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FY2016 Audit Report City    City of Blair, Nebraska FINANCIAL STATEMENTS INDEPENDENT ACCOUNTANT’S REPORT For the year ended September 30, 2016 - 1 -   TABLE OF CONTENTS Page INDEPENDENT ACCOUNTANT’S REPORT 3 - 5 MANAGEMENT’S DISCUSSION AND ANALYSIS 6 - 17 BASIC FINANCIAL STATEMENTS Statement of financial position - Government-wide 18 – 19 Statement of activities - Government-wide 20 Balance sheet - Governmental funds 21 Reconciliation of the balance sheet of governmental funds to the statement of net position 22 Statement of revenues, expenditures, and changes in fund balances - Governmental funds 23 Reconciliation of the statement of revenues, expenditures and changes in fund balances of governmental funds to the statement of activities 24 Statement of net position - Proprietary funds 25 Statement of revenues, expenses, and changes in net position - Proprietary funds 26 Statement of cash flows - Proprietary funds 27 - 28 Statement of net position - Fiduciary funds 29 Statement of changes in fiduciary net position – Fiduciary funds 30 NOTES TO FINANCIAL STATEMENTS 31 - 55 REQUIRED SUPPLEMENTAL INFORMATION Budgetary comparison schedule - General fund 57 - 58 Budgetary comparison schedule - General fund revenues 59 - 2 -   TABLE OF CONTENTS – CONTINUED Page REQUIRED SUPPLEMENTAL INFORMATION - CONTINUED Budgetary comparison schedule - Street fund 60 - 61 Budgetary comparison schedule - Keno fund 62 SUPPLEMENTAL INFORMATION Individual fund balance sheet – Economic development fund, a fund Within the General fund 64 Individual fund statement of revenues, expenditures, and changes in Fund balance – Economic development fund, a fund Within the General fund 65 Combining balance sheet – General fund 66 Combining statement of revenues, expenditures, and changes in 67 Fund balance – general fund Schedule of Expenditures of Federal Awards 68 Notes to Schedule of Expenditures of Federal Awards 69 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS 70 - 71 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB THE UNIFORM GUIDANCE 72 - 74 SCHEDULE OF FINDINGS AND QUESTIONED COSTS 75 - 76 SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS 77 INDEPENDENT AUDITOR’S REPORT To the City Council City of Blair, Nebraska Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, and each major fund of the City of Blair, Nebraska, as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. www.hayes-cpa.comWestroads Pointe | 1015 N. 98th St., Suite 200 | Omaha, NE 68114 | T 402-390-2480 Omni Center | 300 West Broadway, Suite 224 | Council Bluffs, IA 51503 | T 712-322-5503 - 4 - An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, and each major fund of the City of Blair, Nebraska, as of September 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and budgetary comparison information on pages 6 - 17 and 57 - 62 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Blair, Nebraska’s basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. - 5 - The combining and individual non-major fund financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated February 3, 2017, on our consideration of the City of Blair, Nebraska’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Blair, Nebraska’s internal control over financial reporting and compliance. Hayes & Associates, L.L.C. Omaha, Nebraska February 3, 2017 City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 6 - The discussion and analysis of the City of Blair’s financial performance provides an overview and analysis of the City’s financial activities for the fiscal year ended September 30, 2016. It should be read in conjunction with the accompanying basic financial statements. FINANCIAL HIGHLIGHTS  The assets of the City of Blair exceeded its liabilities at the close of the fiscal year ending September 30, 2016, by $48.4 million (net position). Of this amount, $11.8 million (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors.  The City of Blair’s total net position increased by $4.1 million for the year ended September 30, 2016. This was the result of several projects being completed with grants, sales tax revenue, and/or short term warrant funding.  As of September 30, 2016, the City of Blair’s governmental funds reported combined ending fund balances of $3.9 million, a decrease of $1.95 million in comparison with the prior fiscal year.  The fund balances for the General Fund increased $510,404 for the fiscal year ended September 30, 2016. The Debt Service Fund increased $133,841 primarily due to collection of delinquent assessments, and transfer of sales tax. The Street Fund decreased $2.62 million during the same period primarily due to new projects funded by Sales tax and grants and a $3.5 million prior period adjustment. See Note M.  The City’s total debt decreased by $1.1 million during the current fiscal year. The City issued new debt of $5.7 million during the current year and continued to make debt payments this year totaling $6.8 million. The decrease was primarily due to the normal payment of scheduled bond payments. OVERVIEW OF FINANCIAL STATEMENTS The discussion and analysis serves as an introduction to the City of Blair’s basic financial statements. The City of Blair’s basic financial statements are comprised of three components, government-wide financial statements, fund financial statements, and notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 7 - Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Blair’s finances in a manner similar to a private-sector business. The statement of financial position presents information on all of the City of Blair’s assets, deferred outflows, liabilities, and deferred inflows with the difference between them reported as net position. Over time, increases or decrease in net position may serve as a useful indicator of whether the financial position of the City of Blair is improving or deteriorating. The statement of financial position combines and consolidates governmental funds’ current financial resources (short-term spendable resources) with capital assets and long-term obligations. Other nonfinancial factors should also be taken into consideration, such as changes in the City’s property tax base and the condition of the City’s infrastructure (i.e. roads, drainage improvements, storm and sewer lines, etc.), to assess the overall health or financial condition of the City. The statement of activities presents information showing how expenses are taken into account regardless of when cash is received or paid. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes). Both the statement of financial position and the statement of activities are prepared utilizing the accrual basis of accounting as opposed to the modified accrual basis. In the statement of financial position and the statement of activities, the City is divided into two kinds of activities, with the third activity (fiduciary) not included in the government-wide totals:  Governmental Activities - Most of the City’s basic services are reported here, including the police, streets, fire, library, planning and development, parks and recreation, and general administration. Property taxes, sales taxes, and state allocations finance most of these activities.  Business type Activities - The City charges a fee to customers to help it cover all or most of the cost of certain services it provides. The City’s water and sewer system are reported here.  Fiduciary Activities - The City accounts for Agency Funds for TIF District #1 Project which are held in restriction to pay the costs of the District. TIF District #1 bonds are held by the developer and do not carry the full faith and credit of the City. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 8 - Reporting the City’s Most Significant Funds Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by state laws and by bond covenants. However, the City also establishes many other funds to help it control and manage money for particular purposes or to show that it is meeting legal responsibilities for using certain taxes, grant and other money. The City’s three kinds of fund financial statements – governmental, proprietary and fiduciary - utilize different accounting approaches.  Governmental funds - The majority of the City’s basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for spending. These funds are reported using an accounting method identified as the modified accrual basis of accounting, which measures cash and all other financial assets that can readily be converted into cash. The governmental fund statements provide a detailed short-term view of the City’s general governmental operations and the basic services it provides. Governmental fund information helps determine whether there are more or less financial resources that can be spent in the near future to finance the City’s programs. By comparing information presented for governmental funds with similar information presented for governmental activities in the government-wide statements, readers may better understand the long- term effect of the government’s near term financing decisions. The relationships of differences between governmental activities (reported in the statement of financial position and the statement of activities) and governmental funds are detailed in a reconciliation following the fund financial statements. The City of Blair maintains five individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the general fund, debt service fund, street fund, keno fund and capital projects fund, all of which are reported as major funds. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 9 - Fund Financial Statements - Continued  Proprietary funds - The City charges customers for the services it provides, whether to outside customers or to other units within the City. These services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the statement of net position and the statement of activities. In fact, the City’s enterprise funds (a component of proprietary funds) are identical to the business-type activities that are reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The City of Blair maintains two individual enterprise funds. The City uses enterprise funds to account for its water and sewer. The funds provide the same type of information as the government-wide financial statements, only in more detail and include some of the internal service fund type activity. The proprietary fund financial statements provide separate information for the water and sewer funds, both of which are considered to be major funds in the City.  Fiduciary fund - The City accounts for Agency Funds for TIF District #1 Project which are restricted to pay the costs of the District. TIF District #1 bonds are held by the developer and do not carry the full faith and credit of the City.  Notes to 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 immediately following the basic financial statements. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 10 - THE CITY AS A WHOLE - Government-Wide Financial Analysis The City’s combined net position was $48.4 million as of September 30, 2016. Analyzing the net position and net expenses of governmental and business-type activities separately, the governmental activities net position was $23.0 million and the business type activities net position were $25.4 million. This analysis focuses on the net position (table 1) and changes in general revenues (table 2) and significant expenses of the City’s governmental and business- type activities. The comparative government-wide results are provided in the tables for additional analysis. By far the largest portion of the City’s net position (76%) reflects its restricted and capital assets (e.g., donations, community betterment, debt service, rescue squad, and economic development). TABLE 1 (amounts are expressed in thousands) 2016 2015 2016 2015 2016 2015 ASSETS Current and other assets 9,111$ 10,806$ 8,144$ 6,033$ 17,255$ 16,839$ Capital assets 22,304 27,263 48,260 42,435 70,564 69,698 Total assets 31,415 38,069 56,404 48,468 87,819 86,537 LIABILITIES Long-term debt 7,545 7,995 28,565 29,586 36,110 37,581 Other liabilities 866 2,549 2,420 2,119 3,286 4,668 Total liabilities 8,411 10,544 30,985 31,705 39,396 42,249 DEFERRED INFLOWS 46 46 - - 46 46 NET POSITION Net investment in capital assets 14,759 19,268 18,124 11,655 32,883 30,923 Restricted 1,547 1,188 2,176 1,738 3,723 2,926 Unrestricted (deficit) 6,652 7,023 5,119 3,370 11,771 10,393 Total net position 22,958$ 27,479$ 25,419$ 16,763$ 48,377$ 44,242$ Governmental Activities Business-type Activities Total Primary Government City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 11 - Governmental activities: Governmental activities increased the City’s net position by $1.8 million before transfers. Key elements of this increase are as follows:  The revenue in governmental funding activities decreased while expenses increased, but General fund activities still generated a positive gain before transfers. The General Fund was the most effective at covering its costs due to sales tax, fees charged, operating grants, capital grants, and contributions, which was generally a positive increase. The governmental funds had an operating surplus, before considering the transfers to the Governmental activities.  The comparative financial analysis is provided for additional information. The City’s governmental revenues decreased when compared to the prior year by 0.31% or $4.2 million. The primary reason for this decrease was the reduction of grants and contributions from prior year. The assessed value of the property of the City increased by $14.02 million or 2.9% as compared to the prior year while the City property tax rate of $0.357902 per $100 assessment remained unchanged. Business-type Activities Revenues of the City’s business-type activities were $9.6 million for the fiscal year ending September 30, 2016. Expenses for the City’s business-type activities were $7.4 million for the year, resulting in a net position increase of $2.2 million before transfers. The net increase was the result of primarily increased water revenue from the Cargill take or pay contract and recovered insurance payments from the hail storm of 2014. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 12 - 2016 2015 2016 2015 2016 2015 REVENUES Program revenues Charges for services 610$ 815$ 8,678$ 8,534$ 9,288$ 9,349$ Operating grants and contributions 52 267 10 - 62 267 Capital grants and contributions 1,974 4,571 - - 1,974 4,571 General revenues Taxes 5,720 5,793 - - 5,720 5,793 Intergovernmental - - - - - - Interest income 8 7 12 10 20 17 Special assessment 99 354 - - - 354 Gains 647 1,328 906 641 - 1,969 Other 244 421 33 33 277 454 Total revenues 9,354 13,556 9,639 9,218 18,993 22,774 EXPENSES Administration 946 735 - - 946 735 Police 1,842 1,903 - - 1,842 1,903 Fire 228 257 - - 228 257 Parks 618 606 - - 618 606 Library 782 393 - - 782 393 Swimming pool 67 77 - - 67 77 Zoning 290 303 - - 290 303 Animal control 124 86 - - 124 86 Donated fund 31 28 - - 31 28 Mitigation 10 19 - - 10 19 Streets 2,183 1,941 - - 2,183 1,941 Keno 24 26 - - 24 26 Community betterment 14 3 - - 14 3 Rescue squad 160 146 - - 160 146 Bond issuance costs 2 50 - - 2 50 Interest expense 155 168 - - 155 168 Water - - 6,124 5,766 6,124 5,766 Sewer - - 1,256 1,112 1,256 1,112 Total expenses 7,476 6,741 7,380 6,878 14,856 13,619 CHANGE IN NET POSITION BEFORE TRANSFERS 1,878 6,815 2,259 2,340 4,137 9,155 TRANSFERS (6,398) 438 6,398 (438) - - CHANGE IN NET POSITION (4,520) 7,253 8,657 1,902 4,137 9,155 NET POSITION, BEGINNING 27,478 20,225 16,764 14,862 44,242 35,087 NET POSITION, END OF YEAR 22,958$ 27,478$ 25,421$ 16,764$ 48,379$ 44,242$ Governmental Activities Business-type Activities Total Primary Government City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 13 - CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of the fiscal year 2016, the City had $107.3 million invested in a broad range of capital assets, including police and fire equipment, buildings, park facilities, and water and sewer plants. (See Table 3) This amount represents a net increase (including increases and decreases) of $3.5 million or 3.4% over the prior fiscal year. Beginning October 1, 2003, the City began capitalizing general infrastructure assets and depreciating them over their useful lives as required by GASB 34. The general infrastructure assets capitalized in 2016 was $1.9 million. TABLE 3 (amounts are expressed in thousands) Beginning Decreases / Ending Balance Increases Recharacterization Balance GOVERNMENTAL ACTIVITIES Land 1,497$ 160$ (373)$ 1,284$ Construction in progress 9,163 3,228 (12,166) 225 Infrastructure 15,423 1,868 - 17,291 Buildings 6,596 2,297 - 8,893 Equipment 4,959 1,083 (144) 5,898 Total governmental 37,638 8,636 (12,683) 33,591 BUSINESS-TYPE ACTIVITIES Water assets 56,006 9,290 (2,323) 62,973 Sewer assets 10,139 942 (305) 10,776 Total business-type 66,145 10,232 (2,628) 73,749 Totals 103,783$ 18,868$ (15,311)$ 107,340$ City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 14 - Debt At year-end, the City had $3.9 million in General Obligation Bonds outstanding as compared to $4.5 million at the end of the prior fiscal year, resulting in a decrease of $570 thousand shown in Table 4. The Water Revenue Bonds outstanding has a net decrease of $644 thousand. The City has a 25 year take or pay contract with Cargill to secure all debt incurred for expanding the City’s water system for the ability to meet Cargill’s water needs. The expanded plant has a capacity of 20 MGD, with 15.5 MGD being committed to Cargill under the amended 25 year take or pay contract. TABLE 4 (amounts are expressed in thousands) Balance Balance September 30, September 30, 2015 Additions Reductions 2016 General Obligation Bonds 4,495$ -$ (570)$ 3,925$ Revenue anticipation notes 3,500 120 - 3,620 Water Revenue Bonds 28,034 5,550 (6,081) 27,503 Sewer Revenue Bonds 2,746 - (113) 2,633 Totals 38,775$ 5,670$ (6,764)$ 37,681$ Description City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 15 - THE CITY’S FUND At the close of the City’s fiscal year on September 30, 2016, the governmental funds of the City reported a combined fund balance of $3.86 million. General Fund Budgetary Highlights General Fund had revenues over expenditures of $687,768 with a net of $510,404, after transfers in and out, sales of assets, and insurance proceeds. This was primarily accomplished from the fact expenses were slightly below budgeted projections and intergovernmental revenues were up. Debt Service had expenditures of $248,464 more than revenues. When combined with sale of assets from previously foreclosed properties, and transfers in and out, Debt service increased ending balance by $133,841. This was the result of getting the lots in Deerfield sold and transfers in from sales tax to help pay the City’s cost of general obligation bonds for paving and storm sewers in new subdivisions. Street Fund had an operating loss of $560,712. This was offset with the transfer in of $1,316,214 from sales tax for capital projects, insurance proceeds, and sale of assets which resulted in a net increase of $879,547, prior to the $3.5 million prior period adjustment. Keno and Capital Projects Fund had no major deviations in revenues or expenditures. Water had an increase in water revenues from the increase in the take or pay contract with Cargill with the issuance of debt to take out the short term Bond anticipation notes that had been issued for the 2012/2013 plant expansion. The City issued $5.5 million in 20 year bonds to pay off part of the $8.2 million in bond anticipation notes that had been issued for the 2012/2013 plant expansion. It is anticipated the remaining $3.2 million in bond anticipation notes will be called in February of 2017. Sewer Funds had no major deviation of revenues or expenditures. Water and Sewer both finished the year with a ratio of operating income before depreciation, divided by Debt Service greater than 1.25 as required by the covenants in the authorizing Ordinances. All other funds operated without any significant changes to the funds and the City has completed all storm related repairs from the flood of 2011 and hail storm of 2014. The FEMA flood mitigation project has been closed out the City anticipates calling $3.1 million of the $3.5 million Flood Control bonds issued for that project in February and the remaining $0.4 million in May or June of 2017. City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 16 - With the completion of the FEMA mitigation the City will be able to continue near normal operations at the water and wastewater plants in the event of a future flooding event similar to the flood of 2011. In addition the mitigation project allowed for the installation of generators capable of operating the plants in any emergency, without an electrical feed from OPPD. The City has fully migrated from partial self-insured, health coverage for employees to a traditional market rate insurance program through Blue Cross and Blue Shield, with rates remaining fairly stable. ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES Current economic conditions point toward a slight slowing of the economy due to the recent down turn in the agricultural industry from high costs and low commodity prices. Despite the down turn in the regional agricultural economy we anticipate continued growth in the Blair community that will allow for a stable budget environment. The property tax levy for fiscal year 2017 remained stable with a slight increase at 35.8163 cents per hundred of actual valuation compared to the Fiscal 2016 levy of 35.7902. The 2016 valuation for the City was $522,612,640 which was an increase of $21,206,270 or 4.2%. The City is again seeing a steady development of commercial and residential properties. With the Dana College property back on the market for development, due the pull out of Midland University from expanding to the Blair Campus, the City Staff and local economic development corporation, Gateway Development Corporation, are active in pursing potential developers for the property. The City is also working with a couple developers on the possibility of creating new housing lots. The cost of new development lots is one of the primary obstacles facing the City of Blair in the development of new housing. The October closing and decommissioning of the OPPD Nuclear Plant located south of the Blair approximately two miles is anticipated to have some future impact on the Blair economic conditions, although the City is confident that with the decommissioning, which will extend over fifteen to twenty five year period, the City will be able to absorb the loss of jobs at the plant through expansion of current businesses/industries and new companies looking to locate in Blair area.   Local tax receipts appear to be stable with sales taxes receipts continuing to meet or exceed budgeted projections.   City of Blair, Nebraska MANAGEMENT’S DISCUSSION AND ANALYSIS For the year ended September 30, 2016 - 17 - The water and wastewater funds continue to be stable. The Papio NRD will be adding the Lakeland water company up to the NRD’s water system sometime in January which will add another 300 connections to the system. They are also looking at adding part of Fort Calhoun’s water used to the NRD’s rural system that is supplied by Blair. The one issue facing the City’s water system is the renewal of the City’s NPDES permit. The permit for discharging back to the Missouri River is under review by the Nebraska Department of Environmental Quality (DEQ) and current drafts would call for reduction of spent lime being discharged back to the river. This could potentially require installation of some type of treatment process that preliminary estimates call for spending of ten to fifteen million in capital cost and three hundred thousand to four hundred thousand annually. This potential unfunded mandate would require a significant rate increase. The City is continuing to work with DEQ to determine potential alternatives and requirements. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, and investors and creditors with a general overview of the City’s finances and to show the City’s accountability for the money it receives. If you have questions about this report or need additional financial information, contact the City of Blair, 218 S. 16th Street, Blair, NE 68008.   Governmental Business-type Activities Activities Total ASSETS Current Assets Cash and cash equivalents 5,740,700$ 4,495,105$ 10,235,805$ Accounts receivable 6,181 1,460,778 1,466,959 Intergovernmental receivable 67,500 - 67,500 Sales tax receivable 395,411 - 395,411 Property tax receivable 118,857 - 118,857 Prepaid expense 18,560 12,322 30,882 Special assessments receivable 802,731 - 802,731 Total Current Assets 7,149,940 5,968,205 13,118,145 Noncurrent Assets Notes receivable 50,000 - 50,000 Restricted cash and cash equivalents 1,911,429 2,175,693 4,087,122 Capital assets Non-depreciable Land 1,284,451 423,783 1,708,234 Construction in progress 225,529 73,433 298,962 Depreciable Infrastructure 17,290,590 24,740,078 42,030,668 Buildings 8,893,406 45,607,937 54,501,343 Equipment 5,898,522 2,903,756 8,802,278 Accumulated depreciation (11,288,375) (25,489,418) (36,777,793) Net Capital Assets 22,304,123 48,259,569 70,563,692 Total Noncurrent Assets 24,265,552 50,435,262 74,700,814 Total Assets 31,415,492$ 56,403,467$ 87,818,959$ LIABILITIES Current Liabilities Accounts payable 180,061$ 391,557$ 571,618$ Accrued expenses 260,748 171,930 432,678 Accrued interest 29,132 283,997 313,129 Deposits payable 67,800 1,700 69,500 Registered warants 328,280 - 328,280 Bonds payable - due within one year 430,000 1,570,651 2,000,651 Total Current Liabilities 1,296,021 2,419,835 3,715,856 Noncurrent Liabilities Bonds payable - due in more than one year 7,115,000 28,564,973 35,679,973 Total Noncurrent Liabilities 7,115,000 28,564,973 35,679,973 Total Liabilities 8,411,021 30,984,808 39,395,829 City of Blair, Nebraska STATEMENT OF FINANCIAL POSITION September 30, 2016 GOVERNMENT - WIDE See accompanying notes and independent auditor's report - 18 - Governmental Business-type Activities Activities Total DEFERRED INFLOWS Nonrefundable deposits 46,000$ -$46,000$ NET POSITION Net investment in capital assets 14,759,123 18,123,945 32,883,068 Restricted: Debt service 687,496 2,175,693 2,863,189 Donated projects 52,988 - 52,988 Economic development 381,069 - 381,069 Rescue squad 237,667 - 237,667 Reuse funds 6 - 6 Community betterment 187,805 - 187,805 Unrestricted 6,652,317 5,119,021 11,771,338 Total net position 22,958,471 25,418,659 48,377,130 Total liabilities, deferred inflows, and net position 31,415,492$ 56,403,467$ 87,818,959$ - 19 - See accompanying notes and independent auditor's report City of Blair, Nebraska STATEMENT OF FINANCIAL POSITION GOVERNMENT - WIDE September 30, 2016 Op e r a t i n g Ca p i t a l Ch a r g e s f o r Gr a n t s a n d Gr a n t s a n d G o v e r n m e n t a l B u s i n e s s - t y p e Ex p e n s e s Se r v i c e s Co n t r i b u t i o n s Co n t r i b u t i o n s Ac t i v i t i e s Ac t i v i t i e s Tota l FU N C T I O N S / P R O G R A M S Go v e r n m e n t a l a c t i v i t i e s Ad m i n i s t r a t i o n 94 6 , 0 4 0 $ 2 8 1 , 4 7 8 $ 2 1 , 5 2 5 $ - $ (6 4 3 , 0 3 7 ) $ - $ (643,037)$ Po l i c e 1,8 4 2 , 0 2 3 13 , 4 3 7 29 , 2 5 9 - (1 , 7 9 9 , 3 2 7 ) - (1,799,327) Fi r e 22 8 , 4 0 1 - - - (2 2 8 , 4 0 1 ) - (228,401) Pa r k s 61 7 , 5 7 3 40 , 3 4 0 - - (5 7 7 , 2 3 3 ) - (577,233) Li b r a r y 78 1 , 8 3 3 10 , 2 0 1 1, 4 1 2 - (7 7 0 , 2 2 0 ) - (770,220) Sw i m m i n g p o o l 67 , 1 4 3 - - - (6 7 , 1 4 3 ) - (67,143) Zo n i n g 28 9 , 8 6 3 - - - (2 8 9 , 8 6 3 ) - (289,863) An i m a l c o n t r o l 12 3 , 6 8 9 - - - (1 2 3 , 6 8 9 ) - (123,689) Mi t i g a t i o n 10 , 1 0 4 - - - (1 0 , 1 0 4 ) - (10,104) Do n a t e d f u n d s 30 , 5 6 6 - - - (3 0 , 5 6 6 ) - (30,566) Re s c u e s q u a d 16 0 , 2 3 4 15 5 , 4 4 9 - - (4 , 7 8 5 ) - (4,785) Co m m u n i t y b e t t e r m e n t 13 , 7 5 0 - - - (1 3 , 7 5 0 ) - (13,750) St r e e t s 2, 1 8 3 , 0 7 0 - - 1,9 7 4 , 4 3 2 (2 0 8 , 6 3 8 ) - (208,638) Ke n o 24 , 4 8 8 10 9 , 1 1 5 - - 84 , 6 2 7 - 84,627 Bo n d i s s u a n c e c o s t s 2,0 0 0 - - - (2 , 0 0 0 ) - (2,000) In t e r e s t o n l o n g - t e r m d e b t 15 4 , 7 5 3 - - - (1 5 4 , 7 5 3 ) - (154,753) To t a l g o v e r n m e n t a l a c t i v i t i e s 7, 4 7 5 , 5 3 0 6 1 0 , 0 2 0 52 , 1 9 6 1,9 7 4 , 4 3 2 (4 , 8 3 8 , 8 8 2 ) - (4,838,882) Bu s i n e s s - t y p e a c t i v i t i e s Wa t e r 6, 1 2 4 , 3 9 4 7 , 5 2 0 , 8 0 1 1 0 , 0 0 0 - - 1, 4 0 6 , 4 0 7 1,406,407 Se w e r 1, 2 5 6 , 1 2 4 1 , 1 5 7 , 0 8 0 - - - (9 9 , 0 4 4 ) (99,044) To t a l b u s i n e s s - t y p e a c t i v i t i e s 7, 3 8 0 , 5 1 8 8 , 6 7 7 , 8 8 1 1 0 , 0 0 0 - - 1, 3 0 7 , 3 6 3 1,307,363 To t a l p r i m a r y g o v e r n m e n t 14 , 8 5 6 , 0 4 8 $ 9 , 2 8 7 , 9 0 1 $ 6 2 , 1 9 6 $ 1,9 7 4 , 4 3 2 $ (4 , 8 3 8 , 8 8 2 ) 1, 3 0 7 , 3 6 3 (3,531,519) Ge n e r a l r e v e n u e s Ta x e s P r o p e r t y t a x e s 2,2 4 8 , 6 9 9 - 2,248,699 S a l e s t a x 2,4 5 7 , 9 9 6 - 2,457,996 O c c u p a t i o n a n d f r a n c h i s e t a x e s 22 3 , 3 5 3 - 223,353 E x c i s e t a x e s 78 7 , 6 7 2 - 787,672 98 , 9 1 2 - 98,912 8,1 5 4 12 , 0 3 4 20,188 24 4 , 2 8 2 31 , 3 2 4 275,606 42 , 8 7 9 - 42,879 60 4 , 3 1 0 90 6 , 2 8 6 1,510,596 Sp e c i a l a s s e s s m e n t s Un r e s t r i c t e d i n v e s t m e n t e a r n i n g s Ot h e r i n c o m e Ga i n o n s a l e o f a s s e t Ga i n o n i n s u r a n c e r e c o v e r y , n e t o f i m p a i r m e n t Tr a n s f e r s (6 , 3 9 7 , 6 2 8 ) 6 , 3 9 7 , 6 2 8 - T o t a l g e n e r a l r e v e n u e s a n d t r a n s f e r s 31 8 , 6 2 9 7, 3 4 7 , 2 7 2 7,665,901 C h a n g e s i n n e t p o s i t i o n (4 , 5 2 0 , 2 5 3 ) 8 , 6 5 4 , 6 3 5 4 , 1 3 4 , 3 8 2 Ne t p o s i t i o n , b e g i n n i n g o f y e a r 2 7 , 4 7 8 , 7 2 4 1 6 , 7 6 4 , 0 2 4 4 4 , 2 4 2 , 7 4 8 Ne t p o s i t i o n , e n d o f y e a r 22 , 9 5 8 , 4 7 1 $ 2 5 , 4 1 8 , 6 5 9 $ 4 8 , 3 7 7 , 1 3 0 $ Se e a c c o m p a n y i n g n o t e s a n d i n d e p e n d e n t a u d i t o r ' s r e p o r t - 2 0 - Ch a n g e s i n N e t P o s i t i o n Ci t y o f B l a i r , N e b r a s k a ST A T E M E N T O F A C T I V I T I E S Fo r t h e y e a r e n d e d S e p t e m b e r 3 0 , 2 0 1 6 Pr o g r a m R e v e n u e s GO V E R N M E N T - W I D E Ca p i t a l Ge n e r a l De b t S e r v i c e Str e e t Ke n o Pr o j e c t s Fu n d Fu n d Fu n d Fu n d Fu n d Total AS S E T S Ca s h a n d c a s h e q u i v a l e n t s 2,5 5 7 , 5 6 3 $ - $ 3,1 7 1 , 9 1 7 $ - $ 11 , 2 2 0 $ 5,740,700 $ Re c e i v a b l e s In t e r g o v e r n m e n t a l - - 67 , 5 0 0 - - 67,500 Sa l e s t a x 39 5 , 4 1 1 - - - - 395,411 Sp e c i a l a s s e s s m e n t s 37 7 80 2 , 3 5 4 - - - 802,731 Ot h e r 2,6 3 0 - - 3,5 5 1 - 6,181 Pr o p e r t y t a x e s r e c e i v a b l e 10 0 , 1 6 5 2,8 2 9 15 , 8 6 3 - - 118,857 Re s t r i c t e d c a s h a n d c a s h e q u i v a l e n t s Ca s h 79 6 , 7 5 9 80 5 , 4 1 6 - 18 4 , 2 5 4 - 1,786,429 Ce r t i f i c a t e s o f d e p o s i t 12 5 , 0 0 0 - - - - 125,000 To t a l a s s e t s 3,9 7 7 , 9 0 5 $ 1,6 1 0 , 5 9 9 $ 3,2 5 5 , 2 8 0 $ 18 7 , 8 0 5 $ 11 , 2 2 0 $ 9,042,809 $ LI A B I L I T I E S Ac c o u n t s p a y a b l e 10 4 , 6 4 2 $ - $ 75 , 4 1 9 $ - $ - $ 180,061 $ Ac c r u e d e x p e n s e s 37 , 2 5 1 - 9,0 7 9 - - 46,330 Ba n k o v e r d r a f t - - - - - - De p o s i t s p a y a b l e 67 , 8 0 0 - - - - 67,800 Re v e n u e a n t i c i p a t i o n n o t e - 12 0 , 0 0 0 3,5 0 0 , 0 0 0 - - 3,620,000 Re g i s t e r e d w a r r a n t s - - 32 8 , 2 8 0 - - 328,280 To t a l l i a b i l i t i e s 20 9 , 6 9 3 12 0 , 0 0 0 3,9 1 2 , 7 7 8 - - 4,242,471 DE F E R R E D I N F L O W S O F R E S O U R C E S In t e r g o v e r n m e n t a l - - 67 , 5 0 0 - - 67,500 Sp e c i a l a s s e s s m e n t s 37 7 80 1 , 3 7 5 - - - 801,752 Pr o p e r t y t a x e s 60 , 9 3 5 1,7 2 8 9,8 1 2 - - 72,475 To t a l d e f e r r e d i n f l o w s o f r e s o u r c e s 61 , 3 1 2 80 3 , 1 0 3 77 , 3 1 2 - - 941,727 FU N D B A L A N C E S Re s t r i c t e d De b t s e r v i c e - 68 7 , 4 9 6 - - - 687,496 Do n a t e d f u n d s 52 , 9 8 8 - - - - 52,988 Ec o n o m i c d e v e l o p m e n t 38 1 , 0 6 9 - - - - 381,069 Re s c u e s q u a d 23 7 , 6 6 7 - - - - 237,667 Re u s e f u n d s 6 - - - - 6 Co m m u n i t y b e t t e r m e n t - - - 18 7 , 8 0 5 - 187,805 Co m m i t t e d Ca p it a l p ro j ec t s - - - - - - As s i g n e d En c u m b r a n c e s 10 4 , 6 1 3 - - - - 104,613 Un a s s i g n e d 2,9 3 0 , 5 5 7 - (7 3 4 , 8 1 0 ) - 11 , 2 2 0 2,206,967 To t a l f u n d b a l a n c e s 3,7 0 6 , 9 0 0 68 7 , 4 9 6 (7 3 4 , 8 1 0 ) 18 7 , 8 0 5 11 , 2 2 0 3,858,611 To t a l l i a b i l i t i e s , d e f e r r e d i n f l o w s a n d f u n d b a l a n c e s 3,9 7 7 , 9 0 5 $ 1,6 1 0 , 5 9 9 $ 3,2 5 5 , 2 8 0 $ 18 7 , 8 0 5 $ 11 , 2 2 0 $ 9,042,809 $ - 2 1 - Ci t y o f B l a i r , N e b r a s k a GO V E R N M E N T A L F U N D S BA L A N C E S H E E T Se p t e m b e r 3 0 , 2 0 1 6 Se e a c c o m p a n y i n g n o t e s a n d i n d e p e n d e n t a u d i t o r ' s r e p o r t Fund balances of governmental funds 3,858,611$ Amounts reported for governmental activities in the statement of net position are different because Long-term receivables are not current financial resources and therefore is not reported in the funds. 50,000 Prepaid expenses are not a current financial resource. Therefore, they are not included in the governmental funds. 18,560 Capital assets, net of depreciation, are not current financial resources and are not included in the governmental funds. 22,304,123 Accrued compensated absences are not due and payable in the current period and therefore are not reported in the funds. (214,418) Accrued interest does not require current financial resources and therefore is not reported in the funds. (29,132) Nonrefundable prepaid deposits are reported as current resources in the government funds, but are deferred invlows on the government-wide statements. (46,000) Bonds payable are not a current financial resource. Therefore, they are not included in the governmental funds. (3,925,000) Taxes and special assessments receivable that are not available to pay for current period expenditures are recorded as deferred inflows in the governmental funds. 941,727 Net position of governmental activities 22,958,471$ See accompanying notes and independent auditor's report - 22 - City of Blair, Nebraska GOVERNMENTAL FUNDS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS September 30, 2016 TO THE STATEMENT OF NET POSITION Ca p i t a l Ge n e r a l D e b t S e r v i c e St r e e t Ke n o Pr o j ec t s Fu n d Fu n d Fu n d Fu n d Fu n d Total RE V E N U E S Ta x e s 4 ,46 7 ,21 7 $ 49 ,43 1 $ 1 ,13 2 ,42 1 $ - $ 10 0 ,556 $ 5 ,749 ,625 $ Ke n o p ro c e e d s - - - 10 9 ,11 5 -109 ,115 Ch a r g es f o r s e r v i c e s 1 ,44 6 ,09 5 - - - -1 ,446 ,095 S p ec i a l a s s e s s m e n t - 12 6 ,24 6 - - -126 ,246 S p ec i a l a s s e s s m e n t i n t e r e s t - 98 ,91 2 - - -98 ,912 In t e r e s t i n c o m e 7 ,14 6 78 0 17 0 58 -8 ,154 In t e r g ov e r n m e n t a l 50 8 ,98 6 - 2 ,33 0 ,59 2 - -2 ,839 ,578 Ot h e r r e v e n u e s 12 9 ,74 9 52 ,00 0 52 5 ,99 6 - -707 ,745 To t a l r e v e n u e s 6 ,55 9 ,19 3 32 7 ,36 9 3 ,98 9 ,17 9 10 9 ,17 3 10 0 ,556 11 ,085 ,470 EX P E N D I T U R E S Ad m i n i s t r a t i o n 1 ,66 1 ,58 6 10 ,76 7 - - 3 ,798 1 ,676 ,151 Po l i c e D e p ar t m e n t 1 ,77 2 ,15 5 - - - -1 ,772 ,155 Fi r e D e p ar t m e n t 24 4 ,30 0 - - - -244 ,300 Pa r k s D e p ar t m e n t 54 4 ,06 4 - - - -544 ,064 Li b r a r y 46 6 ,99 0 - - - -466 ,990 Sw i m m i n g p oo l 41 ,18 5 - - - -41 ,185 Zo n i n g 28 7 ,26 3 - - - -287 ,263 An i m a l c o n t r o l 10 6 ,33 9 - - - -106 ,339 Ca p it a l o u t l a y 70 6 ,87 3 - 2 ,98 0 ,90 9 - -3 ,687 ,782 Do n a t e d f u n d s 30 ,56 6 - - - -30 ,566 Mi t i g at i o n 10 ,10 4 - - - -10 ,104 Ke n o e x p en s e - - - 24 ,48 8 -24 ,488 Co m m u n i t y b e t t e r m e n t - - - 13 ,75 0 -13 ,750 St r e e t - - 1 ,53 3 ,98 2 - -1 ,533 ,982 De b t s e r v i c e Pr i n c i p le - 47 5 ,00 0 - - 95 ,000 570 ,000 In t e r e s t - 88 ,06 6 35 ,00 0 - 30 ,870 153 ,936 Bo n d i s s u a n c e c o s t - 2 ,00 0 - - -2 ,000 To t a l e x p en d i t u r e s 5 ,87 1 ,42 5 57 5 ,83 3 4 ,54 9 ,89 1 38 ,23 8 12 9 ,668 11 ,165 ,055 EX C E S S ( D E F I C I E N C Y ) O F R E V E N U E S OV E R E X P E N D I T U R E S 68 7 ,76 8 (24 8 ,46 4 ) (56 0 ,71 2 ) 70 ,93 5 (29 ,112 )(79 ,585 ) OT H E R F I N A N C I N G S O U R C E S ( U S E S ) Sa l e o f a s s e t s 1 ,77 3 37 4 ,45 2 52 ,04 8 - -428 ,273 In s u r a n c e p r o c e e d s 53 2 ,31 3 - 71 ,99 7 - -604 ,310 Op e r a t i n g t r a n s f e r s - i n 1 ,89 0 ,71 1 12 5 ,85 3 1 ,31 6 ,21 4 - 46 ,000 3 ,378 ,778 Op e r a t i n g t r a n s f e r s - o u t (2 ,60 2 ,16 1 ) (11 8 ,00 0 ) - (58 ,75 4 ) -(2 ,778 ,915 ) To t a l o t h e r f i n a n c i n g s o u r c e s (17 7 ,36 4 ) 38 2 ,30 5 1 ,44 0 ,25 9 (58 ,75 4 ) 46 ,000 1 ,632 ,446 NE T C H A N G E I N F U N D B A L A N C E S 51 0 , 4 0 4 13 3 , 8 4 1 87 9 , 5 4 7 12 , 1 8 1 16 , 8 8 8 1,552,861 FU N D B A L A N C E S , B E G I N N I N G O F Y E A R 3, 1 9 6 , 4 9 6 55 3 , 6 5 5 1, 8 8 5 , 6 4 3 17 5 , 6 2 4 (5 , 6 6 8 ) 5,805,750 PR I O R P E R I O D A D J U S T M E N T - - (3 , 5 0 0 , 0 0 0 ) - -(3,500,000) FU N D B A L A N C E S , B E G I N N I N G O F Y E A R - R E S T A T E D 3, 1 9 6 , 4 9 6 55 3 , 6 5 5 (1 , 6 1 4 , 3 5 7 ) 17 5 , 6 2 4 (5 , 6 6 8 ) 2,305,750 FU N D B A L A N C E S , E N D O F Y E A R 3 ,70 6 ,90 0 $ 68 7 ,49 6 $ (7 3 4 ,81 0 ) $ 18 7 ,80 5 $ 11 ,220 $ 3 ,858 ,611 $ - 2 3 - Ci t y o f B l a i r , N e b r a s k a ST A T E M E N T O F R E V E N U E S , E X P E N D I T U R E S , A N D C H A N G E S I N FU N D B A L A N C E - G O V E R N M E N T A L F U N D S Fo r t h e y e a r e n d e d S e p t e m b e r 3 0 , 2 0 1 6 Se e a c c o m p a n y i n g n o t e s a n d i n d e p e n d e n t a u d i t o r ' s r e p o r t Net changes in fund balance - total governmental funds 1,552,861$ Amounts reported for governmental activities in the statement of activities differ from the amounts reported in the statement of revenues, expenditures, and changes in fund balances because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets are allocated over their estimated useful lives as functional expense when the cost is above the capitalization threshhold. The activity is reconciled as follows: Cost of assets capitalized, net of retirements 3,467,648 Depreciation expense (1,053,485) Sale and disposition of assets that are reported as receipts of current financial resources in the government funds, but are reported as a reduction of assets and a net gain or lossin that government-wide statements (375,394) Repayment of bond principal is an expenditure in the govermental funds, but the repayment reduces long-term liabilities in the statement of net position. 570,000 Income that is recognized as current financial resources, but are not reported as revenue at the government-wide statements 139,975 Income recognized at the government-wide statements that is not a current financial resource in the government funds.(1,652,250) Changes in liabilities reported in the statement of net position that do not require the use of current financial resources, and therefore, the change is not reported in governmental funds, but is reported in the statement of activities.