTIVITY Transfers are legally authorized transfers of resources from a fund receiving revenue to the fund through which resources are to be expended. The principal purposes for interfund transfers include interfund subsidies and transfers into capital project and debt service funds, and to transfer special revenues towards allowable projects and programs. All transfers either occur on a regular basis or are consistent with the purpose of the fund making the transfer. Interfund transfers for the year ended December 31, 2022, were as follows: Transfer From Capital American Rescue Non-major Non•major Internal Service General fund Improvement fund Plan Act fud Mitigation fund Governmental funds Water fund Sanitary Sewer Storm Drainage Enterprise funds funds Total o General fund • • 2,957,500 2,153 • • 74,000 3,033,653 • Capital Improvement fund 419,731 • • 1,312,453 • • • • 158,845 1,891,028 • Arterial Street fund 353,661 • 759,229 • • • 1,112,890 Non•major Governmental funds 412,467 2,649,545 • 45,453 • 50,000 50,000 50,000 553,500 3,810,965 Internal Service funds 78,000 166,352 • 46,339 9,555 9,555 15,000 86,000 410,801 Total 1,263,858 2,815,897 2,957,500 2,117,135 2,153 96,339 59,555 133,555 15,000 798,345 10,259,337 The City made the following transfers during the year ending December 31, 2022: General Fund: • $404,532 to the Capital Improvement fund for the purchase of the Max House property. • $370,990 to the 2016 Combined Refunding fund for Golf/Cemetery debt service payments. • $353,661 to the Arterial Streets fund for the 2022 Channelization project. • $75,000 to the Equipment Rental Capital Projects fund for cost overruns on vehicles purchased in 2021. • $41,477 to the Local Revitalization fund for the City-owned Parking Lot Improvements project. • $15,199 to the Capital Improvement fund for the Auburn Arts and Culture Center Renovation project. • $3,000 to the Innovation and Technology fund for equipment for a new Outreach Coordinator position. Capital Improvement Fund: • $1,660,935 to the Local Street fund to support multiple capital projects. • $777,200 to the 2020 LTGO A&B Refunding Bonds fund for debt service payments. • $211,410 to the Municipal Parks Construction fund to support the Community Center Parking Lot Improvement and Fairway Drainage Improvement projects. • $148,960 to the Facilities fund for repairs and maintenance to the Arts and Culture Center roof. • $17,392 to the Equipment Rental Capital Projects fund for the M&O Facilities Improvements project. American Rescue Plan Act Fund: • $2,957,500 to the General Fund to mitigate public safety expenses. Mitigation Fund: • $759.229 to the Arterial Streets fund to support multiple capital projects. • $45,453 to the Municipal Parks Construction fund for the Cedar Lanes Pump Track project. • $1,312,453 to the Capital Improvement fund support the Arts and Culture Center Renovation, Downtown Plaza Park, and 104th Avenue Park Development projects. 73 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Non-major Governmental Funds: • $2,153 from the Local Improvement District#350 fund to the General Fund, in order to close out the fund. Water Fund: • $50,000 to the Local Street fund for utility trench mitigation. • $35,500 to the Equipment Rental Capital Projects fund for cost overruns on vehicles purchased in 2021. • $10,839 to the Equipment Rental Capital Projects fund for the M&O Facilities Improvements project. Sanitary Sewer: • $50,000 to the Local Street fund for utility trench mitigation. • $9,555 to the Equipment Rental Capital Projects fund for the M&O Facilities Improvements project. Storm Drainage: • $74,000 to the General Fund for median maintenance. • $50,000 to the Local Street fund for utility trench mitigation. • $9,555 to the Equipment Rental Capital Projects fund for the M&O Facilities Improvements project. Non-Major Enterprise Funds: • $15,000 from the Cemetery fund to the Equipment Rental and Replacement fund for the purchase of a new Gator vehicle. Internal Service Funds: • $553,500 from the Facilities fund to the 2020 LTGO A&B Refunding Bonds fund for debt service payments. • $158,845 from the Facilities fund to the Capital Improvement fund for HVAC repair and replacement. • $86,000 of transfers between Internal Service funds for cost overruns on vehicles purchased in 2021. Loans between funds are classified as interfund receivable and payable. Interfund Loans do not affect total fund equity. Interfund Loans Balance Balance Due From Due To 1/1/2022 New Loans Repayments 12/31/2022 Housing&Comm.Dev. General Fund $ 150,000 $ - $ - $ 150,000 Total interfund loans $ 150,000 $ - $ - $ 150,000 All interfund loans are considered short-term cash loans. *The purpose of the interfund loan to Housing(Si Community Development was to cover authorized expenditures while the City waited for reimbursement of federal Community Development Block Grant monies. 74 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 5 - DUE FROM OTHER GOVERNMENTAL UNITS As of December 31, 2022, the City had receivables due from other governmental units as follows: Due from Other Governmental Units General Fund: Association of Washington Cities 105.528 Auburn School District 84,165 King Conservation District -Farmers Market 20,199 King County District Court 359.062 King County -Real Estate Excise Taxes 220,176 King County Sheriff's -Registered Sex Offender Grant 3,744 King County VSHS Levy grant 64.896 Muckleshoot Indian Tribe 539.508 City of Kent-VT.1 ET 1,168 Pierce County- Real Estate Excise Taxes 19.503 Seattle Police Dept -US Department of Justice JAG Grant 40.006 US Department of Justice-Bulletproof Vest Program 16.023 US Department of Justice-COPS Hiring Program 7,252 WA Association of Sheriffs and Police Chiefs 22.603 WA Dept. of Transportation-CTR Program 6,985 WA State Criminal Justice Training 17.663 WA State Department of Commerce-Grants 30,000 WA State Military Department -EMPG Grant 20,483 WA State Treasurer-Sales Taxes 1,830,019 Total General Fund 3.408.983 Arterial Street Fund: King County Wastewater Treatment Division 14.469 Sound Transit 395,994 WA Dept_ of Transportation-Arterial Street Improvements 1.131.566 Total Arterial Street Fund 1,542,029 Arterial Street Preservation Fund: WA State Transportation Improvement Board-Arterial Street Imp_ 596,419 WA Dept_ of Transportation-Arterial Street Preservation 232.854 Total Arterial Street Preservation Fund 829,273 Drug Forfeiture Fund: City of Puyallup-TNET 9,314 Pierce County Sheriff's Department -TNET 10.348 Total Drug Forfeiture Fund 19.662 Housing S. Community Development: U_S_ Dept_ of Housing -Community Development Block Grant -COVIDI 24.895 U.S. Dept_ of Housing -Community Development Block Grant 78.920 WA State Department of Commerce- CDBG-CV2 grant 110.959 Total Housing E..Community Development Fund 214.774 Municipal Park Construction: King County Finance-Grants 180.824 Total Municipal Park Construction Fund 180.824 General Government Capital Improvements: Pierce County- Real Estate Excise Taxes 16,616 WA Dept. of Transportation-Sidewalk Improvements 37,466 WA State Department of Commerce 2.011 Total General Government Capital Improvements Fund 56.093 Storm Drainage Fund: City of Algona 14.323 City of Pacific 9.025 Pierce County Flood Control District -Capital Improvments 48.928 WA State Department of Ecology -Grant 50.000 Total Storm Drainage Fund 122,276 Solid Waste Fund: City of Algona 2.520 King County -Waste reduction and recycling grant 46,129 Seattle King County Public Health 47,402 WA State Department of Ecology-Grant 21,106 Total Solid Waste fund 117.156 Airport Fund Federal Aviation Administration-Grant 116.772 WA Dept_ of Transportation-Grant 15.769 Total Airport Capital fund 132,541 Facilities Fund: City of Federal Way 18.750 Total Airport Capital fund 18.750 Information Services Fund: City of Algona 2.265 City of Pacific 325 Valley Regional Fire Authority 750 Total Information Services fund 3.340 Equipment Rental Fund: Auburn School District 133.728 Total Information Services fund 133.728 Total 6.779,429 Reconciliation to government-wide statement of net position: Total due from other governmental units. government-wide statement of net position 6.779.4-29 75 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 6 - CAPITAL ASSETS AND RIGHT TO USE ASSETS Capital asset activity for the year ended December 31, 2022, is as follows: Schedule of Asset Activity Capital Assets Balance Decreases/ Balance 1/1/22 Increases Adjustments 12/31/22 Governmental activities: Capital assets, not being depreciated: Land $ 109,092,635 $ 623,465 $ (1,342,682) $ 108,373,418 Construction in progress 4,807,230 8,996,475 (4,776,316) 9,027,389 Total capital assets, not being depreciated 113,899,865 9,619,940 (6,118,998) 117,400,807 Capital assets, being depreciated: Buildings 74,327,862 41,397 (272,898) 74,096,361 Improvements other than buildings 28,283,072 774,170 - 29,057,242 Machinery and equipment 33,575,763 2,430,757 (824,364) 35,182,156 Intangibles 564,093 - - 564,093 Infrastructure 446,219,070 10,185,777 - 456,404,847 Total capital assets being depreciated 582,969,860 13,432,101 (1,097,262) 595,304,699 Less: accumulated depreciation for: Buildings (26,873,585) (1,511,203) 272,897 (28,111,891) Improvements other than buildings (18,334,779) (892,196) - (19,226,975) Machinery and equipment (24,255,433) (2,039,929) 673,034 (25,622,328) Intangibles (54,700) (4,935) - (59,635) Infrastructure (228,503,167) (15,900,663) - (244,403,830) Total accumulated depreciation (298,021,663) (20,348,928) 945,932 (317,424,659) Total capital assets, being depreciated, net 284,948,197 (6,916,827) (151,330) 277,880,039 Governmental activities capital assets, net $ 398,848,062 $ 2,703,113 $ (6,270,329) $ 395,280,846 Business-type activities: Capital assets, not being depreciated: Land $ 12,938,077 $ 239,368 $ - $ 13,177,445 Water Rights 7,823,968 934,805 - 8,758,773 Construction in progress 8,797,449 13,103,338 (13,125,558) 8,775,229 Total capital assets, not being depreciated 29,559,494 14,277,511 (13,125,558) 30,711,447 Capital assets, being depreciated: Buildings 6,085,435 - - 6,085,435 Improvements other than buildings 377,655,039 13,501,252 (3) 391,156,288 Machinery and equipment 2,608,134 - (9,420) 2,598,714 Total capital assets being depreciated 386,348,609 13,501,252 (9,423) 399,840,437 Less: accumulated depreciation for: Buildings (4,504,348) (99,795) - (4,604,142) Improvements other than buildings (149,755,161) (8,321,113) - (158,076,274) Machinery and equipment (2,377,318) (46,168) 7,420 (2,416,066) Total accumulated depreciation (156,636,826) (8,467,076) 7,420 (165,096,482) Total capital assets, being depreciated, net 229,711,783 5,034,176 (2,003) 234,743,955 Business-type activities capital assets, net $ 259,271,276 $ 19,311,687 $ (13,127,561) $ 265,455,402 76 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Schedule of Asset Activity - Continued Right of Use Assets (Leases) Balance Decreases/ Balance 1/1/22 Increases Adjustments 12/31/22 Governmental activities: Lease assets, being amortized: Buildings $ 4,685,125 $ - $ - $ 4,685,125 Machinery and equipment 10,232 216,734 - 226,966 Total lease assets being amortized 4,695,357 216,734 - 4,912,091 Less: accumulated amortization for: Buildings - (257,896) - (257,896) Machinery and equipment - (18,827) - (18,827) Total accumulated amortization - (276,723) - (276,723) Total lease assets, being amortized, net 4,695,357 (59,989) - 4,635,368 Governmental activities lease assets, net $ 4,695,357 $ (59,989) $ - $ 4,635,368 The beginning balances for leased assets have been restated. No lease activity is qualified to be recognized as intangible asset under the business-type activities. Depreciation/amortization expense was charged to functions/programs of the City as follows: Governmental activities: General Government $ 1,127,325 Public Safety 1,031,711 Transportation 14,801,386 Health and Human Services 257,896 Culture and Recreation 1,410,794 Capital assets held by the City's internal service funds are charged to the various functions based on their usage of the assets 1,996,538 Total depreciation/amortization expense-governmental activities $ 20,625,650 Business-type activities: Water $ 3,533,926 Sanitary Sewer 2,478,902 Storm Water 1,837,459 Solid Waste - Airport 580,297 Cemetery 36,492 Total depreciation expense- business-type activities $ 8,467,076 77 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements To comply with the provisions of GASB statements No. 87, the corresponding intangible lease assets and liabilities have been identified. The following discloses additional information for the lease agreements classified under governmental activities. As of December 31, 2022, there were three separate agreements with lessors as listed in the following table. Lessor: Total Feenix Parkside LLC Sharp Business Systems Pitney Bowes Inc. Asset Information: Value of the Right to Use Asset $ 4,685,125 $ 216,734 $ 10,232 $ 4,912,091 Accumulated Amortization (257,896) (10,660) (8,167) (276,723) Book Value $ 4,427,229 $ 206,074 $ 2,065 $ 4,635,368 Liability Information: Lease Liability (Note 7) $ 4,467,116 $ 199,575 $ 2,048 $ 4,668,739 Payment 22,866 40,024 2,048 Non-lease Portion - 18,864 - Interest Rate 1.4810% 2.1567% 0.2383% Other Information: Underlying Asset Building Equipment Equipment Payment Frequency Monthly Semi Annual Quarterly Lease Contract Date January 2020 May 2022 April 2018 Lease Commencement Date February 2020 May 2022 April 2018 Lease End Date February 2040 October 2027 April 2023 Payment Type Fixed Fixed Fixed Lease Description 22,308 square feet Right to use copy Relay 2000 Inserter of rentable area machines machine There were no commitments under leases before the commencement of the lease terms. NOTE 7 - LONG-TERM LIABILITIES General Obligation Bonds are direct obligations of the City for which its full faith and credit are pledged. Debt service for voter-approved issues, of which the City has none, would be funded by special property tax levies. Debt service for City Council authorized bonds, also called councilmanic bonds, is funded from regular property taxes or general revenues, and is generally paid from debt service funds but can be paid from other designated funds. General Obligation Bonds outstanding at year-end are as follows: • 2016 Limited Tax General Obligation Refunding Bonds were issued for the primary purposes of (a) refunding on a current basis the 2005 Limited Tax General Obligation Refunding Bonds and (b) refunding on an advance basis the 2006A Limited Tax General Obligation Bonds. As a result of these transactions, the 2005 and 2006A bonds are considered to be defeased and the liability for those bonds has been removed from the City's financial statements. The remaining balance of outstanding defeased debt as of December 31, 2022, is $1,081,209. • 2020 Limited Tax General Obligation Series A Refunding Bonds were issued in the principal amount of$15,010,000 on October 22, 2020, for the purpose of refunding on a current basis the 2010 Limited Tax General Obligation Series B Bonds of which $17,560,000 was outstanding. The bonds were issued at a premium of $3,124,761 and bear a fixed interest rate of 4-5% through maturity. The net proceeds of $17,973,858 (after payment of $160,903 in issuance costs) were deposited into an irrevocable trust with an escrow agent to pay the full outstanding principal and interest on the 2010 B Bonds on the October 23, 2020, redemption date. As a result of this transaction, the 2010 B bonds are considered to be defeased and the liability for those bonds have been removed from the City's financial statements. The refunding transaction reduced the City's total debt service payments by $3,898,891 78 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements through the final maturity of December 1, 2039, and resulted in an economic gain (the difference between the present values of the debt service payments on the old and new debt) of $3,391,515. • 2020 Limited Tax General Obligation Series B Refunding Bonds were issued in the principal amount of $4,470,000 on October 22, 2020, for the purpose of refunding on a current basis the 2010 Limited Tax General Obligation Series D Bonds of which $5,160,000 was outstanding. The bonds were issued at a premium of $864,988 and bear a fixed interest rate of 2-5% through maturity. The net proceeds of $5,287,071 (after payment of $47,917 in issuance costs) were deposited into an irrevocable trust with an escrow agent to pay the full outstanding principal and interest on the 2010 D Bonds on the October 23, 2020, redemption date. As a result of this transaction, the 2010 D bonds are considered to be defeased and the liability for those bonds have been removed from the City's financial statements. The refunding transaction reduced the City's total debt service payments by $1,003,626 through the final maturity of December 1, 2034, and resulted in an economic gain (the difference between the present values of the debt service payments on the old and new debt) of $903,068. Revenue Bonds are payable from water, sewer and storm drainage utility revenues generated by those enterprise funds. • 2013 Utility System Revenue Bonds were issued to finance water and storm utility system improvements. • 2020 Utility System Revenue Bonds were issued in the par amount of $12,030,000 to finance water utility system improvements. • 2020 Utility System Revenue Refunding Bonds were issued in the principal amount of $11,835,000 for the purpose of advance refunding the 2010 Utility System Revenue Bonds of which $15,675,000 was outstanding. The bonds were issued at a premium of $2,997,541 and bear a fixed interest rate of 5% through maturity. The net proceeds of $14,933,747 (after payment of $129,168 in issuance costs and the City's reserve account contribution of $1,175,010) were deposited into an irrevocable trust with an escrow agent to pay the full outstanding principal and interest on the December 1, 2020 redemption date. As a result of this transaction, the 2010 Revenue Bonds are considered to be defeased and the liability for those bonds have been removed from the City's financial statements. The refunding transaction reduced the City's total debt service payments by $2,728,553 through the final maturity of December 1, 2030 and resulted in an economic gain (the difference between the present values of the debt service payments on the old and new debt) of $2,552,622. State of Washington Public Works Trust Fund and Drinking Water State Revolving Fund Loans are a direct responsibility of the City. Auburn currently has nine outstanding loans with a remaining total balance of $6,487,498. Seven of the loans are for water and sewer construction projects. The loans are being repaid from water and sewer fund revenues over a 20-year period that begins upon each project completion (PWTF 2001, PWTF 2002, PWTF 2004, PWTF 2006, PWTF 2013, DWSRF 2016, & DWSRF 2020). The other two loans are for arterial street improvements and are being repaid from arterial street fund revenues over a 20-year period that began in 2009 upon project completion (PWTF 2008) and over a 29-year period that began in 2013 upon project completion (PWTF 2012). Compensated Absences are paid by those funds that have employees. These are mostly payable by the General fund and enterprise funds. Pension and OPEB liabilities are generally liquidated by funds that have employees. Lease liabilities are recognized in accordance with GASB statement No. 87. This Statement requires lessees to recognize and measure transactions as leases, including recognition of a lease liability at the present value of future lease payments expected to be made during the lease term, which represent the obligations of the lessee under the lease contract. As of December 31, 2022, the lease liabilities were limited only to governmental activities. 79 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The following schedules summarize the long-term debt transactions of the City for the year ended December 31, 2022. The first table summarizes all debt transactions for Auburn,while the second provides information on debt requirements to maturity. Additional schedules reflect the reconciliation of debt by fund type, and detailed information on all long- term debt. CHANGES IN LONG-TERM LIABILITES SUMMARY Long-term liabilities Long-term liabilities payable 12/31/21 Additions Reductions payable 12/31/22 Governmental Activities General Obligation $ 19,013,767 $ - $ (1,082,558) $ 17,931,209 Lease Liability 4,695,357 216,609 (243,227) 4,668,739 Due To Other Governments 16,558,066 - (669,101) 15,888,965 Public Works Trust Fund Loans 2,902,542 - (197,376) 2,705,166 Employee Leave Benefit 3,712,317 2,960,792 (2,634,975) 4,038,134 Other Post Employment Benefits 13,370,311 261,571 (2,675,725) 10,956,157 Net Pension Liability 1,026,840 1,854,544 - 2,881,384 Firemen's Pension Liability 3,049,730 59,120 (610,572) 2,498,278 Premium 3,584,343 - (219,504) 3,364,839 Total Governmental Activities 67,913,273 5,352,636 (8,333,038) 64,932,870 Business-Type Activities Revenue Bonds 29,510,000 - (1,940,000) 27,570,000 Employee Leave Benefits 809,515 617,818 (584,709) 842,624 Net Pension Liability 1,136,662 896,473 0.00 2,033,135 Public Works Trust Fund &Drinking Water Loans 3,584,955 - (539,176.00) 3,045,779 Premium 5,621,084 - (468,969) 5,152,115 Total Business-Type Activities 40,662,216 1,514,291 (3,532,854) 38,643,653 Total All Funds $ 108,575,489 $ 6,866,927 $ (11,865,892) $ 103,576,523 80 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements As of December 31, 2022, the principal and interest requirements to maturity are as follows: DEBT SERVICE REQUIREMENT TO MATURITY Governmental Activities General Obligation Bonds (1) Lease Liability Loans Year Principal Interest Principal Interest Principal Interest 2023 $ 1,818,039 $ 1,425,906 $ 262,717 $ 68,760 $ 197,376 $ 7,969 2024 1,890,575 1,353,809 272,041 64,564 197,376 7,274 2025 1,969,116 1,278,685 277,579 60,228 197,376 6,580 2026 1,674,644 1,192,532 281,988 55,818 197,376 5,885 2027 1,754,825 1,108,800 286,469 51,338 197,376 5,191 2028-2032 10,136,238 4,176,910 1,279,976 197,455 665,348 17,951 2033-2037 11,200,764 1,877,138 1,378,293 99,138 584,966 10,237 2038-2042 3,375,973 163,580 629,675 10,545 467,972 2,925 Total $ 33,820,174 $ 12,577,360 $ 4,668,739 $ 607,847 $ 2,705,166 $ 64,012 (1)Includes Due to Other Governments. Business Type Activities Revenue Bonds Loans Year Principal Interest Principal Interest 2023 $ 2,030,000 $ 1,256,350 $ 513,062 $ 13,001 2024 2,125,000 1,160,400 513,062 10,529 2025 2,225,000 1,059,900 405,218 8,058 2026 2,325,000 954,650 405,218 6,119 2027 2,435,000 844,600 194,538 4,193 2028-2032 10,850,000 2,459,300 972,688 12,319 2033-2037 3,825,000 822,000 29,995 2,625 2038-2042 1,755,000 106,000 11,998 313 Total $ 27,570,000 $ 8,663,200 $ 3,045,777 $ 57,156 81 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements CHANGES IN LONG-TERM LIABILITIES Interest Maturity Original Principal Balance Balance Due Within Issue Name Rates Date Amounts�1 Installments 12/31/21 Additions Reductions 12/31/22 One Year GOVERNMENTAL DEBT General Obligation Bonds: LTGO Refunding 2016 1.64-1.64% 12/1/2025 $ 3,166,930 $71,470-$366,159 $ 1,428,767 $ - $ (347,558) $ 1,081,209 $ 352,733 LTGO Refunding 2020A(LTGO 2010B) 4.00-5.00% 12/1/2039 15,010,000 $480,000-$1,045,000 13,665,000 - (505,000) 13,160,000 530,000 LTGO Refunding 2020E(LTGO 2010D) 4.00-5.00% 12/1/2034 4,470,000 $71,470-$366,159 3,920,000 - (230,000) 3,690,000 240,000 Total General Obligation Bonds 22,646,930 19,013,767 - (1,082,558) 17,931,209 1,122,733 Leases: Feenix Parkside LLC(1) 1.4810% 4,685,125 4,685,125 (218,009) 4,467,116 222,448 Sharp Business Systems(I) 2.1567% 216,609 - 216,609 (17,034) 199,575 38,221 Pitney Bowes Inc.