lexington-fayette urban county government - 2014 … · maturity schedule $24,190,000...
TRANSCRIPT
OFFICIAL STATEMENT DATED OCTOBER 8, 2014
New Issue – Book Entry Only Ratings: Moody’s : "Aa2"S&P: "AA+ "
(See "RATINGS" herein.)
In the opinion of Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP, Bond Counsel, under existing law (i)interest on the Series 2014A Bonds is excludible from gross income of the holders thereof for purposes of federal incometaxation; (ii) interest on the Series 2014A Bonds is not be a specific item of tax preference for purposes of the federal alternativeminimum tax imposed on individuals and corporations; (iii) interest on the Series 2014B Bonds is not excludible from grossincome of the holders thereof for purposes of federal income taxation; and (iv) interest on the Series 2014 Bonds is exempt fromKentucky income tax and the Series 2014 Bonds are exempt from ad valorem taxation by the Commonwealth of Kentucky and anyof its political subdivisions, all subject to the qualifications described herein under the heading "TAX MATTERS."
$34,600,000LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT (KENTUCKY)
SEWER SYSTEM REVENUE REFUNDING BONDSSERIES 2014
$24,190,000Tax-Exempt Sewer System
Revenue Refunding Bonds, Series 2014A
$10,410,000Taxable Sewer System
Revenue Refunding Bonds, Series 2014B
Dated: Date of Delivery Due: As Shown on Inside Cover
The above-captioned Series 2014A Bonds and Series 2014B Bonds (together the "Series 2014 Bonds") of theLexington-Fayette Urban County Government (the “Issuer”) were sold pursuant to a competitive sale as provided in the OfficialTerms and Conditions of Bond Sale. The Series 2014 Bonds shall be dated, bear interest at the rates, and mature, all as set forthon the inside cover pages hereof. The Series 2014 Bonds shall bear interest semiannually on each March 1 and September 1 tomaturity, commencing March 1, 2015. The Series 2014 Bonds are subject to redemption prior to maturity as described herein.
The Series 2014 Bonds will be initially issued as fully registered bonds in book entry form in the name of TheDepository Trust Company ("DTC") or its nominee. There will be no distribution of Series 2014 Bonds to owners of book entryinterests. So long as DTC or its nominee is the sole registered owner, DTC will receive all payments of principal and interestwith respect to the Series 2014 Bonds from The Bank of New York Mellon Trust Company, N.A., Louisville, Kentucky, astrustee and paying agent (the "Trustee"). DTC is required by its rules and procedures to remit such payments to participants inDTC for subsequent disbursement to the owners of book entry interests. So long as DTC or its nominee is the registered ownerof the Series 2014 Bonds, references herein to the Bondholders or registered owners (other than under the captions "TAXMATTERS", "LEGAL MATTERS" and "CONTINUING DISCLOSURE") shall mean DTC or its nominee, and not the ownersof book entry interests in the Series 2014 Bonds. The Series 2014 Bonds will be issued in denominations of $5,000 each orintegral multiples thereof.
The Series 2014 Bonds are being issued by the Issuer for the purpose of (i) currently refunding the entire outstandingprincipal amount of its Taxable Sewer Revenue Bonds, Series 2009 (Build America Bonds – Direct Pay); (ii) advance refundingthe entire outstanding principal amount of its Sewer System Revenue Refunding Bonds, Series 2010A; and (iii) paying the costsof issuance of the Series 2014 Bonds. See “PURPOSE AND PLAN OF REFUNDING” herein.
The Series 2014 Bonds will be secured by a Master Trust Agreement, dated as of September 1, 2014, as amended andsupplemented by a First Supplemental Trust Agreement, dated as of the date of the Series 2014 Bonds (together, the “TrustAgreement”), by and between the Trustee and the Issuer. Pursuant to the Trust Agreement, the payment of the Debt ServiceCharges on the Series 2014 Bonds, and any future Additional Bonds to be issued on parity therewith, shall be secured by a pledgeof the Pledged Revenues of the Sewer System of the Issuer, including the Revenue Fund created under the Trust Agreement.
THE SERIES 2014 BONDS ARE SPECIAL AND LIMITED REVENUE OBLIGATIONS OF THE ISSUER ANDDO NOT CONSTITUTE A DEBT, GENERAL OBLIGATION, AN INDEBTEDNESS, OR PLEDGE OF THE FAITH ANDCREDIT OR LIABILITY OF THE ISSUER, THE COMMONWEALTH OF KENTUCKY OR OF ANY AGENCY ORPOLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF THE CONSTITUTION OR STATUTES OF THECOMMONWEALTH OF KENTUCKY, AND THE SERIES 2014 BONDS ARE PAYABLE SOLELY FROM AND SECUREDBY THE PLEDGED REVENUES OF THE SEWER SYSTEM, INCLUDING THE REVENUE FUND CREATED UNDERTHE TRUST AGREEMENT. NEITHER THE CREDIT NOR THE TAXING POWER OF THE ISSUER, THECOMMONWEALTH OF KENTUCKY OR ANY AGENCY OR POLITICAL SUBDIVISION THEREOF IS PLEDGED TOTHE PAYMENT OF THE PRINCIPAL OF OR INTEREST ON THE SERIES 2014 BONDS.
The Series 2014 Bonds are offered when, as and if issued, subject to the approval of legality and tax treatment by Peck,Shaffer & Williams, a division of Dinsmore & Shohl LLP, Bond Counsel, Lexington, Kentucky. The Series 2014 Bonds areexpected to be available for delivery on or about October 23, 2014.
THIS COVER PAGE CONTAINS CERTAIN INFORMATION FOR QUICK REFERENCE ONLY. IT IS NOT ASUMMARY OF THIS ISSUE. INVESTORS MUST READ THE ENTIRE OFFICIAL STATEMENT TO OBTAININFORMATION ESSENTIAL TO THE MAKING OF AN INFORMED INVESTMENT DECISION.
HUTCHINSON, SHOCKEY, ERLEY & CO.(Series 2014A Bonds)
CITIGROUP(Series 2014B Bonds
MATURITY SCHEDULE
$24,190,000
Lexington-Fayette Urban County Government (Kentucky)
Tax-Exempt Sewer System Revenue Refunding Bonds
Series 2014A
Year
(September 1)
Amount
Interest
Rate
Price
Yield
CUSIP†
2018 $ 500,000 5.000% 115.707 0.850% 528902 JF7
2019 1,800,000 5.000% 117.922 1.190% 528902 JG5 2020 2,945,000 5.000% 119.796 1.460% 528902 JH3 2021 3,095,000 5.000% 121.051 1.730% 528902 JJ9 2022 1,490,000 5.000% 121.949 1.970% 528902 JK6 2023 1,560,000 4.000% 115.278 2.100% 528902 JL4 2024 1,630,000 5.000% 124.885 2.180% 528902 JM2 2025 1,695,000 3.000% 104.788
* 2.450% 528902 JN0
2026 1,755,000 4.000% 113.215* 2.480% 528902 JP5
2027 1,825,000 4.000% 112.563* 2.550% 528902 JQ3
2028 1,895,000 3.000% 99.000 3.089% 528902 JR1 2029 1,960,000 4.000% 111.180
* 2.700% 528902 JS9
2030 2,040,000 4.000% 110.633* 2.760% 528902 JT7
TOTAL $24,190,000
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*Priced to the September 1, 2024 call date.
$10,410,000
Lexington-Fayette Urban County Government (Kentucky)
Taxable Sewer System Revenue Refunding Bonds
Series 2014B
Year
(September 1)
Amount
Interest
Rate
Price
Yield
CUSIP†
2015 $2,290,000 5.000% 104.030 0.280% 528902 JU4
2016 2,410,000 5.000% 108.009 0.650% 528902 JV2 2017 2,540,000 5.000% 110.932 1.100% 528902 JW0 2018 2,165,000 5.000% 113.062 1.500% 528902 JX8 2019 1,005,000 5.000% 114.561 1.850% 528902 JY6
TOTAL $10,410,000
† Copyright 2014, CUSIP Global Services. CUSIP is a registered trademark of the American Bankers Association.
CUSIP Global Services is managed on behalf of the American Bankers Association by Standard & Poor’s. CUSIP
data herein are provided by Standard & Poor’s, CUSIP Service Bureau, a Division of The McGraw-Hill Companies,
Inc. The CUSIP numbers listed are being provided solely for the convenience of the holders only at the time of
issuance of the Series 2014 Bonds, and the Lexington-Fayette Urban County Government does not make any
representations with respect to such numbers or undertake any responsibility for their accuracy now or at any time in
the future. The CUSIP number for a specific maturity is subject to being changed after the issuance of the Series
2014 Bonds as a result of various subsequent actions, including, but not limited to, a refunding in whole or in part of
such maturity or as a result of the procurement of secondary market portfolio insurance or other similar
enhancement by investors that is applicable to all or a portion of certain maturities of the Series 2014 Bonds.
REGARDING THIS OFFICIAL STATEMENT
This Official Statement does not constitute an offering of any security other than theoriginal offering of the Series 2014 Bonds of the Lexington-Fayette Urban County Government(the “Issuer”). No dealer, broker, salesman or other person has been authorized by the Issuer togive any information or to make any representation, other than those contained in this OfficialStatement, and, if given or made, such other information or representations must not be reliedupon as having been authorized by the Issuer. This Official Statement does not constitute anoffer to sell or the solicitation of an offer to buy, nor shall there be any sale of the Series 2014Bonds by any person in any jurisdiction in which it is unlawful for such person to make suchoffer, solicitation or sale.
The information and expressions of opinion herein are subject to change without notice.Neither the delivery of this Official Statement nor any sale made hereunder shall, under anycircumstances, create any implication that there has been no change in the affairs of the Issuersince the date hereof.
Upon issuance, the Series 2014 Bonds will not be registered by the Issuer under anyfederal or state securities law, and will not be listed on any stock or other securities exchange.Neither the Securities and Exchange Commission nor any other federal, state, municipal or othergovernmental entity or agency except the Issuer will have, at the request of the Issuer, passedupon the accuracy or adequacy of this Official Statement or approved the Series 2014 Bonds forsale.
All financial and other information presented in this Official Statement has been providedby the Issuer from its records, except for information expressly attributed to other sources. Thepresentation of information, including tables of receipts from taxes and other sources, is intendedto show recent historic information, and is not intended to indicate future or continuing trends inthe financial position or other affairs of the Issuer. No representation is made that pastexperience, as is shown by that financial and other information, will necessarily continue or berepeated in the future.
Insofar as the statements contained in this Official Statement involve matters of opinionor estimates, even if not expressly stated as such, such statements are made as such and not asrepresentations of fact or certainty, no representation is made that any of such statements havebeen or will be realized, and such statements should be regarded as suggesting independentinvestigation or consultation of other sources prior to the making of investment decisions.Certain information may not be current; however, attempts were made to date and documentsources of information. Neither this Official Statement nor any oral or written representations byor on behalf of the Issuer preliminary to sale of the Series 2014 Bonds should be regarded as partof the contract of the Issuer with the successful bidder or the holders from time to time of theSeries 2014 Bonds.
References herein to provisions of Kentucky law, whether codified in the KentuckyRevised Statutes ("KRS") or uncodified, or to the provisions of the Kentucky Constitution or theordinances or resolutions of the Issuer, are references to such provisions as they presently exist.Any of these provisions may from time to time be amended, repealed or supplemented.
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As used in this Official Statement, "debt service" means principal of, interest and anypremium on, the obligations referred to; and "State" or "Kentucky" means the Commonwealth ofKentucky.
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LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT
MayorJim Gray
Council Members at LargeLinda Gorton (Vice Mayor)
Chuck Ellinger IISteve Kay
Council Members by District
1st DistrictChris Ford
5th DistrictBill Farmer, Jr.
9th DistrictJennifer Mossotti
2nd DistrictShevawn Akers
6th DistrictKevin O. Stinnett
10th DistrictHarry Clarke
3rd DistrictDiane Lawless
7th DistrictJennifer Scutchfield
11th DistrictPeggy Henson
4th DistrictJulian Beard
8th DistrictGeorge Myers
12th DistrictEd Lane
Commissioner of FinanceWilliam O'Mara
Clerk of the Lexington-Fayette Urban County CouncilMeredith Nelson
Division of Water QualityCharles H. Martin, P.E., Director
TRUSTEEThe Bank of New York Mellon Trust Company, N.A.
Louisville, Kentucky
FINANCIAL ADVISORRaymond James & Associates, Inc.
Lexington, Kentucky
BOND COUNSELPeck, Shaffer & Williams, a division of Dinsmore & Shohl LLP
Lexington, Kentucky
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TABLE OF CONTENTS
REGARDING THIS OFFICIAL STATEMENT ............................................................................ I
INTRODUCTION .......................................................................................................................... 1
The Issuer.................................................................................................................................. 1Purpose of the Series 2014 Bonds ............................................................................................ 1Original Issuance of the Series 2009 Bonds as Build America Bonds ..................................... 2Security and Source of Payment for the Series 2014 Bonds as Parity Bonds .......................... 3Parties to the Issuance of the Series 2014 Bonds...................................................................... 3Authority for Issuance............................................................................................................... 3Description of the Series 2014 Bonds....................................................................................... 4Tax Matters ............................................................................................................................... 4Offering and Delivery of the Series 2014 Bonds...................................................................... 5Disclosure Information ............................................................................................................. 5Additional Information ............................................................................................................. 5
DESCRIPTION OF THE SERIES 2014 BONDS.......................................................................... 6
General ...................................................................................................................................... 6Redemption Provisions ............................................................................................................. 7Book-Entry-Only System.......................................................................................................... 8
SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2014 BONDS....................... 11
General .................................................................................................................................... 11Rate Covenant......................................................................................................................... 11Historical Debt Service Coverage........................................................................................... 12Additional Bonds and Borrowing Plans ................................................................................. 13
PURPOSE OF THE SERIES 2014 BONDS AND PLAN OF REFUNDING............................. 14
Purpose of the Series 2014 Bonds .......................................................................................... 14Issuance of the Prior Bonds .................................................................................................... 14Redemption of the Series 2009 Bonds as Build America Bonds............................................ 15Plan of Refunding ................................................................................................................... 15Verification of Mathematical Accuracy.................................................................................. 18Sources and Uses of Funds ..................................................................................................... 18
PRINCIPAL AND INTEREST REQUIREMENTS ON THE SERIES 2014 BONDS ANDCURRENT OUTSTANDING OBLIGATIONS .......................................................................... 19
Prior Bonds ............................................................................................................................. 19Principal and Interest Requirements with respect to the Series 2014 Bonds.......................... 19Other Sewer System Obligations ............................................................................................ 20Estimated Principal and Interest Requirements with respect to the Series 2014 Bonds and theOther Sewer System Obligations ............................................................................................ 21
INVESTMENT CONSIDERATIONS ......................................................................................... 22
THE ISSUER................................................................................................................................ 22
THE SEWER SYSTEM ............................................................................................................... 23
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General .................................................................................................................................... 23Consent Decree ....................................................................................................................... 24Administration and Management of the Sewer System.......................................................... 25The Service Area..................................................................................................................... 30Customer History.................................................................................................................... 31Waste Water Treatment Plants................................................................................................ 32Blue Sky Wastewater Treatment Plant ................................................................................... 33Pump Stations ......................................................................................................................... 34Rates and Charges................................................................................................................... 34
TAX MATTERS........................................................................................................................... 37
Series 2014A Bonds................................................................................................................ 37Series 2014B Bonds................................................................................................................ 39
CONTINUING DISCLOSURE.................................................................................................... 40
Corrective Action Related to Certain Disclosure Requirements ............................................ 40
UNDERWRITING ....................................................................................................................... 41
LEGAL MATTERS...................................................................................................................... 41
RATINGS ..................................................................................................................................... 42
FINANCIAL ADVISOR .............................................................................................................. 43
MISCELLANEOUS ..................................................................................................................... 44
Appendices
APPENDIX A Summary of Certain DefinitionsAPPENDIX B Summary of Certain Provisions of the Trust Agreement and First
Supplemental Trust AgreementAPPENDIX C Certain Operating Data Regarding the Sewer SystemAPPENDIX D Comprehensive Annual Financial Report for the Fiscal Year Ended
June 30, 2013APPENDIX E-1 Form of Legal Approving Opinion of Bond Counsel (Series 2014A
Bonds)APPENDIX E-2 Form of Legal Approving Opinion of Bond Counsel (Series 2014B Bonds)APPENDIX F Form of Continuing Disclosure Certificate
INTRODUCTION
The purpose of this Official Statement, which includes the cover page and appendiceshereto, is to provide certain information with respect to the issuance of $34,600,000 aggregateprincipal amount of Sewer System Revenue Bonds by the Lexington-Fayette Urban CountyGovernment (the “Issuer”), consisting of the following:
(a) $24,190,000 Tax-Exempt Sewer System Revenue Refunding Bonds,Series 2014A (the "Series 2014A Bonds"); and
(b) $10,410,000 Taxable Sewer System Revenue Refunding Bonds, Series2014B (the "Series 2014B Bonds" and together with the Series 2014A Bonds, the "Series2014 Bonds").
This introduction is not a summary of this Official Statement. It is only a briefdescription of and guide to, and is qualified by, more complete and detailed informationcontained in the entire Official Statement, including the cover page and appendices hereto, andthe documents summarized or described herein. A full review should be made of the entireOfficial Statement. The offering of the Series 2014 Bonds to potential investors is made only bymeans of the entire Official Statement.
Terms used, but not defined, in this Official Statement are used as defined in the MasterTrust Agreement, dated as of September 1, 2014 (the “Master Trust Agreement”), as amendedand supplemented by a First Supplemental Trust Agreement, dated as of the date of issuance ofthe Series 2014 Bonds (the “First Supplement” and together, with the Master Trust Agreement,the “Trust Agreement”), by and between the Issuer and The Bank of New York Mellon TrustCompany, N.A., Louisville, Kentucky, as trustee (the “Trustee”). A summary of such definitionsis provided in Appendix A – “SUMMARY OF CERTAIN DEFINITIONS.”
The Issuer
The Series 2014 Bonds are being issued by the Lexington-Fayette Urban CountyGovernment, a political subdivision of the Commonwealth of Kentucky created on April 15,1974 by the merger of the City of Lexington with the County of Fayette. It exists as the singleunit of general local government exercising jurisdiction throughout the geographical boundariesof Fayette County, Kentucky. The Issuer owns and operates a sanitary sewer system (the “SewerSystem”), the services of which are, and are to be, supplied to persons and corporations withinthe jurisdiction of the Sewer System.
Purpose of the Series 2014 Bonds
The proceeds from the sale of the Series 2014 Bonds will be used to:
(i) currently refund the entire outstanding principal amount of the Lexington-Fayette Urban County Government Taxable Sewer Revenue Bonds, Series 2009 (BuildAmerica Bonds - Direct Pay), dated October 22, 2009, issued in the original principalamount of $35,960,000 and currently outstanding in the principal amount of $30,280,000(the “Series 2009 Bonds”);
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(ii) advance refund the entire outstanding principal amount of the Lexington-Fayette Urban County Government Sewer System Revenue Refunding Bonds, Series2010A, dated May 13, 2010, issued in the original principal amount of $13,860,000, andcurrently outstanding in the principal amount of $11,740,000 (the “Series 2010 Bonds”and together with the Series 2009 Bonds, the “Prior Bonds”); and
(iii) paying the costs of issuance of the Series 2014 Bonds,
all as further described herein under the heading “PURPOSE AND PLAN OF REFUNDING.”
Original Issuance of the Series 2009 Bonds as Build America Bonds
Pursuant to Sections 54AA(g) and 6431 of the Internal Revenue Code of 1986, asamended (the “Code”) (added to the Code by the American Recovery and Reinvestment Act of2009), the Series 2009 Bonds were issued as taxable Build America Bonds (Direct Pay) tofinance capital expenditures. In connection with such issuance, the Issuer elected to receivepayments (the “BAB Interest Subsidy Payments”) directly from the United States Treasury in anamount equal to 35% of the corresponding interest payable on such Series 2009 Bonds on eachinterest payment date.
As provided in Ordinance No. 221-2009, adopted by the Lexington-Fayette UrbanCounty Council (the “Legislative Authority”) on October 15, 2009, authorizing the Series 2009Bonds (the “Series 2009 Bond Ordinance”) and the Official Statement with respect to the Series2009 Bonds, in the event that the United States Treasury or any agency of the United States ofAmerica should at any time cease to remit to the Issuer all or any part of the BAB InterestSubsidy Payments payable with respect to the Series 2009 Bonds, then the Issuer has the right toredeem and retire all or any part of the principal amount of the Series 2009 Bonds thenoutstanding.