(172,117) Transfers of contruction in progress from the general government to proprietary funds assets that are not current financial resources in the government funds (6,997,491) Change in net position of governmental activities (4,520,253)$ See accompanying notes and independent auditor's report - 24 - City of Blair, Nebraska GOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS For the year ended September 30, 2016 TO THE STATEMENT OF ACTIVITIES Water Sewer Total CURRENT ASSETS Cash 4,240,273$ 254,832$ 4,495,105$ Accounts receivable - Utilities/user fees 1,258,232 202,546 1,460,778 Prepaid expense 9,385 2,937 12,322 Total current assets 5,507,890 460,315 5,968,205 NON-CURRENT ASSETS Restricted assets Bond and interest sinking fund cash and investments 1,935,935 239,758 2,175,693 Total non-current assets 1,935,935 239,758 2,175,693 CAPITAL ASSETS Land 373,908 49,875 423,783 Construction in progress 68,054 5,379 73,433 Infrastructure 21,516,401 3,223,677 24,740,078 Buildings 39,297,103 6,310,834 45,607,937 Equipment 1,717,032 1,186,724 2,903,756 Accumulated depreciation (20,091,740) (5,397,678) (25,489,418) Total capital assets 42,880,758 5,378,811 48,259,569 TOTAL ASSETS 50,324,583$ 6,078,884$ 56,403,467$ CURRENT LIABILITIES Accounts payable 317,272$ 74,285$ 391,557$ Accrued expenses 119,626 52,304 171,930 Accrued interest 252,972 31,025 283,997 Deposits 1,700 - 1,700 Registered warrants - - - Unearned revenue - - - Bonds payable, current portion 1,451,528 119,123 1,570,651 Total current liabilities 2,143,098 276,737 2,419,835 NON-CURRENT LIABILITIES Bonds payable, net of current portion 26,051,099 2,513,874 28,564,973 Total liabilities 28,194,197 2,790,611 30,984,808 NET POSITION Net investment in capital assets 15,378,131 2,745,814 18,123,945 Restricted for debt service 1,935,935 239,758 2,175,693 Unrestricted 4,816,320 302,701 5,119,021 Total net position 22,130,386 3,288,273 25,418,659 Total liabilities and net position 50,324,583$ 6,078,884$ 56,403,467$ - 25 - ASSETS LIABILITIES AND NET POSITION Enterprise Funds City of Blair, Nebraska STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2016 See accompanying notes and ndependent auditor's report Water Sewer Total OPERATING REVENUES Charges for services 7,475,447$ 1,157,080$ 8,632,527$ Sale of merchandise 31,530 - 31,530 Forfeited discounts 13,824 - 13,824 Other 24,791 6,533 31,324 Total operating revenues 7,545,592 1,163,613 8,709,205 EXPENSES Personnel 1,141,824 421,630 1,563,454 Operating expenses 568,162 265,556 833,718 Utilities 821,475 68,418 889,893 Chemicals 1,073,779 43,580 1,117,359 Materials and supplies 66,240 10,109 76,349 Rental expense - - - Depreciation 1,515,724 269,474 1,785,198 Total expenses 5,187,204 1,078,767 6,265,971 OPERATING INCOME 2,358,388 84,846 2,443,234 NON-OPERATING REVENUES (EXPENSES) Insurance recoveries 871,211 35,075 906,286 Interest income 11,235 799 12,034 Miscellaneous revenues 10,000 - 10,000 Interest expense (815,082) (177,357) (992,439) Bonding costs (122,108) - (122,108) Total nonoperating revenues (expenses) (44,744) (141,483) (186,227) INCOME (LOSS) BEFORE TRANSFERS 2,313,644 (56,637) 2,257,007 OPERATING TRANSFERS Operating transfers - in 6,477,139 576,780 7,053,919 Operating transfers - out (656,291) - (656,291) Total operating transfers 5,820,848 576,780 6,397,628 CHANGE IN NET POSITION 8,134,492 520,143 8,654,635 13,995,894 2,768,130 16,764,024 NET POSITION, END OF YEAR 22,130,386$ 3,288,273$ 25,418,659$ - 26 - City of Blair, Nebraska STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the year ended September 30, 2016 See accompanying notes and independent auditor's report Enterprise Funds NET POSITION, BEGINNING OF YEAR Water Sewer Total Cash received from customers 6,979,322$ 1,130,419$ 8,109,741$ Cash received from interfund services provided - - - Cash payments to suppliers (2,524,728) (472,966) (2,997,694) Cash payments to employees (1,141,871) (416,624) (1,558,495) Cash paid for interfund services used - - - Cash provided from operating activities 3,312,723 240,829 3,553,552 CASH FLOWS FROM NON-CAPITAL FINANCIAL ACTIVITIES Operating transfers 5,820,848 576,780 6,397,628 Proceeds from operating grants 10,000 - 10,000 Cash provided from non-capital financial activities 5,830,848 576,780 6,407,628 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (6,969,205) (640,238) (7,609,443) Insurance proceeds 871,211 35,075 906,286 Gain on purchase of capital assets - - - Repayment of warrants - - - Proceeds from issuance of debt 5,550,000 - 5,550,000 Principle paid on notes and bonds (6,081,243) (113,314) (6,194,557) Interest paid on notes and bonds (836,379) (158,276) (994,655) Bond issuance costs (122,108) - (122,108) Cash used from capital and related financing activities (7,587,724) (876,753) (8,464,477) CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from interest earnings 11,235 799 12,034 Disbursements from (to) restricted assets (437,262) - (437,262) Cash provided from investing activities (426,027) 799 (425,228) CHANGE IN CASH AND CASH EQUIVALENTS 1,129,820 (58,345) 1,071,475 CASH AND CASH EQUIVALENTS, BEGINNING OF YEAR 3,110,453 313,177 3,423,630 CASH AND CASH EQUIVALENTS, END OF YEAR 4,240,273$ 254,832$ 4,495,105$ City of Blair, Nebraska STATEMENT OF CASH FLOWS PROPRIETARY FUNDS September 30, 2016 CASH FLOWS FROM OPERATING ACTIVITIES Enterprise Funds See accompanying notes and independent auditor's report. -27- Water Sewer Total Reconciliation of operating income to net cash from operating activities Operating income 2,358,388$ 84,846$ 2,443,234$ Adjustments to reconcile operating income to net cash from operating activities Depreciation 1,515,724 269,474 1,785,198 Change in receivables (566,270) (33,194) (599,464) Change in prepaid expenses (1,729) (520) (2,249) Change in accounts payable 6,657 (84,783) (78,126) Change in accrued expenses (47) 5,006 4,959 Total adjustments 954,335 155,983 1,110,318 CASH PROVIDED FROM OPERATING ACTIVITIES 3,312,723$ 240,829$ 3,553,552$ See accompanying notes and independent auditor's report. -28- Enterprise Funds City of Blair, Nebraska STATEMENT OF CASH FLOWS PROPRIETARY FUNDS September 30, 2016 Pension TIF Trust Fund Fund 1 ASSETS Cash -$ 2,793$ Investment in fiscal agent: Principal investment accounts 7,533,940 - Guaranteed interest accounts 7,510 - Total Assets 7,541,450$ 2,793$ LIABILITIES Held for others -$ 2,793$ Total Liabilities NET POSITION Net position (deficit) held in trust for retirement 7,541,450 - Total Net Position 7,541,450 - Total liabilities and net position 7,541,450$ 2,793$ See accompanying notes and independent auditor's report - 29 - City of Blair, Nebraska STATEMENT OF NET POSITION FIDUCIARY FUNDS September 30, 2016 Pension Trust Fund Additions Contributions Employer 251,077$ Employee 274,414 Total Contributions 525,491 Investment Earnings Dividends 24,546 Net increase in the fair value of investments 620,961 Total Additions 1,170,998 Deductions Administrative expenses 4,672 Cash retirements 122,374 Withdrawals 8,304 Terminations 294,461 Total Deductions 429,811 Change in Net Position 741,187 Net Position, Beginning of Year 6,800,263 Net Position, End of Year 7,541,450$ City of Blair, Nebraska FIDUCIARY FUNDS September 30, 2016 See accompanying notes and independent auditor's report - 30 - STATEMENT OF CHANGES IN FIDUCIARY NET POSITION City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 31 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The following is a summary of the significant accounting policies of the City of Blair, Nebraska: 1. Reporting Entity The City of Blair, Nebraska (the City) is a Municipal Corporation which was founded and incorporated in 1869. With a population of 8,013, the City of Blair functions as a City of the First Class under Nebraska Statutes. The City operates under a Mayor/Council form of government and provides the following services: public safety, streets, culture and recreation, public improvements, planning and zoning, water and sewer services, and general administrative services. This report includes all funds of the City (the “primary government”). There are no component units. 2. Basis of Accounting/Measurement Focus The accounts of the City are organized on the basis of funds, each of which is considered a separate accounting entity. The operations of each fund are accounted for with a separate set of self-balancing accounts that comprise its assets, liabilities, fund equity, revenues, and expenditures. Governmental resources are allocated to and accounted for in individual funds based upon the purpose for which they are to be spent and the means by which spending activities are controlled. Government-Wide Financial Statements The City’s government-wide financial statements include a statement of net position and a statement of activities (including changes in net position). These statements are prepared using the standards of the Governmental Accounting Standards Board (GASB), General Accepted Accounting Principles (GAAP). These statements present summaries of governmental and business-type activities for the City. These statements are presented on an “economic resources” measurement focus and the accrual basis of accounting. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 32 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 2. Basis of Accounting/Measurement Focus – Continued Government-Wide Financial Statements – Continued Accordingly, all of the City’s assets and liabilities, including capital assets and infrastructure, as well as long-term debt, are included in the statement of net position. The statement of activities presents changes in net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. The statement of activities demonstrates the degree to which the direct expenses of a given function are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function. The types of transactions reported as program revenues for the City are reported in three categories: 1) charges for services, 2) operating grants and contributions, and 3) capital grants and contributions. Charges for services include revenues from customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function. Grant and contributions include revenues restricted to meeting the operational or capital requirements of a particular function. Taxes and other items not properly included among program revenues are reported instead as general revenues. All internal balances in the statement of net position and internal transactions in the statement of activities have been eliminated. The purpose of transfers between funds was to record proper allocation of expenses. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services, or privileges provided, (2) operating grants and contributions, and (3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Fiduciary activities of the City are not included in these statements. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 33 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 2. Basis of Accounting/Measurement Focus – Continued Governmental Fund Financial Statements Governmental fund financial statements include a balance sheet and a statement of revenues, expenditures, and changes in fund balances for all major governmental funds. An accompanying schedule is presented to reconcile and explain the differences in fund balances as presented in these statements to the net position presented in the government-wide financial statements. The City has presented all major funds that meet the qualifications of GASB Statement No. 34, and has chosen to optionally present as major certain other funds (Keno and Capital Projects) that do not meet the major fund requirements. All governmental funds are accounted for on a spending or “current financial resources” measurement focus and the modified accrual basis of accounting. Accordingly, capital assets and bonds payable are not included on the balance sheet. The statement of revenues, expenditures and changes in fund balances present increases (revenues and other financing sources) and decreases (expenditures and other financing uses) in fund balances. Under modified accrual basis of accounting, revenues are recognized in the accounting period in which they become both measurable and available to finance expenditures of the current period. Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within 30 days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred. An exception to this general rule is principal and interest on general long-term debt which is recognized when due. The City reports the following major governmental funds: The General Fund is the government’s primary operating fund. It accounts for all financial resources of the City, except those required to be accounted for in another fund. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 34 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 2. Basis of Accounting/Measurement Focus – Continued Governmental Fund Financial Statements – Continued The Debt Service Fund is used to account for the payment of principal and interest on general long-term debt. The primary sources of revenue are property taxes and special assessments. The Street Fund is used to record transactions in the Street department, as the State of Nebraska requires an accounting to verify the matching of funds it provides for this purpose. The Keno Fund maintains an accounting of Keno gambling activity because the funds earned are restricted to community betterment projects and require special state reporting. The Capital Projects Fund is used to fund capital project construction, development, improvement, and repairs. Proprietary Fund Financial Statements Proprietary Fund Financial Statements include a statement of net position, a statement of revenues, expenses and changes in fund net position, and a statement of cash flows for each major proprietary fund. A column representing internal service funds is also presented in these statements. Proprietary funds are accounted for using the “economic resources” measurement focus and the accrual basis of accounting. Accordingly, all assets and liabilities (whether current or noncurrent) are included on the statement of net position. The statement of revenues, expenses and changes in fund net position presents increases (revenues) and decreases (expenses) in total net position. Under the accrual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 35 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 2. Basis of Accounting/Measurement Focus – Continued Proprietary Fund Financial Statements – Continued 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. Operating expenses for enterprise funds include the cost of services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The City reports the following major proprietary funds: The Water and Sewer Fund accounts for the activities related to the operation of the City’s water delivery and sewage systems. It operates the water treatment and sewer treatment plants, water distribution systems, sewer collection systems, and pump stations. Fiduciary Fund Financial Statements Fiduciary fund financial statements include a statement of net position. The City’s Fiduciary fund represents an agency fund, which is custodial in nature (assets equal liabilities) and does not involve measurement of results of operations. Accordingly, it presents only a statement of fiduciary net position and does not present a statement of changes in fiduciary net position. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 36 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 2. Basis of Accounting/Measurement Focus – Continued Fiduciary Fund Financial Statements – Continued The agency fund is accounted for on a spending or “economic resources” measurement focus and the accrual basis of accounting as is the proprietary funds explained above. The City reports the following fiduciary fund: TIF 1 Fund - An agency fund that accounts for the activities related to redevelopment costs financed by tax incremental finance bonds. The tax incremental finance bonds are to be paid by the taxes of the redeveloped area. Pension Trust Funds – Trust funds account for assets held by the City for the members and beneficiaries of defined benefit and contribution pension plans and deferred compensation plan. The reporting entity includes the following trust funds: Police Pension Accounts for the administration of the police pension fund under the defined contribution plan. General Government Accounts for the administration of the non- police Pension employees' pension funds under the defined contribution plan. Deferred Compensation Accounts for the administration of employees that want Plan to make additional contributions into a plan under the deferred compensation plan. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 37 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 3. Budgetary Policy and Control Budgetary Basis of Accounting The City’s legally adopted budget is not in conformity with accounting principles generally accepted in the United States of America, but meets the requirements of the Nebraska Budget Act. The budget is prepared and adopted using the cash basis of accounting whereby revenues budgeted are expected to be received rather than earned and expenditures budgeted are expected to be disbursed rather than incurred. Differences between the budgeted basis of accounting and the generally accepted basis are reconciled in the budget to actual schedule in the required supplementary information. The City Council sets the property tax levy needed to support the coming year’s budget in August of each year and submits its budget as required by State statute. Budgetary Control Each fund’s appropriated budget is prepared on a detailed line item basis. Revenues are budgeted by source. Expenditures are budgeted by department. Expenditures at the fund level constitute the legal level of control. Expenditures may not exceed appropriations at this level. All budget revisions at this level are subject to final review by the Council. No revisions to the budget were made for the year ended September 30, 2016. 4. The Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. 5. Deposits and Investments The City’s cash and cash equivalents are considered to be cash on hand, demand deposit and short-term investments with original maturities of three months or less from the date of acquisition. Investments are restricted and consist of certificates of deposit shown at cost. There are no significant differences in cost and fair values at September 30, 2016. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 38 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – CONTINUED 6. Capital Assets Capital assets, which include land, buildings, and equipment (furniture, vehicles, etc.) and infrastructure assets (street systems, storm drains, etc.), are reported in governmental activities column of the government-wide financial statements. Capital assets are defined by the City as assets with an initial, individual cost of more than $5,000. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated or annexed capital assets are recorded at estimated market value at the date of donation or annexation. The costs of normal maintenance or repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. The City qualifies for the exemption under GASB 34 to not retroactively apply the capitalization requirements of general infrastructure assets. Depreciation is recorded in the government-wide financial statements on a straight-line basis over the useful life of the assets as follows: Assets Years Equipment 10 Small Vehicles 5 Large Vehicles (i.e. Ambulance & Fire Truck) 10 to 20 Buildings 40 Infrastructure 40 7. Property Taxes Property tax revenue is recognized when collected by the County as the City’s agent within the current period. There are no property taxes due which are not delinquent and all delinquent taxes are considered collectible. The City’s December 31, 2015, valuation was $501,406,370. The levy for the City for the year ending September 30, 2016, was $0.357902 per $100 of value. The total tax levy was $1,794,543. Property taxes are collected by the County and are due December 31 of each year and delinquent in halves at May 1 and September 1 of the following year. In-lieu of tax receipts are equivalent in value to payments for service provided. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 39 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 8. Claims and Judgments Payable The City records a liability for litigation, judgments, and claims when it is probable that an asset has been impaired or a liability has been incurred prior to year-end and the probable amount of loss (net of any insurance coverage) can be reasonably estimated. The liability, if any, is reported in the government-wide statement of net position. The portion of the liability, which will be liquidated with expendable, available financial resources, if any, is reflected as a liability of applicable governmental funds. 9. Compensated Absences General leave for the City includes both vacation and sick pay. Vacation leave is based on an employee’s length of employment. An employee is allowed to carry forward each year, on their anniversary date, that year’s earned vacation, plus 40 hours. Sick leave is earned at a rate approved by the personnel manual, which is currently six (6) hours per month. Sick leave can be accumulated to a maximum of 840 hours and can only be used for illness, medical care, and care of sick members of the immediate family per the personnel manual. Upon termination of employment, an employee is entitled to be compensated for all accumulated unused vacation pay. Unused sick leave is compensated as follows: (1) Upon death or retirement, 50% (2) Upon resignation in good standing, 5% after 10 years of employment increasing to a maximum of 50% after 20 years of employment. 10. Restricted Assets Assets are reported as restricted when limitations on their use change the nature or normal understanding of the availability of the asset. Such constraints are either externally imposed by creditors, contributions, grantors, or laws of other governments, or are imposed by law through constitutional provisions or enabling legislation. The City’s policy is to first apply restricted resources to an expense when incurred for purposes for which both restricted and unrestricted net assets are available. Restricted assets in the governmental funds are related to the reserved fund balances. Restricted assets in the proprietary funds are related to the restricted for debt service fund balances. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 40 - NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - CONTINUED 11. Allowance for Doubtful Accounts The City uses the direct write-off for uncollectable accounts. The City determined that all receivable balances at September 30, 2016 were collectible. 12. Transfers Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to move unrestricted revenue collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Transfers are related to funding for capital projects, debts service, or reallocations of special revenues. They are intended to maintain fund balances and allocate the City’s resources. Interfund transfers were as follows for the year ended September 30, 2016: Transfers Out: General Fund Debt Service Street Fund Capital Projects Fund Water Sewer Total General Fund 1,428,957$ 110,853$ 1,016,214$ 46,000$ -$ 137$ 2,602,161$ Debt Service 118,000 - - - - - 118,000 Keno Fund 43,754 15,000 - - - - 58,754 Capital Projects Fund - - - - - - - Government-Wide CIP - - - - 6,477,139 520,352 6,997,491 Water 300,000 - 300,000 - - 56,291 656,291 Sewer - - - - - - - 1,890,711$ 125,853$ 1,316,214$ 46,000$ 6,477,139$ 576,780$ 10,432,697$ Transfers In : City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 41 - NOTE B. DEPOSITS AND INVESTMENTS Deposits and investments consist of demand deposits and certificates of deposit. The City maintains a cash pool that is available for all funds. The City’s cash deposits and certificates of deposit were either entirely insured or collateralized with securities held by the pledging financial institutions in the City’s name. The carrying amount of the City’s cash deposits was $14,325,720 at September 30, 2016. The bank balances of the City’s cash deposits at September 30, 2016, was $14,449,085. The City’s carrying amount and bank balances include $2,300,693 of certificates of deposit that are part of the Certificate of Deposit Account Registry Service (CDARS). Each of the certificates of deposit has a maturity date less than one year. The City has no formal policy for handling credit risk, interest rate risk, or concentration risk; however, deposits and investments consist of demand deposits and certificates of deposits. The statutes of the State of Nebraska require that local governmental units follow the “prudent man” rule with deposits, and that deposits be secured by collateral valued at market or par whichever is lower less the amount insured by the Federal Deposit Insurance Corporation. The City has no deposit and investment policy that would further limit its deposits, but the City administratively has required all deposits to be collateralized at 105%. The City of Blair has a number of cash funds and investments that are restricted due to donor imposed restrictions or for purposes related to the fund. The certificates of deposit of $2,175,693 are restricted for the enterprise funds (Water and Sewer) for bond and interest expenditures. The cash in the Donations Fund is restricted based on the donor imposed restrictions. The cash in the Economic Development Fund is restricted for economic development and can only be used if it is approved via vote per the City Council. The City Council annually decides how much to budget for the fund. The budget is set not to exceed 1/10 of one per cent of the annual City valuation. The cash in the Debt Service Fund is restricted for the special assessments pledged for the payment of the G.O. bonds. The cash in the Capital Projects (TIF 1) is restricted to pay for the construction projects. If a balance exists after the completion of the projects at the end of the 15 years, those funds would be required to be returned to the County Treasurer for distribution to all taxing entities. The cash in the Water Fund is restricted to pay for the construction and related costs of the water plant expansion contract. If any funds are still available upon completion of the plant expansion project, the unused funds could only be used to pay principle and interest on the bond notes. These funds were received per the bond anticipation note. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 42 - NOTE B. DEPOSITS AND INVESTMENTS – CONTINUED The cash in the Rescue Squad Fund is restricted for the use of the City Fire and Rescue Departments. The cash in the Reuse fund is restricted and can only be used per the Reuse plan or be forfeited to the Nebraska Department of Economic Development. The cash in the Keno fund is restricted for Keno purposes. The following is detail of amounts included in cash, which are restricted for specific purposes: Fund Amount Keno 184,254$ General-Reuse 6 General-Rescue Squad 237,667 Water 1,498,673 Sewer 677,020 Library Fund 250,000 Debt Service 805,416 General-Economic Development 381,069 General-Donations 53,017 4,087,122$ City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 43 - NOTE C. CAPITAL ASSETS A summary of changes in capital assets is as follows: Governmental Activities Balance September 30, 2015 Increases Decreases Balance September 30, 2016 Capital assets not depreciated Land 1,496,550$ 160,000$ (372,098)$ 1,284,452$ Construction in progress 9,163,208 3,228,314 (12,165,994) 225,528 Total capital assets not depreciated 10,659,758 3,388,314 (12,538,092) 1,509,980 Other capital assets Infrastructure 15,422,701 1,867,889 - 17,290,590 Buildings 6,596,687 2,296,719 - 8,893,406 Equipment 4,959,223 1,083,228 (143,929) 5,898,522 Total other capital assets 26,978,611 5,247,836 (143,929) 32,082,518 Less accumulated depreciated Infrastructure (3,456,276) (523,839) - (3,980,115) Buildings (3,586,818) (181,265) - (3,768,083) Equipment (3,332,430) (348,381) 140,634 (3,540,177) Total accumulated depreciation (10,375,524) (1,053,485) 140,634 (11,288,375) Other capital assets, net 16,603,087 4,194,351 (3,295) 20,794,143 Governmental activities capital assets, net 27,262,845$ 7,582,665$ (12,541,387)$ 22,304,123$ City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 44 - NOTE C. CAPITAL ASSETS – CONTINUED Business-Type Activities Balance September 30, 2015 Increases Decreases Balance September 30, 2016 Capital assets not depreciated Land 423,783$ -$ -$ 423,783$ Construction in progress 2,133,019 483,458 (2,543,044) 73,433 Total capital assets not depreciated 2,556,802 483,458 (2,543,044) 497,216 Other capital assets Infrastructure 18,129,124 6,610,957 - 24,740,081 Buildings 42,690,427 2,917,507 - 45,607,934 Equipment 2,768,642 140,564 (5,451) 2,903,755 Total other capital assets 63,588,193 9,669,028 (5,451) 73,251,770 Less accumulated depreciated Infrastructure (2,346,274) (559,996) - (2,906,270) Buildings (19,261,719) (1,095,980) - (20,357,699) Equipment (2,101,678) (129,222) 5,451 (2,225,449) Total accumulated depreciation (23,709,671) (1,785,198) 5,451 (25,489,418) Other capital assets, net 39,878,522 6,633,657 - 47,762,352 Business-type