(5) 0.2383% 10,232 10,232 (8,184) 2,048 2,048 Total Lease Liability 4,911,966 4,695,357 216,609 (243,227) 4,668,739 262,717 Emolovee Leave Benefits: Compensated absences 3,712,317 2,960,792 (2,634,975) 4,038,134 2,918,535 Other Post Employment Benefits: LEOFF 1 13,370,311 261,571 (2,675,725) 10,956,157 455,000 Pensions: Net Pension Liability 1,026,840 1,854,544 - 2,881,384 2,881,384 Firemen's Pension Liability 3,049,730 59,120 (610,572) 2,498,278 - Public Works Trust Fund Loans: PWTF 2008 0.50% 7/1/2028 1,527,273 $80,383 562,679 - (80,383) 482,296 80,383 PWTF 2012 0.50% 6/1/2041 3,284,857 $116,993 2,339,863 - (116,993) 2,222,870 116,993 Total Public Works Trust Fund Loans 4,812,130 2,902,542 - (197,376) 2,705,166 197,376 Premium Related to Debt 3,584,343 - (219,504) 3,364,838 - Total Governmental $ 27,459,060 $ 51,355,207 $ 5,352,636 $ (7,663,937) $ 49,043,905 $ 7,837,745 BUSINESS-TYPE DEBT Revenue Bonds: Utility sys bonds 2013(�) 0.38-4.00% 12/1/2032 11,415,000 $335,000-$785,000 7,165,000 . (530,000) 6,635,000 555,000 Utility sys refunding bonds 2020(2010 Bonds) 5% 12/1/2030 11,835,000 $950,000-$1,450,000 10,885,000 . (995,000) 9,890,000 1,040,000 Utility sys bonds 2020(�) 4.00-5.00% 12/1/2039 12,030,000 $175,000-$895,000 11,460,000 . (415,000) 11,045,000 435,000 Total Revenue Bonds 35,280,000 29,510,000 - (1,940,000) 27,570,000 2,030,000 Employee Leave Benefits: Compensated absences 809,515 617,818 (584,709) 842,624 609,001 Net Pension Liability 1,136,662 896,473 2,033,135 2,033,135 Public Works Trust Fund&Drinking Water Loans: PWTF 2002 1.00% 7/1/2022 641,250 $26,115 26,115 - (26,115) - - PWTF 2004 0.50% 7/1/2024 2,049,036 $107,844 323,532 - (107,844) $ 215,688 107,844 PWTF 2006 0.50% 7/1/2026 3,325,000 $180,418 902,090 - (180,418) $ 721,672 180,418 PWTF 2013 2.00% 6/1/2032 3,325,000 $188,538 2,073,924 - (188,538) $ 1,885,385 188,538 DWSRF 201601 1.50% 10/1/2026 248,066 $30,262 151,312 - (30,262) $ 121,050 30,262 DWSRF 2020 1.75% 10/1/2039 3,030,000 $5,999 107,983 - (5,999) $ 101,984 5,999 Total Public Works Trust Fund&Drinking Water Loans 12,618,352 3,584,955 - (539,176) 3,045,779 513,061 Premium Related to Debt 5,621,084 - (468,969) $ 5,152,115 - Total Proprietary $ 47,898,352 $ 40,662,216 $ 1,514,291 $ (3,532,854) $ 38,643,653 $ 5,185,197 Total All Funds $ 75,357,412 $ 92,017,423 $ 6,866,927 $ (11,196,791) $ 87,687,558 $ 13,022,942 (1)The beginning balances have been restated to comply with GASB Statement No.87. (�)Subject to federal arbitrage compliance rules. (3)The original authorized loan amount was reduced from$1,353,400 in concert with a reduction in project scope(limited to design costs only). 82 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Due to Other Governments • SCORE Public Development Authority issued General Obligation bonds in 2009 to acquire, construct, improve, and equip a consolidated correctional facility located in Des Moines,Washington. These bonds were subsequently refunded in December 2019 and will mature in 2038. The city is contracted to pay 34.94% of the debt service. This debt is paid from the General fund. CHANGES IN LONG-TERM LIABILITIES DUE TO OTHER GOVERNMENTS Interest Maturity Original Principal Balance Balance Due Within Issue Name Rates Date Amount Installments 12/31/21 Additions Reductions 12/31/22 One Year GOVERNMENTAL DEBT: General Oblieation Bonds: SCORE Refunding Bonds 2019 3.00-5.00% 12/1/2038 17,838,617 $637,655-$1,325,973 16,558,066 - (669,101) 15,888,965 695,306 Total General Obligation Bonds Due Other Governments $ 17,838,617 $ 16,558,066 $ - $ (669,101) $ 15,888,965 $ 695,306 LONG-TERM LIABILITIES RECONCILIATION Enterprise Governmental Funds Funds 12/31/22 Liabilities payable from restricted assets: Revenue bonds $ 2,176,444 $ - $ 2,176,444 Long-term bonds payable: General obligation bonds - 17,931,209 17,931,209 Revenue bonds 25,393,556 - 25,393,556 Lease Liability 4,668,739 4,668,739 Public Works Trust Fund loans 3,045,779 2,705,166 5,750,945 Due to Other Governments - 15,888,965 15,888,965 Employee leave benefits 842,624 4,038,134 4,880,758 Other Post Employment Benefits - 10,956,157 10,956,157 Net Pension Liability 2,033,135 2,881,384 4,914,519 Firemen's Pension Liability - 2,498,278 2,498,278 Premium 5,152,115 3,364,838 8,516,953 Total long-term debt $ 38,643,653 $ 64,932,870 $ 103,576,523 Revenue Bond Debt Service Coverage The required debt service coverage for the 2013 utility revenue, 2020 utility revenue, and 2020 utility revenue refunding bonds is 1.25. Debt service coverage for 2022 was 3.78. The ratio indicates the direction and degree to which the revenue stream exists to meet the current debt burden. The ratio is calculated by dividing the net revenue available by debt service requirements. The restricted rate stabilization fund for the utility revenue bonds was established to minimize the effect on rates of revenue fluctuations between years. By transferring cash into this stabilization fund, adjusted net revenue available for debt service, as defined, would be decreased by the amount of the transfer. Conversely, transfers out of the account would increase adjusted net revenue available for debt service. 83 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Estimated Arbitrage Rebate The Federal Tax Reform Act of 1986 requires issuers of tax-exempt debt of over $5 million to make payments to the United States Treasury of investment interest received at yields that exceed the issuer's tax-exempt borrowing rates. Payments of arbitrage rebate amounts due under these regulations must be made to the U.S. Treasury every five years. The City's estimated arbitrage rebate as of December 31, 2022, is $0 for its tax-exempt bond issues. NOTE 8 - PENSION PLANS The following table represents the aggregate pension amounts for all plans for the year 2022: Aggregate Pension Amounts - All State Administered Plans Pension liabilities $ (4,914,519) Pension assets $ 21,209,165 Deferred outflows of resources $ 14,365,765 Deferred inflows of resources $ (13,764,395) Pension expense/expenditures $ 978,064 State Sponsored Pension Plans Substantially all City full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available Annual Comprehensive Financial Report that includes financial statements and required supplementary information for each plan. The DRS Annual Comprehensive Financial Report may be obtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380 Olympia, WA 98540-8380 Or the DRS Annual Comprehensive Financial Report may be downloaded from the DRS website at www.drs.wa.gov. Public Employees' Retirement System (PERS) PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability, and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service. The AFC is the average of the member's 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiring from active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, an optional cost-of-living adjustment (COLA), and a one-time duty-related death benefit, if found eligible by 84 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium,the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2022 were as follows: PERS Plan 1 Actual Contribution Rates: Employer Employee* January—August 2022: PERS Plan 1 6.36% 6.00% PERS Plan 1 UAAL 3.71% Administrative Fee 0.18% Total 10.25% 6.00% September—December 2022: PERS Plan 1 6.36% 6.00% PERS Plan 1 UAAL 3.85% Administrative Fee 0.18% Total 10.39% 6.00% For employees participating in JBM, the contribution rate was 12.26%. PERS Plan 2/3 provides retirement, disability, and death benefits. Retirement benefits are determined as two percent of the member's average final compensation (AFC) times the member's years of service for Plan 2 and one percent of AFC for Plan 3. The AFC is the average of the member's 60 highest-paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions: • With a benefit that is reduced by three percent for each year before age 65; or • With a benefit that has a smaller(or no) reduction (depending on age) that imposes stricter return-to-work rules. PERS Plan 2/3 members hired on or after May 1, 2013, have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non-duty disability payments, a cost-of- living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. 85 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2022 were as follows: PERS Plan 2/3 Actual Contribution Rates: Employer 2/3 Employee 2* January—August 2022: PERS Plan 2/3 6.36% 6.36% PERS Plan 1 UAAL 3.71% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 10.25% 6.36% September—December 2022: PERS Plan 2/3 6.36% 6.36% PERS Plan 1 UAAL 3.85% Administrative Fee 0.18% Employee PERS Plan 3 Varies Total 10.39% 6.36% For employees participating in JBM, the contribution rate was 15.90% The City's actual PERS plan contributions were $1,121,072 to PERS Plan 1 and $1,897,746 to PERS Plan 2/3 for the year ended December 31, 2022. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) LEOFF membership includes all full-time, fully compensated, local law enforcement commissioned officers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of two separate defined benefit plans. LEOFF Plan 1 provides retirement, disability, and death benefits. Retirement benefits are determined per year of service calculated as a percent of final average salary (FAS) as follows: • 20+years of service—2.0% of FAS • 10-19 years of service— 1.5% of FAS • 5-9 years of service— 1% of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held the same position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of the highest consecutive 24 months' salary within the last ten years of service. Members are eligible for retirement with five years of service at the age of 50. Other benefits include duty and non-duty disability payments, a cost-of living adjustment (COLA), and a one-time duty-related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as the plan remains fully funded. The LEOFF Plan I had no required employer or employee contributions for fiscal year 2022. Employers paid only the administrative expense of 0.18 percent of covered payroll. 86 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements LEOFF Plan 2 provides retirement, disability, and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highest consecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If the member has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped at three percent annually and a one-time duty-related death benefit, if found eligible by the Department of Labor and Industries. LEOFF 2 members are vested after the completion of five years of eligible service. Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18 percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2 Retirement Board. Effective July 1, 2017, when a LEOFF employer charges a fee or recovers costs for services rendered by a LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover both the employer and state contributions on the LEOFF 2 basic salary earned for those services. The state contribution rate (expressed as a percentage of covered payroll) was 3.41% in 2022. The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2022 were as follows: LEOFF Plan 2 Actual Contribution Rates: Employer Employee January— December 2022 State and local governments 5.12% 8.53% Administrative Fee 0.18% Total 5.30% 8.53% The City's actual contributions to the plan were $782,428 for the year ended December 31, 2022. The Legislature, by means of a special funding arrangement, appropriates money from the state General Fund to supplement the current service liability and fund the prior service costs of Plan 2 in accordance with the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. This special funding situation is not mandated by the state constitution and could be changed by statute. For the state fiscal year ending June 30, 2022, the state contributed $81,388,085 to LEOFF Plan 2. The amount recognized by the City as its proportionate share of this amount is $492,487. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2022 with a valuation date of June 30, 2021. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary's (OSA) 2013-2018 Demographic Experience Study and the 2021 Economic Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2021 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2022. Plan liabilities were rolled forward from June 30, 2021, to June 30, 2022, reflecting each plan's normal cost (using the entry-age cost method), assumed interest and actual benefit payments. • Inflation: 2.75% total economic inflation; 3.25% salary inflation 87 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements • Salary increases: In addition to the base 3.25% salary inflation assumption, salaries are also expected to grow by promotions and longevity. • Investment rate of return: 7.00% Mortality rates were developed using the Society of Actuaries' Pub. H-2010 mortality rates,which vary by member status (e.g. active, retiree, or survivor), as the base table. The OSA applied age offsets for each system, as appropriate, to better tailor the mortality rates to the demographics of each plan. OSA applied the long-term MP-2017 generational improvement scale, also developed by the Society of Actuaries, to project mortality rates for every year after the 2010 base table. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout their lifetime. Methods did not change from the prior contribution rate setting June 30, 2019, Actuarial Valuation Report (AVR), however OSA introduced a temporary method change to produce asset and liability measures for the June 30, 2020 AVR. There were also the following assumption changes: • OSA updated the Joint-and-Survivor Factors and Early Retirement Factors in the model. Those factors are used to value benefits for early retirement and survivors of members that are deceased prior to retirement. These factors match the administrative factors provided to DRS for future implementation that reflect current demographic and economic assumptions. • OSA updated the economic assumptions based on the 2021 action of the PFC and the LEOFF Plan 2 Retirement Board. The investment return assumption was reduced from 7.5% (7.4%for LEOFF 2) to 7.0%, and the salary growth assumption was lowered from 3.5% to 3.25%. This action is a result of recommendations from OSA's biennial economic experience study. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.00 percent. To determine that rate, an asset sufficiency test was completed to test whether each pension plan's fiduciary net position was sufficient to make all projected future benefit payments for current plan members. Based on OSA's assumptions, the pension plans' 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 of 7.00 percent was used to determine the total liability. Long-Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.00 percent was determined using a building-block-method. In selecting this assumption, the Office of the State Actuary (OSA) reviewed the historical experience data, considered the historical conditions that produced past annual investment returns, and considered Capital Market Assumptions (CMA's) and simulated expected investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses the CMA's and their target asset allocation to simulate future investment returns at various future times. 88 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2022, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB's most recent long-term estimate of broad economic inflation. Long-Term Expected Asset Class Target Allocation Real Rate of Return Arithmetic Fixed Income 20% 1.5% Tangible Assets 7% 4.7% Real Estate 18% 5.4% Global Equity 32% 5.9% Private Equity 23% 8.9% 100% Sensitivity of Net Pension Liability/(Asset) The table below presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.00 percent, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage point lower (6.00 percent) or 1-percentage point higher (8.00 percent) than the current rate. 1% Decrease Current Discount Rate 1% Increase (6.00%) (7.00%) (8.00%) PERS 1 $ 6,565,730 $ 4,914,519 $ 3,473,399 PERS 2/3 10,054,070 (8,537,540) (23,811,723) LEOFF 1 (2,358,663) (2,691,505) (2,980,130) LEOFF 2 $ (459,574) $ (9,980,121) $ (17,771,874) Pension Plan Fiduciary Net Position Detailed information about the State's pension plans' fiduciary net position is available in the separately issued DRS financial report. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2022, the City reported its proportionate share of net pension liabilities as follows: Liability (Asset) PERS 1 $ (4,914,519) PERS 2/3 8,537,540 LEOFF 1 2,691,505 LEOFF 2 $ 9,980,121 89 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The amount of the asset reported above for LEOFF Plans 1 and 2 reflects a reduction for State pension support provided to the City. The amount recognized by the City as its proportionate share of the net pension asset, the related State support, and the total portion of the net pension asset that was associated with the City were as follows: LEOFF 1 Asset LEOFF 2 Asset Employer's proportionate share $ (2,691,505) $ (9,980,121) State's proportionate share of the net (18,205,272) (6,464,905) pension asset associated with the employer TOTAL $ (20,896,777) $ (16,445,026) 1 At June 30, 2022, the City's proportionate share of the collective net pension liabilities was as follows: Proportionate 1 Proportionate Share Change in Share 6/30/21 6/30/22 Proportion PERS 1 0.177157% 0.176504% (0.000653)% PERS 2/3 0.227559% 0.230198% 0.002639% LEOFF 1 0.095644% 0.093826% (0.001818)% LEOFF 2 0.379530% 0.367227% (0.012303)% Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30, 2022, are used as the basis for determining each employer's proportionate share of the collective pension amounts reported by the DRS in the Schedules of Employer and Nonemployer A/locations for all plans except LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1 from 1971 through 2000 and the retirement benefit payments in fiscal year 2022. Historical data was obtained from a 2011 study by the Office of the State Actuary (OSA). The state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employers contributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded, and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding of the remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2022, the state of Washington contributed 39 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 61 percent of employer contributions. Pension Expense For the year ended December 31, 2022, the City recognized pension expense as follows: 1 Pension Expense PERS 1 $ 2,234,087 PERS 2/3 (2,892,265) LEOFF 1 (80,214) LEOFF 2 1,716,456 TOTAL $ 978,064 90 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: PERS 1 Deferred Outflows Deferred Inflows of of Resources Resources Net difference between projected and actual investment $ $ (814,480) earnings on pension plan investments Contributions subsequent to the measurement date 573,736 TOTAL $ 573,736 $ (814,480) PERS 2/3 Deferred Outflows Deferred Inflows of of Resources Resources Differences between expected and actual experience $ 2,115,403 $ (193,268) Net difference between projected and actual investment (6,311,866) earnings on pension plan investments Changes of assumptions 4,758,500 (1,245,946) Changes in proportion and differences between 5,408 (258,233) contributions and proportionate share of contributions Contributions subsequent to the measurement date 959,454 TOTAL $ 7,838,764 $ (8,009,312) LEOFF 1 Deferred Outflows Deferred Inflows of of Resources Resources Net difference between projected and actual investment $ $ (336,072) earnings on pension plan investments TOTAL $ $ (336,072) LEOFF 2 Deferred Outflows Deferred Inflows of of Resources Resources Differences between expected and actual experience $ 2,371,442 $ (92,598) Net difference between projected and actual investment (3,341,727) earnings on pension plan investments Changes of assumptions 2,528,247 (868,996) Changes in proportion and differences between 653,720 (301,211) contributions and proportionate share of contributions Contributions subsequent to the measurement date 399,856 TOTAL $ 5,953,264 $ (4,604,531) Deferred outflows of resources related to pensions resulting from the City's contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2023. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows: Year ended PERS 1 PERS 2/3 LEOFF 1 LEOFF 2 December 31 2023 $ (344,671) $ (2,013,680) $ (142,336) $ (1,020,720) 2024 (313,051) (1,804,114) (128,877) (880,955) 2025 (392,712) (2,157,318) (161,145) (1,181,937) 2026 235,954 2,852,398 96,286 1,470,253 2027 - 998,423 - 443,862 Thereafter $ - $ 994,288 $ - $ 2,118,374 91 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements City of Auburn Fire Relief and Pension Plan The City is the administrator of the Firemen's Pension Plan (Plan), which is a closed, single-employer defined benefit pension plan that was established in conformance with RCW Chapters 41.16 and 41.18. This plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. Membership is limited to firefighters employed prior to March 1, 1970 when the LEOFF retirement system was established. The City's obligation under the Firemen's Pension Plan consists of paying all benefits, including payments to beneficiaries and healthcare, for firefighters who retired prior to March 1, 1970, and excess pension and healthcare benefits of LEOFF for covered firefighters who retired after March 1, 1970. Benefits and refunds of the defined benefit pension plan are recognized when due and payable in accordance with the Plan. The Plan does not issue a separate financial report. Membership of the Firemen's Pension Plan consisted of 11 eligible inactive employees or their beneficiaries, of which 10 received city paid benefits. There are no active employees in this plan. Under state law, the Firemen's Pension Plan is provided an allocation of 25% of all monies received by the state from taxes on fire insurance premiums (which is not considered a special funding situation), interest earnings, member contributions made prior to the inception of LEOFF, and City contributions required to meet projected future pension obligations. In 2022, $104,661 was received from the state from taxes on fire insurance premiums, and $33,944 was received from interest earnings. On-behalf payments of fringe benefits and salaries for the City's employees were recognized as revenues and expenditures/expenses during the period. Administrative costs, such as City staff time and actuarial valuation costs are funded from interest earnings or City contributions. The City has determined that GASB Statement No. 67—Financial Reporting for Pension Plans;an amendment of GASB Statement No. 25 does not apply to the City's single-employer Fire Relief and Pension Fund as there are no assets accumulated in a qualifying trust and it does not meet the criteria applicability set by the statement as the contributions to that fund are not irrevocable. Plan assets may be used to cover medical expenses which are outside of the scope of the pension plan benefits. Therefore, the Fire Relief and Pension Fund has been presented in conformance with GASB Statement No. 73—Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68. The following table represents the plan aggregate pension amounts for 2022: Aggregate Pension Amounts— Fire Relief and Pension Plan Pension liabilities $ 2,498,278 Pension expense/expenditures $ (467,641) Service Retirement Benefit The amount of a members benefit is based upon the rank of the firefighter at the time of retirement and amounts to 50% of salary plus an additional 2% for each year of service in excess of 25 years, to a maximum benefit of 60% of salary. An annual post-retirement increase is determined based upon 2 factors: • escalation by salary in proportion to the current salary of rank from which the firefighter retired (RCW 41.18.040), and • increase proportionate to the annual increase in the Seattle-area CPI and regardless of the increase (or decrease) in the CPI, the benefits are increased at least 2% each year. (RCW 41.18.104) Assumptions and Other Inputs to the Total Pension Liability GASB Statement 73 requires a schedule of changes in Total Pension Liability from year to year. Both the December 31, 2021 and the December 31, 2022 amounts are based on the below specified actuarial valuation (the valuation date) and 92 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements then projected forward to the measurement date. The measurement date is the date as of which the total pension liability is determined. The discount rate and other key actuarial assumptions utilized are noted below: Fire Relief and Pension Plan December 31, 2021 1 December 31, 2022 Discount Rate—municipal bond rate o ° (average rating AA/Aa or higher) 2.00/0 3.75 /o Valuation Date January 1, 2021 January 1, 2021 Measurement Date December 31, 2021 December 31, 2022 Inflation 2.25% 2.25% Salary Increases Including Inflation 3.25% 3.25% Pub-2010 Safety Mortality Pub-2010 Safety Mortality Table (headcount- Table (headcount- weighted) with ages set weighted) with ages set back one year for males is back one year for males is used for healthy used for healthy annuitants. Pub-2010 annuitants. Pub-2010 Safety Disabled Mortality Safety Disabled Mortality Table is used for disabled Table is used for disabled annuitants. A blend of annuitants. A blend of Mortality rates from Pub-2010 rates from Pub-2010 Mortality Tables for Mortality Tables for contingent annuitants and contingent annuitants and retirees is used for retirees is used for surviving spouses. surviving spouses. Mortality rates are Mortality rates are projected forward projected forward generationally using the generationally using the ultimate rates in ultimate rates in Projection Scale MP-2017. Projection Scale MP-2017. Actuarial Cost Method Entry Age Normal Entry Age Normal Total Pension Liability The following table represents the changes in the total pension liability for 2022: Fire Relief and Pension Plan Increase (Decrease) Total Pension Liability Balances as of December 31, 2021 $ 3,049,730 Changes for the year: Interest on total pension liability 59,120 Effect of assumptions, changes or inputs (422,100) Benefit payments (188,472) Balances as of December 31, 2022 $ 2,498,278 Benefit payments are estimated based on expected payouts. 