As set forth in the 2014 Bond Legislation, based on a reduction in the BAB InterestSubsidy Payments related to the interest payment dates commencing July 1, 2013, the Issuer hasdetermined to exercise its right to redeem all or a portion of the Series 2009 Bonds, provided thatthe federal government has not announced its intention to pay the balance of the reduced BABInterest Subsidy Payments prior to the date of the execution of the Series 2014A Certificate ofAward and the Series 2014B Certificate of Award, following the sale of the Series 2014 Bonds(the “Sale Date”).
See “PURPOSE AND PLAN OF REFUNDING – Redemption of the Series 2009 Bondsas Build America Bonds.”
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Security and Source of Payment for the Series 2014 Bonds as Parity Bonds
Pursuant to the Trust Agreement, Bond Service Charges on the Series 2014 Bonds will bepaid from the Bond Account created under such Trust Agreement and held by the Trustee. Tosecure payment of Bond Service Charges, the Issuer will assign to the Trustee the PledgedRevenues of the Sewer System, including the Revenue Fund. As further defined in Appendix Ahereto, the Pledged Revenues include the Gross Revenues of the Sewer System and the RevenueFund (as further defined in Appendix A hereto). (See "SECURITY AND SOURCE OFPAYMENT FOR THE SERIES 2014 BONDS" herein.)
THE SERIES 2014 BONDS ARE SPECIAL AND LIMITED REVENUEOBLIGATIONS OF THE ISSUER AND DO NOT CONSTITUTE A DEBT, GENERALOBLIGATION, AN INDEBTEDNESS, OR PLEDGE OF THE FAITH AND CREDIT ORLIABILITY OF THE ISSUER, THE COMMONWEALTH OF KENTUCKY OR OF ANYAGENCY OR POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF THECONSTITUTION OR STATUTES OF THE COMMONWEALTH OF KENTUCKY, ANDTHE SERIES 2014 BONDS ARE PAYABLE SOLELY FROM AND SECURED BY THEPLEDGED REVENUES OF THE SEWER SYSTEM, INCLUDING THE REVENUE FUNDCREATED UNDER THE TRUST AGREEMENT. NEITHER THE CREDIT NOR THETAXING POWER OF THE ISSUER, THE COMMONWEALTH OF KENTUCKY OR ANYAGENCY OR POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OFTHE PRINCIPAL OF OR INTEREST ON THE SERIES 2014 BONDS.
Parties to the Issuance of the Series 2014 Bonds
The Bank of New York Mellon Trust Company, N.A., Louisville, Kentucky, will serve asthe trustee, bond registrar, paying agent, payee bank, and transfer agent, with respect to theSeries 2014 Bonds (the "Trustee"). Legal matters incident to the issuance of the Series 2014Bonds and with regard to the tax treatment of the interest thereon are subject to the approvinglegal opinion of Peck, Shaffer & Williams, a division of Dinsmore & Shohl LLP, Lexington,Kentucky, as bond counsel (“Bond Counsel”). The Underwriter or Underwriters will be listed onthe cover page of the final Official Statement. The Financial Advisor to the Issuer is RaymondJames & Associates, Inc. (the “Financial Advisor”).
Authority for Issuance
The Series 2014 Bonds will be issued pursuant to (i) Sections 58.010 through 58.140,inclusive, 67A.060 and 82.082 of the Kentucky Revised Statutes (collectively, the “Act”); (ii)Ordinance No. 118-2014 adopted by the Legislative Authority on September 25, 2014,authorizing the Master Trust Agreement (the “General Bond Ordinance”); (iii) Ordinance No.119-2014 adopted by the Legislative Authority on September 25, 2014 authorizing the issuanceof the Series 2014 Bonds (together items (ii), and (iii) are referred to herein as the “2014 BondLegislation”); and (iv) the Trust Agreement.
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Description of the Series 2014 Bonds
General. The Series 2014 Bonds shall be dated their date of delivery and bear interest atthe rates set forth on the inside cover pages hereof. The Series 2014 Bonds are issuable only asfully registered bonds, without coupons, in the denominations of $5,000 or any integral multiplethereof. Interest on the Series 2014 Bonds shall be payable semi-annually on March 1 andSeptember 1 commencing March 1, 2015. The record dates for March 1 and September 1interest payment dates shall be the preceding February 15 and August 15, respectively (each a“Regular Record Date”).
Book-Entry. The Series 2014 Bonds, when issued, will be registered in the name ofCede & Co., as nominee of The Depository Trust Company, New York, New York (“DTC”),which will act as securities depository for the Series 2014 Bonds. Purchasers will not receivecertificates representing their ownership interest in the Series 2014 Bonds purchased. Principaland any redemption premium related thereto is payable to the registered owner at the designatedcorporate trust office of the Trustee. Interest will be payable by electronic transfer or check ordraft sent by the Trustee to the person who is the registered owner as of the Regular Record Dateimmediately preceding the month of the applicable interest payment date. So long as DTC or itsnominee is the registered owner of the Series 2014 Bonds, payments of the principal of andinterest due on the Series 2014 Bonds will be made directly to DTC by the Trustee. (See"DESCRIPTION OF THE SERIES 2014 BONDS – Book-Entry-Only System" herein.)
Redemption
Optional Redemption. The Series 2014A Bonds maturing on or after September1, 2025 shall be subject to optional redemption prior to maturity on any date on or afterSeptember 1, 2024. (See "DESCRIPTION OF THE SERIES 2014 BONDS -Redemption Provisions - Optional Redemption" herein).
The Series 2014B Bonds are not subject to optional redemption prior to maturity.
Redemption Procedures. The procedures for redemption are set forth hereinunder “DESCRIPTION OF THE SERIES 2014 BONDS - Redemption Provisions –Redemption Procedures.”
Tax Matters
Series 2014A Bonds. In the opinion of Peck, Shaffer & Williams, a division of Dinsmore& Shohl LLP, Bond Counsel, under existing law, interest on the Series 2014A Bonds isexcludible from gross income of the holders thereof for purposes of federal income taxation,pursuant to the Internal Revenue Code of 1986, as amended (the "Code"). Furthermore, intereston the Series 2014A Bonds will not be treated as a specific item of tax preference, under Section57(a)(5) of the Code, in computing the alternative minimum tax for individuals and corporations.In rendering the opinions in this paragraph, Bond Counsel has assumed continuing compliancewith certain covenants designed to meet the requirements of Section 103 of the Code. The Issuerhas not designated the Series 2014 Bonds as "qualified tax-exempt obligations" with respect tocertain financial institutions under Section 265 of the Code. See Appendix E-1 hereto for the
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form of the opinion that Bond Counsel proposes to deliver in connection with the Series 2014ABonds.
Series 2014B Bonds. In the opinion of Bond Counsel, under existing law, interest on theSeries 2014B Bonds is not excludible from gross income of the holders thereof for purposes offederal income taxation. See Appendix E-2 hereto for the form of the opinion that Bond Counselproposes to deliver in connection with the Series 2014B Bonds.
Kentucky Taxation. Interest on the Series 2014 Bonds is exempt from Kentucky incometaxation and the Series 2014 Bonds are exempt from ad valorem taxation by the Commonwealthof Kentucky and any of its political subdivisions.
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Bond Counsel expresses no other opinion as to the federal tax consequences ofpurchasing, holding, or disposing of the Series 2014 Bonds.
See “TAX MATTERS” herein.
Offering and Delivery of the Series 2014 Bonds
The Series 2014 Bonds are offered when, as and if issued by the Issuer. The Series 2014Bonds will be delivered on or about October 23, 2014 in New York, New York through theDepository Trust Company (DTC) or by virtue of a “fast close” through DTC.
Disclosure Information
This Official Statement speaks only as of its date, and the information contained herein issubject to change. This Official Statement and continuing disclosure documents of the Issuer areintended to be made available through a continuing disclosure service of the MunicipalSecurities Rulemaking Board’s ("MSRB"), Electronic Municipal Market Access system("EMMA"). Copies of the basic documentation relating to the Series 2014 Bonds, including the2014 Bond Legislation are available from the Issuer.
The Issuer deems this Official Statement to be final for the purposes of Securities andExchange Commission Rule 15c2-12(b)(3) (the "Rule").
Additional Information
Additional information concerning this Official Statement, as well as copies of the basicdocumentation relating to the Series 2014 Bonds, is available from Raymond James &Associates, Inc., 489 East Main Street, Lexington, Kentucky 40507, telephone (859) 232-8211 or(859) 232-8249, Attn: Bob Pennington or Kristen Millard.
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DESCRIPTION OF THE SERIES 2014 BONDS
General
The Series 2014 Bonds will be dated as of the date of their delivery, will bear interestpayable at the rates and time and will mature on dates set forth on the inside cover pages of thisOfficial Statement. The Series 2014 Bonds will be issuable only in fully registered form indenomination of $5,000 each, or any integral multiple thereof. The Series 2014 Bonds shall bedelivered to and initially registered in the name of Cede and Co., as registered owner andnominee for the Depository Trust Company, New York, New York (“DTC”). See"DESCRIPTION OF THE SERIES 2014 BONDS – Book-Entry Only System" herein.
Interest accruing on the Series 2014 Bonds shall be payable semiannually on March 1 andSeptember 1 of each year (commencing March 1, 2015). The interest installment on each Series2014 Bond will be paid to the person who is the registered owner thereof as of the close ofbusiness on the Regular Record Date for such interest installment, which Record Date shall bethe close of business on February 15 or August 15, as the case may be, next preceding theapplicable Interest Payment Date (whether or not a business day). Payment of interest shall bemade by electronic transfer or check or draft mailed to the person who is the registered owner onthe applicable Record Date at the address of such owner as it appears on the books of theTrustee. Principal shall be paid when due upon delivery of a matured Series 2014 Bond forpayment at the designated corporate trust office of the Trustee. So long as DTC or its nominee,Cede & Co., is the registered owner of the Series 2014 Bonds, such payments will be madedirectly to Cede & Co. See "DESCRIPTION OF THE SERIES 2014 BONDS – Book-EntryOnly System" herein.
The Series 2014 Bonds are transferable by the registered owner hereof in person or byhis/her attorney duly authorized in writing, at the designated corporate trust office of the Trustee,but only in the manner and subject to the limitations provided in the 2014 Bond Legislation, andupon surrender and cancellation of the applicable Series 2014 Bond(s), duly endorsed for transferor accompanied by an assignment duly executed by the registered owners or his/her authorizedrepresentative.
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Redemption Provisions
Optional Redemption. The Series 2014A Bonds maturing on and after September 1,2025 are subject to redemption, in the manner provided in the Trust Agreement, at the option ofthe Issuer, either in whole or in part, in inverse order of their maturity dates or on any date, on orafter September 1, 2024, from any legally available funds, at a redemption price equal to theprincipal amount of the Series 2014A Bonds called for redemption, plus accrued interest withrespect thereto to the date fixed for redemption.
The Series 2014B Bonds are not subject to optional redemption prior to maturity.
Redemption Procedures. The Issuer shall give written notice to the Registrar and theTrustee of its election to redeem in the manner provided in and in accordance with the applicableBond Legislation, of the places where the amounts due upon such redemption are payable, and ofthe redemption date and of the principal amount of each maturity of each series of redeemableSeries 2014 Bonds to be redeemed, which notice shall be given at least 45 days prior to theredemption date or such shorter period as shall be acceptable to the Trustee.
Unless waived by any Holder of Series 2014 Bonds to be redeemed, notice of any suchredemption shall be given by the Registrar and the Trustee, on behalf of the Issuer, by mailing acopy of an official redemption notice by first class mail, postage prepaid, or by sending aconfirmed facsimile, at least 30 days prior to the date fixed for redemption to the registeredHolder or Holders of the Series 2014 Bond or Bonds at the address shown on the Register or atsuch other address as is furnished in writing by such registered Holder to the Registrar and theTrustee; provided that, if less than all of an outstanding Series 2014 Bond of one maturity in abook entry system is to be called for redemption, the Registrar and the Trustee shall give noticeto the Depository or the nominee of the Depository that is the Holder of such Series 2014 Bond,and the selection of the beneficial interests in that Series 2014 Bond to be redeemed shall be atthe sole discretion of the Depository and its participants; provided further, that, in connectionwith any optional redemption, the Registrar and the Trustee may, at the written request of theIssuer, provide for conditional notice of optional redemption to the registered Holder or Holdersof a Series 2014 Bond or Bonds so long as any revocation of such notice is sent by first classmail, postage prepaid or sent by facsimile (immediately followed by written confirmation ofreceipt of such facsimile transmission) to the registered Holder of a Series 2014 Bond or Bondsat least ten Business Days prior to the redemption date.
All official notices of redemption shall be dated and shall state:
(a) the redemption date,
(b) the redemption price,
(c) that on the redemption date, the redemption price will become due andpayable upon each Series 2014 Bond, and that interest thereon shall cease to accrue fromand after said date, and
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(d) the place where such Series 2014 Bonds are to be surrendered for paymentof the redemption price, which place of payment shall be the designated office of theTrustee.
Prior to any redemption date, the Issuer shall deposit with the Trustee an amount ofmoney sufficient to pay the redemption price of all the Series 2014 Bonds which are to beredeemed on that date, provided, however, no such deposit need be made if a conditional noticeis being sent.
Failure to receive notice by mailing or any defect in that notice regarding any Series 2014Bond, however, shall not affect the validity of the proceedings for the redemption of any Series2014 Bonds.
Notice of any redemption hereunder with respect to Series 2014 Bonds held under a bookentry system shall be given by the Trustee only to the Depository, or its nominee, as the Holderof such Series 2014 Bonds. Selection of book entry interests in the Series 2014 Bonds called forredemption is the responsibility of the Depository and any failure of such Depository to notifythe book entry interest owners of any such notice and its contents or effect will not affect thevalidity of such notice of any proceedings for the redemption of such Series 2014 Bonds.
Book-Entry-Only System
The following information concerning DTC and DTC’s book-entry-only system has beenobtained from DTC and contains statements that are believed to describe accurately DTC, themethod of effecting book-entry transfers of securities distributed through DTC and certainrelated matters, but neither the Issuer nor the Trustee takes any responsibility for the accuracy ofsuch statements.
The Depository Trust Company ("DTC"), New York, NY, will act as securitiesdepository for the Series 2014 Bonds (the "Securities"). The Securities will be issued as fully-registered securities registered in the name of Cede & Co. (DTC’s partnership nominee) or suchother name as may be requested by an authorized representative of DTC. One fully-registeredSecurity certificate will be issued for each issue of the Securities, each in the aggregate principalamount of such issue, and will be deposited with DTC.
DTC, the world’s largest securities depository, is a limited-purpose trust companyorganized under the New York Banking Law, a "banking organization" within the meaning ofthe New York Banking Law, a member of the Federal Reserve System, a "clearing corporation"within the meaning of the New York Uniform Commercial Code, and a "clearing agency"registered pursuant to the provisions of Section 17A of the Securities Exchange Act of 1934.DTC holds and provides asset servicing for over 3.5 million issues of U.S. and non-U.S. equityissues, corporate and municipal debt issues, and money market instruments (from over 100countries) that DTC’s participants ("Direct Participants") deposit with DTC. DTC alsofacilitates the post-trade settlement among Direct Participants of sales and other securitiestransactions in deposited securities, through electronic computerized book-entry transfers andpledges between Direct Participants’ accounts. This eliminates the need for physical movementof securities certificates. Direct Participants include both U.S. and non-U.S. securities brokersand dealers, banks, trust companies, clearing corporations, and certain other organizations. DTC
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is a wholly-owned subsidiary of The Depository Trust & Clearing Corporation ("DTCC").DTCC is the holding company for DTC, National Securities Clearing Corporation and FixedIncome Clearing Corporation, all of which are registered clearing agencies. DTCC is owned bythe users of its regulated subsidiaries. Access to the DTC system is also available to others suchas both U.S. and non-U.S. securities brokers and dealers, banks, trust companies, and clearingcorporations that clear through or maintain a custodial relationship with a Direct Participant,either directly or indirectly ("Indirect Participants"). DTC has a Standard & Poor’s rating ofAA+. The DTC Rules applicable to its Participants are on file with the Securities and ExchangeCommission. More information about DTC can be found at www.dtcc.com.
Purchases of Securities under the DTC system must be made by or through DirectParticipants, which will receive a credit for the Securities on DTC’s records. The ownershipinterest of each actual purchaser of each Security ("Beneficial Owner") is in turn to be recordedon the Direct and Indirect Participants’ records. Beneficial Owners will not receive writtenconfirmation from DTC of their purchase. Beneficial Owners are, however, expected to receivewritten confirmations providing details of the transaction, as well as periodic statements of theirholdings, from the Direct or Indirect Participant through which the Beneficial Owner entered intothe transaction. Transfers of ownership interests in the Securities are to be accomplished byentries made on the books of Direct and Indirect Participants acting on behalf of BeneficialOwners. Beneficial Owners will not receive certificates representing their ownership interests inSecurities, except in the event that use of the book-entry system for the Securities isdiscontinued.
To facilitate subsequent transfers, all Securities deposited by Direct Participants withDTC are registered in the name of DTC’s partnership nominee, Cede & Co., or such other nameas may be requested by an authorized representative of DTC. The deposit of Securities with DTCand their registration in the name of Cede & Co. or such other DTC nominee do not effect anychange in beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of theSecurities; DTC’s records reflect only the identity of the Direct Participants to whose accountssuch Securities are credited, which may or may not be the Beneficial Owners. The Direct andIndirect Participants will remain responsible for keeping account of their holdings on behalf oftheir customers.
Conveyance of notices and other communications by DTC to Direct Participants, byDirect Participants to Indirect Participants, and by Direct Participants and Indirect Participants toBeneficial Owners will be governed by arrangements among them, subject to any statutory orregulatory requirements as may be in effect from time to time. Beneficial Owners of Securitiesmay wish to take certain steps to augment the transmission to them of notices of significantevents with respect to the Securities, such as redemptions, tenders, defaults, and proposedamendments to the Security documents. For example, Beneficial Owners of Securities may wishto ascertain that the nominee holding the Securities for their benefit has agreed to obtain andtransmit notices to Beneficial Owners. In the alternative, Beneficial Owners may wish to providetheir names and addresses to the Trustee and request that copies of notices be provided directlyto them.
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Redemption notices shall be sent to DTC. If less than all of the Securities within an issueare being redeemed, DTC’s practice is to determine by lot the amount of the interest of eachDirect Participant in such issue to be redeemed.
Neither DTC nor Cede & Co. (nor any other DTC nominee) will consent or vote withrespect to Securities unless authorized by a Direct Participant in accordance with DTC’s MMIProcedures. Under its usual procedures, DTC mails an Omnibus Proxy to the issuer as soon aspossible after the record date. The Omnibus Proxy assigns Cede & Co.’s consenting or votingrights to those Direct Participants to whose accounts Securities are credited on the record date(identified in a listing attached to the Omnibus Proxy).
Redemption proceeds, distributions, and dividend payments on the Securities will bemade to Cede &. Co., or such other nominee as may be requested by an authorized representativeof DTC. DTC’s practice is to credit Direct Participants’ accounts upon DTC’s receipt of fundsand corresponding detail information from the Issuer, on payable date in accordance with theirrespective holdings shown on DTC’s records. Payments by Participants to Beneficial Ownerswill be governed by standing instructions and customary practices, as is the case with securitiesheld for the accounts of customers in bearer form or registered in "street name," and will be theresponsibility of such Participant and not of DTC or the Issuer, subject to any statutory orregulatory requirements as may be in effect from time to time. Payment of redemption proceeds,distributions, and dividend payments to Cede & Co. (or such other nominee as may be requestedby an authorized representative of DTC) is the responsibility of the Issuer, disbursement of suchpayments to Direct Participants will be the responsibility of DTC, and disbursement of suchpayments to the Beneficial Owners will be the responsibility of Direct and Indirect Participants.
DTC may discontinue providing its services as depository with respect to the Securities atany time by giving reasonable notice to the Issuer. Under such circumstances, in the event that asuccessor depository is not obtained, Security certificates are required to be printed anddelivered.