activities, net 42,435,324$ 8,367,288$ (2,543,044)$ 48,259,568$ City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 45 - NOTE C. CAPITAL ASSETS – CONTINUED Depreciation expense was charged to governmental activities functions as follows: Administration 55,375$ Police 82,159 Fire 104,267 Parks 74,138 Library 9,485 Swimming pool 25,958 Animal control 16,720 Rescue Squad 34,763 Streets 650,620 Total Depreciation 1,053,485$ Depreciation was charged to business-type activities as follows: Water 269,474$ Sewer 1,515,724 Total Depreciation 1,785,198$ NOTE D. BONDS PAYABLE A summary of the changes followed by principal and interest schedules and is as follows: Governmental Activities Balance Balance Due Interest September 30, September 30, within Dated Description Rate 2015 Additions Reductions 2016 1 year 12/14/2007 Tax increment financing bond 4.48% 725,000$ -$ (95,000)$ 630,000$ 100,000$ 2/26/2008 Public safety bonds 3.30 - 4.25% 425,000 - (45,000) 380,000 50,000 11/15/2011 General Obligation Refunding Bond 0.75-3.60% 2,180,000 - (315,000) 1,865,000 160,000 7/28/2015 General Obligation 0.5-2.65% 1,165,000 - (115,000) 1,050,000 110,000 Total general obligation and various purpose 4,495,000$ -$ (570,000)$ 3,925,000$ 420,000$ 1/15/2015 Bond Anticipation Note maturing on 12-15-17 1.00% 3,500,000 - - 3,500,000 - 12/21/2015 Public safety tax anticipation bonds maturing on 12-15-25 0.65 - 2.60% - 120,000 - 120,000 10,000 Total governmental activities 7,995,000$ 120,000$ (570,000)$ 7,545,000$ 430,000$ City of Blair, Nebraska NOTES TO FINANCIAL STATEMENTS For the year ended September 30, 2016 - 46 - NOTE D. BONDS PAYABLE (CONTINUED) Business-type Activities Balance Balance Due Interest September 30,September 30, within Dated Description Rate 2015 Additions Reductions 2016 1 year WATER DEBT 4/29/2002 DEQ Bonds 3.03%391,298 - (391,298) - - 6/15/2010 SRF Loan 2010 2.75-4.35% 6,500,000 - - 6,500,000 - 9/28/2010 2010B Revenue Bonds 3.25-3.50% 770,000 - - 770,000 380,000 9/28/2010 2010C Revenue Bonds 2.30% 2,692,572 - (69,945) 2,622,627 71,528 6/5/2012 2012A Revenue Bonds 2.20-2.50% 9,480,000 - (620,000) 8,860,000 1,000,000 9/28/2012 2012 Bond Anticipation Notes 2.50% 5,000,000 - (5,000,000) - - 5/15/2013 2013 Bond Anticipation Notes 2.25% 3,200,000 - - 3,200,000 - 8/24/2016 2016 Revenue Bonds 1.50 - 4.00%- 5,550,000 - 5,550,000 - Total water 28,033,870$ 5,550,000$ (6,081,243)$ 27,502,627$ 1,451,528$ SEWER DEBT 12/15/2004 2004 Revenue Bonds 3.80-4.25% 300,000$ - $ (75,000)$ 225,000$ 80,000$ 3/20/2013 2012 Revenue Bonds 2.10%801,311 - (38,314) 762,997 39,123 9/10/2015 2015 Revenue Bonds 0.95-3.4% 1,645,000 - - 1,645,000 - Total sewer $ 2,746,311 - $ (113,314) $ 2,632,997 $ 119,123 Total business-type activities $ 30,780,181 $ 5,550,000 $ (6,194,557) $ 30,135,624 $ 1,570,651 NOTES TO FINANCIAL STATEMENTS For the year ended September 30, 2016 - 47 - City of Blair, Nebraska NOTE D. BONDS PAYABLE - CONTINUED Governmental Activities Principal Interest Total 430,000 148,351 578,351 3,940,000 120,880 4,060,880 450,000 92,270 542,270 440,000 79,940 519,940 450,000 66,971 516,971 1,650,000 160,282 1,810,282 185,000 6,660 191,660 7,545,000$ 675,354$ 8,220,354$ Business-type Activities Principal Interest Total 1,451,528 872,995 2,324,523 5,018,146 859,493 5,877,639 1,384,801 739,902 2,124,703 1,856,494 702,901 2,559,395 1,453,224 646,357 2,099,581 7,383,484 2,424,303 9,807,787 5,853,020 1,289,389 7,142,409 2,073,419 297,687 2,371,106 775,378 69,105 844,483 253,133 7,160 260,293 27,502,627$ 7,909,292$ 35,411,919$ Principal Interest Total 119,123 67,153 186,276 124,949 63,063 188,012 215,793 58,453 274,246 131,654 54,796 186,450 137,533 52,433 189,966 756,519 214,332 970,851 1,066,457 102,876 1,169,333 80,969 1,709 82,678 2,632,997$ 614,815$ 3,247,812$ 2022-2026 2027-2031 2032-2036 2037-2041 2042-2043 2017 2018 2019 2020 Year ending September 30, 2020 - 48 - Year ending September 30, 2017 2018 2019 2020 2021 2022-2026 2027-2031 2032-2033 Total Bonds issued for the water and sewer funds are collateralized by a pledge of revenues derived and to be derived from the operations of the water and sewer fund. Sinking fund requirements for Water and Sewer debt were a total reserve of $2,173,035 at September 30, 2016. 2022-2026 2027 2021 2021 Water Bonds Sewer Bonds Total City of Blair, NebraskaNOTES TO FINANCIAL STATEMENTS For the year ended September 30, 2016 Total Year ending September 30, 2017 2018 2019 City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 49 - NOTE E. NET POSITION AND FUND BALANCES In the government-wide financial statements net position are classified in the following categories: Net Investment in Capital Assets - This category groups all capital assets, including infrastructure, into one component of net position. Accumulated depreciation on these assets reduces this category. Restricted Net Position - This category presents external restrictions imposed by creditors, grantors, contributors or laws or regulations of other governments and restrictions imposed by law through constitutional provisions or enabling legislation. Unrestricted Net Position- This category represents the net position of the City that is not restricted for any project or other purpose. In the fund financial statements, certain significant changes in the statement require the City to classify fund balances in the following categories: Nonspendable fund balance—amounts that cannot be spent because they are either not in a spendable form (such as inventories and prepaid amounts) or are legally or contractually required to be maintained intact. Restricted fund balance—amounts that can be spent only for specific purposes because of constraints imposed by external providers (such as grantors, bondholders, and higher levels of government), or imposed by constitutional provisions or enabling legislation. Committed fund balance—amounts that can be spent only for specific purposes determined by a formal action of the government’s highest level of decision- making authority. Assigned fund balance—amounts the government intends to use for specific purposes that do not meet the criteria to be classified as restricted or committed. Unassigned fund balance—amounts that are available for any purpose; these amounts can be reported only in the City’s General Fund. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 50 - NOTE E. NET POSITION AND FUND BALANCES - CONTINUED The formal spending processes adopted by the City Council allow departments to encumber funds to make specific purchases that will actually be paid for in the next fiscal year. The encumbrance must be in the form of an approved purchase order before the end of the budget fiscal year. Department managers are authorized to make encumbrances in their respective departments. They are included i n r e s t r i c t e d , committed, or assigned fund balances as appropriate. Encumbrances can be made in any fund and do not lapse at year end. NOTE F. RISK MANAGEMENT The City of Blair is exposed to various risks of loss related to torts; theft, damage to and destruction of assets; errors and omissions; injuries to employees; and natural disasters. These risks are covered by the purchase of commercial insurance. The City assumes liability for any deductibles and claims in excess of coverage limitations. Settled claims from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. NOTE G. PENSION PLANS The City has four pension plans covering substantially all of its employees. Employees other than policemen, volunteer firefighters or rescue personnel are covered by a defined contribution plan, either a 414(h) or 457(b) plan. Policemen are covered under a defined contribution plan established by the statutes of the State of Nebraska. Firefighters or rescue personnel are covered by the Blair Fire and Rescue Volunteers’ Service Award Program. This plan is intended to comply with the Volunteer Emergency Responders Recruitment and Retention Act as set forth in Nebraska Revised Statute and Internal Revenue Code section 457(e)(11). The 414(h) pension plan was established on April 1, 1996 and last restated on August 25, 2008 (effective January 1, 2008). All contributions from a minimum of 3% up to 6% of gross wages in employee contributions and up to a 6% match of gross wage in contributions from the City are invested with an investment manager. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 51 - NOTE G. PENSION PLANS - CONTINUED The employees must have accumulated six months of service, be at least age 21, and work 40 hours per week to participate in the plan. Employees ar e 1 0 0 % v e s t e d i n employer contributions after six years of service. The plan is a single employer plan with the City maintaining fiduciary responsibility for administration of the plan. Contributions for the year ended September 30, 2016, totaled $188,060 which consisted of $94,156 contributed by employees and $93,904 contributed by the City. Contributions are expected to remain relatively level from year to year. The City may amend, modify, or terminate the 414(h) plan. Funds in the plan cannot be diverted to any purposes other than for the exclusive benefit of the participants or their beneficiaries or estates. The 457(b) pension plan was established on July 1, 2008. The 457(b) plan allows employees to contribute additional dollars to their pension above the 414(h) requirement and match. The City will contribute a maximum match of 6% based on a one-to-one match. An employee can contribute voluntary pre-tax amounts up to the legal limits as established by IRS code. The plan is a single employer plan with the City maintaining fiduciary responsibility for it. Contributions for the year ended September 30, 2016, totaled $130,996 which consisted of $108,367 contributed by employees and $22,629 contributed by the City. Contributions are expected to remain relatively level from year to year. The City may amend, modify, or terminate the 457(b) plan. Funds in the plan cannot be diverted to any purposes other than for the exclusive benefit of the participants or their beneficiaries or estates. The policemen are covered under a defined contribution plan established by the statues of the State of Nebraska. Policemen terminating before retirement age receive payment for their contributions to date of termination plus interest accrued and the vested portion of the City’s contributions based on the statues of the State of Nebraska. The City has fiduciary responsibility for the plan and it is a single employer plan only. Contributions of $140,306 for the year ended September 30, 2016 were 12% of gross wages, which complies with statutory requirements. The City contributed 6% of gross wages and the policemen contributed 6%. The City expects contributions to remain relatively level from year to year. The contributions are not actuarially determined. All qualifying police payroll was covered in 2016. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 52 - NOTE G. PENSION PLANS – CONTINUED The Blair Fire and Rescue Volunteers’ Service Award Program became effective October 1, 2008, and covers firefighters or rescue personnel. This plan complies with the Volunteer Emergency Responders Recruitment and Retention Act as s e t f o r t h i n Nebraska Revised Statute and Internal Revenue Code section 457(e)(11). To qualify as a participant for any year of service, one must accumulate at least fifty points during such year of service. For each year of service in which one qualifies as a participant, the City will determine contribution amount and allocated to the account which shall not exceed $3,000, and shall not be less than $100. The City’s contribution for the year ended September 30, 2016, totaled $62,400. NOTE H. RECEIVABLES 1. Accounts Receivable Accounts receivable of the business-type activities consists of utilities accounts receivable (100% of receivable). Accounts receivable of the governmental activities consists of special assessments (57.7%), sales taxes (28.4%), grants receivable (4.9%), property taxes (8.6%) and other (0.4%) receivables. 2. Notes Receivable Notes receivable in the governmental-activities at September 30, 2016, consist of Community Development Block Grant funds received by the City. These funds were required to be loaned to a benefited business for eligible economic development public infrastructure costs. The CDBG note receivable was $400,000. If the benefited business meets certain specific job creation and job maintenance requirements, as defined by the State of Nebraska Department of Economic Development, the note can be forgiven. The benefited business’ progress towards the job creation and job maintenance requirements will be examined on an ongoing basis. To date $350,000 of this note has been forgiven. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 53 - NOTE H. RECEIVABLES – CONTINUED 2. Notes Receivable – Continued The City also entered into a 66-month loan agreement with the benefited business to loan up to $800,000 with an interest rate of 8%. The City’s agreement allows the loan to be forgiven if certain general job creation and job maintenance requirements, as defined by the City, are met. The likelihood that these general job creation and job maintenance requirements are not met is considered to be very low. Therefore, the City has fully discounted the note receivable to zero for the year ended September 30, 2016. NOTE I. SPECIAL ASSESSMENTS RECEIVABLE The City’s special assessments outstanding as of September 30, 2016, are composed of special assessment principle of $802,731. The delinquent special assessments at September 30, 2016 are 16.74% of those outstanding. No special assessments have been pledged to specific debt, although special assessments principle and interest is reserved for various purpose bonds payments only. NOTE J. CONCENTRATION OF CREDIT RISK All of the receivables of the City proprietary funds and special assessments in the debt service fund are from the local Blair area, thereby creating a concentration of credit risk. If the Blair area economy was depressed, this could have an adverse effect on the collection of the outstanding accounts receivable. Cargill, Inc. is a major water and sewer customer for the City. Cargill, Inc. represents 75.1% of water and sewer sales for the year ended September 30, 2016. Although Cargill represents 86.5% of water sales, t h e C i t y h a s a c o n t r a c t w i t h t h e c o m p a n y t h a t s e c u r e s a m i n i m u m monthly revenue stream for payment of the water debt through June 2032, which minimizes the risk for payment of water bonds. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 54 - NOTE K. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENTS During the year, the Authority adopted GASB Statement No. 72 Fair Value Measurement and Application and GASB Statement No. 79 Certain External Investment Pools and Pool Participants. These Statements address accounting and financial reporting issues related to fair value measurements and reporting of external investment pools. The adoption of this standard did not have an impact on the financial statements of the Authority. The Authority also adopted GASB issued Statement No. 76 The Hierarchy of Generally Accepted Accounting Principles for State and Local Governments. This Statement reduces the Generally Accepted Accounting Principles (GAAP) hierarchy to two categories of authoritative GAAP and addresses the use of authoritative and non- authoritative literature in the event that the accounting treatment for a transaction or other event is not specified within a source of authoritative GAAP. NOTE L. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED In June 2015, GASB issued Statement No. 73 Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement No. 68, and Amendments to Certain Provisions of GASB Statements No. 67 and 68; GASB Statement No. 74 Financial Reporting for Postemployment Benefit Plans other than Pension plans; GASB Statement No. 78 Pensions Provided through Certain Multiple- Employer Defined Benefit Pension Plan; and GASB Statement No. 82 Pension Issues – an Amendment of GASB Statements No. 67, No. 68, and No. 73. The primary objective of these Statements is to improve accounting and financial reporting by state and local governments for pensions. Adoption of these pronouncements will not have a significant effect on the financial statements of the Authority. In August 2015, GASB issued Statement No. 77 Tax Abatement Disclosures. This Statement improves financial reporting by giving the users essential information that is not consistently or comprehensively reported to the public at present. Disclosure of information about the nature and magnitude of tax abatements will make these transactions more transparent to the financial users. City of Blair, Nebraska NOTES TO THE FINANCIAL STATEMENTS For the year ended September 30, 2016 - 55 - NOTE L. NEW ACCOUNTING PRONOUNCEMENTS NOT YET ADOPTED – CONTINUED In January 2016, GASB issued Statement No. 80 Blending Requirements for Certain Components Units – an Amendment of GASB Statement No. 14. This Statement amends the blending requirements for the financial statement presentation of component units of all state and local governments. The additional criterion requires blending of a component unit incorporated as a not-for-profit corporation in which the primary government is the sole corporate member. The additional criterion does not apply to component units included in the financial reporting entity pursuant to the provisions of Statement No. 39, Determining Whether Certain Organizations Are Component Units. These Statements are effective for the Authority’s year ending September 30, 2017. NOTE M. NEGATIVE FUND BALANCE The Street fund has a negative fund balance of $734,810. The governmental fund has a negative unassigned fund balance as a result of overspending for specific purposes for which amounts had been committed. NOTE N. PRIOR PERIOD ADJUSTMENT If the necessary legal steps and the ability to consummate refinancing criteria have not been met as of yearend, then revenue anticipation notes should be reported as a liability in the governmental fund receiving proceeds, as well as, in the government-wide statement of net position. The beginning fund balance for the Street fund has been adjusted by $3,500,000 to properly report the bond anticipation notes issued on January 15, 2015, and maturing on December 15, 2017, as a current liability on the governmental funds balance sheet. The net impact is that the Street fund beginning and ending fund balance was decreased by $3,500,000 and the liabilities were increased by the same amount.       REQUIRED SUPPLEMENTAL INFORMATION Original and Final (Over)/Under Budget Actual Budget REVENUES Taxes 4,428,200$ 4,441,842$ (13,642)$ Charges for services 1,500,210 1,446,095 54,115 Interest income 8,580 6,952 1,628 Other revenues 777,700 638,735 138,965 Total revenues 6,714,690 6,533,624 181,066 EXPENDITURES Administration 1,641,006 671,177 969,829 Police Department 2,040,550 1,807,914 232,636 Fire Department 397,677 266,896 130,781 Parks Department 999,734 983,540 16,194 Library 448,182 465,080 (16,898) Swimming pool 65,050 41,655 23,395 Zoning 389,530 296,329 93,201 Mitigation 20,000 10,104 9,896 Insurance 958,660 925,528 33,132 Animal control 105,110 106,972 (1,862) Donated funds 67,198 42,774 24,424 Rescue squad 142,250 125,705 16,545 Reuse 50,000 50,000 - Economic development 450,000 76,950 373,050 Total expenditures 7,774,947 5,870,624 1,904,323 REVENUES OVER (UNDER) EXPENDITURES (1,060,257) 663,000 (1,723,257) OTHER FINANCING SOURCES (USES) Sale of assets 5,000 1,773 3,227 Bond proceeds 230,000 - 230,000 Insurance proceeds 420,000 532,313 (112,313) Operating transfers - in 1,966,350 1,890,711 75,639 Operating transfers - out (3,545,233) (2,602,161) (943,072) Total other financing sources (uses)(923,883) (177,364) (746,519) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER SOURCES (1,984,140) 485,636 (2,469,776)$ FUND BALANCE - BEGINNING OF YEAR 2,724,678 2,724,678 FUND BALANCE - END OF YEAR 740,538$ 3,210,314 City of Blair, Nebraska BUDGETARY COMPARISON SCHEDULE For the year ended September 30, 2016 GENERAL FUND See independent auditor's report - 57 - FUND BALANCE - END OF YEAR 3,210,314$ 471,818 Accrual adjustment for receivables 25,569 Accrual adjustments for payables (801) 3,706,900$ - 58 - See independent auditor's report BUDGETARY COMPARISON SCHEDULE GENERAL FUND - CONTINUED For the year ended September 30, 2016 City of Blair, Nebraska An explanation of the differences between budgetary inflows and outflows and revenues and expenditures determined in accordance with generally accepted accounting principles follows: The budget fund balance at the beginning of the year is a based on cash reserves rather than fund balance. General Fund Balance Accrual adjustments made because the City budgets for revenues and expenditures on the cash basis, rather than on the modified accrual basis. Original and Final (Over)/Under Budget Actual Budget REVENUES Taxes Property tax 1,530,000$ 1,509,463$ 20,537$ Sales tax 2,400,000 2,461,914 (61,914) Motor vehicle tax 154,400 170,345 (15,945) Occupation and franchise tax 273,000 225,285 47,715 Other taxes 70,800 74,835 (4,035) Total taxes 4,428,200 4,441,842 (13,642) Charges for services Business licenses and permits 228,050 190,051 37,999 Library 12,200 10,201 1,999 Equipment rental 69,000 68,482 518 Cemetery lots 14,000 13,500 500 Insurance 949,860 945,190 4,670 Grave openings 30,000 21,850 8,150 Towing 17,000 13,437 3,563 Rescue squad 152,000 155,449 (3,449) Other fees and charges 5,500 7,945 (2,445) Sales of fireworks 15,000 15,000 - RV park 7,600 4,990 2,610 Total charges for services 1,500,210 1,446,095 54,115 INTEREST INCOME 8,580 6,952 1,628 OTHER REVENUES State grants 233,500 30,608 202,892 Federal grants - - - Donations 27,500 60,532 (33,032) Reimbursements 461,000 492,736 (31,736) Other miscellaneous revenue 55,700 54,859 841 Total other revenues 777,700 638,735 138,965 Total revenues 6,714,690$ 6,533,624$ 181,066$ City of Blair, Nebraska GENERAL FUND REVENUES For the year ended September 30, 2016 BUDGETARY COMPARISON SCHEDULE - 59 - See independent auditor's report Original and Final (Over)/Under Budget Actual Budget REVENUES Property taxes 253,924$ 246,289$ 7,635$ Other local taxes 50,700 36,999 13,701 Federal funds 20,000 - 20,000 State funds 1,013,266 987,477 25,789 Warrant income - 325,431 (325,431) Interest income 300 170 130 Other revenue 120,300 96,523 23,777 Total revenues 1,458,490 1,692,889 (234,399) EXPENDITURES Salaries 440,158 415,095 25,063 FICA 35,000 30,800 4,200 Employee insurance 190,555 161,118 29,437 Retirement 27,800 25,635 2,165 Legal 3,500 2,400 1,100 Auditing 8,000 8,086 (86) Engineering 20,000 69,811 (49,811) Office expense 11,400 13,580 (2,180) Utilities 10,000 10,287 (287) Telephone 1,800 2,916 (1,116) Travel 6,500 7,630 (1,130) Training 4,700 5,788 (1,088) Insurance 20,000 24,021 (4,021) Maintenance 140,000 399,015 (259,015) Street lighting 140,000 143,506 (3,506) County fees - 2,397 (2,397) Car expense 3,400 5,336 (1,936) Contract landscaping 62,000 69,879 (7,879) Gas, diesel, and oil 32,000 20,518 11,482 Materials and supplies 162,100 229,454 (67,354) Rental 30,000 18,907 11,093 Capital outlay Equipment 187,200 31,809 155,391 Land - 475 (475) Street improvements 1,824,780 1,340,031 484,749 Total expenditures 3,360,893 3,038,494 322,399 REVENUES OVER (UNDER) EXPENDITURES (1,902,403) (1,345,605) (556,798) See independent auditor's report - 60 - City of Blair, Nebraska BUDGETARY COMPARISON SCHEDULE STREET FUND For the year ended September 30, 2016 Original and Final (Over)/Under Budget Actual Budget REVENUES OVER (UNDER) EXPENDITURES (1,902,403)$ (1,345,605)$ (556,798)$ OTHER FINANCING SOURCES Sale of assets - 52,048 (52,048) Insurance proceeds 65,000 71,997 (6,997) Operating transfers - in 1,613,780 816,214 797,566 Total other financing sources 1,678,780 940,259 738,521 REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER SOURCES (223,623) (405,346) 181,723$ FUND BALANCE BEGINNING OF YEAR 567,019 567,019 FUND BALANCE END OF YEAR 343,396$ 161,673 1,318,624 Accrual adjustments for receivables 2,796,290 Accrual adjustments for payables (1,511,397) 1,284,893 Prior Period Adjustment (3,500,000) (734,810)$ See independent auditor's report - 61 - An explanation of the differences between budgetary inflows and outflows and revenues and expenditures determined in accordance with generally accepted accounting principles follows: The budget fund balance at the beginning of the year is a based on cash reserves rather than fund balance. Street Fund Balance Accrual adjustments made because the City budgets for revenues and expenditures on the cash basis, rather than on the modified accrual basis. City of Blair, Nebraska BUDGETARY COMPARISON SCHEDULE STREET FUND - CONTINUED For the year ended September 30, 2016 Original and Final (Over)/Under Budget Actual Budget REVENUES Keno/lottery proceeds 110,000$ 109,767$ 233$ Other revenue 40 58 (18) Total Revenue 110,040 109,825 215 EXPENDITURES Community betterment project 120,000 13,750 106,250 Other expenses 22,100 24,488 (2,388) Total expenditures 142,100 38,238 103,862 REVENUES OVER (UNDER) EXPENDITURES (32,060) 71,587 (103,647) OTHER FINANCING SOURCES (USES) Operating transfers - out (106,850) (58,753) (48,097) REVENUES AND OTHER FINANCING SOURCES OVER (UNDER) EXPENDITURES AND OTHER SOURCES (138,910) 12,834 (151,744)$ FUND BALANCE BEGINNING OF YEAR 171,421 171,421 FUND BALANCE END OF YEAR 32,511$ 184,255 The budget fund balance at the beginning of the year is based on cash reserves rather than fund balance. 