93 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Sensitivity Analysis The following table presents the total pension liability of the City, calculated using the discount rate of 3.75%, as well as what the City's total pension liability would be if it were calculated using a discount rate that is 1 percentage point lower (2.75%) or 1 percentage point higher (4.75%) than the current rate. 1% Decrease Current Discount Rate 1% Increase (2.75%) (3.75%) (4.75%) $ 2,726,076 2,498,278 2,300,686 Pension Expense The amount of pension expense recognized by the City for the reporting period is as follows: Fire Relief and Pension Plan January 1, 2021 to January 1, 2022 to December 31, 2021 December 31, 2022 Interest on Total Pension Liability $ 69,409 $ 59,120 Contributions From State Fire Insurance Premium Tax (98,371) (104,661) Recognition of Deferred Inflows/Outflows of Resources: Recognition of Economic/Demographic Gains/Losses (534,707) 0 Recognition of Assumption Changes or Inputs 138,062 (422,100) Pension Expense $ (425,607) $ (467,641) Deferred Outflows/Inflows of Resources As of December 31, 2022, there are no deferred outflows and inflows of resources. NOTE 9 - OTHER POST-EMPLOYMENT BENEFITS The following table represents the aggregate OPEB amounts for all plans subject to the requirements of GASB Statement 75 for the year 2022: Aggregate OPEB Amounts OPEB Liabilities $ 10,956,157 OPEB expense/expenditures $ (1,827,776) Plan Description The city is the administrator of the Law Enforcement Officer and Fire Fighter(LEOFF) 1 employees plan providing lifetime medical care. The plan is a single employer, defined benefit, other post-employment benefit plan (OPEB). The plan does not issue a separate standalone financial report. Benefits Provided Effective March 1, 1970, the LEOFF plan was established by the Legislature under Revised Code of Washington (RCW) Chapter 41.26. LEOFF members who joined the system by September 30, 1977, are Plan 1 members. In addition, the City is required to pay post-employment benefits in accordance with RCW Chapter 41.16 and 41.18; all medical and long-term care as long as a disability exists are covered for any active firefighter hired prior to March 1, 1970. For any retired firefighter hired prior to March 1, 1970, medical and long-term care are covered at the discretion of the Retirement Board. Members retired prior to 1961 for reasons other than duty disability are not eligible for medical benefits during retirement. 94 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The City OPEB plan provides medical, prescription drug, dental, Medicare Part B premiums, long-term care, and vision expenses for retirees. The plan does not cover dependent spouses and children. The City's cost is reduced by any amounts retirees receive from Medicare or other health plans. Funding Policy The plan is funded on a pay-as-you-go basis from the General Fund and there are no assets accumulated in a qualifying trust. Membership As of December 31, 2022, there are 34 retirees and 0 active employees meeting the eligibility requirements of a LEOFF 1 member. This is considered a closed group with no new members. Retirees currently receiving benefits 34 Total 34 1 OPEB Liability The actuarial valuation date is January 1, 2021. This is the date as of which the actuarial valuation was performed. The measurement date is December 31, 2022. This is the date as of which the total OPEB liability under GASB 75 is determined. The Reporting Date is the Plan's and City's fiscal year ending date, December 31, 2022. Update procedures were used to roll forward the total OPEB liability to the measurement date. Assumptions and Other Inputs A number of assumptions are used in development of the OPEB plan actuarial valuation as discussed below. GASB 75 requires the discount rate used to measure the Total OPEB Liability (the Actuarial Accrued Liability calculated using the Individual Entry Age Normal Cost Method) to be a yield or index rate for 20-year, tax exempt general obligation municipal bonds with an average rating of AA/Aa or higher. The Bond Buyer General Obligation 20-bond municipal bond index for bonds that mature in 20 years is 3.72%as of December 31, 2022. Rounding this to the nearest 1% results in a discount rate of 3.75% as of the December 31, 2022, measurement date. A medical (healthcare) and dental trend rate of 4.70% along with a long-term care inflation rate of 4.5%and Medicare Part B trend rate of 14.50%were used in calculating the December 31, 2022, OPEB Liability. Mortality assumptions are based on the Pub-2010 Safety Mortality Table (headcount-weighted) with generational projection using the ultimate rates in Projection Scale MP-2017, with ages set back one year for males. For disabled members, mortality assumptions are based on Pub-2010 Safety Disability Mortality Table with generational projection using the ultimate rates in Projection Scale MP-2017. Sensitivity Analysis The following presents the total OPEB liability of the City, calculated using the current healthcare cost trend rates as well as what the City's total OPEB liability would be if it were calculated using trend rates that are one percentage point lower or one percentage point higher than the current trend rates. 1% Decrease Current Trend Rate 1% Increase Total December 31, 2022 OPEB Liability $ 9,832,143 $ 10,956,157 $ 12,254,339 95 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The following presents the total OPEB liability of the City calculated using the discount rate of 3.75%, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.75%) or one percentage point higher (4.75%) than the current rate. 1% Decrease Current Discount 1% Increase Rate Total December 31, 2022 OPEB Liability $ 12,197,179 $ 10,956,157 $ 9,903,413 The following table represents the changes in total OPEB liability for 2022: OPEB LEOFF Plan 1 Increase (Decrease) Total OPEB Liability Balance as of December 31, 2021 $ 13,370,311 Changes for the Year: Interest on Total OPEB Liability 261,571 Effect of Assumptions, Changes or Inputs (2,089,347) Expected Benefit Payments (586,378) Balance as of December 31, 2022 $ 10,956,157 For the year ended December 31, 2022, the City recognized an OPEB expense of $ (1,827,776). Changes in assumptions that affected measurement of the total OPEB liability since the prior measurement date include changes in premiums and claims, mortality, and trends. The City reported no deferred outflows of resources and no deferred inflows of resources related to OPEB. NOTE 10 — ASSOCIATION OF WASHINGTON CITIES EMPLOYEE BENEFIT TRUST ("Trust") Trust Description The City of Auburn is a member of the Association of Washington Cities Employee Benefit Trust Health Care Program (AWC Trust HCP). Chapter 48.62 RCW provides that two or more local government entities may, by Interlocal agreement under Chapter 39.34 RCW,form together or join a pool or organization for the joint purchasing of insurance, and/or joint self-insurance, to the same extent that they may individually purchase insurance or self-insure. An agreement to form a pooling arrangement was made pursuant to the provisions of Chapter 39.34 RCW,the Interlocal Cooperation Act. The AWC Trust HCP was formed on January 1, 2014, when participating cities, towns, and non-city entities of the AWC Employee Benefit Trust in the State of Washington joined together by signing an Interlocal Governmental Agreement to jointly self-insure certain health benefit plans and programs for participating employees, their covered dependents, and other beneficiaries through a designated account within the Trust. As of December 31, 2022, 262 cities/towns/non-city entities participate and have enrollment in the AWC Trust HCP. The AWC Trust HCP allows members to establish a program of joint insurance and provides health and welfare services to all participating members. 96 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements In April 2020, the Board of Trustees adopted a large employer policy, requiring newly enrolling groups with 600 or more employees to submit medical claims experience data in order to receive a quote for medical coverage. Outside of this, the AWC Trust HCP pools claims without regard to individual member experience. The pool is actuarially rated each year with the assumption of projected claims run out for all current members. The AWC Trust HCP includes medical, dental and vision insurance through the following carriers: Kaiser Foundation Health Plan of Washington, Kaiser Foundation Health Plan of Washington Options, Inc., Regence BlueShield, Asuris Northwest Health, Delta Dental of Washington,Willamette Dental Group, and Vision Service Plan. Eligible members are cities and towns within the state of Washington. Non-city entities (public agency, public corporation, intergovernmental agency, or political subdivision within the state of Washington) are eligible to apply for coverage into the AWC Trust HCP, submitting application to the Board of Trustees for review as required in the Trust Agreement. Participating employers pay monthly premiums to the AWC Trust HCP. The AWC Trust HCP is responsible for payment of all covered claims. In 2022, the AWC Trust HCP purchased medical stop loss insurance for Regence/Asuris and Kaiser plans at an Individual Stop Loss (ISL) of$1.5 million through United States Fire Insurance Company.The aggregate policy is for 200% of expected medical claims. Participating employers' contract to remain in the AWC Trust HCP for a minimum of three years. Participating employers with over 250 employees must provide written notice of termination of all coverage a minimum of 12 months in advance of the termination date, and participating employers with under 250 employees must provide written notice of termination of all coverage a minimum of 6 months in advance of termination date. When all coverage is being terminated,termination will only occur on December 31. Participating employers terminating a group or line of coverage must notify the AWC Trust HCP a minimum of 60 days prior to termination. A participating employer's termination will not obligate that member to past debts, or further contributions to the AWC Trust HCP. Similarly, the terminating member forfeits all rights and interest to the AWC Trust HCP Account. The operations of the Health Care Program are managed by the Board of Trustees or its delegates.The Board of Trustees is comprised of four regionally elected officials from Trust member cities or towns, the Employee Benefit Advisory Committee Chair and Vice Chair, and two appointed individuals from the AWC Board of Directors,who are from Trust member cities or towns.The Trustees or its appointed delegates review and analyze Health Care Program related matters and make operational decisions regarding premium contributions, reserves, plan options and benefits in compliance with Chapter 48.62 RCW. The Board of Trustees has decision authority consistent with the Trust Agreement, Health Care Program policies, Chapter 48.62 RCW and Chapter 200-110-WAC. The accounting records of the AWC Trust HCP are maintained in accordance with methods prescribed by the State Auditor's office under the authority of Chapter 43.09 RCW. The AWC Trust HCP also follows applicable accounting standards established by the Governmental Accounting Standards Board ("GASB"). In 2018, the retiree medical plan subsidy was eliminated,and is noted as such in the report for the fiscal year ending December 31,2018.Year-end financial reporting is done on an accrual basis and submitted to the Office of the State Auditor as required by Chapter 200-110 WAC. The audit report for the AWC Trust HCP is available from the Washington State Auditor's office. 97 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 11 — CONSTRUCTION COMMITMENTS At December 31, 2022, the City had the following contractual obligations on construction projects: SCHEDULE OF OUTSTANDING CONSTRUCTION OBLIGATIONS As of December 31,2022 Amount Outstanding Arterial Street Fund $1,001,078 Local Street Fund 36,412 Arterial Street Preservation Fund 556,664 Municipal Parks Construction 281,368 Capital Improvements 1,001,706 Water Capital Fund 660,218 Sewer Capital Fund 836,088 Storm Capital Fund 414,494 Airport Capital Fund 109,162 Equipment Rental Capital Fund 161,427 Total Commitments by Fund $5,058,617 NOTE 12 — CEMETERY ENDOWED CARE FUND The City maintains one permanent fund known as the cemetery endowed care fund. Paid into this fund is 10% of the base, pre-tax sales price of each grave, niche or crypt. This fund is irreducible in principal and no part of the income of this fund shall ever be used for purposes other than those specified upon the creation of the fund. RCW 68.44.020 restricts the use of endowment net appreciation to endowment care "stipulated in the instrument by which the fund was established". For the City, the instrument that established the fund is Auburn City Code section 3.04.080, and section 3.040.120 governs the use of the fund. ACC 3.04.120 restricts net interest or income from investments to the care of the lots and in the improvement or embellishment of the cemetery or the erection or preservation of any buildings or structures, fences or walks, or for the repair, preservation, erection or renewal of any tomb, monument, grave, stone, fence, railing or other erection in or around the cemetery. The funds may also be used for planting and cultivating trees, shrubs, flowers or plants in or around the cemetery. All expenditures of income from the fund must first be authorized by the City Council. For 2022 of the $31,545 net appreciation on investments,all was available for expenditures. Amounts that are available for expenditure are reflected as assigned fund balance. NOTE 13 —JOINT VENTURES/ RELATED PARTY Valley Communications Center The "Valley Communications Center," hereafter referred to as ValleyCom, was established August 20, 1976, when an Interlocal Agreement was entered into by four participating municipal corporations: Auburn, Kent, Renton,and Tukwila. The provisions and terms of the "Interlocal Cooperation Act", pursuant to RCW 39.34, sanction the agreement. On August 4, 1999, the Administration Board of ValleyCom voted to include the City of Federal Way as a full participating member city as of January 1, 2000. The five participating municipal corporations that include the cities of Auburn, Federal Way, Kent, Renton, and Tukwila on April 17, 2000, entered into a new Interlocal Agreement, pursuant to RCW 39.34, et seq. This agreement reaffirmed ValleyCom as a governmental administration agency pursuant to RCW 39.34.030 (3) (b). The initial duration of the agreement was five years and thereafter is automatically extended for consecutive five-year periods, unless terminated as provided by the agreement. Any Member City may withdraw its membership and terminate its participation in this agreement by providing written notice and serving that notice on the other Member Cities on or before December 31 in any one year. After providing 98 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements appropriate notice such termination shall then become effective on the last day of the year following delivery and service of notice to all other Member Cities. Three or more Member Cities may call for a complete termination of ValleyCom, upon supermajority vote ValleyCom will be directed to wind up business and a date will be set for final termination. Final termination shall be at least one year from the date of the vote to terminate this agreement. The agreement shall not terminate until all bonds issued by the Valley Communications Center Development Authority have been paid and retired. The purpose of the ValleyCom joint operation is to provide improved consolidated emergency communications (dispatch) services for police, fire and medical aid to the five participating cities and to several subscribing agencies,which include Public Safety Partners, Fire and EMS Partners and Emergency Backup Facilities. The subscribing agencies include: City of Algona, City of Black Diamond, City of Des Moines, City of Pacific, Enumclaw Fire, King County Airport, King County Fire Districts#2, #20, #44, #47, King County Medic One, Puget Sound Regional Fire Authority, North Highline Fire Department, Renton Regional Fire Authority, South King Fire and Rescue, Valley Regional Fire Authority, Vashon Island Fire and Rescue and King County Sheriff's Office. Separate agreements between ValleyCom and the subscribing agencies have been executed, which set forth condition of services and rates charged. The participating cities provide the majority of revenues to ValleyCom. The method of allocating revenue source was changed in 1990 to a basis of prior year's calls with actual first and second quarter and estimated third and fourth quarter calls. The allocation of prorated financial participation among the five participating cities is the percentage of estimated dispatched calls attributed to each jurisdiction compared to the total actual and estimated dispatched calls,for the period for January 1 through December 31. The percentages are applied to the current approved budget, less revenue from subscribing agencies and all other sources. The 2022 cost distribution for the five participating cities is as follows: Dispatchable Percent of Calls Total * Auburn 81,977 20.45% Federal Way 87,562 21.84% Kent 108,844 27.15% Renton 83,514 20.83% Tukwila 38,968 9.72% Total 400,865 100.00% *Distribution of current year net income is based on these budgeted percentages. SOURCE: ValleyCom-2022 Owner Equity Allocation ValleyCom is served by an Administration Board composed of the Mayors or designated representatives from the five participating cities of Auburn, Kent, Renton, Tukwila, and Federal Way. In 2019, 3 nonvoting members were added to the Administration Board, one for each of the 3 disciplines VCC serves: law enforcement, fire, and paramedics. The Administration Board is responsible for the following functions: 1) Reviews and approves the Valley Corn budget; 2) Appoints and supervises the Executive Director; 3) Approves administrative and personnel policies; 4) Reviews and approves contracts and agreements; 5) Reviews and approves disbursement of funds by ValleyCom; 6) Approves or disapproves recommendations from the Executive Director and the Operations Board; and 7) Sets the long-term strategic vision for the organization. In addition, an Operations Board provides operational guidance and support to ValleyCom. The Operations Board is comprised of 2 members of each participating Member City's Public Safety Department(s), including the head of those Department(s) and/or their designee(s), one appointed representative from Police contract agencies, and one appointed representative from Fire contract agencies. In 2019, the Chief of King County Medic One was added as a member of the Board. The Operations Board performs the following functions: 1) Responsible for operational policies and procedures; 2) assists staff and the Administration Board with strategic planning; 3) Makes recommendations on the selection of the 99 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Executive Director; and 4) Members serve on supporting groups including the Finance Committee and The Advisory Committee on Technology (ACT). The Director presents a proposed budget to the Operations Board on or before August 15 of each year. Said budget is then presented to the Administration Board by September 1 of each year. The Administration Board can make changes to the proposed ValleyCom budget as it finds necessary, but final approval falls to the legislative body of each participating city in accordance with the provisions of the Interlocal Agreement. In August 1993, ValleyCom entered into an Interlocal Cooperation Agreement, pursuant to Chapter 39.34 RCW, with the sub-regions of King County, Seattle, and Eastside Public Safety Communications Agency (EPSCA). This agreement governs the development, acquisition, and installation of the 800 MHz emergency radio communications system (system) funded by the $57 million King County levy, King County Emergency Trunked Radio System (KCETRS). This agreement provides that upon voluntary termination of any sub-region participation in the system, it surrenders its radio frequencies, relinquishes its equipment, and transfers any unexpended levy proceeds and association equipment replacement reserves to another sub-region or consortium of sub-regions. The Puget Sound Emergency Radio Network (PSERN),of which ValleyCom is a stakeholder, is a regional effort underway to replace KCETRS.ValleyCom will maintain the functionality of their portion of KCETRS until this time until it is replaced. They will continue to have 800 MHz fund expenses into 2024 as the old system is disassembled as well as incurring new radio charges from PSERN. The share of equity belonging to the five participating cities is as follows: Item Auburn Federal Way Kent Renton Tukwila Total Equity Dec 31, 2021 $ 8,338,704 $7,095,885 $10,901,977 $8,105,020 $ 3,878,636 $ 38,320,222 Current year change 506,240 540,727 672,154 515,732 240,643 2,475,496 Equity Dec 31, 2022 $ 8,844,944 $ 7,636,612 $ 11,574,131 $8,620,752 $ 4,119,279 $ 40,795,718 of equity 21.68% 18.72% 28.37% 21.13% 10.10% of 2022 distribution 20.45% 21.84% 27.15% 20.83% 9.72% SOURCE.• ValleyCom-2022 Owner Equity Allocation Liabilities are the responsibility of the five participating cities in direct proportion to their equity position. Complete audited financial statements for ValleyCom can be obtained from Valley Communications Center,27519 108th Ave SE, Kent, WA 98030, telephone 253-372-1300 or www.valleycom.org. South Correctional Entity (SCORE) On February 25,2009,the Cities of Auburn, Burien, Des Moines, Federal Way, Renton,SeaTac and Tukwila,Washington (Member Cities) entered into a SCORE Facility Interlocal Agreement (as amended and restated on October 1, 2009, the "2009 Interlocal Agreement") pursuant to chapter 39.34 RCW (Interlocal Cooperation Act) to jointly construct, equip, maintain and operate a consolidated regional misdemeanant correctional facility located in Des Moines, Washington (SCORE Facility) to serve the parties to the 2009 Interlocal Agreement and state agencies and other local governments (Subscribing Agencies) to provide correctional services essential to the preservation of the public health, safety and welfare. To carry out the purposes of the 2009 Interlocal Agreement and to operate, manage and maintain the SCORE Facility, the Member Cities formed the South Correctional Entity (SCORE), a separate governmental administrative agency pursuant to the 2009 Interlocal Agreement and RCW 39.34.030(3). The 2009 Interlocal Agreement named the City of Des Moines as the "Host City" and the remaining Member Cities as the "Owner Cities". Pursuant to a separate "Host City Agreement" dated October 1, 2009, the Host City will not enjoy the same equity position as the Owner Cities until all debts issued are paid and the Host City fulfills all of its obligations as outlined in the Host City Agreement. Pursuant to SCORE financial policies, all unexpended funds or reserve funds 100 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements shall be distributed based on the percentage of the Member City's average daily population at the SCORE Facility for the last three (3) years regardless of its Owner City or Host City status. SCORE and the SCORE Facility may serve the Member Cities and Subscribing Agencies which are in need of correctional facilities. Any agreement with a Subscribing Agency shall be in writing and approved by SCORE as provided within the SCORE Formation Interlocal Agreement. SCORE, as a governmental administrative agency formed under the Interlocal Cooperation Act, is not expressly authorized to issue bonds. To finance and refinance the costs of the SCORE Facility, the City of Renton, Washington, chartered the South Correctional Entity Facility Public Development Authority as a public corporation pursuant to RCW 35.21.730 through 35.21.757 (Public Corporation Act) and Ordinance No. 5444, passed on February 2, 2009 (Charter Ordinance). 