The Issuer may decide to discontinue use of the system of book-entry-only transfersthrough DTC (or a successor securities depository). In that event, Security certificates will beprinted and delivered to DTC.
The Issuer will not have any responsibility or obligations to any Direct Participants orIndirect Participants or the persons for whom they act with respect to (i) the accuracy of anyrecords maintained by DTC or any such Direct Participant or Indirect Participant; (ii) thepayment by any Participant of any amount due to the Beneficial Owner in respect of theprincipal of, premium, if any, or interest on the Series 2014 Bonds; (iii) the delivery by any suchDirect Participant or Indirect Participant of any notice to any Beneficial Owner that is requiredor permitted to be given to owners of the Series 2014 Bonds; (iv) the selection of the BeneficialOwners to receive payments in the event of any partial redemption of the Series 2014 Bonds; or(v) any consent given or other action taken by DTC as Registered Owner.
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SECURITY AND SOURCE OF PAYMENT FOR THE SERIES 2014 BONDS
General
The Series 2014 Bonds are equally and ratably secured from, and secured by, a pledgeand assignment of the Pledged Revenues to the Trustee, pursuant to the Trust Agreement. Asfurther defined in Appendix A hereto, the Pledged Revenues include the Gross Revenues of theSewer System and the Revenue Fund (as further defined in Appendix A hereto).
THE SERIES 2014 BONDS ARE SPECIAL AND LIMITED REVENUEOBLIGATIONS OF THE ISSUER AND DO NOT CONSTITUTE A DEBT, GENERALOBLIGATION, AN INDEBTEDNESS, OR PLEDGE OF THE FAITH AND CREDIT ORLIABILITY OF THE ISSUER, THE COMMONWEALTH OF KENTUCKY OR OF ANYAGENCY OR POLITICAL SUBDIVISION THEREOF WITHIN THE MEANING OF THECONSTITUTION OR STATUTES OF THE COMMONWEALTH OF KENTUCKY, ANDTHE SERIES 2014 BONDS ARE PAYABLE SOLELY FROM AND SECURED BY THEPLEDGED REVENUES OF THE SEWER SYSTEM, INCLUDING THE REVENUE FUNDCREATED UNDER THE TRUST AGREEMENT. NEITHER THE CREDIT NOR THETAXING POWER OF THE ISSUER, THE COMMONWEALTH OF KENTUCKY OR ANYAGENCY OR POLITICAL SUBDIVISION THEREOF IS PLEDGED TO THE PAYMENT OFTHE PRINCIPAL OF OR INTEREST ON THE SERIES 2014 BONDS.
Rate Covenant
As set forth in the Trust Agreement, the Issuer will at all times prescribe and charge suchrates for the services of the Sewer System, and will so restrict Operating and MaintenanceExpenses, as shall result in Net Revenues at least adequate to provide for (i) the paymentsrequired by the 2014 Bond Legislation to be made into the Revenue Fund; (ii) sufficient funds topay the Principal and Interest Requirements on any General Obligation Bonds and Notes and allother Obligations of the Issuer incurred for Sewer System purposes; (iii) sufficient earningscoverage to permit the issue of the Additional Bonds required for the construction of necessaryor advisable extensions or improvements of the Sewer System; and (iv) to provide for the normalgrowth and sound operation of the Sewer System.
In no event shall the sum of Net Revenues with respect to each Fiscal Year be less than120% of the aggregate amount of Principal and Interest Requirements on the Bonds payableduring such Fiscal Year and the Issuer will be responsible for delivering to the Trustee evidenceof compliance therewith in accordance with the Trust Agreement; provided, however, that therequired deposits are being made to the applicable funds on an ongoing basis; and providedfurther, however, that if Additional Bonds are issued to pay the cost of Improvements, theportion of the Principal and Interest Requirements thereon that shall be included in thecalculation in each Fiscal Year during the estimated construction period of the Improvementsshall equal the portion of the interest on said Additional Bonds payable during that Fiscal Yearthat has not been funded.
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Historical Debt Service Coverage
The table set forth below presents historical debt service coverage for Fiscal Years 2009-2014, applying the debt service coverage provisions of the Trust Agreement retroactively to thecalculation of the Net Revenues of the Sewer System available for the payment of debt servicefor the Fiscal Years 2009-2014 on (i) revenue bonds issued for Sewer System purposes(including the Prior Bonds, when applicable, the “Revenue Bonds”) and (ii) General ObligationBonds and Notes and all other Obligations issued for Sewer System purposes (collectively, the“Other Sewer System Obligations” as further described below), all as outstanding at the end ofsuch respective Fiscal Years, as prepared by the Issuer’s Division of Water Quality.
For additional information please see (i) the definition of “Net Revenues” in Appendix B– “SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT – Definitions”and (ii) pages 45-46 of the Comprehensive Annual Financial Report of the Issuer for the FiscalYear Ended June 30, 2013, attached as Appendix D hereto.
ActualFiscal Year
2009
ActualFiscal Year
2010
ActualFiscal Year
2011
ActualFiscal Year
2012
ActualFiscal Year
2013
UnauditedFiscal Year
2014Gross Revenues
Sewer User Fees $35,144,436 $45,573,537 $45,513,175 $44,305,075 $45,921,141 $46,362,035Tap-on Fees 993,375 928,087 1,528,415 1,768,371 2,202,326 2,017,004Other 217,622 194,770 221,511 260,183 231,417 853,966
Total Revenues $36,355,433 $46,696,393 $47,263,100 46,333,629 $48,354,884 $49,233,005
ExpensesOperating
Personnel $9,760,577 $10,574,004 $11,232,861 $10,405,902 $10,014,774 $10,468,631Operating 13,577,651 16,170,553 14,642,808 13,933,579 13,561,872 16,688,521Insurance 1,275,387 1,181,520 414,125 2,219,282 1,677,387 1,088,430Capital 2,586,981 3,846,550 5,908,141 3,581,321 3,584,770 4,804,830
Total Operating Expenses $27,200,596 $31,772,628 $32,197,937 $30,140,083 $28,838,803 $33,050,413
Operating Income(Net Revenues Available for Debt Service) $9,154,836 $14,923,766 $15,065,164 $16,193,546 $19,516,081 $16,182,592
Debt ServiceRevenue Bonds (Senior) $5,561,138 $5,889,017 $7,118,615 $13,878,356+ $4,957,821 $4,915,285Other Sewer System Obligations 419,264† 856,127† 855,860†
Aggregate Debt Service $5,561,138 $5,889,017 $7,118,615 $14,297,620+ $5,813,948 $5,771,144
Debt Service CoverageDebt Service Coverage Ratio for RevenueBonds (Senior)1 165% 253% 212% 117%+ 394% 329%Aggregate Debt Service Coverage Ratio(Revenue Bonds and Other Sewer SystemObligations)2 165% 253% 212% 113%+ 336% 280%
[NOTES TO THE HISTORICAL DEBT SERVICE COVERAGE TABLE APPEAR ON THE FOLLOWING PAGE]
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NOTES TO THE HISTORICAL DEBT SERVICE COVERAGE TABLE______+The debt service for FY 2012 reflects accelerated debt payments with respect to the Issuer’s Sewer System Revenue Bonds,Series A of 2001 and Sewer System Refunding Revenue Bonds, Series B of 2001 B due to a timing issue between the scheduleddue date of the debt payments and the fiscal year end.
†See note to table under “PRINCIPAL AND INTEREST REQUIREMENTS ON THE SERIES 2014 BONDS AND CURRENTOUTSTANDING OBLIGATIONS - Other Sewer System Obligations.”
1Equal to Net Revenues divided by Principal and Interest Requirements on the Revenue Bonds which were outstanding at the endof the respective Fiscal Years.
2Equal to Net Revenues divided by Principal and Interest Requirements on the Revenue Bonds and Other Sewer SystemObligations which were outstanding at the end of the respective Fiscal Years.
Additional Bonds and Borrowing Plans
The Issuer may issue Additional Bonds on a parity with the Series 2014 Bonds payablefrom the Pledged Revenues (including without limitation, the Revenue Fund) for the purpose ofmaking additions and improvements to the Sewer System and/or refunding, for any lawfulpurpose, any outstanding Bonds, subject to certain conditions of the Trust Agreement (seeAppendix B - "SUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT –Additional Bonds" hereto).
As set forth herein under “THE SEWER SYSTEM – Consent Decree,” the Issueranticipates additional borrowings to comply with a federal consent decree (the “ConsentDecree,” as further defined herein), finalized in January 2011. At the current time, it is estimatedthat the Consent Decree and other capital projects will require an investment of approximately$600 million over approximately 12 years. In order to fully fund the requirements of theConsent Decree and the Trust Agreement, the Issuer anticipates continued rate increases.Anticipated funding for the plan includes a mix of cash funding, Kentucky InfrastructureAuthority State Revolving Fund Loans (subordinate to the Series 2014 Bonds), and additionalBonds. The Issuer has put in place processes to monitor developments and manage costsassociated with the Consent Decree and capital expenditures, including various internalforecasting models which contain a 36-month, rolling monthly forecast and annual forecastthereafter until plan completion. Plan estimates through FY 2019 show capital funding in theamount of approximately $362 million to be funded by approximately $110 million of cash,approximately $127 million of Kentucky Infrastructure Authority State Revolving Fund Loansand approximately $125 million of additional Bonds.
The information on projected capital funding amounts and sources of funds above mayconstitute a "forward looking statement" under federal securities law. Actual revenues,expenses, costs and/or funding amounts could differ materially from those forecasted and therecan be no assurance that such estimates of future results will be achieved. For example, there canbe no assurance that the Legislative Body will approve any new rate schedules, or that theLegislative Body may not from time to time consider amending the rate ordinances related to theSewer System. In general, important factors that could cause actual results to differ materiallyfrom anticipated amounts presently estimated include, but are not limited to, material changes inthe size and composition of the Service Area of the Sewer System, unanticipated changes in law
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or unanticipated material litigation, efficiency of operations and the capital construction andexpenditure plans and results of the Sewer System.
PURPOSE OF THE SERIES 2014 BONDS AND PLAN OF REFUNDING
Purpose of the Series 2014 Bonds
The proceeds from the sale of the Series 2014 Bonds will be used to:
(i) currently refund the entire outstanding principal amount of the Series 2009Bonds (the “Refunded Series 2009 Bonds,” as further described below), the proceeds ofwhich Series 2009 Bonds were used to finance the construction of major additions,betterment and extensions to the Sewer System, including but not limited to replacementand elimination of various pumping stations, major trunk line rehabilitations and otherrelated facilities, all in accordance with the Capital Plan of the Sewer System;
(ii) advance refund the entire outstanding principal amount of the Series 2010Bonds (the “Refunded Series 2010 Bonds,” as further described below, and together withthe Refunded Series 2009 Bonds, the “Refunded Prior Bonds”), the proceeds of whichSeries 2010 Bonds were used to refund the outstanding principal amount of theLexington-Fayette Urban County Government Sewer System Revenue Bonds, Series Aof 2001; and
(iii) pay the costs of issuance of the Series 2014 Bonds.
Issuance of the Prior Bonds
The financing structure related to the Prior Bonds of the Issuer provided for the issuanceof revenue bonds for the purpose of financing or refinancing improvements to the Sewer Systempursuant to Ordinance No. 96-2001 adopted by Legislative Authority on May 3, 2001 (the“Series 2001 Bond Ordinance”), as amended by the Series 2009 Bond Ordinance. The Series2001 Bond Ordinance also specifically readopted, reapproved, and incorporated by referencecertain designated sections and provisions of Bond Ordinance No. 153-85, adopted by theLegislative Authority on July 25, 1985. The Series 2010 Bonds were issued pursuant to theSeries 2001 Bond Ordinance, as amended by the Series 2009 Bond Ordinance, and OrdinanceNo. 61-2010, adopted by the Legislative Authority on April 29, 2010 (the “Series 2010 BondOrdinance, and collectively with the Series 2001 Bond Ordinance and the Series 2009 BondOrdinance, the “Prior Ordinance”).
Pursuant to the Prior Ordinance, the payment of principal and interest on the Prior Bondsis payable solely from and secured by a pledge of, a fixed portion of the gross income andrevenues of the Sewer System set aside in a sinking fund established under such Prior Ordinanceto pay such principal and interest when due. Upon the deposit of the applicable portions of theproceeds of the Series 2014 Bonds into the Refunded Series 2009 Escrow Fund and theRefunded Series 2010 Escrow Fund (as described below under “PURPOSE AND PLAN OFREFUNDING – Plan of Refunding”), such revenue pledge shall be fully defeased and releasedwithout any further action necessary.
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Redemption of the Series 2009 Bonds as Build America Bonds
As provided in the Series 2009 Bond Ordinance and the Official Statement with respectto the Series 2009 Bonds, in the event that the United States Treasury or any agency of theUnited States of America should at any time cease to remit to the Issuer all or any part of theBAB Interest Subsidy Payments payable with respect to the Series 2009 Bonds, then the Issuerhas the right to redeem and retire all or any part of the principal amount of Series 2009 Bondsthen outstanding, in any order of maturities (less than all of a single maturity to be selected bylot), on any date upon 30 days’ written notice by regular United States Mail to the holders of theSeries 2009 Bonds upon terms of the principal amount so redeemed plus accrued interest to theredemption date but without premium.
Following a statement by the United States Treasury that interest subsidy payments madeto issuers of direct pay bonds would be reduced, the Issuer received a reduced BAB InterestSubsidy Payment in an amount less than 35% of the corresponding interest due and payable onthe Series 2009 Bonds on July 1, 2013 and has continued to receive reduced BAB InterestSubsidy Payments with respect to the interest payment dates thereafter (the “Reduced BABInterest Subsidy Payments”).
Pursuant to the 2014 Bond Legislation, the Issuer has determined to exercise its right toredeem all or a portion of the Series 2009 Bonds, provided that the federal government has notannounced its intention to pay the balance of the Reduced BAB Interest Subsidy Payments priorto the Sale Date. If such an announcement is made prior to the Sale Date, then the Issuer wouldhave no obligation or authority to redeem all or a portion of the Series 2009 Bonds.
Plan of Refunding
On the date of issuance of the Series 2014 Bonds, a portion of the proceeds thereof willbe applied to the refunding of the entire outstanding principal amount of the Refunded PriorBonds as follows:
(a) A portion of the proceeds of the Series 2014A Bonds (and other monies ofthe Issuer), will be applied to the current refunding, defeasance and legal discharge of theentire outstanding principal amount of the Refunded Series 2009 Bonds through thedeposit thereof in a separate and distinct irrevocable escrow fund for such RefundedSeries 2009 Bonds (the “Refunded Series 2009 Escrow Fund”), to be held by The Bankof New York Mellon Trust Company, N.A., Louisville, Kentucky, as escrow trustee (the"Series 2009 Escrow Trustee") under an Escrow Trust Agreement, dated October 23,2014 (the “Series 2009 Escrow Agreement”), by and between the Issuer and the Series2009 Escrow Trustee. The Series 2009 Escrow Trustee will hold such deposit uninvestedin the Refunded Series 2009 Escrow Fund, to pay the principal of and interest on theRefunded Series 2009 Bonds when due through November 25, 2014 (the "Series 2009Bonds Redemption Date"), and to redeem the Refunded Series 2009 Bonds on suchSeries 2009 Bonds Redemption Date, at a redemption price of 100% of the principalamount thereof, plus accrued interest thereon to the Series 2009 Bonds Redemption Date.See "VERIFICATION OF MATHEMATICAL ACCURACY" herein. Upon the makingof the foregoing deposit with the Series 2009 Escrow Trustee, the Refunded Series 2009
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Bonds will no longer be deemed to be outstanding under the Series 2009 Bond Ordinanceand the indebtedness with respect thereto will be discharged.
(b) A portion of the proceeds of the Series 2014B Bonds (and other monies ofthe Issuer) will be applied to the advance refunding, defeasance and legal discharge of theentire outstanding principal amount of the Refunded Series 2010 Bonds through thedeposit thereof in a separate and distinct irrevocable escrow fund for such RefundedSeries 2010 Bonds (the “Refunded Series 2010 Escrow Fund”), to be held by The Bankof New York Mellon Trust Company, N.A., Louisville, Kentucky, as escrow trustee (the"Series 2010 Escrow Trustee") under an Escrow Trust Agreement, dated October 23,2014 (the “Series 2010 Escrow Agreement”), by and between the Issuer and the Series2010 Escrow Trustee. The Series 2010 Escrow Trustee will apply a portion of the moneyon deposit in the Refunded Series 2010 Escrow Fund to the purchase of certain directobligations of the United States of America (the "United States Treasury Obligations"),which will earn interest at such rates and mature on such dates so as to provide sufficientfunds, together with any cash held uninvested in the Refunded Series 2010 Escrow Fund,to pay the principal of and interest on the Refunded Series 2010 Bonds as same becomesdue through July 1, 2021, which is the final maturity date of the Series 2010 Bonds. See"VERIFICATION OF MATHEMATICAL ACCURACY" herein. Upon the making ofthe foregoing deposit with the Series 2010 Escrow Trustee, the Refunded Series 2010Bonds will no longer be deemed to be outstanding under the Series 2010 Bond Ordinanceand the indebtedness with respect thereto will be discharged.
Upon the issuance of the Series 2014 Bonds, all Prior Bonds will be fully defeased andthe Series 2014 Bonds will be the only Bonds outstanding under the Trust Agreement.
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Refunded Series 2009 Bonds
Maturity Date(July 1)
OutstandingPrincipalAmount Interest Rate Redemption Date
RedemptionPrice
Serial Bonds
2015 $1,490,000 3.750% 11/25/2014 100%2016 1,530,000 4.250% 11/25/2014 100%2017 1,575,000 4.250% 11/25/2014 100%2018 1,620,000 4.375% 11/25/2014 100%2019 1,665,000 4.500% 11/25/2014 100%2025 2,010,000 5.375% 11/25/2014 100%2026 2,085,000 5.500% 11/25/2014 100%2027 2,160,000 5.625% 11/25/2014 100%2028 2,240,000 5.750% 11/25/2014 100%2029 2,330,000 5.750% 11/25/2014 100%2030 2,420,000 5.875% 11/25/2014 100%
Term Bond
20241 9,155,000 4.80% 11/25/2014 100%TOTAL $30,280,000
_______1The entire outstanding principal amount of the Series 2009 Term Bond maturing on July 1, 2024 will be currentlyrefunded.
Refunded Series 2010 Bonds
The Series 2010 Bonds are not subject to optional redemption prior to maturity. Aportion of the proceeds of the Series 2014B Bonds will be used to provide for the defeasance andadvance refunding of the Refunded Series 2010 Bonds by a deposit into the Refunded Series2010 Escrow Fund in the amount required for the payment of principal and interest when due onsuch Refunded Series 2010 Bonds through the final maturity.
Maturity Date(July 1)
OutstandingPrincipalAmount Interest Rate Payment Date
Serial Bonds2015 $1,515,000 2.625% 07/01/20152016 1,560,000 3.000% 07/01/20162017 1,615,000 3.375% 07/01/20172018 1,670,000 3.500% 07/01/20182019 1,730,000 3.500% 07/01/20192020 1,790,000 3.625% 07/01/20202021 1,860,000 3.750% 07/01/2021
TOTAL $11,740,000
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Verification of Mathematical Accuracy
Grant Thornton LLP (the "Verification Agent") will deliver to the Issuer, on or before thesettlement date of the Series 2014 Bonds, its report indicating that it has examined theinformation and assertions provided by the Issuer and its representatives. Included in the scopeof its examination will be a verification of the mathematical accuracy of (a) the computations ofthe adequacy of the cash and/or the maturing principal of and interest on the defeasancesecurities deposited in the Refunded Series 2009 Escrow Fund to pay, when due, the maturingprincipal, interest, and redemption premium, if any, on the Refunded Series 2009 Bonds on orprior to the Redemption Date; (b) the computations of the adequacy of the cash and/or thematuring principal of and interest on the defeasance securities deposited in the Refunded Series2010 Escrow Fund to pay, when due, the maturing principal and interest due on the RefundedSeries 2010 Bonds through final maturity; and (c) the computations supporting the conclusion ofBond Counsel that the Series 2014A Bonds are not "arbitrage bonds" under the Code and theregulations promulgated thereunder. The Verification Agent has expressed no opinion on theassumptions provided to them, nor as to the exemption from income taxation of interest on theSeries 2014A Bonds.