4,203 Accrual adjustment for receivables (653) Accrual adjustments for payables - Keno Fund Balance 187,805$ City of Blair, Nebraska BUDGETARY COMPARISON SCHEDULE KENO FUND For the year ended September 30, 2016 - 62 - See independent auditor's report An explanation of the differences between budgetary inflows and outflows and revenues and expenditures determined in accordance with generally accepted accounting principles follows:         SUPPLEMENTAL INFORMATION ASSETS Restricted cash and cash equivalents 381,069$ Total assets 381,069$ FUND BALANCES Restricted Economic development 381,069$ Total fund balances 381,069$ - 64 - City of Blair, Nebraska INDIVIDUAL FUND BALANCE SHEET ECONOMIC DEVELOPMENT FUND, A FUND WITHIN THE GENERAL FUND September 30, 2016 See independent auditor's report REVENUES Interest income 268$ Other revenues 750 Total revenues 1,018 EXPENDITURES Administration 76,950 Total expenditures 76,950 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES (75,932) OTHER FINANCING SOURCES (USES) Operating transfers - in 250,000 Total other financing sources 250,000 NET CHANGE IN FUND BALANCES 174,068 FUND BALANCES, BEGINNING OF YEAR 207,001 FUND BALANCES, END OF YEAR 381,069$ - 65 - City of Blair, Nebraska INDIVIDUAL FUND STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE ECONOMIC DEVELOPMENT FUND, A FUND WITHIN THE GENERAL FUND For the year ended September 30, 2016 See independent auditor's report Ec o n o m i c T o t a l Ge n e r a l R e s c u e S a l e s T a x I n s u r a n c e H o t e l / M o t e l C D B G D o n a t i o n s C a p i t a l O u t l a y R e u s e D e v e l o p m e n t G e n e r a l Fu n d S q u a d F u n d F u n d F u n d T a x F u n d F u n d F u n d R e s e r v e F u n d F u n d F u n d F u n d AS S E T S Ca s h a n d c a s h e q u i v a l e n t s 3 8 2 , 6 3 3 $ - $ 2 , 0 4 7 , 3 4 5 $ 93 , 1 8 1 $ 17 , 3 0 4 $ 10 0 $ - $ 17 , 0 0 0 $ - $ - $ 2,557,563 $ Re c e i v a b l e s In t e r g o v e r n m e n t a l - - - - - - - - - - - Sa l e s t a x - - 39 5 , 4 1 1 - - - - - - - 395,411 Sp e c i a l a s s e s s m e n t s 37 7 - - - - - - - - - 377 Ot h e r - - - - 2, 6 3 0 - - - - - 2,630 Du e f r o m C o u n t y T r e a s u r e r 10 0 , 1 6 5 - - - - - - - - - 100,165 Re s t r i c t e d c a s h a n d c a s h e q u i v a l e n t s Ca s h 25 0 , 0 0 0 1 1 2 , 6 6 7 - - - - 53 , 0 1 7 - 6 3 8 1 , 0 6 9 796,759 Ce r t i f i c a t e s o f d e p o s i t - 12 5 , 0 0 0 - - - - - - - - 125,000 To t a l a s s e t s 73 3 , 1 7 5 $ 23 7 , 6 6 7 $ 2, 4 4 2 , 7 5 6 $ 93 , 1 8 1 $ 19 , 9 3 4 $ 10 0 $ 53 , 0 1 7 $ 17 , 0 0 0 $ 6 $ 3 8 1 , 0 6 9 $ 3,977,905 $ LI A B I L I T I E S Ac c o u n t s p a y a b l e 10 0 , 2 2 2 $ - $ - $ - $ 4, 3 9 1 $ - $ 29 $ - $ - $ - $ 104,642 $ Ac c r u e d e x p e n s e s 37 , 2 5 1 - - - - - - - - - 37,251 De p o s i t s p a y a b l e 67 , 8 0 0 - - - - - - - - - 67,800 To t a l l i a b i l i t i e s 20 5 , 2 7 3 - - - 4, 3 9 1 - 29 - - - 209,693 DE F E R R E D I N F L O W S O F R E S O U R C E S In t e r g o v e r n m e n t a l - - - - - - - - - - - Sp e c i a l a s s e s s m e n t s 37 7 - - - - - - - - - 377 Pr o p e r t y t a x e s 60 , 9 3 5 - - - - - - - - - 60,935 To t a l d e f e r r e d i n f l o w o f r e s o u r c e s 61 , 3 1 2 - - - - - - - - - 61,312 FU N D B A L A N C E S Re s t r i c t e d Do n a t e d f u n d s - - - - - - 52 , 9 8 8 - - - 52,988 Ec o n o m i c d e v e l o p m e n t - - - - - - - - - 38 1 , 0 6 9 381,069 Re u s e f u n d s - - - - - - - - 6 - 6 Re s c u e s q u a d - 23 7 , 6 6 7 - - - - - - - - 237,667 As s i g n e d En c u m b r a n c e s 10 0 , 2 2 2 - - - 4, 3 9 1 - - - - - 104,613 Un a s s i g n e d 36 6 , 3 6 8 - 2 , 4 4 2 , 7 5 6 93 , 1 8 1 11 , 1 5 2 10 0 - 17 , 0 0 0 - - 2,930,557 To t a l f u n d b a l a n c e s 46 6 , 5 9 0 23 7 , 6 6 7 2, 4 4 2 , 7 5 6 93 , 1 8 1 15 , 5 4 3 10 0 52 , 9 8 8 17 , 0 0 0 6 3 8 1 , 0 6 9 3,706,900 To t a l l i a b i l i t i e s a n d f u n d b a l a n c e s 73 3 , 1 7 5 $ 23 7 , 6 6 7 $ 2, 4 4 2 , 7 5 6 $ 93 , 1 8 1 $ 19 , 9 3 4 $ 10 0 $ 53 , 0 1 7 $ 17 , 0 0 0 $ 6 $ 3 8 1 , 0 6 9 $ 3,977,905 $ - 6 6 - Ci t y o f B l a i r , N e b r a s k a CO M B I N I N G B A L A N C E S H E E T GE N E R A L F U N D Se p t e m b e r 3 0 , 2 0 1 6 Se e i n d e p e n d e n t a u d i t o r ' s r e p o r t Economic Total Ge n e r a l R e s c u e S a l e s T a x I n s u r a n c e H o t e l / M o t e l C D B G D o n a t i o n s C a p i t al O u t l a y R e u s e D e v e l o p m e n t G e n e r a l Fu n d S q u a d F u n d F u n d F u n d T a x F u n d F u n d F u n d R e s e r v e F u n d F u n d F u n d F u n d RE V E N U E S Ta x e s 1 , 9 7 0 , 4 2 7 $ - $ 2 , 4 5 7 , 9 9 6 $ - $ 3 8 , 7 9 4 $ - $ - $ - $ - $ - $ 4,467,217 $ Ch a r g e s f o r s e r v i c e s 3 4 5 , 4 5 6 1 5 5 , 4 4 9 - 9 4 5 , 1 9 0 - - - - - - 1,446,095 In t e r g o v e r n m e n t a l 3 2 , 0 2 0 - 4 5 6 , 7 9 0 - - - 2 0 , 1 7 6 - - - 508,986 In t e r e s t i n c o m e 4 , 5 0 7 4 9 3 1 , 6 9 9 1 0 0 1 9 - 6 0 - - 2 6 8 7,146 Ot h e r r e v e n u e s 4 7 , 4 7 5 - - - - - 3 1 , 5 2 4 - 5 0 , 0 0 0 7 5 0 1 2 9 , 7 4 9 To t a l r e v e n u e s 2 , 3 9 9 , 8 8 5 1 5 5 , 9 4 2 2 , 9 1 6 , 4 8 5 9 4 5 , 2 9 0 3 8 , 8 1 3 - 5 1 , 7 6 0 - 5 0 , 0 0 0 1 , 0 1 8 6,559,193 EX P E N D I T U R E S Ad m i n i s t r a t i o n 4 7 4 , 9 3 1 - 1 2 6 , 7 8 7 9 2 5 , 5 2 7 7 , 3 9 1 - - - 5 0 , 0 0 0 7 6 , 9 5 0 1,661,586 Po l i c e D e p a r t m e n t 1 , 7 7 2 , 1 5 5 - - - - - - - - - 1,772,155 Fi r e D e p a r t m e n t 1 1 8 , 8 2 9 1 2 5 , 4 7 1 - - - - - - - - 244,300 Pa r k s D e p a r t m e n t 5 4 4 , 0 6 4 - - - - - - - - - 544,064 Li b r a r y 4 6 6 , 9 9 0 - - - - - - - - - 466,990 Sw i m m i n g p o o l 4 1 , 1 8 5 - - - - - - - - - 41,185 Zo n i n g 2 8 7 , 2 6 3 - - - - - - - - - 287,263 Ca p i t a l o u t l a y 6 8 8 , 8 2 2 - - - 5 , 8 4 3 - 1 2 , 2 0 8 - - - 706,873 An i m a l c o n t r o l 1 0 6 , 3 3 9 - - - - - - - - - 106,339 Mi t i g a t i o n 1 0 , 1 0 4 - - - - - - - - - 10,104 Do n a t e d f u n d s - - - - - - 3 0 , 5 6 6 - - - 30,566 To t a l e x p e n d i t u r e s 4 , 5 1 0 , 6 8 2 1 2 5 , 4 7 1 1 2 6 , 7 8 7 9 2 5 , 5 2 7 1 3 , 2 3 4 - 4 2 , 7 7 4 - 5 0 , 0 0 0 7 6 , 9 5 0 5,871,425 EX C E S S ( D E F I C I E N C Y ) O F R E V E N U E S OV E R E X P E N D I T U R E S ( 2 , 1 1 0 , 7 9 7 ) 3 0 , 4 7 1 2 , 7 8 9 , 6 9 8 1 9 , 7 6 3 2 5 , 5 7 9 - 8 , 9 8 6 - - ( 7 5 , 9 3 2 ) 687,768 OT H E R F I N A N C I N G S O U R C E S ( U S E S ) Sa l e o f a s s e t s 1 , 7 7 3 - - - - - - - - - 1,773 In s u r a n c e p r o c e e d s 5 3 2 , 3 1 3 - - - - - - - - - 532,313 Op e r a t i n g t r a n s f e r s - i n 1 , 6 3 2 , 7 1 1 - - - - - - 8 , 0 0 0 - 2 5 0 , 0 0 0 1,890,711 Op e r a t i n g t r a n s f e r s - o u t ( 8 , 0 0 0 ) - ( 2 , 5 2 9 , 1 6 1 ) ( 2 5 , 0 0 0 ) ( 4 0 , 0 0 0 ) - - - - - (2,602,161) To t a l o t h e r f i n a n c i n g s o u r c e s 2 , 1 5 8 , 7 9 7 - ( 2 , 5 2 9 , 1 6 1 ) ( 2 5 , 0 0 0 ) ( 4 0 , 0 0 0 ) - - 8 , 0 0 0 - 2 5 0 , 0 0 0 (177,364) NE T C H A N G E I N F U N D B A L A N C E S 4 8 , 0 0 0 3 0 , 4 7 1 2 6 0 , 5 3 7 ( 5 , 2 3 7 ) ( 1 4 , 4 2 1 ) - 8 , 9 8 6 8 , 0 0 0 - 1 7 4 , 0 6 8 510,404 FU N D B A L A N C E S , B E G I N N I N G O F Y E A R 4 1 8 , 5 9 0 2 0 7 , 1 9 6 2 , 1 8 2 , 2 1 9 9 8 , 4 1 8 2 9 , 9 6 4 1 0 0 4 4 , 0 0 2 9 , 0 0 0 6 2 0 7 , 0 0 1 3,196,496 FU N D B A L A N C E S , E N D O F Y E A R 4 6 6 , 5 9 0 $ 2 3 7 , 6 6 7 $ 2 , 4 4 2 , 7 5 6 $ 9 3 , 1 8 1 $ 1 5 , 5 4 3 $ 1 0 0 $ 5 2 , 9 8 8 $ 1 7 , 0 0 0 $ 6 $ 3 8 1 , 0 6 9 $ 3,706,900 $ - 6 7 - Ci t y o f B l a i r , N e b r a s k a C O M B I N I N G S T A T E M E N T O F R E V E N U E S , E X P E N D I T U R E S , A N D C H A N G E S I N FU N D B A L A N C E - G E N E R A L F U N D Fo r t h e y e a r e n d e d S e p t e m b e r 3 0 , 2 0 1 6 Se e i n d e p e n d e n t a u d i t o r ' s r e p o r t Federal CFDA Federal Number Expenditures U.S. Department of Transportation: Direct Programs: Highway Safety Cluster: National Priority Safety Programs 20.616 405d-16-02-04 3,500$ Total Highway Safety Cluster 3,500 Passed through State of Nebraska Department of Roads: Highway Planning and Construction Cluster: Federal-Aid Highway Program 20.205 ENH-89(26)1,258 Federal-Aid Highway Program 20.205 URB-6462(1)22,611 Federal-Aid Highway Program 20.205 ENH-89(30)387,828 Total Highway Planning and Construction Cluster 411,697 Total U.S. Department of Transportation 415,197 Executive Office of the President Passed through Drug Enforcement Administration: High Intensity Drug Trafficking Areas Program 95.001 4,062 Total Executive Office of the President 4,062 U.S. Department of Homeland Security Passed through State of Nebraska Emergency Management Agency: Hazard Mitigation 97.039 FEMA-DR-4013-NE 1,077,242 Total U.S. Department of Homeland Security 1,077,242 Total expenditures of federal awards 1,496,501$ - 68 - See notes to the schedule of expenditures of federal awards and independent auditor's report. City of Blair, Nebraska SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended September 30, 2016 Grant/Project NumberFederal grantor/pass-through grantor/program title City of Blair, Nebraska NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the year ended September 30, 2016 - 69 -   NOTE A. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1. General The accompanying schedule of expenditures of federal awards (the Schedule) presents the activity of all federal financial assistance programs of City of Blair, Nebraska (the City). The City’s reporting entity is defined in note A to the City’s financial statements. Federal financial assistance received directly from federal agencies, as well as passed through other governmental agencies, is included on the Schedule. The Schedule presents expenditures paid for each federal award program in accordance with the Office of Management and Budget (OMB) Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Federal programs are reported as presented in the Catalog of Federal Domestic Assistance (CFDA), whenever possible. 2. Basis of Accounting The Schedule is presented on the full accrual basis of accounting. 3. De Minimis Indirect Cost Rate The City has elected not to charge the 10% de minimis indirect cost rate to its federal award programs. NOTE B. CONTINGENCIES The City receives funds under various federal grant programs, and such awards are to be expended in accordance with the provisions of the various grants. Compliance with the grants is subject to audit by various government agencies, which may impose sanctions in the event of noncompliance. Management believes that is has complied with all aspects of the various grant provisions and the results of adjustments, if any, relating to such audits would not have any material financial impact. INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS To the City Council City of Blair, Nebraska We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, and each major fund of the City of Blair, Nebraska, as of and for the year ended September 30, 2016, and the related notes to the financial statements, which collectively comprise the City of Blair, Nebraska’s basic financial statements, and have issued our report thereon dated February 3, 2017. Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Blair, Nebraska’s internal control over financial reporting to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Blair, Nebraska’s internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of City of Blair, Nebraska’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness i s a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. www.hayes-cpa.comWestroads Pointe | 1015 N. 98th St., Suite 200 | Omaha, NE 68114 | T 402-390-2480 Omni Center | 300 West Broadway, Suite 224 | Council Bluffs, IA 51503 | T 712-322-5503 - 71 - Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Blair, Nebraska’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of material noncompliance or other matters that are required to be reported under Government Auditing Standards. Purpose of this Report The purpose of this report is solely 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 the effectiveness of the entity’s internal control over financial reporting or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control over financial reporting and compliance. Accordingly, this communication is not suitable for any other purpose. Hayes & Associates, L.L.C. Omaha, Nebraska February 3, 2017   INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB THE UNIFORM GUIDANCE To the City Council City of Blair, Nebraska Report on Compliance for Each Major Federal Program We have audited the City of Blair, Nebraska’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City of Blair, Nebraska’s major federal program for the year ended September 30, 2016. The City of Blair, Nebraska’s major federal programs is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the City of Blair, Nebraska’s major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Blair, Nebraska’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. www.hayes-cpa.comWestroads Pointe | 1015 N. 98th St., Suite 200 | Omaha, NE 68114 | T 402-390-2480 Omni Center | 300 West Broadway, Suite 224 | Council Bluffs, IA 51503 | T 712-322-5503 - 73 - We believe that our audit provides a reasonable basis for our opinions on compliance for the major federal program. However, our audit does not provide a legal determination of the City of Blair, Nebraska’s compliance. Opinion on Each Major Federal Program In our opinion, the City of Blair, Nebraska, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal programs for the year ended September 30, 2016. Report on Internal Control Over Compliance Management of the City of Blair, Nebraska is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the Housing Authority’s internal control over compliance with the types of requirements that could have a direct and material effect on the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City of Blair, Nebraska’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. - 74 - The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Hayes & Associates, L.L.C. Omaha, Nebraska February 3, 2017 City of Blair, Nebraska SCHEDULE OF FINDINGS AND QUESTIONED COST For the year ended September 30, 2016 - 75 - I. SUMMARY OF AUDIT RESULTS Financial Statements T y p e o f a u d i t o r s ’ r e p o r t s i s s u e d : Unmodified Internal controls over financial reporting:  M a t e r i a l w e a k n e s s e s i d e n t i f i e d : No  Significant deficiencies identified: No Noncompliance material to financial statements noted: No Federal Awards Internal control over major programs:  M a t e r i a l w e a k n e s s e s i d e n t i f i e d : No  S i g n i f i c a n t d e f i c i e n c i e s i d e n t i f i e d : No Type of auditors’ report issued on c o m p l i a n c e f o r e a c h m a j o r p r o g r a m : Unmodified Any audit findings disclosed that are required to Be reported in accordance with Section 200.516 o f t h e U n i f o r m G u i d a n c e : No Identification of major programs: CFDA Numbers Name of Federal Program or Cluster 97.039 Hazard Mitigation Grant City of Blair, Nebraska SCHEDULE OF FINDINGS AND QUESTIONED COST – CONTINUED For the year ended September 30, 2016 - 76 - I. SUMMARY OF AUDIT RESULTS – CONTINUED Dollar threshold used to distinguish between Type A and Type B programs: $750,000 Auditee qualified as low-risk auditee: Yes II. FINDINGS - FINANCIAL STATEMENTS None noted III. FINDINGS AND QUESTIONED COSTS—MAJOR FEDERAL AWARD PROGRAMS None noted City of Blair, Nebraska SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS For the year ended September 30, 2016 - 77 - II. FINDINGS - FINANCIAL STATEMENTS None noted III. FINDINGS AND QUESTIONED COSTS—MAJOR FEDERAL AWARD PROGRAMS None noted