2009 Bonds. The SCORE PDA issued its Bonds, Series 2009A (2009A Bonds) and Bonds, Series 2009B (Taxable Build America Bonds—Direct Payment) (2009B Bonds, and together the 2009 Bonds) on November 4, 2009 in the aggregate principal amount of$86,235,000. Proceeds of the 2009 Bonds were used to finance a portion of the costs of acquiring, constructing, developing, equipping, and improving the SCORE Facility, to capitalize interest during construction, and to pay costs of issuance for the 2009 Bonds. Pursuant to the 2009 Interlocal Agreement and the ordinances of each city, each Owner City (which included the Cities of Auburn, Burien, Federal Way, Renton, SeaTac, and Tukwila) was obligated to budget for and pay its share, and only its share, of the principal of and interest on the 2009 Bonds as the same become due and payable (referred to as each Owner City's 2009 Capital Contribution). Each Owner City's obligation to pay its 2009 Capital Contribution is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from regular property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. Subsequent Activities: Refunding of 2009 Bonds and Amendment and Restatement of Interlocal Agreement. Pursuant to the 2009 Interlocal Agreement, on September 5, 2018, the City of Federal Way gave its notice of intent to withdraw from SCORE effective December 31, 2019. The remaining Member Cities (including the cities of Auburn, Burien, Des Moines, Renton, SeaTac, and Tukwila) entered into an Amended and Restated SCORE Interlocal Agreement (2019 Interlocal Agreement),which amended and restated the 2009 Interlocal Agreement in its entirety, removed Federal Way as a Member City and an Owner City, terminated the Host City Agreement, and made other revisions to provide for the issuance of bonds to refund the 2009 Bonds. On December 11, 2019,the Authority issued its Refunding Bonds, Series 2019 in the aggregate principal amount of$51,055,000 (2019 Bonds). The 2019 Interlocal Agreement became effective on the date of issuance of the 2019 Bonds. Proceeds of the 2019 Bonds were used to defease and refund all of the outstanding 2009 Bonds. Pursuant to the 2019 Interlocal Agreement and the ordinances of each city, each Owner City (including the Cities of Auburn, Burien, Des Moines, Renton, SeaTac, and Tukwila) is obligated to budget for and pay its share, and only its share, of the principal of and interest on the 2019 Bonds as the same become due and payable (referred to as each Owner City's 2019 Capital Contribution). Each Owner City's obligation to pay its 2019 Capital Contribution is an irrevocable, unconditional full faith and credit obligation of such Owner City, payable from regular property taxes levied within the constitutional and statutory authority provided without a vote of the electors of the Owner City on all of the taxable property within the Owner City and other sources of revenues available therefor. 101 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The following is a summary of the debt service requirements for the 2019 Bonds: Summary of Debt Service Requirements-Refunding Bonds,2019(Ref 2009A&2009B) I Debt Service Schedule Debt Service Allocation to Owner Cities Auburn Burien Des Moines Renton SeaTac Tukwila Year Principal Interest Total 34 94% 4.82% 6.02% 40.96% 3.62% 9 64% 2023 1,990,000 1,919,500 $ 3,909,500 $ 1,365,979 $ 188,438 $ 235,352 $ 1,601,331 $ 141,524 $ 376,876 2024 2,070,000 1,839,900 3,909,900 1,366,119 188,457 235,376 1,601,495 141,538 376,914 2025 2,155,000 1,757,100 3,912,100 1,366,888 188,563 235,508 1,602,396 141,618 377,126 2026 2,260,000 1,649,350 3,909,350 1,365,927 188,431 235,343 1,601,270 141,518 376,861 2027 2,375,000 1,536,350 3,911,350 1,366,626 188,527 235,463 1,602,089 141,591 377,054 2028-2032 13,770,000 5,778,500 19,548,500 6,830,246 942,238 1,176,820 8,007,066 707,656 1,884,475 2033-2037 17,060,000 2,485,800 19,545,800 6,829,303 942,108 1,176,657 8,005,960 707,558 1,884,215 2038 3,795,000 113,850 3,908,850 1,365,752 188,407 235,313 1,601,065 141,500 376,813 Totals $ 45,475,000 $ 17,080,350 $ 62,555,350 $ 21,856,840 $ 3,015,169 $ 3,765,832 $ 25,622,672 $ 2,264,503 $ 6,030,334 I I The City of Auburn reports its share of equity interest in the Governmental Activities column within the Government- wide financial statements under non-current assets. The following summary of the Capital Contributions for the 2019 Bonds is condensed (unaudited) financial information reported as of December 31, 2022, in relation to SCORE: South Correctional Entity(SCORE) I Member City 2021 Percent of Equity 2021 Equity Balance 2022 Percent of Equity 2022 Apportionment 2022 Equity Balance Auburn 41.93% $ 13,728,641 41.48% $ 367,485 $ 14,096,126 Burien 5.30% 1,736,041 5.39% 95,847 1,831,888 Des Moines 4.95% 1,619,395 5.02% 88,153 1,707,548 Renton 31.93% 10,449,372 32.11% 464,559 10,913,931 SeaTac 8.13% 2,661,310 8.27% 151,004 2,812,314 Tukwila 7.76% 2,541,785 7.73% 85,550 2,627,335 Grand Totals 100.00% $ 32,736,544 100.00% $ 1,252,598 $ 33,989,142 I I Completed financial statements for SCORE and SCORE PDA can be obtained at SCORE, Attn: Finance Director, 20817 17th Avenue South, Des Moines,WA 98198. Since the obligation to fund future joint venture-related debt is separately reported as due to other governments, the investment in joint ventures is reported as a combination of this debt with the current reported equity in joint ventures as follows: Since the obligation to fund future joint venture-related debt is separately reported as due to other governments, the investment in joint ventures is reported as a combination of this debt with the current reported equity in joint ventures as follows: Investment in Joint Ventures Balance Additions Reductions Balance 12/31/2021 12/31/2022 Valley Communication Public Dev Auth $ - $ - $ - $ - SCORE Public Development Authority 16,558,066 - (669,101) 15,888,965 Due to Other Governments 16,558,066 - (669,101) 15,888,965 Valley Communications Center 8,338,704 506,240 - 8,844,944 South Correctional Entity (SCORE) 13,728,641 367,485 - 14,096,126 Equity Share 22,067,345 873,725 - 22,941,070 Total Investment in Joint Ventures $38,830,035 102 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 14—JOINTLY GOVERNED ORGANIZATION / RELATED PARTY Residents of the cities of Auburn, Algona and Pacific approved in the November 7, 2006, general election the creation of a regional fire authority pursuant to RCW 52.26. The new regional fire protection service authority, called the Valley Regional Fire Authority (VRFA), provides first responder fire and emergency medical services to residents of Auburn, Algona, and Pacific. The VRFA is a new municipal corporation, with its own Governing Board, and is legally separate from the three cities it serves. The Governing Board of the VRFA consists of the Mayors of the three cities within the VRFA service area, as well as two Councilmembers from each city. Membership on the Governing Board is made by appointment from the city council of the respective member cities. Effective January 1, 2007, all personnel, assets, equipment, and contractual obligations of the former Auburn Fire Department were transferred to the VRFA. Similar transfers were made by the cities of Algona and Pacific. In accordance with the interlocal agreement at time of formation, each member city retained its obligation for LEOFF 1 firefighter and Fire Relief and Pension Plan obligations. Premium and benefit payments for retired LEOFF 1 firefighters for 2022 $181,292. Medical premiums and benefit payments made under the Fire Relief and Pension Plan for 2022 $27,677. NOTE 15 — CONTINGENCIES AND LITIGATIONS As of December 31, 2022 a number of claims were pending against the City for damages and legal actions. While the outcome of these actions is uncertain, no uncovered losses are anticipated at this time with these pending claims. In the event of a liability finding against the City, it is anticipated that any potential adverse judgment against the City also would be subject to coverage under the City's general liability insurance. The City participates in a number of federal and state assisted programs. These grants are subject to audit by the grantors or their representatives. Such audits could result in requests for reimbursement to grantor agencies for expenditures disallowed under the terms of the grants. The City's management believes that such disallowances, if any, will be immaterial. NOTE 16 — RISK MANAGEMENT & INSURANCE Risk Management The City is exposed to various risks of loss such as: theft and damage and destruction of assets, errors and omissions, injuries or property damage to others, employees' health, and natural disasters. All risk financing activities are accounted for in the Insurance internal service fund. To insure against risks of loss the City of Auburn is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and / or jointly contracting for risk management services. WCIA has a total of 166 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one- year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis,without deductibles. Coverage includes general, automobile, police, errors or omissions, stop gap, employment practices, prior wrongful acts, and employee benefits liability. Limits are $4 million per occurrence in the self-insured layer, and $16 million in limits above the self-insured layer is provided by reinsurance. Total limits are $20 million per occurrence subject to aggregates and sublimity. The Board of Directors determines the limits and terms of coverage annually. 103 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements All Members are provided a separate cyber risk policy and premises pollution liability coverage group purchased by WCIA. The cyber risk policy provides coverage and separate limits for security&privacy, event management, and cyber extortion, with limits up to $1 million and subject to member deductibles, sublimits, and a $5 million pool aggregate. Premises pollution liability provides Members with a $2 million incident limit and $10 million pool aggregate subject to a $100,000 per incident Member deductible. Insurance for property, automobile physical damage, fidelity, inland marine, and equipment breakdown coverage are purchased on a group basis. Various deductibles apply by type of coverage. Property coverage is self-funded from the members' deductible to $750,000, for all perils other than flood and earthquake, and insured above that to $400 million per occurrence subject to aggregates and sublimits. Automobile physical damage coverage is self-funded from the members' deductible to $250,000 and insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims and litigation administration. WCIA contracts for certain claims investigations, consultants for personnel and land use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members,who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, reinsurance and other administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments which comply with all State guidelines. A Board of Directors governs WCIA, which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. No settlement has exceeded insurance coverage over the past three years. Workers' Compensation Title 51 RCW requires the City to ensure payment of benefits for job-related injuries and diseases through the Workers' Compensation fund or through self-insurance. The City become self-insured for Worker's Compensation in 2014. The funding and allocations for the worker's compensation program are reviewed by an actuary on an annual basis. The actuarial study made by Bickmore as of December 31, 2022, projected ultimate loss during 2023 and 2024 program years to be $758,000 and $799,000, respectively. At December 31, 2022, incurred but not reported and claims payable were estimated at $1,132,000. At December 31, 2022, fund equity was $2,905,349. The City carrier's excess works' compensation insurance coverage with a private carrier for losses exceeding $500,000 per occurrence to a maximum indemnity in occurrence with statutory limits. Claims handling is currently contracted to an independent, qualified third-party administrator (TPA). The Workers Compensation claims liability includes an estimated amount for claims that have been incurred but not reported (IBNR). Reported claims liabilities are based on the requirements of GASB 10, which requires that a liability for claims be reported if information prior to the issuance of the financial statements indicates that it is probable that a liability has been incurred at the date of the financial statements and the amount of the loss can be reasonable estimated. 104 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Changes in the Workers Compensation self-insurance fund claims liabilities in 2022 and 2021 were: CHANGES OF ESTIMATED CLAIMS LIABILITIES FOR 2022 AND 2021 Workers Compensation 2022 2021 Beg. of Year Claims Liabilities $865,000 $932,000 Less: Claim Payments (195,336) (166,601) Plus: Claims and Changes in Estimates 462,336 99,601 End of Year Claims Liabilities $1,132,000 $865,000 NOTE 17 -TAX ABATEMENTS GASB Statement No. 77 defines tax abatements and requires certain disclosures about any tax abatement agreements. For financial reporting purposes, a tax abatement is defined as a reduction in tax revenues that results from an agreement between one or more governments and an individual entity in which (a) one or more governments promises to forgo tax revenues to which they are otherwise entitled and (b) the individual or entity promises to take a specific action after the agreement has been entered into that contributes to economic development or otherwise benefits the governments or the citizens of those governments. The city has the following tax abatement agreements in place as of December 31, 2022: The city offers a multifamily property tax exemption within the downtown core to encourage construction of new multifamily housing, and that the provisions of additional housing opportunities in the downtown core will assist in achieving the goals of the city's comprehensive plan. Under Chapter 84.14 RCW, the city provides the opportunity for a limited, eight-year exemptions from ad valorem property taxation for a qualified new multifamily and rehabilitated multifamily housing constructed in the downtown core and twelve-year exemptions from ad valorem property taxation for qualified new affordable multifamily and rehabilitated multifamily housing contracted in the downtown core. Abatements are obtained through application by the property owner, including proof of improvements that have been made, and equal 100 percent of the additional property tax resulting from the increase in assessed value because of the improvements. If application is approved and all requirements met, exemption begins January Pt, of the year immediately following the calendar year of issuance of the final certificate of tax emption. If at any time it is determined the property no longer complies with the terms of the contract or the requirements, or the use of the property for any reason no longer qualifies for the tax exemption, the tax exemption shall be cancelled and additional taxes, interest and penalties imposed. 1) Plan A Development LLC, project name Trek Apartments; a four-story building of 126 apartment units with outdoor plaza and ground parking and retail space. The final certificate of tax exemption was issued December 3, 2015, with the eight-year ad valorem property tax exemption to start with tax year 2016. The city's portion of the property tax abated during the fiscal year 2022 was $39,591. 2) Merrill Gardens at Auburn LLC, project name Merrill Gardens; a senior living community with 129 apartment units (114 assisted living units and 15 memory care units). The building is four stories above grade with one level of below grade parking. The final certificate of tax exemption was issued September 14, 2017, with the eight- year ad valorem property tax exemption to start with tax year 2018. The city's portion of the property tax abated during the fiscal year 2022 was $43,316. 3) Altus Group US Inc, project name The Verge Apartments; a 7-story building of 226 apartment units, upper story outdoor plazas, parking and ground floor commercial space. The final certificate of tax exemption was 105 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements issued on October 14, 2021,with the eight-year ad valorem property tax exemption to start with tax year 2022. The city's portion of the property tax abated during the fiscal year 2022 was $65,847. The State of Washington has the following tax abatement that impacts tax revenues of the City: Aerospace Incentives - The purchase and use of computer hardware, software, or peripherals, including installation charges is exempt from sales and use tax per RCWs 82.08.975 and 82.12.975 if the buyer uses the purchased items primarily in developing, designing, and engineering aerospace products. The following table shows the impact to the City of Auburn for taxes abated by the State of Washington during the calendar year ended September 30, 2022 (the latest information available): Amount of Tax Abatement Program Taxes Abated Aerospace Incentives - Computer Hardware, Software, and Peripherals Sales and Use Tax Exemption State law(RCW 82.32.330)forbids the disclosure of sales and use tax information for less than three taxpayers. Source: Washington State Department of Revenue 106 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements NOTE 18 - LEASES (LESSORS) Lease receivables are recognized in accordance with GASB statement 87. The statement requires the lessor to recognize a lease receivable at the present value of lease payments anticipated to be received during the lease term. The city as of December 31, 2022, has lease receivables for both governmental and business type activities. The following provides the description, terms, and additional information for the lease agreements in which City of Auburn is the lessor: Page 1 of 2 Commencement Purchase Lessee Lease Description Fund Contract Date Date Lease End Date Option Auburn Condo Hangars Assoc Land situated at 2509"E"Street N E, Airport June-2001 June-2001 June-2051 No Auburn.WA NW Hangars LLC Auburn Flyers Condo I:12,273 square Airport June-2002 June-2002 June-2052 No feet of land NW Hangars LLC Auburn Flyers Condo II:24,948 square Airport January-2004 January-2004 January-2054 No feet of land NW Hangars LLC Auburn Flyers Condo III:26,765 square Airport August-2005 August-2005 August-2055 No feet of land Auburn Hangars Owners Assoc(AHOA) 98,326 square feet Airport September-2001 September-2001 September-2051 No Cascade Helicopter Services Certain premises,facilities and rights on Airport February-1978 June-1978 May-2068 No Auburn Airport Jim Jacobsen 10,296 square feet of land located at Airport June-2002 June-2002 June-2052 No Auburn Airport Normandy Aircraft 782 square feet in the Airport Airport December-2019 January-2020 January-2023 No Administration building S50 Hangars LLC Commercial office and shop space Airport October-2022 October-2022 October-2042 No SpanaFlight LLC Certain space in the Airport Airport January-2021 January-2021 December-2033 No Administration building SpanaFlight LLC 2,400 square feet of Airport land Airport January-2021 January-2021 January-2023 No Sprint Spectrum L.P. 900 square feet of land and 720 square General April-2006 June-2006 May-2026 No feet of building exterior space Auburn Food Bank 6,647 square feet of rentable area General October-2020 November-2020 January-2040 No Auburn Professional Plaza 125 Parking Stalls General December-2008 February-2010 January-2065 No We Care Daily Clinics 1,960 square feet of rentable area located General October-2021 November-2021 October-2028 No on North Auburn Way and exclusive use of two parking stalls Seattle SMSA Lmtd Partnership-Verizon Athena facility and tower space in Fulmer anicipal Parks Constructs September-2014 October-2014 September-2044 No Park 107 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements Page 2 of 2 Non-lease Payment Lessee Payment Type Index Payment Note Payment Amount Component Frequency Auburn Condo Hangars Assoc Fixed N/A $ 7,449 $ 460 Monthly NW Hangars LLC Variable CPI 979 100 Monthly NW Hangars LLC Variable CPI 1,873 70 Monthly NW Hangars LLC Variable CPI 2,024 90 Monthly Auburn Hangars Owners Assoc Variable CPI 7,405 300 Monthly (AHOA) Cascade Helicopter Services Variable CPI 4,245 10 Monthly Jim Jacobsen Variable CPI 653 10 Monthly Normandy Aircraft Variable CPI 2,615 20 Monthly S50 Hangars LLC Variable CPI 1,089 10 Monthly SpanaFlight LLC Variable CPI 1,543 - Monthly SpanaFlight LLC Variable CPI 173 - Monthly Sprint Spectrum L.P. Variable CPI 4,175 - Monthly Auburn Food Bank Fixed N/A Increased from $3,323.50 3,490 - Monthly for Feb 1,2022 through Jan 31,2024 Auburn Professional Plaza Fixed N/A Increased from $2,141.51 2,324 - Monthly for April 1 through December 31,2022 We Care Daily Clinics Fixed N/A $100 of increase applicable 2,250 - Monthly annually Seattle SMSA Lmtd Partnership-Verizc Fixed N/A 3 percent of increase 15,761 - Annual applicable annually 108 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements The non-lease component has not been included in the measurement of lease receivable due to not being qualified for such measurement per GASB Statement No. 87. CHANGES IN DEFERRED INFLOW OF RESOURCES BUSINESS-TYPE ACTIVITIES: Balance as of Balance as of January 1,2022 Additions Reductions December 31,2022 Deferred Inflow of Resources Buildings SpanaFlight LLC $ 206,120 $ - $ 17,177 $ 188,943 550 Hangars LLC -Airport - 177,757 1,728 176,029 Total Building Deferred Inflow of Resources 206,120 177,757 18,905 364,972 Land Auburn Flyers Condo III-Airport 590,863 - 17,559 573,304 Jim Jacobsen-Airport 223,647 - 7,351 216,295 Auburn Flyers Condo I-Airport 249,465 - 8,184 241,280 Auburn Flyers Condo II- Airport 529,819 - 16,525 513,294 Auburn Hangars Owners Assoc(AHOA) 1,973,254 - 66,433 1,906,821 Normandy Aircraft 33,698 - 31,105 2,592 Cascade Helicopter Services-Airport 1,616,498 - 34,826 1,581,672 Auburn Condo Hangars Assoc (ACHA) 1,932,094 - 65,637 1,866,457 Total Land Deferred Inflow of Resources 7,149,337 - 247,622 6,901,715 Total Deferred Inflow of Resources $ 7,355,457 $ 177,757 $ 266,526 $ 7,266,687 GOVERNMENTAL ACTIVITIES: Balance as of Balance as of January 1,2022 Additions Reductions December 31,2022 Deferred Inflow of Resources Buildings Auburn Food Bank $ 664,631 $ - $ 36,754 $ 627,878 We Care Daily Clinics 176,648 - 25,851 150,797 Auburn Professional Plaza-Parking Stalls 843,511 - 19,579 823,933 Total Building Deferred Inflow of Resources 1,684,791 - 82,183 1,602,607 Infrastructure Seattle SMSA Lmtd Partnership -Verizon 394,664 - 17,348 377,317 Total Infrastructure Deferred Inflow of Resources 394,664 - 17,348 377,317 Land SBA 2012 TC Assests LLC - Sprint Copy 235,513 - 53,324 182,189 Total Land Deferred Inflow of Resources 235,513 - 53,324 182,189 Total Deferred Inflow of Resources $ 2,314,968 $ - $ 152,855 $ 2,162,113 The beginning balances are restated in accordance with GASB Statement No. 87. 