Sources and Uses of Funds
The following table sets forth the sources and uses of funds by the Issuer in connectionwith the issuance of the Series 2014 Bonds and the refunding of the Prior Bonds:
Sources Series 2014A Series 2014B TotalSeries 2014 Bond Proceeds
Par Amount $24,190,000.00 $10,410,000.00 $34,600,000.00Net Premium 3,566,099.85 992,107.05 4,558,206.90Total Bond Proceeds $27,756,099.85 $11,402,107.05 $39,158,206.90
Other SourcesDeposit from the Debt Service Reserve Fund
with respect to the Prior Bonds 3,470,920.08 1,445,669.92 4,916,590.00
TOTAL SOURCES $31,227,019.93 $12,847,776.97 $44,074,796.90UsesDeposit to respective Escrow Fund
Cash Deposit $30,888,896.00 $ 195.50 $30,889,091.50Purchase of United States Treasury Obligations 0.00 12,732,650.43 12,732,650.43
Bond Issuance Expenses(1) 338,123.93 114,931.04 453,054.97TOTAL USES $31,227,019.93 $12,847,776.97 $44,074,796.90
__________(1) Includes underwriter’s discount, printing costs, rating agency fees, legal fees, fees of the Trustee, fees of theEscrow Agent, and other issuance costs.
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PRINCIPAL AND INTEREST REQUIREMENTS ON THE SERIES 2014 BONDSAND CURRENT OUTSTANDING OBLIGATIONS
Prior Bonds
The following Prior Bonds of the Issuer are currently outstanding under the PriorOrdinances, to be refunded in full with a portion of the proceeds of the Series 2014 Bonds.
Date ofOriginal
Issue Description Interest RateFinal
MaturityOriginal
Amount IssuedAmount
Outstanding10/22/2009 Series 2009 Bonds 3.750%-5.875% 07/01/2030 $35,960,000 $30,280,00005/13/2010 Series 2010 Bonds 2.625%-3.750% 07/01/2021 13,860,000 11,740,000TOTAL $49,820,000 $42,020,000
Upon issuance, the Series 2014 Bonds will be the only Outstanding Bonds under theTrust Agreement.
Principal and Interest Requirements with respect to the Series 2014 Bonds
The following table sets forth the Principal and Interest Requirements with respect to theSeries 2014 Bonds.
Series 2014A Bonds Series 2014B BondsPeriodEnding Principal Interest Principal Interest
PeriodDebt Service
Annual DebtService
3/1/2015 $372,017.78 $185,066.67 $ 557,084.45 $ 557,084.45
9/1/2015 523,150.00 $2,290,000 260,250.00 3,073,400.00
3/1/2016 523,150.00 203,000.00 726,150.00 3,799,550.00
9/1/2016 523,150.00 2,410,000 203,000.00 3,136,150.00
3/1/2017 523,150.00 142,750.00 665,900.00 3,802,050.00
9/1/2017 523,150.00 2,540,000 142,750.00 3,205,900.00
3/1/2018 523,150.00 79,250.00 602,400.00 3,808,300.00
9/1/2018 $ 500,000 523,150.00 2,165,000 79,250.00 3,267,400.00
3/1/2019 510,650.00 25,125.00 535,775.00 3,803,175.00
9/1/2019 1,800,000 510,650.00 1,005,000 25,125.00 3,340,775.00
3/1/2020 465,650.00 465,650.00 3,806,425.00
9/1/2020 2,945,000 465,650.00 3,410,650.00
3/1/2021 392,025.00 392,025.00 3,802,675.00
9/1/2021 3,095,000 392,025.00 3,487,025.00
3/1/2022 314,650.00 314,650.00 3,801,675.00
9/1/2022 1,490,000 314,650.00 1,804,650.00
3/1/2023 277,400.00 277,400.00 2,082,050.00
9/1/2023 1,560,000 277,400.00 1,837,400.00
3/1/2024 246,200.00 246,200.00 2,083,600.00
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Series 2014A Bonds Series 2014B BondsPeriodEnding Principal Interest Principal Interest
PeriodDebt Service
Annual DebtService
9/1/2024 1,630,000 246,200.00 1,876,200.00
3/1/2025 205,450.00 205,450.00 2,081,650.00
9/1/2025 1,695,000 205,450.00 1,900,450.00
3/1/2026 180,025.00 180,025.00 2,080,475.00
9/1/2026 1,755,000 180,025.00 1,935,025.00
3/1/2027 144,925.00 144,925.00 2,079,950.00
9/1/2027 1,825,000 144,925.00 1,969,925.00
3/1/2028 108,425.00 108,425.00 2,078,350.00
9/1/2028 1,895,000 108,425.00 2,003,425.00
3/1/2029 80,000.00 80,000.00 2,083,425.00
9/1/2029 1,960,000 80,000.00 2,040,000.00
3/1/2030 40,800.00 40,800.00 2,080,800.00
9/1/2030 2,040,000 40,800.00 2,080,800.00 2,080,800.00
TOTAL $24,190,000 $9,966,467.78 $10,410,000 $1,345,566.67 $45,912,034.45 $45,912,034.45
Other Sewer System Obligations
Currently there are no outstanding General Obligation Bonds and Notes issued for SewerSystem purposes. The Issuer has the following outstanding Obligations, consisting of KentuckyInfrastructure Authority Loans, which are Subordinate Obligations under the Trust Agreement.
Loan Date DescriptionInterest
RateFinal
Maturity†Original
Amount IssuedAmount
Outstanding06/01/2012 Loan – A9-01 South Elkhorn 2.00% 12/01/2031 $14,045,119.00 $12,584,806.9411/01/2013 Loan – A13-003 East Lake 2.00% N/A 536,778.58 536,778.5801/01/2012 Loan - A10-08 Wolf Run 2.00% N/A 7,972,208.54 7,972,208.5411/01/2013 Loan - A13-18 E2A 2.00% N/A 3,164,636.56 3,164,636.5611/01/2013 Loan - A13-003 Century Hills 2.00% N/A 522,273.75 522,273.7502/01/2014 Loan - A13-002 Bob O Link 2.00% N/A 1,070,057.39 1,070,057.39TOTAL $27,311,073.82 $25,850,761.76
______†Until the remaining balance is requested, the Kentucky Infrastructure Authority does not issue an amortization schedule for theloan nor does the Issuer initiate payment of principal toward the loan. The maturity of the loan is set when the final balance of theloan is requested from the Kentucky Infrastructure Authority. Currently, Loan-A9-01 South Elkhorn (the “South Elkhorn Loan”)is the only such loan for which an amortization schedule has been issued and the loan payments thereunder commenced on June1, 2012. The payments related to the South Elkhorn Loan are the only amounts currently listed in the table in “SECURITY ANDSOURCE OF PAYMENT FOR THE SERIES 2014 BONDS - Historical Debt Service Coverage” under Other Sewer SystemObligations.
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Estimated Principal and Interest Requirements with respect to the Series 2014 Bonds andthe Other Sewer System Obligations
The following table sets forth the estimated Principal and Interest Requirements withrespect to the Series 2014 Bonds and the Other Sewer System Obligations.
Fiscal Year
Principal andInterest
Requirements forthe Series 2014
Bonds
Principal andInterest
Requirements forOther Sewer System
Obligations†
AggregatePrincipal and InterestRequirements for theSeries 2014 Bonds andOther Sewer System
Obligations2015 $ 557,084.45 $ 988,519.10 $1,545,603.552016 3,799,550.00 1,661,701.98 5,461,251.982017 3,802,050.00 1,661,592.80 5,463,642.802018 3,808,300.00 1,661,481.39 5,469,781.392019 3,803,175.00 1,661,367.78 5,464,542.782020 3,806,425.00 1,661,251.91 5,467,676.912021 3,802,675.00 1,661,133.70 5,463,808.702022 3,801,675.00 1,661,013.11 5,462,688.112023 2,082,050.00 1,660,890.17 3,742,940.172024 2,083,600.00 1,660,764.74 3,744,364.742025 2,081,650.00 1,660,636.79 3,742,286.792026 2,080,475.00 1,660,506.30 3,740,981.302027 2,079,950.00 1,660,373.18 3,740,323.182028 2,078,350.00 1,660,237.42 3,738,587.422029 2,083,425.00 1,660,098.93 3,743,523.932030 2,080,800.00 1,659,957.67 3,740,757.672031 2,080,800.00 1,659,813.58 3,740,613.582032 0.00 1,231,736.86 1,231,736.862033 0.00 803,657.17 803,657.172034 0.00 803,504.27 803,504.272035 0.00 803,348.32 803,348.32
TOTALS $45,912,034.45 $31,203,587.17 $77,115,621.62_________†As stated in the note to the table under “Other Sewer System Obligations” above, the Issuer does not initiate payment ofprincipal toward the Kentucky Infrastructure Authority Loans until the final balance of the loan is requested from the KentuckyInfrastructure Authority. To provide the estimates of Principal and Interest Requirements in this table, debt service with respectto the Kentucky Infrastructure Authority Loans has been estimated based on the following assumptions: level debt service,commencing June 1, 2015, amortized over a 20 year period (as each such loan is referenced above under “Other Sewer SystemObligations”), with the exception of the South Elkhorn Loan, for which an actual amortization schedule has been issued. Debtservice with respect to the Kentucky Infrastructure Authority Loans (actual and estimated) does not include certain annual feesrelated thereto.
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INVESTMENT CONSIDERATIONS
The Series 2014 Bonds, like all obligations of state and local government, are subject tochanges in value due to changes in the condition of the tax-exempt bond market.
Prospective purchasers of the Series 2014 Bonds may need to consult their own taxadvisors prior to any purchase of the Series 2014 Bonds as to the impact of the Internal RevenueCode of 1986, as amended, upon their acquisition, holding or disposition of the Series 2014Bonds.
With regard to the risks related to a change in status with respect to the BAB InterestSubsidy Payments related to the Refunded Series 2009 Bonds, see “PURPOSE AND PLAN OFREFUNDING – Redemption of the Series 2009 Bonds as Build America Bonds” herein. Withregard to the risk involved in a lowering of the bond rating of the Issuer, see "RATINGS" herein.With regard to creditors’ rights, see "SECURITY AND SOURCE OF PAYMENT FORBONDS" herein.
THE ISSUER
The Lexington-Fayette Urban County Government is an urban county governmentcreated from the merger of the City of Lexington and the County of Fayette in 1974 and operatespursuant to Chapter 67A of the Kentucky Revised Statues. The Issuer operates under a Mayor-Council form of government where executive and administrative functions are vested with theMayor and legislative authority is vested with the Legislative Authority.
The Mayor is the chief executive officer and is elected to serve a four-year term. TheLexington-Fayette Urban County Council has fifteen members, including twelve memberselected from single-member districts in Fayette County who serve two-year terms and threemembers elected at-large who serve four-year terms. The Vice-Mayor is the at-large memberwho receives the most votes in the general election. (See page iii hereof for a listing of theincumbent Mayor and members of the Lexington-Fayette Urban County Council.)
The Mayor is assisted in the administration of the government by departmentcommissioners who are appointed by the Mayor with approval of the Legislative Authority. TheIssuer has seven departments, headed by department commissioners, which are responsible foradministering programs and implementing policies. Each department is divided into divisionsthat are managed by division directors.
The Issuer has 2,800 authorized full-time equivalent positions. Of these positions, 48%are police, fire and community correction personnel, and the remaining 52% are civil service,non-civil service, appointed or elected positions.
The Department of Finance and Administration is responsible for the custody, investmentand disbursement of all funds; debt management; retirement fund administration; coordination ofthe annual financial audit and publication of the Comprehensive Annual Financial Report. Thisdepartment includes the divisions of Accounting, Community Development, Human Resources,Purchasing, Revenue and Risk Management.
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The Department of Public Safety includes the divisions of Police, Fire and EmergencyServices, Community Corrections, Emergency Management/E-911 and Code Enforcement.
The Department of Public Works and Development is responsible for providing a broadrange of public services including solid waste collection and recycling, sanitary sewerconveyance and treatment, stormwater control, street maintenance, and construction design andmaintenance. This department is also responsible for developing long-range capital plans forsanitary sewer and stormwater facilities. The divisions in this department include Engineering,Streets, Roads and Forestry, Traffic Engineering, Historic Preservation, Planning, Purchase ofDevelopment Rights and Building Inspection.
The Department of Social Services provides human resources services to Fayette Countyresidents including providing assistance to families and children, coordinating a community-wide effort to implement the new welfare reform programs and organizing programs for seniorcitizens. The divisions in this department include Adult and Tenant Services, Family Servicesand Youth Services.
The Department of General Services includes the divisions of Facilities and FleetManagement and Parks and Recreation. In addition, the Commissioner’s office oversees themanagement of the Issuer telephone system, utilities, parking facilities and coordinates specialevents.
The Department of Environmental Quality includes the divisions of EnvironmentalPolicy, Water Quality and Waste Management.
The Department of Law provides legal services for the Issuer. The Corporate Counselfunction prepares all legal instruments for the government and provides advice to its employeesand agencies. These activities include managing the preparation of legal opinions, ordinances,resolutions, contracts and other legal documents. The Litigation function represents the Issuer incivil cases and lawsuits and coordinates representation of cases handled by outside attorneys.
THE SEWER SYSTEM
General
The Division of Water Quality (“DWQ”) provides residents and businesses withinFayette and northern Jessamine counties in Kentucky with wastewater treatment and stormwatermanagement services. DWQ operates and maintains the government-owned sanitary sewersystem (the “Sewer System”) which serves over 117,000 customers and includes 78 pumpstations, almost 1,400 miles of sewer line, over 28,000 manholes, and 3 wastewater treatmentplants, Town Branch, West Hickman, and Blue Sky. The stormwater management programs ofthe DWQ encompass the design, review, construction and inspection of stormwaterinfrastructure and the management of stormwater runoff control and flood mitigation projects.
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Consent Decree
The Issuer is required, under a federal consent decree (the “Consent Decree”) with theU.S. Environmental Protection Agency (“EPA”) and the Energy and Environment Cabinet of theCommonwealth of Kentucky - Department for Environmental Protection (“KDEP”), finalized inJanuary 2011, to take all actions necessary, including rehabilitation of the Sewer System, toeliminate sanitary sewer overflows, unpermitted discharges and exceedances, which result inviolations of the Clean Water Act.
The Consent Decree obligates the Issuer to address certain immediate violations; requiresdevelopment of a system-wide sanitary sewer assessment to identify other problems—includinga self-assessment of all the division’s operations, staff, and equipment; and requires developmentand implementation of a capital work plan to eliminate those problems. The Consent Decreealso requires the Issuer to assess sewer capacity and develop a capacity assurance program toensure adequate capacity exists before new connections are made to the Sewer System. TheEPA established deadlines to meet the requirements outlined in the Consent Decree. Failure tomeet those deadlines could result in additional fines and in stipulated penalties.
The Issuer has completed all of the early action items required in the Consent Decree;completed all required system assessments, studies, modeling and planning; developed andsubmitted all required plans and schedules for construction projects and operational changes; andis in the process of implementing those plans.
Most of the plans and assessments required by the Consent Decree led to thedevelopment of a three (3) volume capital improvement plan known as the Remedial MeasuresPlans (RMPs). The RMPs have been submitted for EPA approval and negotiation for finalapproval is ongoing between the Issuer and the EPA. The RMPs identify all capital measuresnecessary to meet the objectives of the Consent Decree and includes completion schedules that,once approved by the EPA, become enforceable components of the Consent Decree. The RMPsinclude over 80 projects with an estimated cost of $600 million. Sanitary sewer overflowelimination can include increasing system capacity, repairing the system to reduce the amount ofrainwater entering the sewer system or providing wet weather storage for the excess flows duringrain events. Projects in the RMPs are designed to provide capacity in the Sewer System for aprojected full build out of the Sewer System for the year 2035.
The RMPs were submitted to EPA in 2011 and 2012. In early 2014, the Issuer respondedto comments sent collectively by EPA and KDEP. To date no formal response has been issuedby EPA or KDEP.
All plans and submittals requiring EPA approval have been submitted on or ahead of theConsent Decree compliance schedule, with only the RMPs not yet receiving EPA approval. Inthe absence of EPA approval for the RMPs, the Issuer has elected to proceed withimplementation of required initiatives to ensure all deadlines are met.
The Issuer’s proposed timeline for completing the required improvements to the SewerSystem is 12 years (calendar years 2014-2026). The Issuer’s success in correcting existingproblems will be monitored by the reduction of overflows at manholes and pump stations inaccordance with the standards set forth in the Consent Decree.
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Financing for the RMPs will come from cash reserves, future cash flows, borrowingthrough bond issues and Kentucky Infrastructure Authority Loans. To insure adequate revenuesfor future facility improvements the Issuer adopted an ordinance on February 8, 2001 increasingthe sanitary sewer charges and connection fees by 20%, effective July 1, 2002. To insureadequate revenues for future improvements, the Issuer adopted Ordinance 34-2008 on February21, 2008 increasing sanitary sewer charges as follows: effective May 1, 2008 through June 30,2009, all sewer fees rates were raised by 50%. Effective July 1, 2009, all sewer fees and rateswere raised by 35%. Rates and fees shall be adjusted each July 1st beginning July 1, 2010, by anamount based upon the Consumer Price Index for All Urban Consumers, U.S. City Average(CPI-u) published monthly by the Bureau of Labor Statistics. Rates shall be adjusted up if soindicated by a factor determined by averaging the monthly CPI-u published for the 12-monthperiod ending, and including, April of the year before the July 1 adjustment.
A public document repository for all Consent Decree deliverables is available on theIssuer’s website.
Administration and Management of the Sewer System
DWQ is responsible for the day to day operation of the sanitary sewer system. Thedivision is a component of the overall organizational structure of the Issuer and reports to theMayor and the Legislative Body via the Commissioner of Environmental Quality and PublicWorks and the Chief Administrative Officer (CAO). Other departments and divisions of theIssuer provide essential support services to DWQ, including:
Department of Law: legal services and representation on all legal matterspertaining to the System.
Department of Finance: fiscal management, accounting services, revenuecollection services and central purchasing services.
Division of Human Resources: employee recruitment, training and disciplinarysupport services.
The Division of Engineering: review, approval and inspection of dedicatedinfrastructure installed as part of privately funded new development and re-development projects.
The Director of Water Quality is responsible for the management of all technicaloperations of DWQ. A brief professional biography of the Director of Water Quality is set forthbelow.
Charles H. Martin, P.E., Director. Charlie Martin has been the Director for theDivision of Water Quality since its formation in July 2007. The merger of stormwatermanagement and sanitary sewer operations within LFUCG formed the Division of WaterQuality. Mr. Martin was previously the Director for the Division of Sanitary Sewers andhas also held the positions of Collection System Manager and Deputy Director for thedivision, along with three interim assignments as the Commissioner of the EnvironmentalQuality and Public Works Department. Mr. Martin has been employed by the Issuer
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since 1999 and has spent his entire career with the Issuer managing Lexington’swastewater operations.
Prior to his arrival in Lexington, Charlie spent five years employed by the OhioEnvironmental Protection Agency first as an Environmental Engineer and later as anEnvironmental Supervisor in the Division of Drinking and Groundwaters. A nativeOhioan, Charlie began his career with a water and wastewater utility in 1979. Mr. Martinhas over 30 years of water and wastewater utility experience.
Charlie is a graduate of the University of Michigan with a B.S. in CivilEngineering, is a licensed Professional Engineer in both Ohio and Kentucky and is alicensed Water Supply Operator in the State of Ohio. Charlie also serves as FayetteCounty’s representative to the Bluegrass Water Supply Commission.
Organizational Structure. A generalized representation of the organizational structure ofDWQ is provided below.
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Technical Services Units. Capital construction projects within DWQ are managed bythree technical services units all reporting directly to the Director of Water Quality.
1. Wastewater Treatment Plant Engineering Services. All wastewatertreatment plant capital construction work (RMP projects and non-RMP projects) ismanaged by the chief plant engineer, Tiffany Rank, P.E. Technical support is providedby plant engineering and operations staff along with procured consulting engineeringservices
2. Remedial Measures Plan Engineering Services. All RMP capitalconstruction projects, excluding the wastewater RMP projects, are managed exclusivelyby Vernon Azevedo, P.E. Jim Gray, Mayor of Lexington, hired Mr. Azevedo as theconstruction manager for these RMP projects to ensure efficient and effective overallproject management of this aggressive capital construction program. Technical support isprovided by staff engineers of the Issuer, the RMP Program Management team of Hazenand Sawyer / CDM Smith and a list of pre-qualified engineering consultants.