109 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements CHANGES IN LEASE RECEIVABLES BUSINESS-TYPE ACTIVITIES: Balance as of Balance as of January 1,2022 Additions Reductions December 31,2022 Lease Receivable Buildings SpanaFlight LLC $ 206,120 $ - $ 16,203 $ 189,917 S50 Hangars LLC-Airport - 177,757 2,432 175,325 Total Building Lease Receivable 206,120 177,757 18,635 365,242 Land Auburn Flyers Condo III-Airport 590,863 - 13,841 577,021 Jim Jacobsen-Airport 223,647 - 6,851 216,796 Auburn Flyers Condo I-Airport 249,465 - 6,599 242,866 Auburn Flyers Condo II-Airport 529,819 - 12,611 517,208 Auburn Hangars Owners Assoc(AHOA) 1,973,254 - 52,771 1,920,483 Normandy Aircraft 33,698 - 31,103 2,595 Cascade Helicopter Services-Airport 1,616,498 - 25,098 1,591,400 Auburn Condo Hangars Assoc(ACHA) 1,932,094 - 52,842 1,879,252 Total Land Lease Receivable 7,149,337 - 201,716 6,947,621 Total Lease Receivable $ 7,355,457 $ 177,757 $ 220,351 $ 7,312,863 GOVERNMENTAL ACTIVITIES: Balance as of Balance as of January 1,2022 Additions Reductions December 31,2022 Lease Receivable Buildings Auburn Food Bank $ 664,631 $ - $ 32,914 $ 631,717 We Care Daily Clinics 176,648 - 19,989 156,659 Auburn Professional Plaza-Parking Stalls 843,511 - 13,665 829,846 Total Building Lease Receivable 1,684,791 - 66,569 1,618,222 Infrastructure Seattle SMSA Lmtd Partnership-Verizon 394,664 - 10,870 383,795 Total Infrastructure Lease Receivable 394,664 - 10,870 383,795 Land SBA 2012 TC Assests LLC-Sprint Copy 235,513 - 51,524 183,989 Total Land Lease Receivable 235,513 - 51,524 183,989 Total Lease Receivable $ 2,314,968 $ - $ 128,962 $ 2,186,006 The beginning balances are restated in accordance with GASB Statement No.87. The following provides the total amount of inflows including lease revenue and interest revenue for year 2022: Lease Revenue Interest Revenue Total Governmental Activities 152,855 33,479 186,334 Business-type Activities 266,526 123,804 390,331 Total 419,381 157,284 576,665 110 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements As of December 31, 2022, future lease receivable principal and interest payments are as follows: Governmental Activities Business-type Activities Year ended December 31 Principal Interest Total Principal Interest Total 2023 134,163 32,202 166,365 190,432 126,661 317,093 2024 137,282 30,770 168,052 191,119 123,379 314,498 2025 140,253 29,301 169,554 194,583 120,034 314,618 2026 110,510 27,843 138,353 197,992 116,626 314,618 2027 89,647 26,583 116,231 201,465 113,153 314,618 2027-2032 356,304 115,907 472,211 1,061,802 511,287 1,573,089 2033-2037 376,672 87,954 464,626 1,083,334 415,715 1,499,049 2038-2042 301,976 58,960 360,936 1,163,952 314,429 1,478,381 2043-2047 127,770 40,963 168,733 1,205,705 210,094 1,415,799 2048-2052 107,971 31,442 139,412 1,054,374 105,779 1,160,152 2053-2057 117,842 21,570 139,412 284,482 53,158 337,640 2058-2062 128,616 10,796 139,412 221,160 32,962 254,122 2063-2067 57,001 1,088 58,089 241,380 12,742 254,122 2068-2072 21,084 92 21,177 Total 2,186,006 515,380 2,701,387 7,312,863 2,256,113 9,568,976 NOTE 19 - REPORTING CHANGE In June 2017,the GASB issued Statement No. 87, Leases which establishes standards of accounting and financial reporting for leases by lessees and lessors. GASB Statement No. 87 requires recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. In addition, GASB 87 requires the lessee to recognize a lease liability and an intangible right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of resources. The City, implemented GASB 87 during the fiscal year ending December 31, 2022. These changes were incorporated in the City's December 31, 2022, financial statements and had no effect on the beginning net position or fund balances of the City. 111 City of Auburn: 2022 Annual Comprehensive Financial Report Notes to the Financial Statements * CITY OF * * UBURN * WASHINGTON 112 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information REQUIRED SUPPLEMENTARY INFORMATION Schedule of Proportionate Share of the Net Pension Liability As of June 30, 2022 Last 10 Fiscal Years* PERS 1 2022 2021 2020 2019 2018 2017 2016 2015 Employer's proportion of the net pension 0.176504% 0.177157% 0.176594% 0.184008% 0.190096% 0.192614% 0.194185% 0.192878% liability(asset) Employer's proportionate share of the net pension liability(asset) $ 4,914,519 $ 2,163,502 $ 6,234,722 $ 7,075,761 $ 8,489,752 $ 9,139,685 $10,428,649 $10,089,313 Covered payroll $ 28,798,537 $ 27,362,217 $ 26,748,878 $ 25,792,744 $ 24,866,577 $ 24,085,628 $22,947,013 $ 21,788,519 Employer's proportionate share of the net pension liability as a percentage of its 17.07% 7.91% 23.31% 27.43% 34.14% 37.95% 45.45% 46.31% covered payroll Plan fiduciary net position as a percentage 76.56% 88.74% 68.64% 67.12% 63.22% 61.24% 57.03% 59.10% of the total pension liability PERS 2/3 2022 2021 2020 2019 2018 2017 2016 2015 Employer's proportion of the net pension 0.230198% 0.227559% 0.229959% 0.236778% 0.239249% 0.243488% 0.247760% 0.241739% liability(asset) Employer's proportionate share of the net $ (8,537,540) $(22,668,538) $ 2,941,045 $ 2,299,919 $ 4,084,964 $ 8,460,044 $12,223,580 $ 8,637,472 pension liability(asset) Covered payroll $ 28,798,537 $ 27,362,217 $ 26,748,878 $ 25,763,285 $ 24,674,226 $ 23,904,107 $22,734,107 $21,460,504 Employer's proportionate share of the net pension liability as a percentage of its -29.65% -82.85% 11.00% 8.93% 16.56% 35.39% 53.77% 40.25% covered payroll Plan fiduciary net position as a percentage 106.73% 120.29% 97.22% 97.77% 95.77% 90.97% 85.82% 89.20% of the total pension liability LEOFF 1 2022 2021 2020 2019 2018 2017 2016 2015 Employer's proportion of the net pension 0.093826% 0.095644% 0.096208% 0.097999% 0.101761% 0.102451% 0.101574% 0.103718% liability(asset) Employer's proportionate share of the net pension liability(asset) $ (2,691,505) $ (3,276,345) $ (1,816,897) $ (1,937,059) $ (1,847,473) $ (1,554,407) $(1,046,503) $ (1,250,031) State's proportionate share of the net pension liability(asset)associated with the $(18,205,272) $ (22,161,113) $(12,289,444) $ (13,102,219) $ (12,496,261) $ (10,513,971) $(7,078,518) $ (8,455,179) employer Total $(20,896,777) $(25,437,458) $ (14,106,341) $(15,039,278) $(14,343,734) $(12,068,378) $ (8,125,021) $(9,705,210) Plan fiduciary net position as a percentage 169.62% 187.45% 146.88% 148.78% 144.42% 136.00% 123.74% 127.36% of the total pension liability LEOFF 2 2022 2021 2020 2019 2018 2017 2016 2015 Employer's proportion of the net pension 0.367227% 0.379530% 0.374857% 0.394720% 0.403472% 0.370954% 0.359661% 0.354511% liability(asset) Employer's proportionate share of the net $ (9,980,121) $(22,044,674) $ (7,646,536) $ (9,144,451) $ (8,191,361) $ (5,147,640) $(2,091,896) $ (2,193,486) pension liability(asset) State's proportionate share of the net pension liability(asset)associated with the $ (6,464,905) $ (14,221,221) $ (4,889,380) $ (5,988,390) $ (5,303,752) $ (3,339,178) $ (1,363,764) $ (1,450,178) employer Total $(16,445,026) $(36,265,895) $ (12,535,916) $ (15,132,841) $ (13,495,113) $ (8,486,818) $(3,455,660) $(3,643,664) Covered payroll $ 14,631,934 $ 14,178,478 $ 13,661,010 $ 13,248,982 $ 12,697,917 $ 11,623,292 $10,953,667 $10,336,409 Employer's proportionate share of the net pension liability as a percentage of its -68.21% -155.48% -55.97% -69.02% -64.51% -44.29% -19.10% -21.22% covered payroll Plan fiduciary net position as a percentage 116.09% 142.00% 115.83% 119.43°/o 118.50% 113.40% 106.04% 111.67% of the total pension liability 113 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information REQUIRED SUPPLEMENTARY INFORMATION Schedule of Proportionate Share of the Net Pension Liability As of June 30, 2022 Last 10 Fiscal Years* The City implemented GASB Statement No. 68 in fiscal year 2015. Information is not available for prior years. The schedule will be built prospectively until it contains ten years of data. Notes to Schedule: Significant methods and assumptions used in calculating the actuarial determined contribution are presented in Note 8. Contribution and covered payroll on this schedule is based on the plan fiscal year—July 1 —June 30. The LEOFF 1 plan is closed and has no further covered payroll. 114 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information REQUIRED SUPPLEMENTARY INFORMATION Schedule of Employer Contributions As of December 31, 2022 Last 10 Fiscal Years* PERS 1 2022 2021 2020 2019 2018 2017 2016 2015 Statutorily or contractually required contributions $ 1,121,072 $ 1,205,178 $ 1,318,974 $ 1,310,731 $ 1,296,482 $ 1,216,069 $ 1,132,885 $ 1,001,824 Contributions in relation to the statutorily or $ (1,121,072) $ (1,205,178) $ (1,318,974) $ (1,310,731) $ (1,296,482) $ (1,216,069) $ (1,132,885) $ (1,001,824) contractually required contributions Covered payroll $29,838,946 $28,098,202 $26,726,280 $26,516,814 $25,212,705 $24,538,921 $23,510,382 $22,436,909 Contributions as a percentage of covered payroll 3.76% 4.29% 4.94% 4.94% 5.14% 4.96% 4.82% 4.47% PERS 2/3 2022 2021 2020 2019 2018 2017 2016 2015 Statutorily or contractually required contributions $ 1,897,746 $ 2,005,971 $ 2,121,829 $ 2,047,116 $ 1,941,592 $ 1,714,887 $ 1,495,562 $ 1,286,928 Contributions in relation to the statutorily or $ (1,897,746) $ (2,005,971) $ (2,121,829) $ (2,047,116) $ (1,941,592) $ (1,714,887) $ (1,495,562) $ (1,286,928) contractually required contributions Covered payroll $29,838,946 $28,098,202 $26,726,280 $26,516,814 $25,087,758 $24,350,435 $23,330,702 $22,130,501 Contributions as a percentage of covered payroll 6.36% 7.14% 7.94% 7.72% 7.74% 7.04% 6.41% 5.82% LEOFF 2 2022 2021 2020 2019 2018 2017 2016 2015 Statutorily or contractually required contributions $ 782,428 $ 756,576 $ 737,023 $ 730,140 $ 708,333 $ 639,662 $ 594,665 $ 551,812 Contributions in relation to the statutorily or $ (782,428) $ (756,576) $ (737,023) $ (730,140) $ (708,333) $ (639,662) $ (594,665) $ (551,812) contractually required contributions Covered payroll $15,020,410 $ 14,315,013 $13,852,684 $13,597,937 $13,044,797 $ 11,992,821 $ 11,370,216 $10,553,437 Contributions as a percentage of covered payroll 5.21% 5.29% 5.32% 5.37% 5.43% 5.33% 5.23% 5.23% The City implemented GASB Statement No. 68 in fiscal year 2015. Information is not available for prior years. The schedule will be built prospectively until it contains ten years of data. Note to Schedule: Significant methods and assumptions used in calculating the actuarial determined contribution are presented in Note 8. 115 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Total Pension Liability& Related Ratios Fire Relief and Pension Plan Last 10 Fiscal Years Fiscal Year Ending December 31 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Total Pension Liability - Beginning $3,049,730 $ 3,562,986 $3,452,448 $2,973,304 $ 3,212,435 $3,218,004 N/A N/A N/A N/A Service Cost - - - - - - N/A N/A N/A N/A Interest on Total Pension Liability 59,120 69,409 91,863 114,553 108,873 116,957 N/A N/A N/A N/A Effect of Plan Changes - - - - - - N/A N/A N/A N/A Effect of Economic/Demographic Gains(Losses) - (534,707) - 208,957 - - N/A N/A N/A N/A Effect of Assumption Changes or Inputs (422,100) 138,062 244,126 376,773 (142,719) 77,612 N/A N/A N/A N/A Benefit Payments (188,472) (186,020) (225,451) (221,139) (205,285) (200,138) N/A N/A N/A N/A Net Change in Total Pension Liability (551,452) (513,256) 110,538 479,144 (239,131) (5,569) N/A N/A N/A N/A Total Pension Liability - Ending $ 2,498,278 $3,049,730 $3,562,986 $3,452,448 $2,973,304 $ 3,212,435 N/A N/A N/A N/A Covered Employee Payroll $ - $ - $ - $ - $ - $ - N/A N/A N/A N/A Total Pension Liability as a%of Covered Payroll N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A The City implemented GASB Statement No. 73 in fiscal year 2017. Information is not available for prior years. The schedule will be built prospectively until it contains ten years of data. Notes to Schedule: No assets have been accumulated in a trust that meets the criteria of a qualified plan. The effect of assumption changes or inputs is the result of a change in the discount rate from 2.00% as of December 31, 2021 to 3.75% as of December 31, 2022. Significant methods and assumptions used in calculating the actuarial determined contribution are presented in Note 8. 116 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information REQUIRED SUPPLEMENTARY INFORMATION Schedule of Changes in Total OPEB Liability and Related Ratios Firemen's Relief and Pension Plan and LEOFF 1 Employees For the Year Ended December 31 Last 10 Fiscal Years* Fiscal Year Ending December 31 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 Total OPEB Liability- Beginning $13,370,311 $14,784,873 $13,702,359 $16,228,865 $17,472,360 N/A N/A N/A N/A N/A Service Cost - - - - - N/A N/A N/A N/A N/A Interest on Total OPEB Liability 261,571 290,093 368,593 636,891 597,724 N/A N/A N/A N/A N/A Changes of Benefit Terms - - - - - N/A N/A N/A N/A N/A Effect of Economic/Demographic Gains(Losses) - (704,125) - (3,427,650) - N/A N/A N/A N/A N/A Effect of Assumption Changes or Inputs (2,089.347) (437,389) 1,315,995 883,507 (1.045,269) N/A N/A N/A N/A N/A Expected Benefit Payments (586,378) (563,141) (602,074) (619.254) (795,950) N/A N/A N/A N/A N/A Total OPEB Liability- Ending $10,956,157 $ 13,370,311 $14,784,873 $13,702,359 $16,228,865 N/A N/A N/A N/A N/A Covered Employee Payroll - - - - - N/A N/A N/A N/A N/A Total OPEB Liability as a%of Covered N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A Payroll The City implemented GASB Statement No. 75 in fiscal year 2018. Information is not available for prior years. The schedule will be built prospectively until it contains ten years of data. Notes to Schedule: No assets have been accumulated in a trust that meets the criteria in paragraph 4 of GASB 75 to pay related benefits. The effect of assumption changes or inputs is the result of a change in the discount rate from 2.00% as of December 31, 2021 to 3.75% as of December 31, 2022. Significant methods and assumptions used in calculating the actuarial determined contribution are presented in Note 9. 117 City of Auburn: 2022 Annual Comprehensive Financial Report Required Supplemental Information * * C I Y OF *I * UBURN WASHINGTON 118 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR GOVERNMENTAL FUNDS The City has four types of Non-Major Governmental Funds. Special Revenue Funds Special revenue funds account for the proceeds of specific revenue sources and are segregated into individual funds to ensure that expenditures are made exclusively for qualified purposes. Special revenue funds are accounted for on a modified accrual basis. Biennial budgets are adopted with appropriations lapsing at year-end. Debt Service Funds Debt service funds account for payments of principal and interest on general obligation and special assessment long-term debt. Capital Project Funds Capital project funds account for the City of Auburn's financial resources used for the acquisition or construction of major non-proprietary capital facilities. Permanent Funds Permanent funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs that are for the benefit of the City or its citizens. 119 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING BALANCE SHEET NON-MAJOR GOVERNMENT FUNDS December 31,2022 Total Total Total Total Total Nonmajor Nonmajor Nonmajor Nonmajor Nonmajor Special Revenue Debt Service Capital Projects Permanent Governmental Funds Funds Funds Funds Funds ASSETS: Cash and Cash Equivalents $ 8,162,194 $ 461,865 $ 1,548,256 $ 2,201,305 $ 12,373,620 Receivables: Customer Accounts 282 - - - 282 Taxes 295,432 - - - 295,432 Other Receivables 101,934 - 194,853 - 296,787 Due From Other Governmental Units 1,063,709 - 180,824 - 1,244,533 Long-Term Notes, Leases and Contracts - - 372,925 - 372,925 Prepaids 95,000 - - - 95,000 Total Assets 9,718,551 461,865 2,296,858 2,201,305 14,678,579 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Liabilities: Current Payables 814,788 - 94,801 - 909,589 Interfund Payable(Note 4) 150,000 - - - 150,000 Total Liabilities 964,788 - 94,801 - 1,059,589 Deferred Inflow of Resources: Deferred Inflows Related to Leases - - 559,506 - 559,506 Total Deferred Inflow of Resources - - 559,506 - 559,506 Fund Balances: Nonspendable 95,000 - - 2,070,670 2,165,670 Restricted 4,324,095 1,702 1,369,732 - 5,695,529 Committed 4,219,956 - - - 4,219,956 Assigned 114,712 460,163 272,819 130,635 978,329 Total Fund Balances 8,753,763 461,865 1,642,551 2,201,305 13,059,484 Total Liabilities, Deferred Inflows and Fund Balances $ 9,718,551 $ 461,865 $ 2,296,858 $ 2,201,305 $ 14,678,579 120 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR GOVERNMENT FUNDS For the Year Ended December 31, 2022 Total Total Total Total Total Nonmajor Nonmajor Nonmajor Nonmajor Nonmajor Special Revenue Debt Service Capital Projects Permanent Governmental REVENUES: Taxes: Property $ - $ - $ 279,460 $ - $ 279,460 Retail Sales&Use - 250,000 - - 250,000 Interfund Utility 624,025 - - - 624,025 Utility 1,666,311 - - - 1,666,311 Excise 189,977 - - - 189,977 Other 885 - - - 885 Intergovernmental 3,568,653 - 180,824 - 3,749,477 Charges for Services 54,380 - 4,416 63,313 122,109 Investment Earnings 121,804 6,753 26,096 31,545 186,198 Miscellaneous 331,818 - 132,865 - 464,683 Total Revenues 6,557,853 256,753 623,661 94,858 7,533,125 EXPENDITURES: Current: Security of Persons&Property 314,648 - - - 314,648 Transportation 6,380,851 - - - 6,380,851 Economic Environment 1,196,100 - - - 1,196,100 Cultural and Recreation - - 1,251 - 1,251 Debt Service: Principal - 1,082,558 - - 1,082,558 Interest - 797,682 - - 797,682 Capital Outlay - - 669,917 - 669,917 Total Expenditures 7,891,599 1,880,240 671,168 - 10,443,007 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,333,746) (1,623,487) (47,507) 94,858 (2,909,882) OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 1,810,935 1,701,690 298,341 - 3,810,966 Transfers Out(Note 4) - (2,153) - - (2,153) Total Other Financing Sources (Uses) 1,810,935 1,699,537 298,341 - 3,808,813 Net Change in Fund Balances 477,189 76,050 250,834 94,858 898,931 Fund Balances- Beginning 8,276,574 385,815 1,391,717 2,106,447 12,160,553 Fund Balances- Ending $ 8,753,763 $ 461,865 $ 1,642,551 $ 2,201,305 $ 13,059,484 121 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules * * CITY OF * AUBURN WASHINGTON 122 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Special revenue funds account for the proceeds of specific revenue sources and are segregated into individual funds to ensure that expenditures are made exclusively for qualified purposes. Special revenue funds are accounted for on a modified accrual basis. Annual budgets are adopted with appropriations lapsing each year of the biennium. The City has seven non-major special revenue funds. The Local Street Fund This fund was created when Auburn voters approved the Save Our Streets lid lift in 2004 and is used to account for all revenues and expenditures related to this initiative. Hotel/Motel Tax Fund This fund was created to account for the hotel/motel taxes levied to support City tourist promotion. Arterial Street Preservation Fund This fund was created to repair classified arterial streets and is funded from a one percent utility tax increase that was adopted by Council in 2008. Drug Forfeiture Fund Money seized and forfeited from drug activity is deposited in this fund to be used exclusively for drug investigation and enforcement. The Housing and Community Development Fund Accounts for projects associated with the Community Development Block Grant program. The Recreational Trails Fund Created for the purpose of trail development. This is a tax-supported fund. The Business Improvement Area Fund Accounts for special assessments on downtown merchants for ongoing services and for improvements made to the downtown area. 123 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING BALANCE SHEET NON-MAJOR SPECIAL REVENUE FUNDS December 31, 2022 Page 1 of 2 Hotel/ Arterial Housing Local Motel Street Drug Community Streets Tax Preservation Forfeiture Development ASSETS: Cash and Cash Equivalents $ 3,111,173 $ 464,374 $ 3,059,459 $ 1,161,412 $ 121,653 Receivables: Customer Accounts - - - 282 - Taxes 295,432 - - - - Other Receivables - - 101,934 - - Due From Other Governmental Units - - 829,273 19,662 214,774 Prepaids - - - - - Total Assets 3,406,605 464,374 3,990,666 1,181,356 336,427 LIABILITIES AND FUND BALANCES: Liabilities: Current Payables 43,109 75 477,727 44,341 143,523 Interfund Payable (Note 4) - - - - 150,000 Total Liabilities 43,109 75 477,727 44,341 293,523 Fund Balances: Nonspendable - - - - - Restricted - 464,299 2,566,155 1,116,248 42,904 Committed 3,320,024 - 899,932 - - Assigned 43,472 - 46,852 20,767 - Total Fund Balances 3,363,496 464,299 3,512,939 1,137,015 42,904 Total Liabilities and Fund Balances $ 3,406,605 $ 464,374 $ 3,990,666 $ 1,181,356 $ 336,427 124 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules Page 2 of 2 Total Business Nonmajor Recreational Improvement Special Revenue Trails Area Funds $ 97,169 $ 146,954 $ 8,162,194 - - 282 - 295,432 - - 101,934 - 1,063,709 95,000 95,000 97,169 241,954 9,718,551 106,013 814,788 - 150,000 106,013 964,788 95,000 95,000 95,794 38,695 4,324,095 - 4,219,956 1,375 2,246 114,712 97,169 135,941 8,753,763 $ 97,169 $ 241,954 $ 9,718,551 125 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES NON-MAJOR SPECIAL REVENUE FUNDS For the Year Ended December 31, 2022 Page 1 of 2 Hotel/ Arterial Housing Local Motel Street Drug Community Streets Tax Preservation Forfeiture Development REVENUES: Taxes: Interfund Utility $ - $ - $ 624,025 $ - $ - Utility 295,432 - 1,370,879 - - Excise - 189,977 - - - Other - - - - - Intergovernmental - - 2,566,155 18,628 976,870 Charges for Services - - 33,766 20,614 - Investment Earnings 43,472 7,093 46,852 20,767 - Miscellaneous - - - 331,818 - Total Revenues 338,904 197,070 4,641,677 391,827 976,870 EXPENDITURES: Current: Security of Persons and Property - - - 314,648 - Transportation 2,118,417 - 4,262,434 - - Economic Environment - 165,900 - - 976,808 Total Expenditures 2,118,417 165,900 4,262,434 314,648 976,808 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,779,513) 31,170 379,243 77,179 62 OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 1,810,935 - - - - Total Other Financing Sources (Uses) 1,810,935 - - - - Net Change in Fund Balances 31,422 31,170 379,243 77,179 62 Fund Balances- Beginning 3,332,074 433,129 3,133,696 1,059,836 42,842 Fund Balances- Ending $ 3,363,496 $ 464,299 $ 3,512,939 $ 1,137,015 $ 42,904 126 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules Page 2 of 2 Total Business Nonmajor Recreational Improvement Special Revenue Trails Area Funds $ - $ - $ 624,025 - - 1,666,311 - - 189,977 - 885 885 7,000 - 3,568,653 - - 54,380 1,374 2,246 121,804 - - 331,818 8,374 3,131 6,557,853 - - 314,648 - - 6,380,851 - 53,392 1,196,100 - 53,392 7,891,599 8,374 (50,261) (1,333,746) - - 1,810,935 - - 1,810,935 8,374 (50,261) 477,189 88,795 186,202 8,276,574 $ 97,169 $ 135,941 $ 8,753,763 127 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL LOCAL STREETS SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Utility Tax Revenue $ - $ - $ 295,432 $ 295,432 Investment Earnings 10,500 10,500 43,472 32,972 Total Revenues 10,500 10,500 338,904 328,404 EXPENDITURES: Current: Transportation 1,664,500 4,287,057 2,118,417 2,168,640 Total Expenditures 1,664,500 4,287,057 2,118,417 2,168,640 Excess (Deficiency) of Revenues Over (Under) Expenditures (1,654,000) (4,276,557) (1,779,513) 2,497,044 OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 1,650,000 3,072,022 1,810,935 (1,261,087) Total Other Financing Sources (Uses) 1,650,000 3,072,022 1,810,935 (1,261,087) Net Change in Fund Balances (4,000) (1,204,535) 31,422 1,235,957 Fund Balances- Beginning 1,318,428 3,332,074 3,332,074 - Fund Balances- Ending $ 1,314,428 $ 2,127,539 $ 3,363,496 $ 1,235,957 128 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOTEL/MOTEL TAX SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Excise $ 165,000 $ 165,000 $ 189,977 $ 24,977 Charges for Services 2,500 2,500 - (2,500) Investment Earnings 1,400 1,400 7,093 5,693 Total Revenues 168,900 168,900 197,070 28,170 EXPENDITURES: Current: Economic Environment 177,110 177,110 165,900 11,210 Total Expenditures 177,110 177,110 165,900 11,210 Excess (Deficiency) of Revenues Over (Under) Expenditures (8,210) (8,210) 31,170 39,380 OTHER FINANCING SOURCES (USES): Net Change in fund Balances (8,210) (8,210) 31,170 39,380 Fund Balances- Beginning 187,276 433,129 433,129 - Fund Balances- Ending $ 179,066 $ 424,919 $ 464,299 $ 39,380 129 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL ARTERIAL STREET PRESERVATION SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Interfund Utility $ 759,900 $ 759,900 $ 624,025 $ (135,875) Utility 1,287,500 1,287,500 1,370,879 83,379 Intergovernmental - 3,876,251 2,566,155 (1,310,096) Charges for Services - 258,770 33,766 (225,004) Investment Earnings 11,400 11,400 46,852 35,452 Total Revenues 2,058,800 6,193,821 4,641,677 (1,552,144) EXPENDITURES: Current: Transportation 1,950,000 7,657,385 4,262,434 3,394,951 Total Expenditures 1,950,000 7,657,385 4,262,434 3,394,951 Excess (Deficiency) of Revenues Over (Under) Expenditures 108,800 (1,463,564) 379,243 1,842,807 OTHER FINANCING SOURCES (USES): Transfers Out (Note 4) (185,000) (185,000) - 185,000 Total Other Financing Sources (Uses) (185,000) (185,000) - 185,000 Net Change in Fund Balances (76,200) (1,648,564) 379,243 2,027,807 Fund Balances - Beginning 1,514,104 3,133,696 3,133,696 - Fund Balances - Ending $ 1,437,904 $ 1,485,132 $ 3,512,939 $ 2,027,807 130 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL DRUG FORFEITURE SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Intergovernmental $ - $ - $ 18,628 $ 18,628 Charges for Services 18,000 18,000 20,614 2,614 Investment Earnings 5,000 5,000 20,767 15,767 Miscellaneous 125,000 125,000 331,818 206,818 Total Revenues 148,000 148,000 391,827 243,827 EXPENDITURES: Current: Security of Persons& Property 356,531 367,531 314,648 52,883 Total Expenditures 356,531 367,531 314,648 52,883 Excess (Deficiency of Revenues Over (Under) Expenditures (208,531) (219,531) 77,179 296,710 OTHER FINANCING SOURCES (USES): Transfers In (Note 4) - 6,000 - (6,000) Transfers Out (Note 4) - (86,600) - 86,600 Total Other Financing Sources and Uses - (80,600) - 80,600 Net Change in Fund Balances (208,531) (300,131) 77,179 377,310 Fund Balances- Beginning 612,573 1,059,837 1,059,836 (1) Fund Balances- Ending $ 404,042 $ 759,706 $ 1,137,015 $ 377,309 131 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL HOUSING & COMMUNITY DEVELOPMENT SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Intergovernmental $ 600,000 $ 1,344,900 $ 976,870 $ (368,030) Total Revenues 600,000 1,344,900 976,870 (368,030) EXPENDITURES: Current: Economic Environment 600,000 1,344,900 976,808 368,092 Total Expenditures 600,000 1,344,900 976,808 368,092 Excess (Deficiency) of Revenues Over (Under) Expenditures - - 62 62 OTHER FINANCING SOURCES (USES): Net Change in Fund Balances - - 62 62 Fund Balances- Beginning 42,904 42,842 42,842 - Fund Balances- Ending $ 42,904 $ 42,842 $ 42,904 $ 62 132 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL RECREATION TRAILS SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: TAXES: Intergovernmental $ 7,000 $ 7,000 $ 7,000 $ - Investment Earnings 700 700 1,374 674 Total Revenues 7,700 7,700 8,374 674 EXPENDITURES: Excess (Deficiency) of Revenues Over (Under) Expenditures 7,700 7,700 8,374 674 OTHER FINANCING SOURCES (USES): Net Change in Fund Balances 7,700 7,700 8,374 674 Fund Balances- Beginning 87,125 88,795 88,795 - Fund Balances- Ending $ 94,825 $ 96,495 $ 97,169 $ 674 133 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL BUSINESS IMPROVEMENT AREA SPECIAL REVENUE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Taxes: Other $ 55,000 $ 55,000 $ 885 $ (54,115) Investment Earnings 400 400 2,246 1,846 Total Revenues 55,400 55,400 3,131 (52,269) EXPENDITURES: Current: Economic Environment 90,000 90,000 53,392 36,608 Total Expenditures 90,000 90,000 53,392 36,608 Excess (Deficiency) of Revenues Over (Under) Expenditures (34,600) (34,600) (50,261) (15,661) Net Change in Fund Balances (34,600) (34,600) (50,261) (15,661) Fund Balances- Beginning 62,025 186,202 186,202 - Fund Balances- Ending $ 27,425 $ 151,602 $ 135,941 $ (15,661) 134 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR GOVERNMENTAL FUNDS DEBT SERVICE FUNDS Debt service funds account for payments of principal and interest on general obligation and special assessment long-term debt. The City of Auburn has two outstanding general obligation issues, and two special assessment funds. The 2016 General Obligation Bonds Accounts for the debt service on a Council-approved bond issue to refund on a current basis the 2005 General Obligation Refunding Airport Bonds and refunding on an advance basis the 2006A General Obligation Bonds for Golf and Cemetery. 