3. Non-Remedial Measures Plan Engineering Services. All non-RMP capitalconstruction work is managed by Richard Day, P.E. Technical support is provided bystaff engineers of the Issuer, and a list of pre-qualified engineering consultants.
Each of these technical services units utilize consulting engineers to provide eitheroverall program management services and/or detailed design, bidding and constructionadministration services to ensure timely and efficient delivery of capital projects.
Program Management Consultant. Hazen and Sawyer, in partnership with CDM Smith,provides DWQ with overall program management services for the implementation of the RMPs.Hazen and Sawyer has provided RMP program management services since 2010, initiallyserving as the lead consultant on the development of the RMPs currently under review by theEPA. Hazen and CDM’s project management experience with the Issuer’s Consent Decreetraces back to the early phases of Consent Decree implementation, beginning with developmentand calibration of the hydraulic model in 2008.
The program management team has facilitated value engineering analysis and led DWQin its other efforts to reduce overall project risk while maximizing efficiency. The RMP programmanagement contract Hazen and Sawyer was renewed in 2013 and will continue indefinitelycontingent on future change order approvals by the Legislative Body.
Hazen and Sawyer does not serve as the design engineer for specific RMP projects. EachRMP project is awarded to a prequalified consulting engineer who completes the design, biddingand construction services tasks for the awarded project under the overall direction of the programmanagement team.
Employee Relations. The Sewer System currently has 199 full-time employees. Theemployees are non-unionized and there are no memorandums of understanding with theemployees. The Issuer participates in the Commonwealth of Kentucky's County Employees'Retirement System (CERS) which is administered by the Board of Trustees of the Kentucky
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Retirement System. The contributions for Sewer System employees are paid from the revenuesof the Sewer System.
Employee Pension Plan. All full-time employees of the Issuer, after six months ofservice, participate in the County Employee Retirement System (“CERS”), which is a cost-sharing multiple-employer defined benefit retirement plan administered by Kentucky RetirementSystems (“KRS”), an agency of the Commonwealth. CERS provides for retirement, disabilityand death benefits to plan members and beneficiaries. KRS issues a publicly available financialreport that includes financial statements and required supplemental information for CERS. Thatreport may be obtained by writing to KRS, 1260 Louisville Road, Frankfort, Kentucky 40601-6124, or by visiting their website at www.kyret.com.
Plan members are required to contribute 5% of creditable compensation if hired beforeSeptember 1, 2008. Plan members hired on or after that date are required to contribute 6% ofcreditable compensation. Participating Sewer System employees contributed creditablecompensation to CERS as set forth in the table below.
The Issuer is required to contribute the remaining amounts necessary to pay benefitswhen due. The Issuer’s contribution rate, determined by CERS, was 18.96% effective July 1,2011; 19.55% effective July 1, 2012; 18.89% effective July 1, 2013; and 17.67% effective July1, 2014. Employer contribution rates are intended to fund the normal cost on a current basis plusan amount equal to the amortization of unfunded past service costs over 30 years. The annualcost to the Issuer is equal to the annual required contributions. The Issuer contributions, totalpayroll and CERS covered payroll with respect to Sewer System employees are set forth below:
Fiscal Year(Ending June 30)
EmployeeContributions
EmployerContributions Total Payroll Covered Payroll
2012 $337,575.57 $1,280,086.57 $10,405,901.81 $10,405,901.812013 334,668.81 1,308,555.06 10,014,773.51 10,014,773.512014 339,605.06 1,283,027.90 10,468,631.38 10,468,631.38
Benefits fully vest on reaching five years of service for nonhazardous employees.Aspects of benefits for nonhazardous employees include retirement after 27 years of service orage 65. Nonhazardous employees who begin participation on or after September 1, 2008 mustmeet the rule of 87 (member’s age plus years of service credit must equal 87, and the membermust be a minimum of 57 years of age) or the member is age 65, with a minimum of 60 monthsservice credit. All employees of the Sewer System participating in the CERS defined benefitretirement plan are nonhazardous employees.
According to a report of November 8, 2013, prepared by Cavanaugh MacdonaldConsulting, LLC (“Cavanaugh”), the actuary for KRS, funding levels for Kentuckygovernmental pension funds, including the CERS nonhazardous pension fund, have fallen inresponse to investment returns less than the actuarially assumed rate, higher than anticipatedretirement rates, 2009 assumption changes for the CERS nonhazardous pension fund, andincreasing expenditures for retiree cost of living adjustments.
Consequently, as of June 30, 2013, the funding level for the CERS non-hazardouspension fund was at 60.1%.
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The Issuer has vetted new accounting requirements for the reporting of the unfundedaccrued pension liabilities with its independent auditors and anticipates a prior period non-cashadjustment to net assets. It is anticipated that Cavanaugh will be calculating each employer’sproportionate share of the CERS plan’s net pension liability and pension expense, and KRS willprovide this information to its participating employers in an annual report. Until Cavanaugh hascompleted these calculations and KRS has provided the information to the Issuer, the Issuer willbe unable to determine the amount of the prior period non-cash adjustment to net assets. Inaddition, the Issuer intends to comply with the requirements of GASB 68 related to pensionaccounting commencing with its fiscal year beginning July 1, 2014.
For additional pension information relating to all employees of the Issuer, see AppendixD – Note 9 – “DEFINED BENEFIT PENSION PLANS AND OTHER POST EMPLOYMENTBENEFITS.”
[Remainder of page intentionally left blank]
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The Service Area
The Sewer System is owned and operated by the Issuer and primarily serves residents andbusinesses within Fayette and northern Jessamine counties in Kentucky (as set forth in the mapbelow, the “Service Area”).
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Customer History
The Sewer System serves residential, commercial, and wholesale customers throughoutthe Service Area. The Sewer System customer history for the past five fiscal years is as follows:
Customer History: Overall (FY 2010-2014)
Fiscal Year Number of CustomersVolume
(in 1,000 gallons) Revenue2010 104,926 8,513,707 $47,100,3032011 107,028 8,572,155 47,963,3052012 107,583 8,255,846 46,894,3772013 111,847 8,086,361 48,924,8352014 117,053 8,304,192 49,680,370*
_______*UnauditedSource: Division of Water Quality
Customer History: Residential and Non-Residential Customers (FY 2010-2014)
Fiscal Year
ResidentialNumber ofCustomers % Change
Non-ResidentialNumber ofCustomers % Change
2010 97,232 1.1% 7,694 -0.5%2011 99,211 2.0% 7,817 1.6%2012 99,746 0.5% 7,837 0.3%2013 103,224 3.5% 8,623 10.0%2014 108,430 5.0% 8,623 0.0%
_______Source: Division of Water Quality
Largest Customers of the Sewer System for Fiscal Year 2014
Rank Company Usage/Gallons† Revenue1 University of Kentucky* 629,920,655 $3,921,9872 St. Joseph Hospital* 82,900,840 508,1293 Central Baptist Hospital* 70,585,252 430,1684 LFUCG Detention Center 67,529,336 355,8915 Kentucky Horse Park 64,292,059 391,9416 Federal Medical Center 53,100,340 323,4517 Lexmark* 47,161,392 308,0908 Suburban Trailer Park 43,657,020 266,1649 Federal Government VA Hospital* 28,457,384 171,593
10 Lexington Marriott Resort 24,743,520 229,638TOTALS 1,112,347,798 $6,907,052
_______† As measured by water consumption on the basis of sanitary sewer rates.*Multiple AccountsSource: Division of Water Quality
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Waste Water Treatment Plants
Town Branch Wastewater Treatment Plant. The Town Branch Wastewater TreatmentPlant (the “Town Branch WWTP”) was one of the first sewage treatment plants in this section ofthe United States. It began operating in 1919 in its current location just off of Old Frankfort Pikeinside New Circle Road. The original plant consisted of Imhoff tanks, trickling filters and sludgedrying beds. In 1935, sludge digesters and pretreatment screens were added. The plant at thistime had a capacity of about 6 million gallons per day (MGD).
In 1947, two additional sludge digesters were constructed. A major expansion began in1960 which converted the plant into a 12 MGD activated sludge plant utilizing the Krausprocess, which improves sludge settling characteristics and adds an oxygen source to the sludge.In 1971, another expansion increase Town Branch's capacity to 18 MGD and added sludgedisposal facilities that eliminated the use of sludge lagoons and drying beds at this site. Anupgrade and expansion was completed in 1987.
Town Branch WWTP is designed to treat wastewater generated from approximately 60percent of Fayette County, serving a population of 130,000. Under normal operation, thetreatment plant is expected to remove over 90 percent of the incoming loads of total suspendedsolids, as measured by 5-day biochemical oxygen demand and ammonia nitrogen levels. Thisadvanced secondary treatment facility has a permitted design flow of 30 MGD organic capacityand 64 MGD in hydraulic capacity.
Renewal is pending for the Town Branch WWTP permit through the Kentucky PollutionDischarge Elimination System (“KPDES”) permitting process. The draft permit was posted for a30 day public comment period on August 20, 2014. If approved, process modifications andimprovements must be undertaken to meet the proposed total phosphorus effluent limit. If notapproved, the Town Branch WWTP is authorized to continue operation under the current permitconditions until a new permit is approved.
West Hickman Creek Wastewater Treatment Plant. Lexington's West Hickman CreekWastewater Treatment Plant (the “West Hickman Creek WWTP”) began operating in 1972 on a269 acre site located just across the Fayette County line in Jessamine County. Originally, theplant began with a Kraus modification of the activated sludge process, which is a way ofoperating the process that improves the settling characteristics of the sludge and adds an oxygenresource. This was followed by twenty acres of polishing lagoons, which provide a wetland areaand wildlife habitat for treated wastewater. At this point in time, the plant had a capacity of 5million gallons per day (MGD) and provided service for 50,000 Lexington residents.
As Lexington's population increased, so did the need for a larger treatment plant. Withsouth Lexington's population expected to exceed 150,000 by the year 2000, the West HickmanCreek WWTP required a major upgrade and expansion. As such, in January of 1982,construction began on the expansion of the plant, which would increase capacity threefold to16.8 MGD with a peak capacity of 32 MGD.
Ten years after this upgrade, Lexington completed another expansion of the WestHickman Creek WWTP which increased capacity of the plant to over 22 million gallons per day.This expansion also provided fine screens, raw sewage screw pumps, a centrifuge for thickening
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sludge, a computer monitoring system, and dechlorination facilities. In 2001, Lexington'sgrowing population demanded that the West Hickman Creek WWTP be upgraded and expandedyet again to an organic capacity of 33.8 MGD with a peak hydraulic capacity of 64 MGD.
The upgraded West Hickman Creek WWTP is classified as a single-staged activatedsludge nitrification system which treats billions of gallons of wastewater annually. The facilityremoves over 90 percent of the incoming pollutants as measured by 5-day carbonaceousbiochemical oxygen demand, total suspended solids, and ammonia nitrogen levels.
Renewal is pending for West Hickman WWTP permit through the KPDES permittingprocess. The draft permit was posted for a 30 day public comment period on August 20, 2014. Ifnot approved, the West Hickman WWTP is authorized to continue operation under the currentpermit conditions until a new permit is approved.
Blue Sky Wastewater Treatment Plant
Constructed in the late 1960’s the Blue Sky Wastewater Treatment Plant (the “Blue SkyWWTP”) has a design capacity of 150,000 GPD and utilizes the contact stabilization process forsewage treatment. The plant, under private ownership, was a compliant operation for many yearsuntil the late 1990’s when the plant began to incur violations for ammonia discharges. By 2001,the plant was operating under an Agreed Order with the Commonwealth of Kentucky. In 2003,after further non-compliance, the owner filed bankruptcy and abandoned the facility.
The Issuer immediately took control of the facility in order to continue providing sanitarysewer service to nearly 150 existing Blue Sky service accounts. In 2004, LFUCG was appointedreceiver of the Blue Sky Wastewater Inc. assets by the Franklin County (Kentucky) CircuitCourt.
The Issuer has operated the Blue Sky WWTP since 2003 without significant KPDESpermit violations.
The elimination of the Blue Sky WWTP was included as a component in the ConsentDecree settlement negotiations as a Commonwealth Supplemental Environmental Project(“SEP”). While not required as compliance component of the Consent Decree, all parties agreedthat closure of the facility was in the best interests of the public. Appendix K-1 of the ConsentDecree requires termination of the Blue Sky WWTP discharge by January 3, 2015.
In 2011, the Issuer acquired all assets associated with the Blue Sky WWTP via a MasterCommissioner’s sale and immediately began design of a pumping station system that would leadto permanent closure of the Blue Sky WWTP. Construction of the pumping system began in2013, with diversion of all flow from the Blue Sky WWTP to the new pump station currentlyscheduled to occur by September 30, 2014. Once diversion of the flow is complete, demolitionof the Blue Sky WWTP will occur.
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Pump Stations
The Division of Water Quality is responsible for monitoring, operation; repair andmaintenance on the 78 pump stations located throughout Fayette County. These pump stationsrange in capacity from 1,000 gallons per day at the Georgetown Road Fire Dept. to 5,000,000gallons per day at Wolf Run Pump station. Pump Stations are necessary in the conveyance ofsewage from a large area to a centralized treatment facility. Often pump stations are needed to"lift" the sewage through a force main to a point where it can continue to flow by gravity to thetreatment facility. Lexington is unusual in its topography in that water runs away fromLexington in almost all directions. This makes it difficult to take advantage of the flow of gravityand results in the necessity of more pump stations than in other cities of comparable size.
All of the pump stations in the Sewer System are automated in the pumping of sewage.Additionally; telemetry systems have been installed in all pump stations which sendflow/performance data and alarm situations a central location. The Issuer initiated an upgrade ofits telemetry system in 2013 to integrate monitoring of the wastewater treatment plants and pumpstations on a single platform. Completion of this upgrade is scheduled for December 2014. Theuse of telemetry systems substantially decreases the man hours needed to check each pumpstation on a daily basis. Most low capacity pump stations are checked on a weekly basis. All themajor stations are checked and maintained on a daily or twice per day frequency. Pump stationoperations include cleaning bars racks of debris and rotation of lead and lag pumps.
The Consent Decree required the Issuer to upgrade its emergency power and pumpingcapabilities for all of its pumping stations. The Pump Station Operation Plan for Power Outages(PSOPPO) was approved by EPA in October 2013. The implementation phase of the plan hasresulted in surge protection installations and electrical grounding upgrades for pump stationssusceptible to lightning strikes. LFUCG has also purchased multiple trailer mounted generatorsand emergency pumps that can be deployed in the event of electrical or mechanical failures atpump stations not equipped with permanent generators.
Rates and Charges
All sanitary sewer user fees are based on water consumption as an approximation ofsewer use into the facility. The consumption amount is provided by the water service supplier(Kentucky American Water Co.) and is based on water meter readings. Provision is made in eachsewer user schedule for water not discharged to the sewer system (e.g., irrigation, pool filling).Additionally, all sanitary sewer users are permitted to contract with Kentucky American WaterCo. for a separate irrigation meter to supply water used in irrigation or other uses not dischargedto the sanitary sewer system. This meter will not be subject to sewer user fees.
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The Lexington-Fayette Urban County Government’s rate schedule is broken into twotiers. Schedule A (residential) and Schedule B (non-residential).
Schedule A(Applies to single family dwellings or multi-unit dwellings which are individually metered)
Unit As of July 1, 2014
First unit (0-100 cubic feet) $5.09Each additional unit (100 cubic feet) $3.83
_______Source: Division of Water Quality
The spring/summer sewer user fee is charged on the lower of actual consumption or theprevious fall/winter consumption average. This will allow for pool filling and landscape wateringduring spring/summer months. New customers with no fall/winter average are charged at a rateof 90 percent of water consumption until the fall quarter begins.
Schedule B(Applies to all users not classified under Schedule A)
Unit As of July 1, 2014
First unit (0-100 cubic feet) $6.17Each additional unit (100 cubic feet) $4.65
_______Source: Division of Water Quality
Schedule B users may be charged for extra-strength loading of conventional pollutants asfollows:
Unit In excess of Per Lb Charge as of July 1, 2014
Biochemical Oxygen Demand (BOD) 250 mg/l $0.839Suspended Solids 250 mg/l $0.694Ammonia Nitrogen 25 mg/l $2.108_______Source: Division of Water Quality
The Issuer permits Schedule B users to install exclusion meters for the purpose ofexcluding from sewer user fees any water not returned to the Sewer System.
Monthly Receipts. Billings occur each day throughout the month, based on theread/route schedule from Kentucky American Water Company (“KAWC”), which provides theusage information for billing. Payments are due 21 days from the bill date. The Issuer did notbegin enforcing shut-offs until June 2014. Accounts selected for shut off are determined byamount due and longest overdue going from highest to lowest. The collection rate for the 12-month period ending May 2014 was 95.6%.
Rate Setting Process. Recommendations regarding user fees are prepared for theLegislative Body by the Department of Finance and the Division of Water Quality. TheLegislative Body considers and votes on such recommendations in the form of legislation,
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requiring two readings. Such legislation provides the amount of any increase and its effectivedate, which is usually July 1, the beginning of the fiscal year.
Rate History. The following tables summarize the District's rate history since May 1,2008 for residential and non-residential customers.
Residential Sewer User Fees
Rate EffectiveDate
No. ofCubic Feet Rate
DollarAmount ofIncrease
Percentage ofIncrease
5/1/2008 0-100 $3.50 ******48.0%
>100 $2.64
7/1/2009 0-100 $4.73 $1.2335.0%
>100 $3.56 $0.92
7/1/2010 0-100 $4.75 $0.020.5%
>100 $3.58 $0.02
7/1/2011 0-100 $4.83 $0.081.7%
>100 $3.64 $0.06
7/1/2012 0-100 $4.94 $0.112.3%
>100 $3.72 $0.08
7/1/2013 0-100 $4.99 $0.051.01%
>100 $3.76 $0.04
7/1/2014 0-100 $5.09 $0.101.95%
>100 $3.83 $0.07_______Source: Division of Water Quality
Non-Residential Sewer User Fees
Rate EffectiveDate
No. ofCubic Feet Rate
DollarAmount ofIncrease
Percentage ofIncrease
5/1/2008 0-100 $4.25 ******48%
>100 $3.20
7/1/2009 0-100 $5.73 $1.4835%
>100 $4.32 $1.12
7/1/2010 0-100 $5.76 $0.030.5%
>100 $4.34 $0.02
7/1/2011 0-100 $5.86 $0.101.7%
>100 $4.41 $0.07
7/1/2012 0-100 $5.99 $0.132.3%
>100 $4.51 $0.10
7/1/2013 0-100 $6.05 $0.061.01%
>100 $4.56 $0.05
7/1/2014 0-100 $6.17 $0.121.95%
>100 $4.65 $0.09_______Source: Division of Water Quality
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TAX MATTERS
Series 2014A Bonds
General. In the opinion of Bond Counsel for the Series 2014A Bonds, based upon ananalysis of existing laws, regulations, rulings and court decisions, interest on the Series 2014ABonds is excludible from gross income for Federal income tax purposes. Bond Counsel for theSeries 2014A Bonds is also of the opinion that interest on the Series 2014A Bonds is not aspecific item of tax preference under Section 57 of the Code for purposes of the Federalindividual or corporate alternative minimum taxes. Furthermore, Bond Counsel for the Series2014A Bonds is of the opinion that interest on the Series 2014A Bonds is exempt from Kentuckyincome taxation and the Series 2014A Bonds are exempt from ad valorem taxation by theCommonwealth of Kentucky and any of its political subdivisions.
The form of the opinion of Bond Counsel regarding the Series 2014A Bonds is attachedhereto as Appendix E-1.
The Code imposes various restrictions, conditions, and requirements relating to theexclusion from gross income for Federal income tax purposes of interest on obligations such asthe Series 2014A Bonds. The Issuer has covenanted to comply with certain restrictions designedto ensure that interest on Series 2014A Bonds will not be includible in gross income for Federalincome tax purposes. Failure to comply with these covenants could result in interest on theSeries 2014A Bonds being includible in income for Federal income tax purposes and suchinclusion could be required retroactively to the date of issuance of the Series 2014A Bonds. Theopinion of Bond Counsel assumes compliance with these covenants. However, Bond Counselhas not undertaken to determine (or to inform any person) whether any actions taken (or nottaken) or events occurring (or not occurring) after the date of issuance of the Series 2014ABonds may adversely affect the tax status of the interest on the Series 2014A Bonds.
Certain requirements and procedures contained or referred to in the Trust Agreement andother relevant documents may be changed and certain actions (including, without limitation,defeasance of the Series 2014A Bonds) may be taken or omitted under the circumstances andsubject to the terms and conditions set forth in such documents. Bond Counsel expresses noopinion as to any Series 2014A Bonds or the interest thereon if any such change occurs or actionis taken or omitted upon the advice or approval of bond counsel other than Peck, Shaffer &Williams, a division of Dinsmore & Shohl LLP.
Although Bond Counsel for the Series 2014A Bonds is of the opinion that interest on theSeries 2014A Bonds will be excludible from gross income for Federal income tax purposes andthat interest on the Series 2014A Bonds is excludible from gross income for Kentucky incometax purposes, the ownership or disposition of, or the accrual or receipt of interest on, the Series2014A Bonds may otherwise affect a Holder’s Federal, state or local tax liabilities. The natureand extent of these other tax consequences may depend upon the particular tax status of theHolder or the Holder’s other items of income or deduction. Bond Counsel expresses no opinionsregarding any tax consequences other than what is set forth in its opinion and each Holder orpotential Holder is urged to consult with tax counsel with respect to the effects of purchasing,holding or disposing the Series 2014A Bonds on the tax liabilities of the individual or entity.
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Receipt of tax-exempt interest, ownership or disposition of the Series 2014A Bonds mayresult in other collateral federal, state or local tax consequence for certain taxpayers. Sucheffects include, without limitation, increasing the federal tax liability of certain foreigncorporations subject to the branch profits tax imposed by Section 884 of the Code, increasing thefederal tax liability of certain insurance companies, under Section 832 of the Code, increasingthe federal tax liability and affecting the status of certain S Corporations subject to Sections 1362and 1375 of the Code, increasing the federal tax liability of certain individual recipients of SocialSecurity or Railroad Retirement benefits, under Section 86 of the Code and limiting the amountof the Earned Income Credit under Section 32 of the Code that might otherwise be available.Ownership of any Series 2014A Bonds may also result in the limitation of interest and certainother deductions for financial institutions and certain other taxpayers, pursuant to Section 265 ofthe Code. Finally, residence of the holder of Series 2014A Bonds in a state other than Kentuckyor being subject to tax in a state other than Kentucky, may result in income or other tax liabilitiesbeing imposed by such states or their political subdivisions based on the interest or other incomefrom the Series 2014A Bonds.
The Issuer has not designated the Series 2014A Bonds as “qualified tax-exemptobligations” under Section 265(b)(3) of the Code.
Prospective purchasers of the Series 2014A Bonds are advised to consult their own taxadvisors prior to any purchase of the Series 2014A Bonds as to the impact of the Code upon theiracquisition, holding or disposition of the Series 2014A Bonds, as well as pending or proposedfederal and state legislation and court proceedings.
Original Issue Premium. “Acquisition Premium” is the excess of the cost of a bond overthe stated redemption price of such bond at maturity or, for bonds that have one or more earliercall dates, the amount payable at the next earliest call date. The Series 2014A Bonds that matureon September 1, 2018 through September 1, 2027 and September 1, 2029 through September 1,2030, inclusive (the “Premium Bonds”) are being initially offered and sold to the public withAcquisition Premium. For federal income tax purposes, the amount of Acquisition Premium onthe Premium Bonds must be amortized and will reduce the bondholder’s adjusted basis in thatbond. The amount of any Acquisition Premium paid on the Premium Bonds that must beamortized during any period will be based on the “constant yield” method, using the originalbondholder’s basis in such Premium Bonds and compounding semiannually. This amount isamortized ratably over that semiannual period on a daily basis. However, no amount ofamortized Acquisition Premium on the Premium Bonds may be deducted in determiningbondholder’s taxable income for federal income tax purposes.
Please note that because the Premium Bonds that mature on September 1, 2025 throughSeptember 1, 2027 and September 1, 2029 through September 1, 2030, are callable prior to theirstated maturity both the amount of, and the required amortization period for, the AcquisitionPremium will depend both upon when the Premium Bonds can be redeemed and if in fact theyare redeemed. The Premium Bonds that mature on September 1, 2018 through September 1,2024 are not callable prior to their stated maturity date, which will determine the amortizationperiod. Holders of any Premium Bonds, both original purchasers and any subsequent purchasers,should consult their own tax advisors as to the actual effect of such Acquisition Premium with
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respect to their own tax situation and as to the treatment of the Acquisition Premium for state taxpurposes.
Original Issue Discount. The Series 2014A Bonds that mature on September 1, 2028(the “Discount Bonds”) are being initially offered and sold to the public at a discount (“OID”)from the amounts payable at maturity thereon. OID is the excess of the stated redemption priceof a bond at maturity (the face amount) over the “issue price” of such bond. The issue price isthe initial offering price to the public (other than to bond houses, brokers or similar personsacting in the capacity of underwriters or wholesalers) at which a substantial amount of bonds ofthe same maturity are sold pursuant to that initial offering. For federal income tax purposes, OIDon each bond will accrue over the term of the bond. The amount accrued will be based on asingle rate of interest, compounded semiannually (the “yield to maturity”) and, during each semi-annual period, the amount will accrue ratably on a daily basis. The OID accrued during theperiod that an initial purchaser of a Discount Bond at its issue price owns it is added to thepurchaser’s tax basis for purposes of determining gain or loss at the maturity, redemption, sale orother disposition of that Discount Bond. In practical effect, accrued OID is treated as statedinterest, is treated, that is, as excludible from gross income for federal income tax purposes.
In addition, original issue discount that accrues in each year to an owner of a DiscountBond is included in the calculation of the distribution requirements of certain regulatedinvestment companies and may result in some of the collateral federal income tax consequencesdiscussed above. Consequently, owners of any Discount Bond should be aware that the accrualof original issue discount in each year may result in an alternative minimum tax liability,additional distribution requirements, or other collateral federal income tax consequencesalthough the owner of such Discount Bond has not received cash attributable to such originalissue discount in such year.
Holders of Discount Bonds should consult their own tax advisors as to the treatment ofOID and the tax consequences of the purchaser of such Discount Bonds other than at issue priceduring the initial public offering and as to the treatment of OID for state tax purposes.
Series 2014B Bonds
In the opinion of Bond Counsel for the Series 2014B Bonds, based upon an analysis ofexisting laws, regulations, rulings and court decisions, interest on the Series 2014B Bonds is notexcludible from gross income for Federal income tax purposes. Furthermore, Bond Counsel forthe Series 2014B Bonds is of the opinion that interest on the Series 2014B Bonds is exempt fromKentucky income taxation and the Series 2014B Bonds are exempt from ad valorem taxation bythe Commonwealth of Kentucky and any of its political subdivisions.
The form of the opinion of Bond Counsel regarding the Series 2014B Bonds is attachedhereto as Appendix E-2.
Certain requirements and procedures contained or referred to in the Trust Agreement andother relevant documents may be changed and certain actions (including, without limitation,defeasance of the Series 2014B Bonds) may be taken or omitted under the circumstances andsubject to the terms and conditions set forth in such documents. Bond Counsel expresses noopinion as to any Series 2014B Bonds or the interest thereon if any such change occurs or action
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is taken or omitted upon the advice or approval of bond counsel other than Peck, Shaffer &Williams, a division of Dinsmore & Shohl LLP.
Prospective purchasers of the Series 2014B Bonds are advised to consult their own taxadvisors prior to any purchase of the Series 2014B Bonds as to the impact of the Code upon theiracquisition, holding or disposition of the Series 2014B Bonds, as well as pending or proposedfederal and state legislation and court proceedings.
CONTINUING DISCLOSURE
In the 2014 Bond Legislation authorizing the Series 2014 Bonds, the Issuer covenants toannually provide certain financial information and operating data (the “Annual FinancialInformation and Operating Data”) and other information necessary to comply with therequirements of Rule 15c-12 of the Securities and Exchange Commission (the “Rule”), and totransmit the same to the Municipal Securities Rulemaking Board through its ElectronicMunicipal Market Access System (“EMMA”). Each covenant is for the benefit of and isenforceable by the owners of the Series 2014 Bonds. The specific nature of the Annual FinancialInformation and Operating Data and a listing of events for which notices shall be provided areset forth in Appendix F – “FORM OF CONTINUING DISCLOSURE CERTIFICATE.” Thesecovenants have been made in order to assist the original purchaser of the Series 2014 Bonds incomplying with the Rule.
Corrective Action Related to Certain Disclosure Requirements
While the Issuer is currently in material compliance with respect to its undertakings tofile certain annual financial information and operating data relating to the continuing disclosureagreements entered into with respect to the Prior Bonds (and certain other Revenue Bonds whichare no longer outstanding) (the "Existing Agreements" and such annual financial information andoperating data as described therein, the “Prior Annual Financial Information and OperatingData”), the Issuer did not distribute certain Prior Annual Financial Information and OperatingData in a timely manner as required by the Rule and the Existing Agreements related to suchPrior Bonds. The Prior Annual Financial Information and Operating Data of the Issuer for theyears ending June 30, 2009, June 30, 2010, June 30, 2011, and June 30, 2012 was not filed by therespective dates as required by the related Existing Agreements. For the years ending June 30,2009, June 30, 2010, June 30, 2011, June 30, 2012, and June 30, 2013, certain operating dataentitled "Sanitary Sewer System Ratio Composition of Revenues and Expenses" and certaininformation that was contained in Appendix A of the official statements related to the PriorBonds (and certain other Revenue Bonds which are no longer outstanding), were not included inthe respective initial filings of the Prior Annual Financial Information and Operating Data forsuch years, as required in the related Existing Agreements (but were provided in supplementalfilings).
The Issuer has procedures in place to ensure compliance with the Rule, the ExistingAgreements with respect to the Prior Bonds (for as long as the Prior Bonds remain outstanding),and the Continuing Disclosure Certificate to be entered into with respect to the Series 2014Bonds, and, except for the late filings mentioned above, is in material compliance with thecontinuing disclosure undertaking requirements of the Rule in connection with its outstanding
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Prior Bonds that are subject to such requirements. The Issuer intends to make timely disclosurein the future with respect to its Series 2014 Bonds.
UNDERWRITING
The Series 2014A Bonds are being purchased for reoffering by Hutchinson, Shockey,Erley & Co. (the "Series 2014A Underwriter"). The Series 2014A Underwriter has agreed topurchase the Series 2014A Bonds at an aggregate purchase price of $27,635,391.75 (reflectingthe par amount of the Series 2014A Bonds of $24,190,000.00, plus net premium of$3,566,099.85, less Series 2014A Underwriter’s discount of $120,708.10). The initial publicoffering prices which produce the yields set forth on as shown under "MATURITYSCHEDULE" on the inside cover pages hereof may be changed by the Series 2014AUnderwriter and the Series 2014A Underwriter may offer and sell the Series 2014A Bonds tocertain dealers (including dealers depositing Series 2014A Bonds into investment trusts) andothers at prices lower than the offering prices which produce the yields set forth herein under"MATURITY SCHEDULE."
The Series 2014B Bonds are being purchased for reoffering by Citigroup Global MarketsInc. (the "Series 2014B Underwriter"). The Series 2014B Underwriter has agreed to purchasethe Series 2014B Bonds at an aggregate purchase price of $11,385,555.15 (reflecting the paramount of the Series 2014B Bonds of $10,410,000.00, plus premium of $992,107.05, less Series2014B Underwriter’s discount of $16,551.90). The initial public offering prices which producethe yields set forth on as shown under "MATURITY SCHEDULE" on the inside cover pageshereof may be changed by the Series 2014B Underwriter and the Series 2014B Underwriter mayoffer and sell the Series 2014B Bonds to certain dealers (including dealers depositing Series2014B Bonds into investment trusts) and others at prices lower than the offering prices whichproduce the yields set forth herein under "MATURITY SCHEDULE."
LEGAL MATTERS
General Information
Legal matters incident to the issuance of the Series 2014 Bonds and with regard to the taxtreatment thereof are subject to the approving legal opinions of Bond Counsel. Upon delivery ofthe Series 2014 Bonds of the Issuer to the successful bidder therefor, the Series 2014 Bonds willbe accompanied by approving opinions dated the date of such delivery, rendered by BondCounsel. Forms of such legal opinions with respect to the Series 2014 Bonds are attached heretoas Appendix E-1 and Appendix E-2, respectively.
Bond Counsel has performed certain functions to assist the Issuer in the preparation bythe Issuer of its Official Statement. However, said firm assumes no responsibility for, and willexpress no opinion regarding the accuracy or completeness of this Official Statement or anyother information relating to the Issuer or the Series 2014 Bonds that may be made available bythe Issuer or others to the bidders or holders of the Series 2014 Bonds or others.
The engagement of said firm as Bond Counsel is limited to the preparation of certain ofthe documents contained in the transcript of proceedings with regard to the Series 2014 Bonds,and an examination of such transcript proceedings incident to rendering its legal opinion. In its
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capacity as Bond Counsel, said firm has reviewed the information in this Official Statementunder Sections entitled “INTRODUCTION – Security and Source of Payment for the Series2014 Bonds as Parity Bonds,” “ - Authority for Issuance,” DESCRIPTION OF THE SERIES2014 BONDS – General,” SECURITY AND SOURCE OF PAYMENT FOR THE SERIES2014 BONDS – Rate Covenant,” and “TAX MATTERS” as to law and legal conclusions, whichreview did not include any independent verification of financial statements and statistical dataincluded therein, if any.
Transcript and Closing Certificates
A complete transcript of proceedings, a no-litigation certificate and other appropriateclosing documents will be delivered by the Issuer when the Series 2014 Bonds are delivered tothe original purchaser. The Issuer will also provide to the original purchaser, at the time of suchdelivery, a certificate from the Mayor and/or Commissioner of Finance of the Issuer addressed tosuch purchaser relating to the accuracy and completeness of this Official Statement.
Litigation
The Issuer is currently involved in a rate case with the Jessamine South Elkhorn WaterDistrict customers before the Kentucky Public Service Commission. The tap-on fee rates whichare charged to Jessamine South Elkhorn Water District customers are currently being reviewedby the Kentucky Public Service Commission in Case No. 2014-00204. The potential impact ofthis administrative matter is limited solely to the tap-on fee rates being assessed to thoseparticular customers under the Issuer’s contract with the water district. The Issuer has added lessthan 170 of these customers into its system since 2006.
Except as provided above, to the knowledge of the Issuer, no litigation or administrativeaction or proceeding is pending or threatened directly affecting the Series 2014 Bonds, thesecurity for the Series 2014 Bonds, or the application of the proceeds of the Series 2014 Bonds.A No-Litigation Certificate to that effect will be delivered to the purchaser at the time of thedelivery of the Series 2014 Bonds.
RATINGS
As noted on the cover page of this Official Statement, Moody’s Investors Service("Moody’s") has assigned its municipal bond rating of "Aa2" (Negative Outlook) to the Series2014 Bonds and Standard & Poor’s Ratings Service, a division of The McGraw-Hill Companies,Inc. ("S&P"), has assigned its municipal bond rating of "AA+" (Stable Outlook) to the Series2014 Bonds. The ratings when assigned and in effect from time to time reflect only the views ofthe rating organizations. The explanation of its views and the meaning and significance of therating may be obtained from the respective rating agency.
There can be no assurance that a rating when assigned will continue for any given periodof time or that it will not be lowered or withdrawn entirely by the rating agency if in its judgmentcircumstances so warrant. Any such downward change in or withdrawal of a rating may have anadverse effect on the marketability and/or market price of the Series 2014 Bonds.
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The Issuer presently expects to furnish each rating agency with information and materialthat it may request on future general obligation bond issues. However, the Issuer assumes noobligation to furnish requested information and materials, and may issue debt for which a ratingis not requested. Failure to furnish requested information and materials, or the issuance of debtfor which a rating is not requested, may result in the suspension or withdrawal of the ratingagencies’ ratings on outstanding Series 2014 Bonds.
FINANCIAL ADVISOR
Prospective bidders are advised that Raymond James & Associates, Inc. has beenemployed as Financial Advisor in connection with the issuance of the Series 2014 Bonds. Thefees for services of the Financial Advisor with respect to the sale of the Series 2014 Bonds arecontingent upon the issuance and delivery thereof.
This Official Statement has been prepared under the direction of the Issuer by theCommissioner of Finance and Administration with the assistance of Raymond James &Associates, Inc., Lexington, Kentucky (the “Financial Advisor”) employed by the Issuer toperform professional services in the capacity of financial advisor. In their role as FinancialAdvisor to the Issuer, the Financial Advisor has provided advice on the plan of financing andstructure of the issue, reviewed and commented on certain legal documents and drafted certainportions of the Official Statement (based upon information provided by the Issuer). Theinformation set forth herein has been obtained from the Issuer and other sources which arebelieved to be reliable. The Financial Advisor has not verified the factual information containedin this Official Statement but relied on the information supplied by the Issuer and the certificateof the Issuer as to the Official Statement.
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MISCELLANEOUS
All foregoing summaries and descriptions of provisions set forth in the Bond Ordinanceand all references to other documents and materials not purported to be quoted in full are briefoutlines of certain provisions of such documents, reference to which documents is hereby madeand copies of which will be furnished by the Financial Advisor upon written request.
To the extent any statements made in this Official Statement involve matters of opinionor estimates, whether or not expressly stated to be such, such statements are made as such andnot as representations of fact or certainty, and no representation is made that any of suchstatements will be realized. Information herein has been derived by the Issuer from official andother sources and is believed by the Issuer to be reliable, but such information other than thatobtained from official records of the Issuer has not been independently confirmed or verified bythe Issuer and its accuracy is not guaranteed. Neither this Official Statement nor any statementwhich may have been made orally or in writing is to be construed as a contract with the holdersof the Series 2014 Bonds.
This Official Statement has been duly executed and delivered for and on behalf of theLexington-Urban County Government, by its Mayor.
LEXINGTON-FAYETTE URBAN COUNTYGOVERNMENT
By: /s/ Jim GrayMayor
Dated: October 8, 2014
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APPENDIX ASUMMARY OF CERTAIN DEFINITIONS
The following is a list of terms used in this Official Statement, many of which are basedon the definitions thereof set forth in the Trust Agreement.
“Accreted Value” shall have the meaning set forth in the Trust Agreement.
“Additional Bonds” means Sewer System Revenue Bonds of the Issuer which may beissued under the Trust Agreement.
“Appreciated Value” shall have the meaning set forth in the Trust Agreement.
“Authorized Officer” means “Authorized Officer,” as defined in the Bond Legislation, orany lawful successors and assigns.
“BAB Interest Subsidy Payments” means the Issuer’s election to receive paymentsdirectly from the United States Treasury in an amount equal to 35% of the corresponding interestpayable on the Series 2009 Bonds on each interest payment, as provided by Sections 54AA(g)and 6431 of the Code.
“Balloon Bonds” shall have the meaning set forth in the Trust Agreement.
“Bond” or “Bonds” means the Series 2014 Bonds and any Additional Bonds excludingSubordinate Obligations.
“Bondholder” or “Bondholders” or “Holder” or “Holders” means the person or persons inwhose name any Bond is registered.
“Bond Account” means the “Sewer System Revenue Bond Account” created inaccordance with the Trust Agreement, and which account is part of the Revenue Fund.
“Bond Counsel” means a firm of attorneys of nationally recognized standing on thesubject of municipal bonds.
“Bond Legislation” means, when used in connection with any series of Bonds, includingan earlier series of Bonds (if any), the ordinance or other legislation (including any applicableCertificate of Award) providing for the issuance of such Bonds, as the same may be amended,modified, or supplemented by any amendments or modifications thereof and supplements theretoentered into in accordance with the provisions of the Trust Agreement, and when used inconnection with Additional Bonds or related Bonds when subsequent Additional Bonds areoutstanding, shall mean or include, as the case may be, the ordinance or other legislation(including any applicable Certificate of Award) providing for the issuance of such AdditionalBonds, as the same may be amended, modified, or supplemented by any amendments ormodifications thereof and supplements thereto entered into in accordance with the provisions ofthe Trust Agreement (including but not limited to the 2014 Bond Legislation).