2020 A Series and B Series Refunding General Obligation Bonds The 2020 A Series accounts for the debt service on the refund of the 2010 B Series General Obligation Bonds which was to finance acquisition costs of certain condominium units in the City Hall Annex. The 2020 B Series accounts for the debt service on the refund of the 2010 D Series General Obligation Bonds which was to finance a portion of the downtown infrastructure improvements in the City's revitalization area. The L.I.D. Guarantee Fund This fund provides financial security for outstanding L.I.D. bonds and special assessment debt. Special Assessment Debt Fund Accounts for the special assessment collections and debt service payments for all local improvement districts located within the City. 135 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules * CITYOF UBURN WASHINGTON 136 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING BALANCE SHEET NON-MAJOR DEBT SERVICE FUNDS December 31,2022 Total 2020 2016 Nonmajor Refunding Combined Refunding LID Special Debt Service A&B (2010 B&D) Golf/Cemetery Guarantee Assessments Funds ASSETS: Cash and Cash Equivalents $ 460,163 $ - $ 1,702 $ - $ 461,865 Total Assets 460,163 - 1,702 - 461,865 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES: Fund Balances: Restricted - - 1,702 - 1,702 Assigned 460,163 - - - 460,163 Total Fund Balances 460,163 - 1,702 - 461,865 Total Liabilities,Deferred Inflows and Fund Balances $ 460,163 $ - $ 1,702 $ - $ 461,865 137 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE NON-MAJOR DEBT SERVICE FUNDS For the Year Ended December 31, 2022 Total 2020 2016 Nonmajor Refunding Combined Refunding L I D Special Debt Service A&B (2010 B&D) Golf/Cemetery Guarantee Assessments Funds REVENUES: Taxes: Retail Sales&Use $ 250,000 $ - $ - $ - $ 250,000 Investment Earnings 6,726 - 25 2 6,753 Total Revenues 256,726 - 25 2 256,753 EXPENDITURES: Debt Service: Principal 735,000 347,558 - - 1,082,558 Interest 774,250 23,432 - - 797,682 Total Expenditures 1,509,250 370,990 - - 1,880,240 Excess(Deficiency) of Revenues Over (Under) Expenditures (1,252,524) (370,990) 25 2 (1,623,487) OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 1,330,700 370,990 - - 1,701,690 Transfers Out (Note 4) - - - (2,153) (2,153) Total Other Financing Sources (Uses) 1,330,700 370,990 - (2,153) 1,699,537 Net Change in Fund Balances 78,176 - 25 (2,151) 76,050 Fund Balances- Beginning 381,987 - 1,677 2,151 385,815 Fund Balances- Ending $ 460,163 $ - $ 1,702 $ - $ 461,865 138 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR GOVERNMENTAL FUNDS CAPITAL PROJECT FUNDS Capital projects funds account for the City of Auburn's financial resources used for the acquisition or construction of major non-proprietary capital facilities. Auburn has two non-major capital project funds. The Municipal Park Construction Fund Accounts for park related construction activity and includes funding from a portion of field rental income and adult athletic team fees. The Local Revitalization Fund Accounts for the City Hall Plaza and the Downtown Promenade project. 139 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules Li Y OF i F ),,L, .... )y* UBUIUCT WASHINGTON 140 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING BALANCE SHEET CAPITAL PROJECT FUNDS December 31, 2022 Municipal Nonmajor Park Local Capital Project Construction Revitalization Funds ASSETS: Cash and Cash Equivalents $ 1,275,437 $ 272,819 $ 1,548,256 Other Receivables 194,853 - 194,853 Due From Other Governmental Units 180,824 - 180,824 Long-Term Notes, Leases and Contracts 372,925 - 372,925 Total Assets 2,024,039 272,819 2,296,858 LIABILITIES AND FUND BALANCES: Liabilities: Current Payables 94,801 - 94,801 Total Liabilities 94,801 - 94,801 Deferred Inflow of Resources: Deferred Inflow Related to Leases 559,506 - 559,506 Total Deferred Inflow of Resources 559,506 - 559,506 Fund Balances: Restricted 1,369,732 - 1,369,732 Assigned - 272,819 272,819 Total Fund Balances 1,369,732 272,819 1,642,551 Total Liabilities and Fund Balances $ 2,024,039 $ 272,819 $ 2,296,858 141 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES CAPITAL PROJECT FUNDS For the Year Ended December 31, 2022 Municipal Nonmajor Park Local Capital Project Construction Revitalization Funds REVENUES: Taxes: Property $ 279,460 $ - $ 279,460 Intergovernmental 180,824 - 180,824 Charges for Services 4,416 - 4,416 Investment Earnings 22,149 3,947 26,096 Miscellaneous 132,865 - 132,865 Total Revenues 619,714 3,947 623,661 EXPENDITURES: Cultural and Recreation 1,251 - 1,251 Capital Outlay 580,733 89,184 669,917 Total Expenditures 581,984 89,184 671,168 Excess (Deficiency) of Revenues Over (Under) Expenditures 37,730 (85,237) (47,507) OTHER FINANCING SOURCES (USES): Transfers In (Note 4) 256,864 41,477 298,341 Total Other Financing Sources (Uses) 256,864 41,477 298,341 Net Change in Fund Balances 294,594 (43,760) 250,834 Fund Balances- Beginning 1,075,138 316,579 1,391,717 Fund Balances- Ending $ 1,369,732 $ 272,819 $ 1,642,551 142 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR GOVERNMENTAL FUNDS PERMANENT FUNDS Permanent funds are used to report resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support City programs that are for the benefit of the City or its citizens. Auburn has one permanent fund. The Cemetery Endowed Care Fund Accounts for non-expendable investments held by the City's trustee. The interest income from investments is available for use by the cemetery fund for capital enhancement and maintenance. 143 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington BALANCE SHEET PERMANENT FUND December 31, 2022 Cemetery Endowed Care ASSETS: Cash and Cash Equivalents Non-Expendable Trust $ 2,201,305 Total Assets 2,201,305 LIABILITIES AND FUND BALANCES: FUND BALANCES: Nonspendable 2,070,670 Assigned 130,635 Total Fund Balances 2,201,305 Total Liabilities and Fund Balances $ 2,201,305 144 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE PERMANENT FUND For the Year Ended December 31, 2022 Cemetery Endowed Care REVENUES: Increase to Endowment from Lot Sales $ 63,313 Investment Earnings 31,545 Total Revenues 94,858 EXPENDITURES: Excess (Deficiency) of Revenues Over (Under) Expenditures 94,858 OTHER FINANCING SOURCES (USES): Net Change in Fund Balance 94,858 Fund Balance- Beginning 2,106,447 Fund Balance- Ending $ 2,201,305 145 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules * * CITY OF AUBURN WASHINGTON 146 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR PROPRIETARY FUNDS ENTERPRISE FUNDS The City's enterprise funds are used to account for operations that are financed and operated in a manner similar to private business operations. The goods and services these funds provide to the general public are primarily financed by service charges. Enterprise funds are self-supporting and use the accrual method of accounting. Auburn has two non-major enterprise funds. The Airport Fund Provides accounting of the activities of the Auburn Municipal Airport. Sources of income for the fund are leases, rentals, fuel charges, investment interest, and grant funding as available. The Cemetery Fund Accounts for Mountain View Cemetery's operations. 147 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington COMBINING STATEMENT OF NET POSITION NON-MAJOR ENTERPRISE FUNDS December 31, 2022 Total Non major Enterprise Airport Cemetery Funds ASSETS: Current Assets: Cash and Cash Equivalents $ 1,921,511 $ 1,709,233 $ 3,630,744 Restricted Cash: Customer Deposits 130,082 - 130,082 Customer Accounts 218 - 218 Other Receivables 194,548 - 194,548 Due From Other Governmental Units 132,541 - 132,541 Inventories 29,888 10,084 39,972 Total Current Assets 2,408,788 1,719,317 4,128,105 Noncurrent Assets: Long-Term Contracts, Leases and Notes 7,126,540 - 7,126,540 Net Pension Asset 113,275 213,825 327,100 Capital Assets Not Being Depreciated: Land 3,919,049 342,836 4,261,885 Construction in Progress 412,450 59,938 472,388 Capital Assets: Buildings and Equipments 3,094,306 997,335 4,091,641 Improvements Other Than Buildings 13,978,825 1,539,068 15,517,893 Less: Accumulated Depreciation (10,095,566) (1,697,004) (11,792,570) Total Capital Assets (Net of A/D) 11,309,064 1,242,173 12,551,237 Total Noncurrent Assets 18,548,879 1,455,998 20,004,877 Total Assets 20,957,667 3,175,315 24,132,982 DEFERRED OUTFLOWS OF RESOURCES: Deferred Outflow Related to Pensions 53,594 144,202 197,796 Total Deferred Outflows of Resources 53,594 144,202 197,796 LIABILITIES: Current Liabilities: Current Payables 190,831 55,607 246,438 Employee Leave Benefits - Current 10,205 23,440 33,645 Customer Deposits 130,082 - 130,082 Total Current Liabilities 331,118 79,047 410,165 Noncurrent Liabilities: Employee Leave Benefits 3,915 8,992 12,907 Total Noncurrent Liabilities 3,915 8,992 12,907 Total Liabilities 335,033 88,039 423,072 DEFERRED INFLOWS OF RESOURCES: Deferred Inflow Related to Leases 7,266,687 - 7,266,687 Deferred Inflow Related to Pensions 73,434 204,736 278,170 Total Deferred Inflows of Resources 7,340,121 204,736 7,544,857 NET POSITION: Net Investment in Capital Assets 11,309,064 1,242,173 12,551,237 Restricted for: Pension Asset 113,275 213,825 327,100 Unrestricted 1,913,768 1,570,744 3,484,512 Total Net Position $ 13,336,107 $ 3,026,742 $ 16,362,849 148 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn, Washington COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION NON-MAJOR ENTERPRISE FUNDS For the Year Ended December 31, 2022 Total Nonmajor Enterprise Airport Cemetery Funds OPERATING REVENUES: Charges for Services $ 754,850 $ 1,674,935 $ 2,429,785 Other Operating Revenue 969,870 - 969,870 Total Operating Revenues 1,724,720 1,674,935 3,399,655 OPERATING EXPENSES: Operations &Maintenance 1,204,070 1,128,257 2,332,327 Administration 292,022 487,752 779,774 Depreciation/Amortization 580,297 36,492 616,789 Other Operating Expenses 3,580 21,891 25,471 Total Operating Expenses 2,079,969 1,674,392 3,754,361 Operating Income (Loss) (355,249) 543 (354,706) NON-OPERATING REVENUE (EXPENSE): Interest Revenue 27,672 26,126 53,798 Other Non-Operating Revenues 711,471 12,022 723,493 Gain (Loss) on Sale of Capital Assets - 4,250 4,250 Total Non-Operating Revenue (Expense) 739,143 42,398 781,541 Income (Loss) Before Contributions &Transfers 383,894 42,941 426,835 Transfers Out (Note 4) - (15,000) (15,000) Change in Net Position 383,894 27,941 411,835 Net Position, January 1 12,952,213 2,998,801 15,951,014 Net Position, December 31 $ 13,336,107 $ 3,026,742 $ 16,362,849 149 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS For the Fiscal Year Ended December 31, 2022 Page 1 of 2 Total Non Major Enterprise Airport Cemetery Funds CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received From Users $ 1,388,655 $ 1,674,935 $ 3,063,590 Cash Paid to Suppliers for Goods&Services (849,967) (662,255) (1,512,222) Cash Paid for Taxes (31,516) (21,891) (53,407) Cash Paid to Employees (406,106) (927,119) (1,333,225) Other Cash Received 13,510 - 13,510 Other Non-Operating Revenue - 16,272 16,272 Net Cash Provided (Used) By Operating Activities 114,576 79,942 194,518 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Operating Grant Received 574,157 - 574,157 Operating Transfers Out - (15,000) (15,000) Net Cash Provided (Used) by Non-Capital Financing Activities 574,157 (15,000) 559,157 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from Sale of Equipment - 2,000 2,000 Purchase of Capital Assets (623,892) (54,362) (678,254) Lease Principal Receipts 229,619 - 229,619 Lease Interest Receipts 115,578 - 115,578 Net Cash Provided (Used) for Capital and Related Financing Activities (278,695) (52,362) (331,057) CASH FLOW FROM INVESTING ACTIVITIES: Interest Received 27,672 26,126 53,798 Net Cash Provided (Used) in Investing Activities 27,672 26,126 53,798 Net Increase(Decrease) in Cash and Cash Equivalents 437,710 38,706 476,416 Cash and Cash Equivalents- Beginning of Year 1,613,883 1,670,527 3,284,410 Cash and Cash Equivalents - End of Year $ 2,051,593 $ 1,709,233 $ 3,760,826 CASH AT END OF YEAR CONSISTS OF: Cash and Cash Equivalents 1,921,511 1,709,233 3,630,744 Restricted Cash-Customer Deposits 130,082 - 130,082 Total Cash $ 2,051,593 $ 1,709,233 $ 3,760,826 150 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF CASH FLOWS NON-MAJOR ENTERPRISE FUNDS For the Fiscal Year Ended December 31, 2022 Page 2 of 2 Total Non Major Enterprise Airport Cemetery Funds RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES Operating Income (Loss) $ (355,249) $ 543 $ (354,706) ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES: Depreciation 580,297 36,492 616,789 Lease Revenue Classified as Operating Income and Financing Cash Flow (229,619) - (229,619) Other Non-Operating Revenue 13,510 16,272 29,782 Asset(Increases) Decreases: Accounts Receivable (61,457) - (61,457) Inventory 15,030 (867) 14,163 Lease Receivable (7,312,862) - (7,312,862) Liability Increases (Decreases): Accounts&Vouchers Payable 165,071 12,754 177,825 Deposits Payable 1,186 - 1,186 Wages&Benefits Payable 33,032 23,678 56,710 Compensated Absences Payable (1,050) (8,930) (9,980) Lease Deferred Inflows 7,266,687 - 7,266,687 Total Adjustments 469,825 79,399 549,224 Net Cash Provided (Used) by Operating Activities $ 114,576 $ 79,942 $ 194,518 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Total Non Cash Investing, Capital and Financing Activities $ - $ - $ - 151 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules * * CITY OF AUBURN WASHINGTON 152 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules NON-MAJOR PROPRIETARY FUNDS INTERNAL SERVICE FUNDS The City of Auburn's internal service funds are used to account for the financing of goods and services provided by one department of operation to other departments on a cost reimbursement basis. Internal service funds are self-supporting and use the accrual method of accounting. Auburn has five internal service funds. The Insurance Fund Provides a source of funds to pay unemployment claims and property and casualty claims which fall below deductible levels. The Workers Comp Self Insurance Fund Provides a source of funds to pay time loss and medical benefits for employees who are affected by an occupational injury or illness. The Facilities Funds Accounts for the costs of maintaining various City facilities. The Information Services Fund Accounts for the costs of purchasing and maintaining the City's various computer and telecommunications systems. The Equipment Rental Fund Accounts for the costs of purchasing, maintaining, and operating Auburn's fleet of vehicles and related equipment. 153 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS December 31,2022 Workers Comp Information Equipment Insurance Self Insurance Facilities Services Rental Total ASSETS: Current Assets: Cash and Cash Equivalents $ 1,507,792 $ 4,132,853 $ 684,059 $ 3,447,279 $ 8,284,297 $ 18,056,280 Customer Accounts - - 66,045 - - 66,045 Due From Other Governmental Units - - 18,750 3,340 133,728 155,818 Inventories - - - - 395,069 395,069 Total Current Assets 1,507,792 4,132,853 768,854 3,450,619 8,813,094 18,673,212 Noncurrent Assets: Net Pension Asset - - 98,952 720,039 125,912 944,903 Capital Assets Not Being Depreciated: Construction in Progress - - - 12,552 78,255 90,807 Capital Assets: Buildings and Equipment - - - 9,872,762 20,169,392 30,042,154 Improvements Other than Buildings - - - 294,889 217,501 512,390 Right of Use(Leases) - - - 226,966 - 226,966 Less: Accumulated Depreciation/Amortization - - - (9,010,420) (12,458,164) (21,468,584) Total Capital Assets(Net of A/D) - - - 1,396,749 8,006,984 9,403,733 Total Noncurrent Assets - - 98,952 2,116,788 8,132,896 10,348,636 Total Assets 1,507,792 4,132,853 867.806 5,567,407 16,945,990 29,021,848 DEFERRED OUTFLOWS OF RESOURCES: Deferred Outflows Related to Pensions - 7,349 221,776 525,797 201,564 956,486 Total Deferred Outflows of Resources - 7,349 221,776 525,797 201,564 956,486 LIABILITIES: Current Liabilities: Current Payables 18,826 87,338 445,687 271,687 1,274,410 2,097,948 Claims Payable(Incurred but not reported) - 1,132,000 - - - 1,132,000 Employee Leave Benefits-Current - - 52,152 144,407 31,453 228,012 Leases Payable-Current - - - 40,269 - 40,269 Accrued Interest - - - 1,064 - 1,064 Total Current Liabilities 18,826 1,219,338 497,839 457,427 1,305,863 3,499,293 Noncurrent Liabilities Employee Leave Benefits - - 20,006 55,397 12,066 87,469 Leases Payable - - - 161,354 - 161,354 Net Pension Liability - 1,087 - - 910,960 912,047 Total Noncurrent Liabilities - 1,087 20,006 216,751 923,026 1,160,870 Total Liabilities 18,826 1,220,425 517,845 674,178 2,228,889 4,660,163 DEFERRED INFLOWS OF RESOURCES: Deferred Inflow Related to Pensions - 14,428 99,498 698,036 184,951 996,913 Total Deferred Inflows of Resources - 14,428 99,498 698,036 184,951 996,913 NET POSITION: Net Investment in Capital Assets - - - 1,195,126 8,006,984 9.202.110 Restricted For: Pension Asset - - 98,952 720,039 125,912 944,903 Unrestricted 1,488,966 2,905,349 373,287 2,805,825 6,600,818 14.174,245 Total Net Position $ 1,488,966 $ 2,905,349 $ 472,239 $ 4,720,990 $ 14,733,714 $ 24,321,258 154 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31,2022 Workers Comp Information Equipment Insurance Self Insurance Facilities Services Rental Total OPERATING REVENUES: Charges for Services $ - $ 1,164,884 $ 3,482,733 $ 6,561,402 $ 4,264,600 $ 15,473,619 Other Operating Revenue - - 53,841 42,089 - 95,930 Total Operating Revenues - 1,164,884 3,536,574 6,603,491 4,264,600 15,569,549 OPERATING EXPENSES: Operations&Maintenance - 1,024,800 3,487,974 6,748,202 1,954,603 13,215,579 Administration 297,423 154,900 35,900 64,200 983,221 1,535,644 Depreciation/Amortization - - - 594,061 1,402,477 1,996,538 Total Operating Expenses 297,423 1,179,700 3,523,874 7,406,463 4,340,301 16,747,761 Operating Income(Loss) (297,423) (14,816) 12,700 (802,972) (75,701) (1,178,212) NON-OPERATING REVENUE (EXPENSE): Interest Revenue 18,214 57,711 14,054 51,070 116,311 257,360 Other Non-Operating Revenues - - - 1,052 18,747 19,799 Gain/(Loss) on Sale of Capital Assets - - - - 45,695 45,695 Interest Expense - - - (1,076) - (1,076) Total Non-Operating Revenue(Expense) 18,214 57,711 14,054 51,046 180,753 321,778 Income(Loss) Before Contributions (279,209) 42,895 26,754 (751,926) 105,052 (856,434) Transfers In(Note 4) - - 148,960 3,000 258,841 410,801 Transfers Out(Note 4) - - (712,345) - (86,000) (798,345) Change in Net Position (279,209) 42,895 (536,631) (748,926) 277,893 (1,243,978) Net Position,January 1 1,768,175 2,862,454 1,008,870 5,469,916 14,455,821 25,565,236 Total Net Position-Ending $ 1,488,966 $ 2,905,349 $ 472,239 4,720,990 $ 14,733,714 $ 24,321,258 155 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Fiscal Year Ended December 31,2022 Page 1 of 2 Workers Comp Self Information Equipment Insurance Insurance Facilities Services Rental Total CASH FLOWS FROM OPERATING ACTIVITIES: Cash Received From Users $ - $ 1,164,884 $ 3,554,672 $ 6,635,247 $ 4,264,600 $ 15,619,403 Cash Paid to Suppliers for Goods&Services (297,151) (697,549) (2,267,137) (3,583,454) (1,212,477) (8,057,768) Cash Paid to Employees - (163,947) (1,175,988) (2,937,195) (1,141,480) (5,418,610) Other Cash Received - - - 1,052 (91,386) (90,334) Net Cash Provided(Used)By Operating Activities (297,151) 303,388 111,547 115,650 1,819,257 2,052,691 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES: Transfers In - - 148,960 3,000 258,841 410,801 Transfers Out - - (712,345) - (86,000) (798,345) Net Cash Provided(Used)by Non-Capital Financing Activities - - (563,385) 3,000 172,841 (387,544) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES: Proceeds from Sale of Equipment - - - - 135,666 135,666 Purchase of Capital Assets - - - (508,861) (1,868,823) (2,377,684) Proceeds from Insurance Settlement - - - - 110,133 110,133 Principal Payment on Debt - - - (25,218) - (25,218) Interest Payment on Debt - - - (11) - (11) Net Cash Provided(Used)for Capital and Related Financing Activities - - - (534,090) (1,623,024) (2,157,114) CASH FLOW FROM INVESTING ACTIVITIES: Interest Received 18,214 57,711 14,054 51,070 116,311 257,360 Net Cash Provided(Used)in Investing Activities 18,214 57,711 14,054 51,070 116,311 257,360 Net Increase(Decrease)in Cash and Cash Equivalents (278,937) 361,099 (437,784) (364,370) 485,385 (234,607) Cash and Cash Equivalents-Beginning of Year 1,786,729 3,771,754 1,121,843 3,811,649 7,798,912 18,290,887 Cash and Cash Equivalents- End of Year $ 1,507,792 $ 4,132,853 $ 684,059 $ 3,447,279 $ 8,284,297 $ 18,056,280 CASH AT END OF YEAR CONSISTS OF: Cash and Cash Equivalents 1,507,792 4,132,853 684,059 3,447,279 8,284,297 18,056,280 Total Cash $ 1,507,792 $ 4,132,853 $ 684,059 $ 3,447,279 $ 8,284,297 $ 18,056,280 156 City of Auburn: 2022 Annual Comprehensive Financial Report Fund Financial Statements &Schedules City of Auburn,Washington COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Fiscal Year Ended December 31,2022 Page 2 of 2 Workers Comp Self Information Equipment Insurance Insurance Facilities Services Rental Total RECONCILIATION OF NET OPERATING INCOME TO NEW CASH PROVIDED BY OPERATING ACTIVITIES Operating Income(Loss) $ (297,423) $ (14.816) $ 12,700 $ (802.972) $ (75.701) $ (1.178.212) ADJUSTMENTS TO RECONCILE OPERATING INCOME TO NET CASH PROVIDED(USED) BY OPERATING ACTIVITIES: Depreciation - - - 594,061 1.402.477 1,996.538 Other Non-Operating Revenues - - - - (91,386) (91,386) Asset(Increases)Decreases: Accounts Receivable - - 18,098 32,808 - 50,906 Inventory - - - - (26.289) (26.289) Liability Increases(Decreases): Accounts&Vouchers Payable 272 318,204 97,718 67,642 695,179 1,179,015 Wages&Benefits Payable - - (19,970) 226.380 (87.747) 118.663 Compensated Absences Payable - - 3,001 (2,269) 2,724 3,456 Total Adjustments 272 318,204 98,847 918,622 1,894,958 3,230,903 Net Cash Provided(Used)by Operating Activities $ (297,151) $ 303,388 $ 111,547 $ 115.650 $ 1.819.257 $ 2.052.691 SCHEDULE OF NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Total Non Cash Investing,Capital and Financing Activities $ - $ - $ $ - $ - $ - 157 City of Auburn: 2022 Annual Comprehensive Financial Report Other Supplementary Information CITY OF AUBURN WASHINGTON 158 City of Auburn: 2022 Annual Comprehensive Financial Report Other Supplementary Information Managerial Funds The Cumulative Reserve Fund and the Fire Pension Fund are now combined with the General Fund. For budgetary purposes, however, they are included and presented as Schedules of Revenues, Expenditures, and Changes in Fund Balances— Budget to Actual. The City of Auburn has the following managerial funds: Cumulative Reserve Fund —This fund is for the purpose of revenue stabilization for future operations. Fire Pension Fund — The City is the administrator of the Firemen's Pension Plan (Plan), which is a closed, single-employer defined benefit pension plan that was established in conformance with RCW Chapters 41.16 and 41.18. This plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. 159 City of Auburn: 2022 Annual Comprehensive Financial Report Other Supplementary Information City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL CUMULATIVE RESERVE FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Investment Earnings $ 80,000 $ 80,000 $ (71,379) $ (151,379) Total Revenues 80,000 80,000 (71,379) (151,379) EXPENDITURES: Excess (Deficiency) of Revenues Over (Under) Expenditures 80,000 80,000 (71,379) (151,379) OTHER FINANCING SOURCES (USES): Sale of Capital Assets - 2,029,800 2,029,784 (16) Transfers In (Note 4) - 18,500,000 18,500,000 - Transfers Out (Note 4) (1,950,000) (2,442,200) (419,731) 2,022,469 Total Other Financing Sources (Uses) (1,950,000) 18,087,600 20,110,053 2,022,469 Net Change in Fund Balances (1,870,000) 18,167,600 20,038,674 1,871,090 Fund Balances- Beginning 6,484,315 10,553,767 10,553,767 - Fund Balances- Ending $ 4,614,315 $ 28,721,367 $ 30,592,441 $ 1,871,090 RECONCILIATION OF PERSPECTIVE DIFFERENCE BETWEEN BUDGETARY INFORMATION AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP): The Cumulative Reserve Fund is combined with the General Fund for purposes of GASB Statement 54 (30,592,441) Fund Balance- Ending (GAAP) $ - The notes to the financial statements are an integral part of this statement. 