A-2
“Bond Service Charges” means, for any period of time, the principal of (whether at statedmaturity, by mandatory redemption, by acceleration or otherwise), Accreted Value, AppreciatedValue, any interest and any premium, only to the extent any of the foregoing are applicable,required to be paid by the Issuer on the Bonds for that period or payable at that time, as the casemay be.
“Business Day” means a day of the year, other than (a) a Saturday; (b) a Sunday; (c) aday on which banks located in the city in which either the designated corporate trust office of theTrustee pursuant to the Trust Agreement is located or, if applicable, the designated office of theletter of credit bank from which the draws on a letter of credit are required to be presented arerequired or authorized by law to remain closed; or (d) a day on which the New York StockExchange or the payment system of the Federal Reserve System is closed.
“Capital Appreciation Bond” or “Capital Appreciation Bonds” means any AdditionalBond or Additional Bonds, issued under a Supplemental Trust Agreement and/or BondLegislation as to which interest is (a) compounded periodically on dates that are specified in theSupplemental Trust Agreement and/or Bond Legislation authorizing such Capital AppreciationBond or Bonds and (b) payable only at the maturity, earlier redemption or other payment thereofpursuant to the Supplemental Trust Agreement and/or Bond Legislation authorizing such CapitalAppreciation Bond or Bonds.
“Certificate of Award” means a certification of the Issuer, providing for the award ofcertain terms and provisions in connection with the issuance, sale, and delivery of Bonds, andgenerally amends and supplements the Bond Legislation.
“Certified Public Accountant” or “Certified Public Accountants” means an independentCertified Public Accountant or Accountants or firm of Certified Public Accountants, dulylicensed in Kentucky, and may include Certified Public Accountants regularly employed to auditthe financial affairs of the Sewer System and/or of other financial matters of the Issuer.
“Code” means the Internal Revenue Code of 1986, as amended, and the accompanyingTreasury Regulations.
“Commercial Paper Obligations” means a negotiable instrument or instruments, as part ofa single issuance, a series of issuances, or a program, generally maturing in 270 days or less inaccordance with terms (including denominations) set forth in a Supplemental Trust Agreement.
“Common Reserve Fund” shall have the meaning set forth in the Trust Agreement.
“Construction Account” means the Sewer System Revenue Construction Account createdpursuant to the Trust Agreement, which account is part of the Revenue Fund.
“Consultant” means a nationally recognized firm of independent consultantsknowledgeable in the operation and finances of municipal sewer systems, having a favorablereputation for skill and experience in such work, designated by the Legislative Authority. TheConsultant may be an Independent Engineer or, if otherwise qualified, the independent CertifiedPublic Accountant engaged to perform annual audits of the Sewer System.
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“Credit Facility” shall have the meaning set forth in the Trust Agreement.
“Crossover Refunded Bond” shall have the meaning set forth in the Trust Agreement.
“Crossover Refunding Bond” shall have the meaning set forth in the Trust Agreement.
“Defeasance Obligations” means shall have the meaning set forth in the TrustAgreement.
“Deferred Income Bonds” shall have the meaning set forth in the Trust Agreement.
“Depository” means any securities depository that is a clearing agency under federal lawoperating and maintaining, with its participants or otherwise, a book entry system to recordownership of book entry interests in Bonds, and to effect transfers of book entry interests inBonds in book entry form, and includes and means initially The Depository Trust Company (alimited purpose trust company), New York, New York.
“Director of Water Quality” means the Director of Water Quality, or a successor title orposition.
“Eligible Investments” means any investment authorized by Section 66.480 of theKentucky Revised Statutes, as the same may be amended, modified, revised, supplemented, orsuperseded from time to time.
“Escrow Amounts” shall have the meaning set forth in the Trust Agreement.
“First Supplement” means the First Supplemental Trust Agreement, dated as of the dateof issuance of the Series 2014 Bonds, by and between the Issuer and the Trustee, supplementingthe Master Trust Agreement and relating to the issuance of the Series 2014 Bonds.
“Fiscal Year” means July 1st to and including June 30th or such other consecutive twelvemonth period as may hereafter be established as the fiscal year for the Sewer System by theIssuer for budgeting and accounting purposes to be evidenced by a certificate of an AuthorizedOfficer filed with the Trustee.
“Fixed Rate Bonds” means any Additional Bond or Additional Bonds bearing interestthroughout its term at a fixed rate of interest, without consideration to any Interest Rate HedgeAgreement.
“GAAP” means generally accepted accounting principles for local government units asprescribed by (a) the Governmental Accounting Standards Board or any successor thereto, and(b) the pronouncements of the American Institute of Certified Public Accountants or anysuccessor thereto.
“General Bond Ordinance” means Ordinance No. 118-2014 adopted by the LegislativeAuthority on September 25, 2014, authorizing the Master Trust Agreement.
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“General Obligation Bonds” means the Issuer’s general obligation bonds outstanding asof the date of delivery of the Bonds and such additional general obligation bonds hereafter issuedby the Issuer for the purpose of making improvements or enlargements to the Sewer System,excluding general obligation bonds issued in anticipation of the collection of specialassessments.
“General Obligation Notes” means the Issuer’s notes (herein the “notes”) issued fromtime to time in anticipation of the issuance of the Issuer’s General Obligation Bonds, and notesissued to refund such notes for the purpose of making improvements or enlargements to theSewer System, excluding notes issued in anticipation of General Obligation Bonds which areissued in anticipation of the collection of special assessments.
“Gross Revenues” means all income and revenue of the Sewer System, including rents,royalties, fees, and other revenue and income derived from all operations, services, properties,and facilities of the Sewer System, including rates and charges therefor, and proceeds of the saleor disposition of assets, judgments, and all other income arising out of the operation of the SewerSystem, whether or not recurring, determined in accordance with GAAP.
“Improvements” means any improvements, additions or extensions to the Sewer System,including real estate and interests in real estate, buildings, structures, fixtures, and facilities andadditions thereto, and machinery, equipment, furniture and other personal property, and/or othercapital costs in connection with the acquisition or construction therewith, including but notlimited to costs for designs, plans, and specifications that may be capitalized.
“Independent Engineer” means any engineer or firm of engineers, independent of theIssuer, experienced in the construction and operation of plants and systems such as the SewerSystem, knowledgeable with respect to rate studies applicable thereto, having a good reputationfor skill and experience in such work, selected by the Issuer and satisfactory to the Trustee andthe Original Purchasers.
“Interest Payment Date” means the dates identified as such in the Bond Legislation forthe Bonds.
“Interest Rate Hedge Agreement” shall have the meaning set forth in the TrustAgreement.
“Interest Subaccount” means the Interest Subaccount of the Bond Account as providedfor in the Trust Agreement, which is a separate account or subaccount related to the BondAccount.
“Issuer” means the Lexington-Fayette Urban County Government, an urban countygovernment and political subdivision of the Commonwealth of Kentucky, and its lawfulsuccessors and assigns.
“Kentucky Infrastructure Authority Loans” means loans and other programs providingfinancial assistance from the Kentucky Infrastructure Authority (or its successor organization).
“Legal Officer” means the legal counsel to the operator of the Sewer System.
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“Legislative Authority” means the Urban County Council of the Lexington-FayetteUrban County Government and any officer, board, commission, or other body which hereaftersucceeds, by operation of law, to the powers and duties of such council.
“Master Trust Agreement” shall mean the Master Trust Agreement, dated as ofSeptember 1, 2014, by and between the Issuer and the Trustee.
“Net Revenues” means all Gross Revenues (excluding (w) grants, (x) gains or losses ondisposition of assets and/or judgments received, (y) gains or losses arising from the earlyextinguishment of Bonds, General Obligation Bonds and Notes and Obligations, and (z) othernon-operating revenues, such as (not by way of limitation) exaction fees, interest income, certaintransfers, and certain mark-to-market adjustments) minus Operating and Maintenance Expenses.For purposes of clarification, and by way of example and not limitation, the proceeds ofKentucky Infrastructure Authority Loans are not intended to be included in Net Revenues.
“Notice by Mail” or “notice” of any action or condition “by Mail” shall have the meaningset forth in the Trust Agreement.
“Notice by Publication” or “notice” of any action or conditions “by Publication” shallhave the meaning set forth in the Trust Agreement..
“Obligations” means all obligations (including Subordinate Obligations) of the Issuer forborrowed money with respect to the Sewer System (including, without limitation, capital leasesand Kentucky Infrastructure Authority Loans) which mature, or shall be renewable by the Issuermore than 365 days from incurrence thereof (including Commercial Paper Obligations that arepart of a program or expected series of issuances and reissuances and/or expected renewalslasting, in aggregate, more than 365 days), excluding Bonds, General Obligation Bonds andGeneral Obligation Notes, advances, and any obligations issued in anticipation of the collectionof special assessments.
“Operating and Maintenance Expenses” shall have the meaning which would be given toit in accordance with GAAP consistently applied, but shall include only those expensesapplicable to the Sewer System and all its appurtenances, and shall exclude expenses of anyother utility of the Issuer whether or not such other utility shall be operated as a single unit withthe Sewer System. Notwithstanding the foregoing, interest expense, any expenses relating tocredit enhancement of any Bonds, amortization and depreciation shall not be included inOperating and Maintenance Expenses.
“Original Purchasers” means the Original Purchasers identified pursuant to BondLegislation and/or a Supplemental Trust Agreement.
“Outstanding,” “outstanding Bonds” or “Bonds outstanding” means all Bonds whichhave been authenticated and delivered by the Trustee under the Trust Agreement except:
(a) Bonds cancelled or held in safekeeping by the Trustee on surrender,exchange or transfer or cancelled because of payment at maturity or redemption;
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(b) Bonds which are deemed to have been paid and discharged pursuant to theprovisions of the Trust Agreement;
(c) Bonds in lieu of which others have been authenticated under the TrustAgreement.
“Paying Agent” means the banks or trust companies designated by the Issuer at which theprincipal and interest and any premium on the Bonds shall be payable, and initially means theTrustee.
“Person” means one or more natural persons, firms, associations, partnerships,corporations or public bodies.
“Pledged Revenues” means (a) Gross Revenues of the Sewer System, (b) the RevenueFund and all accounts in the Revenue Fund, as well as all moneys, investments, investmentearnings, and interest thereon regardless of whether any such interest would be included asincome under GAAP and (c) net receipts from Interest Rate Hedge Agreements, and (d) EscrowAmounts; and excluding (i) any amounts set aside or to be set aside for rebate to the UnitedStates of America pursuant to Section 148(f) of the Code, including, but not limited to, amountscreated in any Rebate Fund relating to any Bond or Bonds, (ii) amounts, moneys, investments, orsecurities in a Common Reserve Fund or a Series Reserve Fund, (iii) any amounts held in aConstruction Fund not part of the Revenue Fund, (iv) any cost of issuance account or fundrelating to a specific series of Bonds, (v) construction or project accounts or funds established inconnection with Kentucky Infrastructure Authority Loans and/or other Subordinate Obligations,and (vi) any amounts deposited in the Rate Stabilization Fund.
“Principal and Interest Requirements” means, except as provided below, for any period oftime: as applied to the Bonds of any series, the principal payable (whether pursuant to statedmaturity, mandatory sinking fund, or other mandatory redemption requirement), Accreted Value,Appreciated Value, and interest due and payable on the Bonds, only to the extent that any of theforegoing are applicable, less any capitalized interest (if any) and accrued interest (if any) ondeposit in the Bond Account; and as applied to General Obligation Bonds and Notes and anyother Obligations, the principal payable (whether pursuant to a stated maturity or a mandatorysinking fund, or other mandatory redemption requirement), interest due and payable and otheramounts due and payable in that period less any capitalized interest (if any) and accrued interest(if any) available in any fund or account designated for the payment of interest on said GeneralObligation Bonds and Notes and other Obligations. Principal and Interest Requirements:
(a) on any (i) Bonds that are secured by a letter of credit or other CreditFacility (whether Outstanding or to be issued as Additional Bonds), (ii) Variable RateBonds (whether Outstanding or to be issued as Additional Bonds), (iii) Balloon Bonds(whether Outstanding or to be issued as Additional Bonds), and (iv) Tender Bonds(whether Outstanding or to be issued as Additional Bonds), shall be computed byassuming amortization on the basis of level debt service over the Assumed AmortizationPeriod bearing interest at the Assumed Interest Rate; and
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(b) on General Obligation Notes, shall be deemed to be the Principal andInterest Requirements on the General Obligation Bonds anticipated thereby, assumingthat such Bonds were issued as of the date of issuance of the General Obligation Notesand the first payment of principal thereon is made on September 1st of the second yearfollowing the issuance of the General Obligation Notes; and to the extent that any termsof any General Obligation Notes are such that interest thereon for any future period oftime is expressed to be calculated at a rate which is not then susceptible of precisedetermination, then interest on such General Obligation Notes shall be computed byassuming that such General Obligation Notes are to be amortized on the basis of leveldebt service over the Assumed Amortization Period and that such Additional Bonds bearinterest at the Assumed Interest Rate; and
(c) on Additional Bonds with a maturity of seven years or less and issued inanticipation of Additional Bonds with a longer maturity, shall be deemed to be thePrincipal and Interest Requirements on the Additional Bonds anticipated thereby,assuming that such Additional Bonds were issued as of the date of calculation with amaturity of 25 years, amortized on the basis of level debt service, bearing interest at a rateequal to the higher of (i) the then current “20-Bond Index” of The Bond Buyer, or if suchindex and/or publication is no longer provided or published, then an equivalent successorindex and/or equivalent successor publication; provided, to the extent there is more thanone applicable successor index, then the appropriate index shall be the index that is mostcomparable to the applicable Assumed Amortization Period and the credit quality of theIssuer, or (ii) the latest rate borne by Issuer revenue bonds; if the Principal and InterestRequirements on such Additional Bonds can be measured under either clause (a) aboveor under this subsection (c), then the result producing the higher Principal and InterestRequirements shall be deemed to the applicable Principal and Interest Requirements; and
(d) on Additional Bonds and General Obligation Bonds or Notes issued inanticipation of the receipt of grants previously awarded for Sewer System purposes, shallexclude the principal to the extent it is to be paid from the anticipated grant; and
(e) on Bonds, Additional Bonds and General Obligation Bonds or portionsthereof for which the Issuer has entered into an Interest Rate Hedge or other agreementwith another party (the “Counterparty”) or otherwise arranges to (i) swap the debt servicedue thereon for payment to be made to the Counterparty, (ii) hedge the debt service duethereon against changes in interest rates, or (iii) otherwise synthetically or by derivativemeans alter, cap or collar the Issuer’s debt service thereon, shall be (x) for Fixed RateBonds, the higher of the Principal and Interest Requirements on the Fixed Rate Bonds,and to the extent that it is subject to determination, the net effective economic debtservice payments to be made by the Issuer under the terms (including the duration) of theInterest Rate Hedge and (y) for Variable Rate Bonds, the higher of the Principal andInterest Requirements determined in a manner consistent with clause (a) above and to theextent that it is subject to determination, the net effective economic debt servicepayments to be made by the Issuer under the terms (including the duration) of the InterestRate Hedge.
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(f) Notwithstanding the foregoing provisions in this subsection, with respectto determining the Principal and Interest Requirements to establish compliance with therate covenant in the Trust Agreement, the Principal and Interest Requirements shall bethe actual principal of and interest due and payable on the Bonds described in clause (a)above during the Fiscal Year for which compliance with the Trust Agreement is to bedetermined, as such calculation is a “Fiscal Year” calculation and not a “maximumannual” calculation.
“Prior Bonds” means, together, the Series 2009 Bonds and the Series 2010 Bonds.
“Principal Payment Date” means the date or dates identified as such in the BondLegislation authorizing the issuance of such Additional Bonds.
“Principal Subaccount” means the Principal Subaccount of the Bond Account as providedfor in the Trust Agreement, which is a separate account or subaccount related to the BondAccount.
“Prior Ordinance” means collectively, the Series 2001 Bond Ordinance, as amended bythe Series 2009 Bond Ordinance, and the Series 2010 Bond Ordinance.
“Rate Stabilization Fund” means the Rate Stabilization Fund created pursuant to the TrustAgreement, and which fund shall not be part of the Revenue Fund.
“Rate Stabilization Fund Required Balance” shall have the meaning set forth in the TrustAgreement.
“Rating Agency” means any nationally recognized securities rating agency to which theIssuer has applied for a rating on any outstanding Bonds and which rating is currently in effect.
“Rebate Fund” means the Rebate Fund created pursuant to the Trust Agreement, andwhich fund shall not be part of the Revenue Fund.
“Refunded Prior Bonds” means, together, the Refunded Series 2009 Bonds and theRefunded Series 2010 Bonds.
“Refunded Series 2009 Bonds” means the entire outstanding principal amount of theSeries 2009 Bonds.
“Refunded Series 2010 Bonds” means entire outstanding principal amount of the Series2010 Bonds.
“Register” means the books kept and maintained by the Trustee for registration andtransfer of Bonds pursuant to the Trust Agreement.
“Regular Record Date” means, with respect to any Bond, the close of business on thefifteenth day of the calendar month next preceding an Interest Payment Date.
“Reserve Fund Guaranty” shall have the meaning set forth in the Trust Agreement.
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“Reserve Fund Guaranty Agreement” shall have the meaning set forth in the TrustAgreement.
“Revenue Fund” means the “Sewer System Revenue Fund” created in accordance withthe Trust Agreement.
“Sale Date” means the date on which the Series 2014 Bonds are sold and purchased, asprovided evidenced by the execution of the Series 2014A Certificate of Award and the Series2014B Certificate of Award.
“Series Reserve Fund” means a debt service reserve fund established pursuant to theterms of Bond Legislation for Bonds or pursuant to a Supplemental Trust Agreement for Bonds,which reserve fund shall provide security for the repayment of principal and interest on aparticular series of Bonds. The Issuer may establish more than one Series Reserve Fund, eachseparately securing different series of Bonds.
“Series 2001 Bond Ordinance” means Ordinance No. 96-2001 adopted by LegislativeAuthority on May 3, 2001, as amended by the Series 2009 Bond Ordinance. The Series 2001Bond Ordinance also specifically readopted, reapproved, and incorporated by reference certaindesignated sections and provisions of Bond Ordinance No. 153-85, adopted by the LegislativeAuthority on July 25, 1985.
“Series 2009 Bond Ordinance” means Ordinance No. 221-2009, adopted by theLexington-Fayette Urban County Council (the “Legislative Authority”) on October 15, 2009,which amended the Series 2001 Bond Ordinance and authorized the Series 2009 Bonds.
“Series 2009 Bonds” means the Issuer’s Taxable Sewer Revenue Bonds, Series 2009(Build America Bonds - Direct Pay), dated October 22, 2009, issued in the original principalamount of $35,960,000 and currently outstanding in the principal amount of $30,280,000.
“Series 2010 Bond Ordinance” means Ordinance No. 61-2010, adopted by theLegislative Authority on April 29, 2010, providing for the authorization of the Series 2010Bonds.
“Series 2010 Bonds” means the Issuer’s Sewer System Revenue Refunding Bonds, Series2010A, dated May 13, 2010, issued in the original principal amount of $13,860,000, andcurrently outstanding in the principal amount of $11,740,000.
“Series 2014 Bonds” means, together, the Series 2014A Bonds and the Series 2014BBonds.
“Series 2014A Bonds” means the Lexington-Fayette Urban County Government Tax-Exempt Sewer System Revenue Refunding Bonds, Series 2014A, issued in the original principalamount of $24,190,000, and dated October 23, 2014.
“Series 2014A Certificate of Award” means the certificate of award executed inconnection with the sale and purchase of the Series 2014A Bonds.
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“Series 2014B Bonds” means the Lexington-Fayette Urban County Government TaxableSewer System Revenue Refunding Bonds, Series 2014B, issued in the original principal amountof $10,410,000, and dated October 23, 2014.
“Series 2014B Certificate of Award” means the certificate of award executed inconnection with the sale and purchase of the Series 2014B Bonds.
“Sewer System” means the sewer system presently owned or operated by the Issuer as apublic utility, and includes any extensions, modifications, enlargements, or additions thereto,including Improvements, if any.
“Subordinate Obligations” means certain Obligations secured by a security interest in allor a portion of Pledged Revenues subordinate to that of the Bonds, which contains provisionssubstantially in the form set forth in Exhibit C to the Master Trust Agreement and KentuckyInfrastructure Authority Loans.