160 City of Auburn: 2022 Annual Comprehensive Financial Report Other Supplementary Information City of Auburn, Washington SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL FIRE PENSION FUND For the Year Ended December 31, 2022 Budget Amounts Variance with Final Actual Final Budget Original Adopted Results Positive (Negative) REVENUES: Intergovernmental $ 88,400 $ 88,400 $ 104,661 $ 16,261 Investment Earnings 15,200 15,200 20,450 5,250 Total Revenues 103,600 103,600 125,111 21,511 EXPENDITURES: CURRENT: Security of Persons& Property 211,204 211,204 224,149 (12,945) Total Expenditures 211,204 211,204 224,149 (12,945) Excess (Deficiency) of Revenues Over (Under) Expenditures (107,604) (107,604) (99,038) 8,566 Net Change in Fund Balances (107,604) (107,604) (99,038) 8,566 Fund Balances- Beginning 1,926,737 1,989,570 1,989,570 - Fund Balances- Ending $ 1,819,133 $ 1,881,966 $ 1,890,532 $ 8,566 RECONCILIATION OF PERSPECTIVE DIFFERENCE BETWEEN BUDGETARY INFORMATION AND GENERALLY ACCEPTED ACCOUNTING PRINCIPLES (GAAP): The Fire Pension Reserve Fund is combined with the General Fund for purposes of GASB Statement 54 (1,890,532) Fund Balance- Ending (GAAP) $ - The notes to the financial statements are an integral part of this statement. 161 City of Auburn: 2022 Annual Comprehensive Financial Report Other Supplementary Information * * CITY OF AUBURN WASHINGTON 162 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn STATISTICAL SECTION December 31, 2022 Financial Trends Information Financial trends schedules are intended to provide users with information to assist them in understanding and assessing how the City's financial position has changed over time. Schedule 1 Net position by components 164 Schedule 2 Changes in net position 165 Schedule 3 Fund balances, government funds 166 Schedule 4 Changes in fund balances, government funds 167 Schedule 5 Tax revenues by source, government funds 168 Revenue Capacity Information The objective of providing revenue capacity information is to help users understand and assess the factors affecting the City's ability to generate its most significant local source revenues. Schedule 6 Assessed value by type 169 Schedule 7 Property tax data 170 Schedule 8 Property tax levies and collections 172 Schedule 9 Principal taxpayers-property taxes and sales taxes 173 Schedule 10 Retail tax collections by sector 174 Debt Capacity Information Debt capacity information is intended to assist users to understand and assess the City's current levels of outstanding debt and ability to issue additional debt in the future. Schedule 11 Ratios of outstanding debt by type 175 Schedule 12 Computation of legal debt margin 176 Schedule 13 Legal debt margin ratios 176 Schedule 14 Computation of net direct and estimated overlapping debt 177 Schedule 15 Ratios of net general bonded debt to assessed value 178 Schedule 16 Pledged revenue bond coverages 179 Demographic and Economic Information These schedules offer demographic and economic information to assist users in understanding certain aspects of the environment within which the City operates and to provide information that facilitates comparisons of financial statement information over time and across governmental units. Schedule 17 Population, income and housing trends 180 Schedule 18 Major employers 181 Operating Information These schedules contain service and infrastructure data to help users understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Schedule 19 Staffing levels by department 182 Schedule 20 Operating indicators by department 183 Schedule 21 Capital indicators by department 184 Schedule 22 Utility customers by customer class 185 163 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 1 NET POSITION BY COMPONENTS Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Governmental activities: Net Investment in Capital Assets $346,195,793 $348,080,505 $361,094,242 $367,128,894 $373,368,906 $375,208,981 $372,887,236 $372,441,433 $373,890,921 $371,760,693 Restricted 15,019,909 16,404,328 19,470,880 26,745,270 29,854,240 30,001,950 33,911,413 32,842,097 38,133,392 60.149,452 Unrestricted 47,426,352 51,898,566 40,928,090 42,900,814 42,803,759 42,377,297 59,840,168 67,845,872 88,819,913 85,050,827 Total governmental activities net position 408,642,054 416,383,399 421,493,212 436,774,978 446,026,906 447,588,227 466,638,817 473,129,402 500,844,225 516,960,973 Business-type activities Net Investment in Capital Assets 165,619,867 169,098,916 187,604,782 195,490,061 205,677,614 208,136,620 212,172,136 208,850,752 228,161,102 230,412,106 Restricted 16,839,589 14,115,610 4,764,340 3,110,414 1,856,970 1,924,566 2,001,709 11,471,309 1,639,895 7,557,854 Unrestricted 32,880,216 37,724,080 32,974,662 40,797,698 41,627,494 49,088,740 56,928,121 63,474,681 69,517,542 68,868,085 Total business-type activities net position 215,339,672 220,938,606 225,343,784 239,398,173 249,162,078 259,149,926 271,101,966 283,796,742 299,318,539 306,838,045 Primary government. Net Investment in Capital Assets 511,815,660 517,179,421 548,699,024 562,618,955 579,046,520 583,345,601 585,059,372 581,292,185 602,052,023 602,172,799 Restricted 31,859,498 30,519,938 24,235,220 29,855,684 31,711,210 31,926,516 35,913,122 44,313,406 39,773,287 67,707,306 Unrestricted 80,306,568 89,622,646 73,902,752 83,698,512 84,431253 91,466,037 116,768,289 131,320,553 158,337,455 153,918,912 Total primary government net position $623,981,726 $637,322,005 $646,836,996 $ 676,173,151 $695,188,984 $706,738,153 $737,740,783 $756,926,144 $800,162,764 $823,799,018 Source:City of Auburn,Finance Department 164 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 2 CHANGES IN NET POSITION Last Ten Fiscal Years (Accrual Basis of Accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Expenses Governmental activities: General government $ 7,508,112 $ 8,363,427 $ 9,187,539 $ 9,557,602 $ 10,384,647 $ 10,191,329 $ 13,292,724 $ 12,332,380 $ 12,837.356 $ 14,735,664 Public safety 27,423,015 27,144,153 29,883,217 32,117,837 32,746,406 30,337,791 24,016,496 37,951,994 32,440,701 38,402,492 Transportation 14,861,834 16,150,877 17,324,036 16,602,993 17,904,352 17,620,176 17,709,231 17,781,630 18,469,045 18,517,806 Physical environment 2,699,301 2,976,461 2,924,046 3,266,375 3,217,885 3,794,576 3,981,499 3,981,592 2,992,107 3,597,960 Culture and recreation 9,184,289 11,094,524 12,096,651 12,811,186 13,539,098 13,665,612 13,400,311 11,681,611 12,332,974 14,800,322 Economic environment 2,346,025 2,751,869 3,044,354 3,224,984 3,859,863 4,140,104 4,457,626 5,308,106 3,664.340 4,662,845 Health and human services 510,285 622,374 925,299 573,115 674270 787,535 619,247 671,257 2,107,798 2,179,401 Interest on long-term debt 3,795,024 3,615,211 1,986,853 1,709,647 1,555,803 1,502,236 1,466,217 650,215 651,329 677,414 Total governmental activities expenses 68,327,885 72,718,896 77,371,995 79,863,739 83,882,324 82,039,359 78,943,351 90,358,785 85,495,650 97,573,904 Business-type activities Water 11,893,094 11,992,944 13,691,529 13,107,629 12,408,008 12,499,974 13,023,888 13,253,694 13,624,963 14,094,553 Sewer 21,584,215 23,026,216 23,992,161 25,685,370 25,360,718 26,213,221 26,907,482 26,004,990 26,829,991 28,481,203 Storm drainage 7,726,467 7,668,072 8,308,559 8,814,542 8,979,969 9,374,373 9,126,096 8,780,867 9,545,696 10,370,729 Solid waste 12,535,078 12,760,313 12,907,832 13,460,155 14,539,703 15,311,654 15,682,121 15,620,963 18,383,884 26,457,098 Golf course 1,933,597 - - - - - - - - - Non-major business-type activities 1.857252 1,924,874 2,062,695 2.150.693 2.106.557 2,186,842 2,628.203 2,603,752 3,081.240 3.754.361 Total business-type activities expenses 57,529,703 57,372,419 60,962,776 63,218,389 63,394,955 65,586,064 67,367,790 66,264,266 71,465,774 83,157,944 Total pnmary government expenses $125,857,588 $ 130,091,315 $ 138,334,771 $ 143,082,128 $147,277279 $147,625,423 $ 146,311,141 $156.623,051 $ 156,961,424 $ 180,731,848 Program revenues Governmental activities: Charges for services General Government $ 893,326 $ 1,160,198 $ 1,243,263 $ 939,184 $ 1,241,905 $ 1,462,867 $ 3,758,197 $ 3,584,821 $ 4,545,962 $ 4,506,672 Public Safety 2,103,823 2,273,903 1,993,117 1,468,536 2,523,667 2,821,516 3,240,007 2,146,428 2,612,840 1,006,147 Transportation 1,967,778 1,660,270 1,446,026 3,265,147 2,118,980 886,760 3,207,197 2,103,258 4,239,115 1,796,513 Physical Environment 398.564 276,632 384,485 260.555 431.580 611,342 503.798 671,543 719.487 427,515 Culture and Recreation 873.970 2,876,185 3.052,599 2,508,166 3,073262 3,355,206 3,183.370 2,191,540 3,409.793 2,715,193 Economic Environment 3,586.844 3,087,853 2.989,579 3,896.453 2,400.940 1.913,090 2,729.376 1,790,286 3,248,829 2,015,619 Total charges for services 9,824,305 11,335,041 11,109,069 12,338,041 11,790,334 11,050,781 16,621,946 12,487,875 18,776,026 12,467,659 Operating grants and contnbutions 1,967,252 1,333,652 4,234,309 2,767,931 2,257,646 2,831,794 3,394,916 6,904,118 4,877,951 7,398,845 Capital grants and contributions 5,955,062 6,001,230 19.526,548 13,275.208 13,229.502 9,065,857 6,461.827 9,455,065 11,838,148 8,644,981 Total governmental activities program revenues 17,746,619 18,669,923 34.869,926 28,381,180 27,277.482 22,948,432 26,478.689 28,847,058 35,492,125 28,511,485 Business-type activities. Charges for services 57,533,735 60,332,817 63,391,139 65,733,943 68,220,200 69,723,671 70,315,493 68,966,638 73,687,356 84,871,076 Operating grants and contnbutions 90,361 111,025 106,286 106,286 106,286 106,286 106,286 106,286 - - Capital grants and contributions 5,483,344 5,070,810 5,821,857 10,574,852 4,363,568 4,566,838 6,686,288 6,518,995 13,400,812 3,847,367 Total business-type activities program revenues 63,107,440 65,514,652 69,319,282 76,415,081 72,690.054 74,396,795 77,108.067 75,591,919 87,088,168 88,718,443 Total pnmary government program revenues 80,854,059 84,184,575 104,189,208 104,796,261 99,967.536 97,345,227 103,586.756 104,438,977 122,580,293 117,229,928 Net(expense)/revenue Governmental activities (50,581266) (54,048,973) (42,502,069) (51,482,559) (56,604,841) (59,090,927) (52,464,662) (61,511,727) (50,003,525) (69,062,419) Business-type activities 5,577,737 8,142,233 8.356,506 13,196.692 9,295.099 8,810.731 9,740.277 9,327,653 15,622.394 5,560,499 Total pnmary government net expense $(45,003,529) $(45,906,740) $ (34,145,563) $ (38,285,867) $(47,309,742) $(50,280,196) $(42,724,385) $(52,184,074) $ (34,381,131) $ (63,501,920) General revenues and other changes in net position Governmental activities Taxes: Property taxes $ 14,490,790 $ 15.867,838 $ 17,271,705 $ 18,102.286 $ 20,967.953 $ 21,546,734 $ 22,075,276 $ 22,721,452 $ 23,458.850 $ 24,635,089 Retail sales and use tax 18,335,157 19,744,684 21,125,730 21,475,335 22,333,454 21,996,115 22,212,601 21,900,597 25,289,050 26,295,124 Interfund utility taxes 3,892,250 4,068,667 4,260,831 4,624,951 4,540,265 4,552,505 4,760,229 4,543,436 7,101,829 6,396,937 Utility taxes 9,156,636 9,040,015 8,838,179 8,917,401 10,391,462 9,841,620 9,278,114 8,866,275 9,521,243 9,532,991 Excise taxes 2,555.850 2,888,797 4,999,517 5,057,013 4,141,146 4,393,134 5,650.339 4,580,114 6,463,047 6,110,151 City Business and Occupation(') - - - - - - - - - 4,664,551 Other taxes 4,429.090 4,601,925 4,722,482 5,160,215 5,253,964 5,213,217 4,751,163 3,846,314 5,031,185 4,635,655 Investment earnings 121,687 105,117 118,399 332,520 787,786 1,657,481 2,134,741 1,027,312 (114,738) 815,061 Miscellaneous (4,625,627) 178,482 194,600 157,874 204,306 428,580 258,502 252,441 572,013 1,789,159 Transfers (218230) 5,294,793 (462,955) 424,173 454,436 414,975 394,287 264,371 395,869 304,449 Total governmental activities 48,137,603 61,790,318 61,068,488 64251.768 69,074.772 70,044,361 71,515.252 68,002,312 77,718.348 85,179,167 Business-type activities: Investment earnings 68,400 51,261 70,560 196,595 479,132 989,564 1,387,405 364,027 17,401 1,068,685 Miscellaneous 763,717 2,700,233 1,881,835 1,085,275 444,110 602,528 1,218,645 3,267,467 277,871 1,194,771 Transfers 218230 (5,294,793) 462,955 (424,173) (454,436) (414,975) (394,287) (264,371) 395,869) (304,449) Total business-type activities: 1,050,347 (2,543,299) 2,415,350 857.697 468.806 1,177,117 2,211.763 3,367,123 100.597) 1,959,007 Total pnmary government $ 49,187,950 $ 59,247,019 $ 63,483,838 $ 65,109,465 $ 69,543,578 $ 71,221,478 $ 73,727,015 $ 71,369,435 $ 77,617,751 $ 87,138,174 Change in net position Before Change in Accounting Principle Governmental activities (2,443,663) 7,741,345 18,566,419 12,769.209 12,469,931 10,953,434 19,050.590 6,490,585 27,714,823 16,116,748 Business-type activities 6.628.084 5,598,934 10,771,856 14,054.389 9,763.905 9,987,848 11,952.040 12,694,776 15,521,797 7,519,506 Total pnmary government $ 4,184,421 $ 13,340,279 $ 29,338,275 $ 26,823,598 $ 22,233,836 $ 20,941,282 $ 31,002,630 $ 19,185,361 $ 43,236,620 $ 23,636,254 Change in Accounting Principle Governmental activities (222,743) - (13,456,606) 2,512.557 (3218,004) (9,389,375) - - - - Business-type activities (156,715) - (6,366,678) - - - - - - - Total pnmary government $ (379,458) $ - $ (19,823,284) $ 2,512,557 $ (3218,004) $ (9,389,375) $ - $ - $ - $ - Change in net position After Change in Accounting Principle Governmental activities (2,666,406) 7,741,345 5,109,813 15281,766 9251,927 1,564,059 19,050,590 6,490,585 27,714,823 16,116,748 Business-type activities 6,471,369 5,598,934 4,405,178 14,054,389 9,763,905 9,987,848 11,952,040 12,694,776 15,521,797 7,519,506 Total pnmary government $ 3,804,963 $ 13,340,279 $ 9,514,991 $ 29,336,155 $ 19,015,832 $ 11,551,907 $ 31,002,630 $ 19,185,361 $ 43,236,620 $ 23,636,254 (1)City implemented a City Business and Occupation Tax January 1,2022 Source:City of Auburn,Finance Department 165 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 3 FUND BALANCES, GOVERNMENT FUNDS Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General Fund Nonspendable $127 $127 $127 $0 $30,453 $38,179 $36,097 $47,085 $49,674 57,740 Committed - - - - - - - - - 1,311,450 Assigned 5,892,611 4,045,598 7,284,159 7,160,098 9,315,528 9,375,470 17,118,273 11,257,547 9,204,036 10,801,447 Unassigned 17,751,778 20,914,093 20,267,776 24,991,081 25,414,801 24,627,984 19,068,746 30,634,592 38,646,995 46,001,244 Total General Fund 23,644,516 24,959,818 27,552,062 32,151,179 34,760,782 34,041,633 36,223,116 41,939,224 47,900,705 58,171,881 All other governmental funds Nonspendable 1,536,316 1,574,148 1,585,707 1,666,043 1,717,134 1,775,453 1,826,063 1,925,183 2,010,357 2,165,670 Restricted 13,483,593 14,830,180 17,885,173 25,079,227 28,137,106 28,226,498 32,085,350 30,916,914 36,123,035 39,207,433 Committed 3,242,662 5,066,181 3,658,719 5,421,640 3,223,108 3,079,656 3,172,152 3,910,112 5,283,101 4,219,956 Assigned 4,976,833 4,725,119 4,755,182 1,226,315 1,221,511 2,827,045 2,239,557 1,906,717 1,579,346 1,800,573 Total All Other Governmental Funds $23,239,404 $26,195,628 $27,884,781 $33,393,225 $34,298,859 $35,908,652 $39,323,122 $38,658,926 $44,995,839 $47,393,632 Source:City of Auburn,Finance Department 166 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 4 CHANGES IN FUND BALANCES,GOVERNMENT FUNDS Last Ten Fiscal Years (Modified Accrual Bann of Accouhng) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Revenues Taxes $48,545,041 $ 51,718,489 $56,632,337 $ 58,279,984 $62,425,246 $62,430,346 $64,032,701 $62,638,993 $71,897,684 $77,638,547 Licenses and permits 3,041,948 2,400,662 2,074,432 3,005,125 1,906,796 1,853,554 2,825,404 2,086,579 2,980,103 2,275,480 Intergovernmental 11,854,984 9,379,699 13,620,446 12,714,010 16,187,560 12,234,229 11,137,941 14,734,337 13,771,035 17,286,788 Charges for services 3,891,776 5,717,712 7,321,295 11,563,678 7,117,774 6,471,503 10,467,203 8,670,078 12,437,155 10,499.530 Fines and forfeits 1,441,603 1,258,408 938,775 905,921 882,254 920.187 914,240 635.209 434,042 390.200 Special assessments 40,772 472,800 7,494 4,111 3,835 2,210 2,807 712 591 Investment earnings 144,151 135,709 117,942 279,058 672,713 1,308,888 1.767,742 1,005,175 (187,615) 564,524 Miscellaneous 621,673 1,691,274 1,890,419 1,854,450 1,966,333 1,600,279 2,406,291 774,011 2,227,176 2,016,895 Total revenues 69,581,948 72,774,753 82,603,140 88,606,337 91,162,511 86,821,196 93,554,329 90,545,094 103,560,171 110,671,964 Expenditures General government 7,300,667 7,712,018 8,661,592 8,936,366 9,755,757 9,804,631 12,688,544 11,951,230 13,138,358 14,517,861 Public safety 27,146,590 27,264,294 29,164,772 30,809,069 32,084,376 34,226,582 36,322,025 36,790,348 38,989,056 40,559,737 Transportation 15,119,530 8,979,583 16,323,425 12,607,616 20,652,538 15,512,706 11,641,856 10,102,948 12,831,014 14,535,310 Physical environment 2,855.908 3,086,738 2,991,145 3,309,993 3,359,548 4,128,266 4,372,251 4.339,008 3,985,974 4,321,115 Economic environment 2,692,389 2,783,898 3,066,674 3,324,309 3,880,025 4,314,648 4,699,552 5,587,597 4,240,428 5,037,287 Health and human services 631,997 626,681 925,299 573,115 674,270 787,535 619,247 821,362 2,192,261 1,982,524 Culture and recreation 7,925,325 9,759,110 10,700,680 11,480,488 11,943,070 12,450,884 12.437,720 10,571,483 11,953,562 13,958,960 Capital outlay0( 2,746,599 3,394,886 3,580,304 6,784,343 2,096,281 2,145,994 3,270,129 3,743,808 2,955,695 8,431,192 Debt service. Principal 2,238,181 2,704,468 1,713,940 1,737,569 1,635,126 1,676,777 1,437,533 1,738,594 1,239,178 1,497,942 Interest/other 2,709,768 2,892,281 1,801,109 1,632,786 1,590,525 1,537,504 1,478,169 822,678 847,629 868,442 Total expenditures 71,366,954 69,203,957 78,928,940 81,195,654 87,671,516 86,585,527 88,967,026 86,469,056 92,373,155 105,710,370 Excess of revenues over(under)expenditures (1,785,006) 3,570,796 3,674,200 7,410,683 3,490,995 235,669 4,587,303 4,076,038 11,187,016 4,961,594 Other financing sources(uses) Transfers in 4,776,100 5,309,769 7,100,830 11,121,265 7,050,817 8,205,317 6,477,764 12,216,778 9,703,240 9,848,536 Transfers out (4,450,925) (5,003,448) (6,668,626) (11,182,611) (7,163,278) (7,838,860) (5,646,268) (11,430,226) (9,007.928) (9,156,543) Insurance recoveries 192,898 136,585 153,041 83,737 134,003 288,518 177,154 189,322 416,066 103,473 Issuance of debt 3,044,491 240,366 - 3,128,732 - - - - -Leases - - - - - - - - - 4,685,125 Issuance of refunding bond - - - 38,198 - - - 19,480,000 -Debt Premium - - - - - - - 3,989,749 - - Payment to escrow agent-refunded bore - - - (3,005,000) - - - (23,469,749) - - Sales of capital assets 2,593,405 17,458 21,952 - 2,700 - - - - 2,226,784 Total other financing sources(uses) 6,155,969 700,730 607,197 184,321 24,242 654,975 1,008,650 975,874 1,111,378 7,707,375 Net change in fund balances $ 4,370,963 $ 4,271,526 $ 4,281,397 $ 7,595,004 $ 3,515,237 $ 890,644 $ 5,595,953 $ 5,051,912 $12,298,394 $12,668,969 Debt service as a percentage of noncapital 8 71/ 10 68% 5.50% 5 14% 4 66% 4.38% 3 72% 3 36% 2 58% 2 72 expenditures (1) Capital outlay reported in governmental funds for 2022 are$8,431,192 plus$10,288,383 which is reported for each functional activity with the other funds results in total capital outlay of$18,719,575as reported on the Reconciliation of the Statement of Revenues.Expenditures,and Changes in Fund Balances of Government Funds to the Statement of Activities. Source.City of Auburn,Finance Department 167 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 5 TAX REVENUES BY SOURCE, GOVERNMENT FUNDS Last Ten Fiscal Years Fiscal Sales Interfund City Business & Year Property &Use Utility Utility Excise Occupation(1) Other Total 2013 14,535,673 18,335,157 3,892,250 9,156,636 2,555,850 - 69,475 48,545,041 2014 15,933,338 19,744,684 4,068,667 9,040,015 2,888,797 - 42,988 51,718,489 2015 17,337,108 21,125,730 4,260,831 8,838,179 4,999,517 - 70,972 56,632,337 2016 18,067,324 21,475,335 4,624,951 8,917,401 5,057,013 - 137,960 58,279,984 2017 20,976,384 22,333,454 4,540,265 10,391,462 4,141,146 - 42,535 62,425,246 2018 21,561,924 21,996,115 4,552,505 9,841,620 4,393,134 - 85,048 62,430,346 2019 22,057,841 22,212,601 4,760,229 9,278,114 5,650,339 - 73,577 64,032,701 2020 22,688,696 21,900,597 4,543,436 8,866,275 4,580,114 - 59,875 62,638,993 2021 23,480,894 25,289,050 7,101,829 9,521,243 6,463,047 - 41,621 71,897,684 2022 24,637,908 26,295,124 6,396,937 9,532,991 6,110,151 4,664,551 885 77,638,547 Change 2013-2022 69.5% 43.4% 64.4% 4.1% 139.1% 100.0% -98.7% 59.9% (1) City implemented a City Business and Occupation Tax January 1, 2022. Source: City of Auburn, Finance Department Figure 5: Tax Revenues by Source 2013-2022 $90 $80 $70 4 $60 , I ■City Business 5. I I I -, . . &Occupation $50 , , . ■ ■ ■ ■Excise&Other $40 i , • • OUtility $30 • U Dinterfund I I IUtility $20 •Sales&Use $10 111 111 1 $0 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 168 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 6 ASSESSED VALUE BY TYPE Last Ten Fiscal Years (Amounts Expressed in Thousands) State Total Total Fiscal Property Personal Land and Assessed Direct Year and Other Property Building Value Rate 2013 124,230 745,891 6,098,598 6,968,719 2.10 2014 132,854 880,015 6,409,300 7,422,169 2.17 2015 146,941 911,493 7,308,219 8,366,653 2.08 2016 156,673 958,859 7,851,588 8,967,119 2.05 2017 171,829 957,161 8,592,887 9,721,877 2.20 2018 169,543 918,637 9,611,541 10,699,721 2.03 2019 171,044 733,264 10,585,207 11,489,515 1.92 2020 165,647 832,886 11,381,503 12,380,036 1.82 2021 173,560 602,789 12,592,421 13,368,770 1.77 2022 185,841 666,342 13,839,177 14,691,361 1.66 Source: King County Dept of Assessments & Pierce County Assessor-Treasurer Figure 6: Assessed Value by Type 2013-2022 $14 $12 $10 0 State Property c $8 0 0 Personal Property •Land and Buildings � $6 $4 $2 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 169 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 7 PROPERTY TAX DATA Last Ten Fiscal Years Page 1 of 2 Item 2013 2014 2015 2016 Assessed and estimated actual values (1) Estimated and actual value (in thousands) $ 6,968,719 $ 7,422,169 $ 8,366,653 $ 8,967,119 Assessed value (in thousands) 6,968,719 7,422,169 8,366,653 8,967,119 Ratio of assessed to actual 100% 100% 100% 100% Property tax rates (1) Direct regular and special General fund $ 2.10000 $ 2.16739 $ 2.08085 $ 2.04719 Subtotal 2.10000 2.16739 2.08085 2.04719 Overlapping regular and special (1) Auburn School District $ 6.62190 $ 6.50262 $ 6.14079 $ 5.82831 King County 1.54051 1.51605 1.34522 1.48027 State of Washington 2.56720 2.47044 2.28514 2.16898 Port of Seattle 0.23324 0.21533 0.18885 0.16954 Sound Transit - - - - Emergency Medical Services 0.30000 0.33500 0.30217 0.28235 Hospital District 0.50000 0.50000 0.50000 0.50000 King County Library District 0.56743 0.56175 0.50276 0.47714 Valley Regional Fire Authority 1.20479 1.20294 1.18043 1.13495 King County Flood Zone 0.13210 0.15369 0.13860 0.12980 King County Ferry District 0.00378 0.00349 - - Subtotal 13.67095 13.46131 12.58396 12.17134 Total direct and overlapping $ 15.77095 $ 15.62870 $ 14.66481 $ 14.21853 Sources: (1) King County and Pierce County Departments of Assessments; real and personal property has been assessed at 100% of the estimated actual value. Figure 7a:Ten Years City Property Tax Rates 2013-2022 $3.00 c 0 .Co 2 j $2.50 - v v $2.00 - 0 0 0 v $1.50 - o. $1.00 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 170 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section Page 2 of 2 2017 2018 2019 2020 2021 2022 $ 9,721,877 $ 10,699,721 $ 11,489,516 $ 12,380,036 $ 13,368,770 $ 14,691,361 9,721,877 10,699,721 11,489,516 12,380,036 13,368,770 14,691,361 100% 100% 100% 100% 100% 100% $ 2.19668 $ 2.03239 $ 1.92435 $ 1.81928 $ 1.76739 $ 1.66241 2.19668 2.03239 1.92435 1.81928 1.76739 1.66241 $ 6.74299 $ 6.29971 $ 3.81351 $ 5.19948 $ 5.20244 $ 4.98502 1.38294 1.32735 1.21906 1.23953 1.24688 1.22827 2.03205 2.91820 2.62922 3.02799 3.08823 2.81695 0.15334 0.13518 0.12266 0.11944 0.11984 0.11258 0.25000 0.22745 0.20700 0.19937 0.19709 0.18409 0.26305 0.23940 0.21762 0.26500 0.26499 0.24841 0.50089 0.45689 0.41673 0.40069 0.38511 0.35434 0.45118 0.41190 0.37441 0.36040 0.35733 0.32757 1.06821 0.98189 0.92352 0.86897 1.10439 1.03322 0.11740 0.10708 0.09660 0.09199 0.08909 0.08146 12.96205 13.10505 10.02033 11.77286 12.05539 11.37191 $ 15.15873 $ 15.13744 $ 11.94468 $ 13.59214 $ 13.82278 $ 13.03432 Figure 7b: Property Tax Rates Last Ten Fiscal Years $14.00 0 Sound Transit $12.00 - 0 Hospital District i:ic ■ King County Ferry District m - - ° $10.00 - - 2_ 7 ■ King County Fbod Zone m ~ $8.00 -� i 0 Valley Regional Fire Authority O L a.a - • King County Library District i $6.00 ra • Emergency Medical Services $4.00 Ifil ■ Port of Seattle O State of Washington $2.00 O King County $0.00 ■ Aubum School District 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 171 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 8 PROPERTY TAX LEVIES AND COLLECTIONS Last Ten Fiscal Years Total Tax Collected Within the Collections Fiscal Levy for Fiscal Year of the Levy in Subsequent Total Collections to Date Current Year Year Fiscal Year Amount % of Levy Years Amount % of Levy Levy Balance King County: 2013 12,884,878 12,673,712 98.4% 222,207 $ 12,895,919 100.1% $ (11,041) 2014 14,182,035 13,970,560 98.5% 189,416 14,159,976 99.8% 22,059 2015 15,364,794 15,226,048 99.1% 176,988 15,403,036 100.2% (38,242) 2016 16,057,152 15,897,626 99.0% 194,829 16,092,455 100.2% (35,303) 2017 18,647,980 18,418,844 98.8% 218,676 18,637,520 99.9% 10,460 2018 19,097,241 18,872,111 98.8% 212,007 19,084,118 99.9% 13,123 2019 19,542,746 19,298,789 98.8% 221,215 19,520,004 99.9% 22,742 2020 20,041,417 19,775,977 98.7% 220,110 19,996,087 99.8% 45,329 2021 20,702,997 20,480,037 98.9% 154,118 20,634,155 99.7% 68,842 2022 21,731,904 21,449,439 98.7% - 21,449,439 98.7% 282,465 $ 380,434 Pierce County: 2013 1,484,398 1,471,129 99.1% 13,269 $ 1,484,398 100.0% $ 0 2014 1,595,675 1,586,010 99.4% 9,665 1,595,675 100.0% 0 2015 1,746,163 1,738,447 99.6% 7,716 1,746,163 100.0% (0) 2016 1,867,636 1,857,614 99.5% 10,022 1,867,636 100.0% (0) 2017 2,237,907 2,229,137 99.6% 8,770 2,237,907 100.0% (0) 2018 2,320,452 2,312,378 99.7% 8,073 2,320,452 100.0% 0 2019 2,389,591 2,383,037 99.7% 6,553 2,389,591 100.0% 0 2020 2,434,937 2,433,602 99.9% 1,172 2,434,774 100.0% 162 2021 2,515,397 2,505,423 99.6% 8,232 2,513,655 99.9% 1,742 2022 2,627,703 2,615,456 99.5% - 2,615,456 99.5% 12,247 $ 14,151 Total current levy balance $ 394,586 Source: King County Finance and Business Operations Division Pierce County Budget and Finance Department FIGURE 8:TEN YEARS COLLECTION OF LEVIED PROPERTY TAXES Last Ten Fiscal Years 100.5% 100.0% Collection 99.5% percentage within the fiscal 99.0% year of the levy 98.5% 47 }Total collection 98.0% percentage 97.5% 97.0% I I I I I I I I I 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 172 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 9a PRINCIPAL TAXPAYERS-PROPERTY TAXES Current Year and Ten Years Ago 2022 2013 Percentage Percentage of Total City of Total City Assessed Taxable Assessed Taxable Taxpayer Value Rank Assessed Value Value Rank Assessed Value BOEING $ 343.698.553 1 2.34% $ 470.247.997 1 6.75 EPROPERTY TAX 198,647,800 2 1.35% 75,920,115 3 1.09 SAFEWAY INC C/O COMP PROPER 195,649,210 3 1.33% 43,600,200 8 0.63.10 PPF INDUSTRIAL 180,506,900 4 1.23% 72,076,400 4 1.030/0 USPP VALLEY CENTRE CORPORAT 157,640,800 5 1.07% N/A N/A C/O PROLOGIS- RE TAX 118,633,500 6 0.81% N/A N/A GLIMCHER REALTY 113,853,000 7 0.77% 87,826,065 2 1.26 MARVIN F POER AND COMPANY 101,429,400 8 0.69% N/A N/A LIT INDUSTRIAL 68,768,200 9 1.35% N/A N/A HARSCH INVEST 62.020.500 10 0.42% N/A N/A Puget Sound Energy N/A 63,758,052 5 0.91 Muckleshoot Indian Tribe N/A 56,321,200 6 0.810/0 Belara Communities LLC N/A 48,145.500 7 0.690/0 Four Lakes Apartments LLC N/A 27,466.500 9 0.390/0 Wal-Mart Property N/A 26,724,119 10 0.380/0 TOTALS $ 1,540,847,863 11.37% $ 972,086,148 13.95 Source: King County and Pierce County Departments of Assessments Total assessed value for 2022: $ 14,691,361,482 Total assessed value for 2013: $ 6,968,719,333 FIGURE 9a-1:TOP TAXPAYER ASSESSED VALUE AS A F IGURE 9a-2:TOP 10 TAXPAYERS ASSESSED VALUE AS A PERCENTAGE OF TOTAL ASSESSED VALUE PERCENTAGE OF TOTAL ASSESSED VALUE Current Year and Ten Years Ago Current Year and Ten Years Ago 25% 25% 20% 20% 15% 15% 10% 10% 5% ] 5% 0% - 0% 2022 2013 2022 2013 City of Auburn,Washington SCHEDULE 9b PRINCIPAL TAXPAYERS-SALES TAXES Current Year and Ten Years Ago 2022 2013 Percentage Percentage Sales of Total City Sales of Total City Tax Sales Taxes Tax Sales Taxes Received Sector(1) Rank Received Received Sector(1) Rank Received $ 787,445 Automotive 1 3.5% $ 449,062 General Retail 1 3.1% 533,029 Retail Trade 2 2.4% 362,413 Automotive 2 2.5% 513,759 Automotive 3 2.3% 359,830 Automotive 3 2.5% 468,761 Retail Trade 4 2.1% 324,812 Transportation Manufacturing 4 2.3% 407,259 Automotive 5 1.8% 286,488 Automotive 5 2.0% 367,117 Automotive 6 1.6% 269,068 Automotive 6 1.9% 362,121 Retail Trade 7 1.6% 230,690 Bldg.Material&Garden 7 1.6% 334,664 Construction 8 1.5% 228,864 General Retail 8 1.6% 330,909 Transportation 9 1.5% 219,474 Automotive 9 1.5% 328,525 Miscellaneous 10 1.4% 206,562 Automotive 10 1.4% $ 4,433,589 19.6% $ 2,937,263 20.4% Source: Washington State Department of Revenue (1)It is illegal to disclose specific taxpayer sales tax information,so the above information is being provided without identification. 173 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 10 RETAIL TAX COLLECTIONS BY SECTOR Last Ten Fiscal Years (Amounts Expressed in Thousands) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 RETAIL TRADE SECTOR Automotive/gas $ 3,136 $ 3,309 $ 3,707 $ 3,659 $ 3,972 $ 4,122 $ 4,069 $ 3,827 $ 4,555 $ 4,780 Furniture 235 254 254 185 197 210 222 209 290 440 Electronics&appliances 174 237 295 221 211 229 277 300 344 190 Building materials 447 502 590 579 580 576 652 751 803 789 Food stores 335 353 368 397 369 388 406 451 487 565 Health&personal care 174 188 221 284 369 420 426 348 391 406 Apparel 889 1,009 1,080 1,136 1,119 1,170 1,236 873 1,123 1,137 General merchandise 974 955 988 1,018 993 221 818 878 917 1,026 Misc.retail trade 990 1,182 1,193 1,032 1,033 1,827 1,399 1,689 2,107 2,100 Subtotal-Retail Trade 7,354 7,989 8,695 8,512 8,843 9,163 9,506 9,327 11,017 11,433 SERVICE SECTOR Information $ 446 $ 487 $ 526 $ 630 $ 662 $ 638 $ 668 $ 685 $ 760 $ 848 Finance&insurance 91 88 95 111 122 140 138 178 158 197 Real estate,rental,leasing 279 315 334 359 368 368 434 369 449 463 Professional,scientific,technical 184 216 195 238 239 254 344 394 482 514 Administrative,supply&remediation services 336 350 383 329 276 424 524 652 792 785 Educational 50 49 60 50 56 47 46 40 44 47 Healthcare&social services 33 66 82 92 75 93 93 111 99 120 Arts&entertainment 149 158 208 156 110 119 120 50 74 126 Accommodation&food service 979 1,067 1,159 1,218 1,276 1,435 1,469 1,205 1,429 1,528 Other services 507 526 603 788 728 711 609 537 637 767 Subtotal-Services 3,054 3,322 3,646 3,970 3,912 4,229 4,445 4,220 4,924 5,395 OTHER SECTORS Construction $ 1,943 $ 1,754 $ 2,297 $ 2,292 $ 2,632 $ 2,310 $ 2,193 $ 3,068 $ 3,034 $ 2,828 Manufacturing 624 1,163 862 761 678 754 821 390 501 749 Transportation 46 71 66 99 89 120 89 197 373 249 Wholesaling 1,279 1,205 1,229 1,265 1,363 1,469 1,496 1,346 1,424 1,578 Other business 64 120 72 67 65 154 265 308 410 428 Subtotal-Other 3,956 4,312 4,525 4,485 4,827 4,807 4,863 5,309 5,742 5,833 GRAND TOTAL $14,364 $ 15,623 $ 16,866 $ 16,967 $17,582 $ 18,198 $18,814 $18,856 $ 21,683 $ 22,661 OVERLAPPING SALES TAX RATES Basic sales tax rates City of Auburn 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% 0.85% Washington State 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% 6.50% King County 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% Regional Transit Authority 0.90% 0.90% 0.90% 0.90% 0.90% 1.40% 1.40% 1.40% 1.50% 1.50% Metro 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% 0.90% Criminal Justice 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% 0.10% Total basic sales tax rate 9.50% 9.50% 9.50% 9.50% 9.50% 10.00% 10.00% 10.00% 10.10% 10.10% Special sales tax rates Restaurants-for stadium funding(I) 0.50% 0.00% 0.00% 0.00% O.00% 0.00% 0.00% 0.00% 0.000/0 0.00% Motor vehicles 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% 0.30% (1)This tax expired on October 1,2011 Source: City of Auburn Finance Department and State of Washington FIGURE 10: RETAIL TAX COLLECTIONS City of Auburn:2013-2022 $22 $20 - -S $18 = ■ Other $16 = = MI O Wholesaling o $14 ■ — • Manufacturing $12 =.= — — 0 Construction $10 .-,-,- -IIO Services $8 ■ Other Retail $6 ■ Automotive $2 I - — — $0 .`. 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 174 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 11 RATIOS OF OUTSTANDING DEBT BY TYPE Last Ten Fiscal Years Governmental Activities Business-type Activities General Public Works Public Works Total Percentage Fiscal Obligation Trust Fund Capital Lease Revenue Trust Fund Primary of Personal Per Year Bonds Loans Leases Liability Bonds Loans Government(2) Income(1) Capita 2013 $59,568,505 $ 4,239,813 $ 480,771 - $ 34,292,569 $ 8,203,090 $106,784,748 5.57% $1,458.11 2014 57,367,766 4,284,173 435,068 - 32,813,473 7,524,538 102,425,018 5.12% 1,372.44 2015 55,094,519 4,086,797 569,773 - 31,304,378 7,563,847 98,619,314 4.85% 1,305.44 2016 54,245,944 3,889,421 476,635 - 28,545,000 7,522,767 94,679,767 4.48% 1,228.65 2017 50,766,661 3,692,045 382,914 - 28,161,699 6,702,388 89,705,707 4.07% 1,136.09 2018 48,427,873 3,494,669 282,461 - 26,523,113 5,866,029 84,594,145 3.58% 1,049.36 2019 42,703,404 3,297,294 173,692 - 24,829,528 4,967,012 75,970,930 2.98% 929.65 2020 41,060,378 3,099,918 - - 37,460,053 4,351,217 85,971,566 3.10% 1,049.20 2021 39,156,176 2,902,542 - - 35,131,084 3,584,955 80,774,757 2.60% 917.06 2022 21,296,047 2,705,166 - 4,668,739 32,722,115 3,045,779 64,437,846 1.96% 726.06 Sources: City of Auburn,Finance Department (1)Personal income data provided by US Census Bureau estimate for 2013. other years are city estimates (2)Excludes compensated absences FIGURE 11: PER CAPITA DEBT Last Ten Fiscal Years 1,500 ,+--__ 1,200 900 600 - 300 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 175 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 12 COMPUTATION OF LEGAL DEBT MARGIN As of December 31, 2022 General Capacity Special Purpose Capacity Parks and Utility Total Councilmanic Excess Levy Open Spaces Purpose Capacity December 31,2022 - Total Assessed Value: $ 17,563,516,672 2.5% of Assessed Value $ - $ 439,087,917 $ 439,087,917 $ 439,087,917 $ 1,317,263,751 1.5% of Assessed Value 263,452,750 (263,452,750) - - - Statutory Debt Limit 263,452,750 175,635,167 439,087,917 439,087,917 1,317,263,751 Debt Outstanding 36,525,340 - - - 36,525,340 Net Debt Outstanding 36,525,340 - - - 36,525,340 Remaining Debt Capacity $226,927,410 $ 175,635,167 $ 439,087,917 $ 439,087,917 $ 1,280,738,411 City of Auburn,Washington SCHEDULE 13 LEGAL DEBT MARGIN RATIOS Last Ten Fiscal Years (Expressed in Thousands) 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Debt Limit $546,602 $617,872 $ 661,996 $ 716,628 $ 791,936 $ 854,513 $923,770 $990,892 $ 1,078,980 $ 1,317,264 Total net debt applicable to limit 64,047 61,892 59,409 57,152 54,208 52,097 46,115 40,356 38,474 36,525 Legal debt margin $482,554 $555,980 $602,588 $659,476 $737,728 $ 802,416 $877,655 $950,535 $ 1,040,505 $ 1,280,738 Total net debt applicable to the limit as a percentage of debt limit 11.72% 10.02% 8.97% 7.98% 6.85% 6.10% 4.99% 4.07% 3.57% 2.77% 176 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 14 COMPUTATION OF NET DIRECT AND ESTIMATED OVERLAPPING DEBT As of December 31, 2022 Net Debt Percent Bonded Amount Outstanding Applicable(3) Applicable Net direct debt: Net direct debt- City of Auburn (1) $ 24,001,213 Estimated net overlapping debt: (2) King County $ 571,505,000 1.78% $ 10,172,789 Port of Seattle 336,890,000 1.78% 5,996,642 School District No. 210(4) 521,914,000 55.33% 288,775,016 School District No. 408 455,600,000 80.27% 365,710,120 School District No. 415 203,156,000 1.72% 3,494,283 Rural Library District 30,415,000 2.90% 882,035 Valley Regional Fire Authority 6,890,000 89.01% 6,132,789 Pierce County 102,915,000 0.83% 854,195 Total estimated net overlapping debt 682,017,869 Total direct and overlapping debt $ 706,019,082 Sources: (1) Includes both bonded and non bonded debt related to government activities. From Sch. 7 Changes in LT Liabilities (2) Overlapping governments (3) King County Assessors office and Pierce County Assessors office. (4) School District No. 210 overlapping debt is as of 8/31/2022. Calculation of overlapping debt: applicable percentage is determined by the ratio of assessed valuation of taxable property in overlapping unit to valuation of property subject to taxation in the City of Auburn. 177 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 15 RATIOS OF NET GENERAL BONDED DEBT TO ASSESSED VALUE AND GROSS BONDED DEBT PER CAPITA Last Ten Fiscal Years Ratio of Net Net Bonded Net Assessed Net Bonded Debt to Bonded Fiscal Value (I) Bonded Debt Assessed Debt per Year Population (Thousands) Debt (2) (Thousands) Value Capita 2013 73,235 $ 6,968,719 $ 59,568,505 $ 59,569 0.85% $ 813 2014 74,630 7,422,169 57,367,766 57,368 0.77% 769 2015 75,545 8,366,653 55,094,519 55,095 0.66% 729 2016 77,060 8,967,119 54,245,944 54,246 0.60% 704 2017 78,960 9,721,877 50,766,661 50,767 0.52% 643 2018 80,615 10,699,721 48,427,873 48,428 0.45% 601 2019 81,720 11,489,516 42,703,404 42,703 0.37% 523 2020 81,940 12,380,036 41,060,378 41,060 0.33% 501 2021 88,080 13,368,770 39,156,176 39,156 0.29% 445 2022 88,750 14,691,361 21,296,047 21,296 0.14% 240 Notes: (1) From Schedule 7 (2) General Obligation Debt related to government activities, from Schedule 11. FIGURE 15: BONDED DEBT RATIOS Last Ten Fiscal Years 0.0100 $1,000 0.0080 $800 (11 > 0.0060 $600 0.0040 $400 0 0.0020 $200 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Year Debt/AV t Debt/Pop 178 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 16 PLEDGED REVENUE BOND COVERAGES Last Ten Fiscal Years Direct(2) Debt Service Requirements Gross (1) Operating Net Revenue Times Year Revenue Expense Available Principal Interest Total (3) Coverage 2013 $42,406,722 $ 36,406,640 $ 6,000,082 $ 1,028,830 $ 1,277,285 $ 2,306,115 2.60 2014 46,900,016 35,502,812 11,397,204 1,943,830 1,508,405 3,452,235 3.30 2015 49,673,159 38,425,799 11,247,360 2,197,667 1,599,347 3,797,014 2.96 2016 50,385,548 38,614,719 11,770,829 2,231,093 1,563,433 3,794,526 3.10 2017 51,771,171 38,726,814 13,044,357 2,326,117 1,523,830 3,849,947 3.39 2018 53,103,312 39,020,666 14,082,646 2,422,369 1,494,706 3,917,075 3.60 2019 53,910,487 39,330,641 14,579,846 2,482,692 1,391,468 3,874,160 3.76 2020 51,149,771 38,530,032 12,619,739 2,553,276 1,334,334 3,887,610 3.25 2021 54,013,161 41,094,457 12,918,704 2,626,262 1,450,352 4,076,614 3.17 2022 57,526,616 42,612,259 14,914,357 2,479,176 1,363,783 3,842,959 3.88 Source: City of Auburn, Finance Department (1) Includes water, sewer&storm drainage operating, interest and other revenues. (2) Includes water, sewer&storm drainage operating expenses less depreciation. (3) Includes both parity and non-parity debt. FIGURE 16: UTILITY BOND COVERAGES Last Ten Fiscal Years $16 $14 s -* / $12 $10 u c $8 0 $6 $4 iu a a- _ —N i N —111 $2 $0 , 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 YEAR • Net revenue available Debt service requirements 179 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 17 POPULATION, INCOME AND HOUSING TRENDS Last Ten Fiscal Years Item 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 School enrollment(') 14,971 15,277 15,663 15,945 16,525 16,949 17,300 16,702 16,880 17,640 Rate of unemployment(�) 6.0% 5.4% 4.9% 4.4% 4.4% 4.2% 3.5% 9.5% 6.4% 3.9% Population(3) 73,235 74,630 75,545 77,060 78,960 80,615 81,720 81,940 88,080 88,750 Personal income(thousands of dollars)(4) $1,917,219 $2,000,606 $2,033,520 $ 2,111,829 $2,206,142 $2,365,567 $2,552,034 $2,769,162 $3,108,167 $3,284,283 Per capita personal income(4) $ 26,179 $ 26,807 $ 26,918 $ 27,405 $ 27,940 $ 29,344 $ 31,229 $ 33,795 $ 35,288 $ 37,006 Housing units(5) One unit 15,393 15,804 16,042 16,167 16,373 16,616 16,674 17,046 17,128 17,185 Two or more 10,841 10,841 10,847 10,854 11,110 11,417 12,008 12,230 12,532 12,738 Mobile home or special 2,630 2,631 2,637 2,630 2,675 2,659 2,663 2,671 2,674 2,676 Total housing units 28,864 29,276 29,526 29,651 30,158 30,692 31,345 31,947 32,334 32,599 Sources: (1)Auburn School District No.408 (2)Bureau of Labor Statistics(BLS) (3)WA State Office of Financial Management (4)US Census Bureau (5)WA State Office of Financial Management FIGURE 17: POPULATION AND HOUSING TRENDS Last Ten Fiscal Years 100,000 80,000 4 .... A A A ��A 60,000 40,000 4 t ! t + 4 4 $ 20,000 0 I I I I I I I I I 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 -A-Population I Total housing units 180 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 18 MAJOR EMPLOYERS Current Year and Ten Years Ago 2022 2013 Percentage Percentage of Total City of Total City Employer Product/service Employees Rank Employment Employees Rank Employment The Boeing Company Aerospace 3,600 1 8.8% 6,016 1 16.8% Auburn School District Education 2,536 2 6.2% 1,902 3 5.3% Muckleshoot Indian Tribe Gaming 1,472 3 3.6% 1,632 4 4.6% Multicare Auburn Medical Center** Hospital 1,208 4 3.0% 955 6 2.7% Green River Community College Education 857 5 2.1% 1,000 5 2.8% Safeway Distribution Center Distribution 800 6 2.0% 638 9 1.8% Costco Wholesale/Optical#190 Distribution 782 7 1.9% - City of Auburn City government 574 8 1.4% - Ply Gem Pacific Windows Corp. Manufacturing 550 9 1.3% - Walmart#2385 Retail 336 10 0.8% - Social Security Administration Gov't/Public offices 620 10 l.7% Zones, LLC Technology Retailer 644 8 1.8% Emerald Downs Racetrack Horse Racing 725 7 2.0% The Outlet Collection Retail 2,500 2 7.0% Totals 12,715 31.2% 16,632 46.5% 2022 - City of Auburn, Economic Development 2013 -City of Auburn ACFR Previously the Supermall. °°Previously Auburn Regional Medical Center. FIGURE 18a:AUBURN EMPLOYMENT BASE FIGURE 18b:AUBURN EMPLOYMENT BASE PERCENTAGE PERCENTAGE O F TOP EMPLOYER COMPARED TO ALL OF TOP 10 EMPLOYERS C OMPARED TO ALL EMPLOYERS EMPLOYERS Last Ten Fiscal Years Last Ten Fiscal Years 100% 100% - 80% 80% 60% 60% ■Top employer 7 ■Top 10 employers 1 40% OAII employers 40% D AlI employers 20% 20% 0% 2013 2022 0% 2013 2022 181 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 19 STAFFING LEVELS BY DEPARTMENT Last Ten Fiscal Years Department 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Mayor 7 3 3 3 3 3 3 4 5 6 Administration (1) - 8 8 10 11 12 8 7 5 5 Human Resources 8 8 8 9 8 8 8 9 8 8 Finance 23 23 22 22 22 22 24 24 25 26 Legal 13 14 14 14 15 15 16 16 21 21 Community Development 29 25 26 26 26 25 32 31 32 33 Police 125 126 129 131 138 140 140 140 139 139 Public Works 48 49 50 53 54 55 55 55 55 55 Parks, Arts and Recreation (2) 36 45 45 47 47 47 49 48 48 48 Street 19 19 19 19 20 20 21 21 21 23 Water 22 24 23 23 23 23 23 23 23 24 Sewer 10 10 10 10 10 10 10 10 10 10 Storm Drainage 10 10 10 10 10 12 12 12 12 12 Solid Waste 2 2 2 2 2 2 - - - - Airport (3) - - - - - 3 3 3 3 3 Cemetery 5 5 5 6 6 6 6 6 6 7 Golf Course (2) 8 - - - - - - - - - Facilities 9 9 10 10 10 10 11 11 11 11 Multimedia (4) - 4 4 4 4 4 4 4 4 4 Innovation &Technology 18 15 16 16 17 17 18 18 18 18 Equipment Rental 10 12 12 12 12 12 12 12 13 13 TOTAL 402 411 416 427 438 446 454 453 459 466 Source: City of Auburn Finance Department (1) The Administration Department was created in 2014. These FTEs were reorganized from several existing departments such as the Mayors Department, Public Works and Community Development. This department primarily consists of Emergency Management, Economic Development and Public Affairs. (2) In 2014 the Golf Course Fund was reclassified from an Enterprise Fund and is now included in the General Fund. This change moved 8 FTEs from the Golf Course Fund to the Parks, Arts and Recreation Department. (3) In 2018, 3.0 FTEs were added to the Airport and the Airport is now managed in-house. (4) In 2014 the Multimedia Division was reorganized from the Innovation &Technology Fund into its'own Internal Service Fund. The 3.6 FTEs report to the Director of Administration. In 2021,the Multimedia Assistant position was increased from 0.6 FTE to 0.75 FTE. FIGURE 19:STAFFING LEVELS BY TYPE OF SERVICE Last Ten Fiscal Years 160 140 120 ,� ■2013 0 02014 Ti W la' 12015 J 15 l 80 11—J ❑2016 7 •2017 z 60 0201820 ❑ 19 1E2020 ___] ❑2021 2C lIlII]I I I IT 1ICA ©2022 Police Public Parks,Arts& Utilities Administration Community Other Works/Streets Recreation Development 182 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 20 OPERATING INDICATORS BY DEPARTMENT Last Ten Fiscal Years 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Planning* Commercial permits 394 389 386 410 320 322 338 270 278 232 Commercial construction value($1,000's) $138,248 $ 60,732 $ 66,223 $151,220 $ 74,840 $ 72,623 $ 157,026 $ 93,920 $ 101,169 $ 75,544 Residential permits 576 463 340 426 345 210 195 202 232 289 Residential construction value($1,000's) $ 97,151 $ 84,539 $ 63,370 $ 73,679 $ 52,750 $ 25,790 $ 18,832 $ 32,630 $ 37,018 $ 34,235 Police Crimes: Arson 14 32 - - 19 20 22 19 16 32 Aggravated Assault 145 156 186 179 198 158 171 208 184 252 Burglary 651 810 851 727 722 615 547 587 611 828 DUI 138 126 188 158 194 223 180 186 159 111 Homicide 5 1 8 6 3 1 5 6 5 13 Narcotics 279 458 511 458 742 912 797 770 231 133 Rape 26 31 31 36 49 42 45 32 47 42 Robbery 109 104 91 98 117 115 125 125 136 127 Theft 2,583 3,192 2,728 2,235 2,169 2,945 2,223 2,922 3,269 3,566 Theft-motor vehicle 678 630 996 756 692 637 580 697 902 1,205 Traffic: Non-criminal 5,378 6,520 5,489 5,926 5,074 5,573 4,372 3,421 3,411 2,044 Parking 2,052 5,238 3,737 3,822 3,777 3,477 4,425 2,990 3,013 2,928 Parks and Recreation Athletic teams 382 358 321 328 306 312 315 15 158 259 Recreation activities 3,568 3,557 3,511 2,435 3,389 3,498 3,520 1,169 1,828 2,297 Golf course rounds 47,480 47,697 52,718 48,803 47,001 50,720 51,860 51,684 61,771 57,517 Senior center visits 36,991 40,715 38,485 36,636 35,454 32,464 77,378 35,417 35,133 31,593 Cultural activities 180 202 204 203 214 211 229 86 163 165 Museum audience served 14,163 13,968 13,535 14,380 13,570 15,153 14,638 3,463 6,441 5,061 Cemetery placements 226 250 237 281 264 263 253 273 353 331 Sources: Various city departments *Includes the following permit types: Building,addition,tenant improvements,alterations and sign permits. 183 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn, Washington SCHEDULE 21 CAPITAL ASSET INDICATORS BY DEPARTMENT Last Ten Fiscal Years 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 General City Total area (square miles) 30 30 30 30 30 30 30 30 30 30 Public Works Miles of streets 245 244 254 238 238 247 248 245 247 247 Number of streetlights(1) 6,110 6,211 6,362 6,552 6,581 6,738 3,429 3,526 3,589 3,628 Number of traffic signals 94 94 95 95 95 95 94 95 96 96 Utilities Number of services 14,106 14,573 14,787 14,872 14,746 14,769 14,781 14,909 15,021 15,107 Miles of water lines(1) 315 316 320 321 323 347 283 287 288 290 Miles of sanitary sewer lines n] 220 220 223 224 225 227 206 209 209 210 Miles of storm lines(1) 263 282 294 319 337 362 234 240 244 246 Number of fire hydrants(1) 3,329 3,559 3,580 3,577 3,595 3,664 3,014 3,115 3,132 3,171 Public Safety Number of police stations 2 2 2 3 3 3 3 4 4 3 Parks and Recreation Total park acreage(2) 635 972 977 988.7 986 986 986 986 986 986 Number of softball/baseball fields 17 18 18 18 18 18 18 18 18 18 Number of soccer/football fields 4 4 4 4 4 4 4 4 4 4 Number of playgrounds 36 28 31 31 30 30 30 30 30 30 Sources: Various city departments (1)This statistic has declined because it now represents City owned asset only effective in 2019. (2)The increase in total park acreage since 2013 is due to property inventory update in anticipation of the Parks Recreation &Open Space Plan update and additional park categories are now being reported. 184 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section City of Auburn,Washington SCHEDULE 22 NUMBER OF UTILITY CUSTOMERS BY CUSTOMER CLASS Last Ten Fiscal Years 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Water Customers by Class Single Family Residential 11,476 11,822 11,973 12,054 12,010 12,010 12,028 12,078 12,132 12,162 Multifamily 986 1,000 1,003 1,002 1,009 1,012 1,010 1,023 1,027 1,027 Commercial 1,094 1,146 1,190 1,186 1,158 1,159 1,163 1,168 1,170 1,171 Mfr./Industrial 37 38 38 37 2 2 2 2 2 2 Schools 37 37 37 38 37 37 37 37 37 38 City Accounts 28 30 30 31 31 30 30 31 31 31 Irrigation 441 493 509 517 492 512 505 564 616 670 Total Retail Water Customers 14,099 14,566 14,780 14,865 14,739 14,762 14,775 14,903 15,015 15,101 Wholesale Water Customers 7 7 7 7 7 7 7 6 6 6 Sewer Customers by Class Single Family Residential 11,982 12,631 12,890 13,091 13,124 13,176 13,234 13,319 13,368 13,411 Non-single Family Residential 2,659 2,713 2,728 2,725 2,724 2,728 2,731 2,749 2,758 2,761 Total Sewer Customers 14,641 15,344 15,618 15,816 15,848 15,904 15,965 16,068 16,126 16,172 Storm Customers by Class Single Family Residential 15,618 16,013 16,222 16,200 16,566 16,610 16,665 16,723 16,820 16,867 Non-single Family Residential 1,640 1,670 1,679 1,913 1,671 1,691 1,696 1,702 1,753 1,759 Total Storm Customers 17,258 17,683 17,901 18,113 18,237 18,301 18,361 18,425 18,573 18,626 Sources: City of Auburn- Utility Billing 185 City of Auburn: 2022 Annual Comprehensive Financial Report Statistical Section CITY OF AUBURN WASHINGTON 186