“Supplemental Trust Agreement” means a trust agreement amending or supplementingthe terms of the Trust Agreement, as provided for therein.
“Surplus Account” means the Sewer System Revenue Surplus Account created inaccordance with the Trust Agreement, and which account is part of the Revenue Fund.
“Tender Bonds” shall have the meaning set forth in the Trust Agreement.
“Trustee” means, the bond trustee and its successors and any corporation or associationsresulting from or surviving any consolidation or merger to which it or its successors may be aparty and any successor trustee at the time serving as successor trustee under the TrustAgreement, all as further identified in the Bond Legislation, and/or pursuant to a SupplementalTrust Agreement.
“Trust Agreement” means the Trust Agreement, dated as of September 1, 2014, by andbetween the Issuer and the Trustee, as the same may be amended, modified, or supplementedfrom time to time by any amendments or modifications thereof and supplements thereto enteredinto in accordance with the provisions thereto, including without limitation, any SupplementalTrust Agreement, and including specifically the First Supplement relating to the issuance of theSeries 2014 Bonds.
“2014 Bond Legislation” means, collectively, the General Bond Ordinance andOrdinance No. 119-2014 adopted by the Legislative Authority on September 25, 2014authorizing the issuance of the Series 2014 Bonds.
“Valuation Date” shall have the meaning set forth in the Trust Agreement.
“Variable Rate Bond” or “Variable Rate Bonds” shall have the meaning set forth in theTrust Agreement.
“Year” means the calendar year unless otherwise specified. The calendar year shall bethe Fiscal Year of the Sewer System unless otherwise provided by law.
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APPENDIX BSUMMARY OF CERTAIN PROVISIONS OF THE TRUST AGREEMENT AND
FIRST SUPPLEMENTAL TRUST AGREEMENT
This summary is not to be regarded as a complete statement of the Trust Agreement orthe First Supplement, to which reference is made for a full statement of terms thereof. Copies ofthe Trust Agreement and the First Supplement are on file with the Trustee. Capitalized termsused, but not defined, in this summary are used as defined in the Trust Agreement. See AppendixE – Summary of Certain Definitions.
Table of Contents
General Provisions .......................................................................................................................... 2Creation of Trust ............................................................................................................................. 2Additional Bonds ............................................................................................................................ 2Purchase In Lieu of Redemption..................................................................................................... 5Establishment of Funds and Accounts............................................................................................ 6Moneys, Investments, Securities to be Held in Trust for all Holders of the Bonds; Moneys,Investments, and Funds Held in Trust, but not for all Holders of Bonds ....................................... 7Investment of Moneys in Revenue Fund; Valuation ...................................................................... 7Application of Gross Revenues and Net Revenues ........................................................................ 8Events of Default .......................................................................................................................... 11Acceleration .................................................................................................................................. 13Other Remedies; Rights of Holders .............................................................................................. 14Right of Holders to Direct Proceedings ........................................................................................ 14Appointment of Receivers ............................................................................................................ 14Waivers of Events of Default........................................................................................................ 15Supplemental Trust Agreements Not Requiring Consent of Holders........................................... 15Supplemental Trust Agreements Requiring Consent of Holders.................................................. 17Release of Trust Agreement.......................................................................................................... 17Payment and Discharge of Bonds ................................................................................................. 17Covenants of the Issuer................................................................................................................. 19Insurance ....................................................................................................................................... 21Application of Proceeds of Insurance. .......................................................................................... 23Summary of the First Supplemental Trust Agreement ................................................................. 25
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General Provisions
The Series 2014 Bonds will be issued pursuant to the Trust Agreement, executed onbehalf of the Issuer by its Mayor and attested by the Urban County Council Clerk. The FirstSupplement provides, among other things, for the form of fully registered bonds in the case ofthe Series 2014 Bonds, the manner of execution, authentication and delivery of the Series 2014Bonds, the transfer and exchange of Series 2014 Bonds, and procedures for redemption andpayment of the Series 2014 Bonds. The Master Trust Agreement also sets forth the duties andresponsibilities of the Trustee, its fees, succession on merger or resignation, and the manner ofdefeasance of the Trust Agreement.
Creation of Trust
Pursuant to the Trust Agreement, the Issuer pledges the Pledged Revenues, including theRevenue Fund, as security for the performance of its obligations thereunder. As further definedin Appendix E hereto, the Pledged Revenues include the Gross Revenues of the Sewer Systemand the Revenue Fund (as further defined in Appendix E hereto).
Additional Bonds
General. If no Event of Default has occurred and is continuing the Issuer may issueAdditional Bonds from time to time for any lawful purpose, including, but not limited to, (i)refunding any one or more series of Bonds and (ii) making Improvements to the Sewer System.With respect to payment from Pledged Revenues, including the Revenue Fund, of the Issuer,such Additional Bonds shall be on a parity with the Series 2014 Bonds and any Additional Bondstheretofore or thereafter issued and shall be payable from the Bond Account.
Before any Additional Bonds are authenticated, there shall be delivered to the Trustee thefollowing items:
(a) A copy, certified by the Clerk of the Legislative Authority, of the BondLegislation passed by the Legislative Authority authorizing the issuance of suchAdditional Bonds, and, in the case of Additional Bonds issued for the purpose ofrefunding any outstanding Bonds, such Bond Legislation shall also describe the Bonds tobe refunded;
(b) an original signed copy of any Certificate of Award or ordinance of awardexecuted pursuant to the Bond Legislation (and only to the extent applicable, a bondpurchase agreement), specifying the interest rate or rates of such Additional Bonds andother matters and directing the authentication and delivery of such Additional Bonds to orupon the order of the purchaser therein named upon payment of the purchase price setforth therein;
(c) If such Additional Bonds are to be issued to finance Improvements, astatement, signed by a Consultant, the independent auditor of the Issuer, or anIndependent Engineer or Director of Water Quality, giving (i) an estimate of the cost ofthe Improvements, including an amount for contingencies but excluding financing
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charges, reserves and interest during construction, and (ii) an estimate of the completiondate for said Improvements;
(d) A certificate, signed by an Authorized Officer of the Issuer, setting forth:
(i) The Net Revenues for the most recent Fiscal Year for whichaudited financial statements are available, adjusted to reflect on an annualizedbasis any increase or decrease in rates, charges and rentals of the Sewer Systemwhich became effective during that period or prior to the date of issuance of theAdditional Bonds, and
(ii) The amount of the maximum annual Principal and InterestRequirements on Bonds for any Fiscal Year thereafter, including the Principal andInterest Requirements on such Additional Bonds for purposes of the calculationsrelating to debt service coverage which are described in (II) and (III) below.
(e) A certificate, signed by an Authorized Officer or the Director of WaterQuality, stating that they are unaware of any Event of Default which will be existing andcontinuing immediately after the issuance of such Additional Bonds;
(f) An opinion of Bond Counsel to the effect that such counsel is of theopinion that the issuance of such Additional Bonds has been duly and validly authorized,that all conditions precedent under the Trust Agreement and Bond Legislation to thedelivery of such Additional Bonds and any Supplemental Trust Agreement permitted bythe Trust Agreement to be performed by the Issuer have been fulfilled and that suchAdditional Bonds are valid and binding special obligations of the Issuer enforceable inaccordance with their terms with customary exceptions for bankruptcy, creditor's rightsand general principles of equity;
(g) A fully executed counterpart of the Supplemental Trust Agreement;
(h) A request and authorization to the Trustee on behalf of the Issuer toauthenticate and deliver such Additional Bonds to, or on the order of, the OriginalPurchaser or Purchasers thereof upon payment to the Trustee, but for the account of theIssuer of the sum specified therein plus accrued interest, which shall be deposited asprovided in the Bond Legislation authorizing such Additional Bonds; and
(i) If such Additional Bonds are to be issued to provide for the refunding oradvance refunding all or a portion of the Bonds outstanding, to the extent necessary, anescrow agreement providing for the refunding of any such series of Bonds being refundedand/or a verification report from an independent firm of Certified Public Accountants thatthe funds on deposit under the applicable escrow agreement are sufficient to pay theprincipal of and interest on the refunded bonds, as provided for therein, to maturity orredemption as the same shall become due or payable without further investment orreinvestment.
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Additional Bonds for New Money Improvements. The Trustee shall not authenticate anddeliver Additional Bonds for Improvements unless it receives a certificate from (1) so long asprior bonds remain outstanding, a Consultant, an independent auditor of the Issuer, or anIndependent Engineer or Director of Water Quality, stating that the rate covenant specified in thetrust agreement or ordinance authorizing the prior bonds is currently being met, and (2) anAuthorized Officer of the Issuer stating that:
(I) The proceeds (excluding accrued interest but including any premium) ofsuch Additional Bonds shall be not less than the additional cost of the Improvements (ora portion thereof) determined to be the higher of such cost as estimated (A) in the BondLegislation mentioned in paragraph (a) of this Section, or (B) in the statement of theDirector of Water Quality or the Independent Engineer mentioned in paragraph (c) of thisSection or the opinion of the Legal Officer mentioned in paragraph (d) of this Section,whichever is applicable, less any other funds available or to be made available to pay theadditional costs of the Improvements;
(II) The Net Revenues during that twelve (12) consecutive calendar months inwhich Net Revenues was the greatest in the eighteen (18) immediately precedingcalendar months immediately preceding the calendar month in which such AdditionalBonds are issued, as set forth in the certificate required under paragraph (e)(i) of thisSection, is at least equal to (A) 120% of the maximum annual Principal and InterestRequirements as set forth in the certificate required under paragraph (e)(ii) aboveincluding the Principal and Interest Requirements on all Bonds and the proposedAdditional Bonds and (B) 100% of the maximum aggregate annual Principal and InterestRequirements on all Bonds and the proposed Additional Bonds as set forth in thecertificate required under paragraph (e)(ii) above and on General Obligation Bonds andNotes and other Obligations in any subsequent Fiscal Year; or
(III) The forecasted Net Revenues of the first two full Fiscal Years of theSewer System shown in the statement, study or report described in the next paragraph areat least equal to (A) 125% of the maximum Principal and Interest Requirements shown inparagraph (e)(ii) above and (B) 105% of the maximum aggregate annual Principal andInterest Requirements on all Bonds and the proposed Additional Bonds as set forth in thecertificate required under paragraph (e)(ii) above and on General Obligation Bonds andNotes and other Obligations in any subsequent Fiscal Year.
The statement, study or report referred to in subparagraph (III) above shall be signed by aConsultant, the independent auditor of the Issuer, or an Independent Engineer, retained by theIssuer, giving a forecast for the first two Fiscal Years immediately following the Fiscal Year inwhich the completion date of the “project” or said Improvements is to occur (as estimated by aConsultant, an independent auditor of the Issuer, or an Independent Engineer or the Director ofWater Quality as part of the statement mentioned in paragraph (c) above) stating the basis ofsuch forecast; provided, however, that the rates and charges assumed by such Consultant,independent auditor of the Issuer, or Independent Engineer in issuing its statement, study orreport for the purposes of subparagraph (III) above shall be authorized by the LegislativeAuthority prior to the issuance of the Additional Bonds authorized by the ordinance referred to inparagraph (a) above.
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Additional Bonds for Refunding. The Trustee shall not authenticate and deliverrefunding Additional Bonds unless:
(x) the proceeds (excluding accrued interest but including any premium) ofsuch refunding Additional Bonds plus any moneys to be withdrawn from the RevenueFund by the Trustee for such purpose, as provided in the Trust Agreement, together withany other funds available to the Issuer for such purpose, together with the interest thatshall accrue (without further investment or reinvestment of either the principal amount ofsuch Defeasance Obligations or the interest earnings therefrom) upon any DefeasanceObligations acquired, shall be not less than an amount sufficient to pay the principal ofand the redemption premium, if any, on the Bonds to be refunded and the interest whichwill accrue thereon to the redemption date or maturity dates, as the case may be, and theexpenses incident to such financing to the extent not paid from other sources, as requiredto cause such Bonds to be paid and discharged in accordance with Article X of the TrustAgreement, and
(y) either (a) the maximum annual Principal and Interest Requirements forany Fiscal Year thereafter after giving effect to the issuance of such refunding AdditionalBonds shall, for any Fiscal Year during which all Bonds not being refunded areoutstanding, be not greater than 105% of the maximum annual Principal and InterestRequirements on account of all Bonds outstanding immediately prior to the issuance ofsuch refunding Bonds, including the Bonds to be refunded or (b) the conditions set forthin paragraphs (II) or (III) above in this Section are met with respect to such refundingAdditional Bonds.
Other Types of Additional Bonds and Subordinate Obligations. The Trust Agreementalso contains special provisions which apply to any Additional Bonds which are proposed to beissued for New Money Improvements, specific types of Additional Bonds other than Fixed RateBonds, such as Bonds which are insured or secured by a Credit Facility, Tender Bonds, Bondswith an Interest Rate Hedge Agreement, Variable Rate Bonds, Balloon Bonds, CapitalAppreciation Bonds and/or Deferred Income Bonds, Crossover Refunded Bonds or CrossoverRefunding Bonds, and Commercial Paper Obligations. The Issuer may also issue SubordinateObligations, which shall be subordinate to the Bonds which are outstanding or any AdditionalBonds which may be issued pursuant to the Trust Agreement.
Purchase In Lieu of Redemption.
The Issuer may require any Bond that is subject to optional redemption to be tendered bythe Holder thereof for mandatory purchase by the Issuer, in lieu of such optional redemption, onany date permitted for such optional redemption, at a purchase price equal to the then applicableredemption price that would apply on the purchase date. In order to exercise this option, theIssuer must obtain the prior written consent of any applicable bond insurer or credit providerwhose Bonds will be subject to purchase in lieu of redemption. Upon receiving any necessaryconsents, the Issuer may exercise this option by written request delivered to the Trustee withinthe time period specified in the Trust Agreement for the optional redemption of the Bonds, andthe purchase of any Bonds in lieu of redemption will be mandatory and enforceable against anyHolders. On the date fixed for purchase under any exercise of this option, the Issuer shall pay to
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the Trustee the purchase price of the Bonds then being purchased in immediately available funds,and the Trustee shall pay the same to the Holders of such Bonds against delivery. In the case ofthe purchase of less than all of the Bonds of a particular series, the particular Bonds of suchseries to be purchased will be selected in accordance with the provisions specified in the TrustAgreement as though the purchase price were a redemption of those Bonds or in such othermanner as the Issuer shall direct. Notwithstanding the foregoing, no purchase in lieu ofredemption will be made unless the Issuer has delivered to the Trustee concurrently therewith anopinion of Bond Counsel to the effect that the purchase will not adversely affect, to the extentapplicable, the Tax Status of each series of Bonds subject to purchase in lieu of redemption.Following such purchase, the person depositing moneys to purchase such Bonds shall be theowner of such Bonds for all purposes under the Trust Agreement and interest accruing on suchBonds after such deemed purchase shall be payable solely to the purchaser thereof or assigneesof its interest in such Bonds.
Establishment of Funds and Accounts
Revenue Fund. The Master Trust Agreement establishes the Revenue Fund which ismaintained in the custody of the Trustee and consists of the following accounts:
(a) the Bond Account, and within the Bond Account, three separatesubaccounts:
(i) the Principal Subaccount;
(ii) the Sinking Fund Subaccount; and
(iii) the Interest Subaccount;
into which deposits for the payment of principal of the Bonds, capitalized interest on theBonds, and interest on the Bonds, respectively, shall be deposited.
(b) Construction Account; and
(c) Surplus Account.
Additional Accounts and/or Funds. The Master Trust Agreement also provides for thecreation of a Rate Stabilization Fund, a Rebate Fund, and a Common Reserve or Series Fund(s),as needed. Additional accounts and/ or funds may be created pursuant to Bond Legislationand/or Supplemental Trust Agreements, such as construction or project funds for any particularImprovements, costs of issuance accounts or funds (see “Series 2014A Costs of Issuance Fund”below), escrow accounts or funds for the redemption of Bonds, and other similar specialaccounts and/or funds, which accounts and funds shall not be part of the Revenue Fund. Theaforesaid accounts and funds shall be held by the parties identified in the Bond Legislationand/or Supplemental Trust Agreement, and shall be used and invested as set forth in the BondLegislation, any Supplemental Trust Agreement, and/or as provided in the Trust Agreement.
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Series 2014A Costs of Issuance Fund. Pursuant to the First Supplement, the Series 2014Costs of Issuance Fund is established with the Trustee, consisting of two subaccounts: the Series2014A Costs of Issuance Account and the Series 2014B Costs of Issuance Account. A portion ofthe proceeds of the Series 2014A Bonds and the Series 2014B Bonds, respectively, shall bedeposited into the applicable accounts and disbursed by the Trustee to pay costs associated withthe issuance of the Series 2014A Bonds and Series 2014B Bonds, respectively. Any amountsremaining in the Series 2014A Costs of Issuance Account and/or the Series 2014B Costs ofIssuance Account after 90 days following the issuance of the Series 2014 Bonds shall betransferred to the Surplus Account.
Moneys, Investments, Securities to be Held in Trust for all Holders of the Bonds; Moneys,Investments, and Funds Held in Trust, but not for all Holders of Bonds
All moneys, investments, and securities required or permitted to be deposited with orpaid to the Trustee under any provision of the Trust Agreement, including without limitationamounts in the Revenue Fund, and any investments thereof, shall be held by the Trustee in trustfor the benefit of the all Holders on a parity basis, as Pledged Revenues; provided, however,moneys, investments, and securities held by the Trustee in the following accounts or funds shallbe held for the benefit of certain Holders, but not for the benefit of all Holders on a parity basis,as Pledged Revenues: (a) Rebate Fund, (b) a Common Reserve Fund or a Series Reserve Fund (ifany), (c) the Rate Stabilization Fund (if any), (d) a Construction Fund not part of the RevenueFund (if any), (e) any costs of issuance fund or account, or (f) any amounts, funds, or accountsspecifically excluded from the definition of Pledged Revenues; however, all moneys described inthe preceding sentence held by the Trustee shall be subject to the lien of the Trust Agreementwhile so held provided such an account or fund is held by the Trustee.
Investment of Moneys in Revenue Fund; Valuation
Moneys in any account within the Revenue Fund shall be invested and reinvested by theTrustee in Eligible Investments at the written direction of an Authorized Officer of the Issuer.Any investments of moneys held to the credit of any of the accounts within the Revenue Fundshall mature or be prepayable at the option of the Trustee (at the written direction of the Issuer)not later than the respective dates when the money held to the credit of those funds and accountswill be required for the purposes intended.
Investment income from investment of amounts in the Bond Accounts shall be retained insuch account and credited against the amount of the Bond Service Charges to be paid by theIssuer prior to each respective Interest Payment Date and Principal Payment Date. Earnings onany moneys or investments in the Surplus Account shall be credited as provided in the Issuer’sinvestment policy, as published from time to time.
The value of the obligations in which money in a fund or account has been invested shallbe computed at market value or the face value thereof, plus accrued interest, whichever is lower.
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The Trustee agrees to cause a valuation to be made each Valuation Date for any and allinvestments entered into by the Trustee or investment securities held in connection with, ondeposit with, or credited to the funds (or any accounts within said funds) identified in the TrustAgreement.
Application of Gross Revenues and Net Revenues
So long as any Bonds secured by the Trust Agreement remain outstanding andnotwithstanding any other ordinance, resolution, order, or agreement to the contrary, the Issuershall transfer to the Trustee Gross Revenues no later than the fifteenth (15th) day (or if such a dayis not a Business Day, then the next succeeding Business Day thereafter) of each month,beginning November 15, 2014, for the purpose of making the following payments in thefollowing order; provided, however, the Issuer shall not be required to transfer the followingamounts from Gross Revenues to the Trustee, solely as a matter of convenience, and not as amatter affecting the pledge or priority of payments to be made from Gross Revenues under thisTrust Agreement, including this Section, (a) Operating and Maintenance Expenses to the extentthat an Authorized Officer of the Issuer determines on or before the fifteenth (15th) day (or ifsuch a day is not a Business Day, then the next succeeding Business Day thereafter) of eachmonth that there will be a deposit of Gross Revenues made to the Surplus Account as provided inparagraph NINTH below after application of Gross Revenues in paragraphs FIRST throughEIGHTH below, which withholding shall not change the priority of the payments under thisTrust Agreement, including this Section, as the withholding of such Operating and MaintenanceExpense is solely a matter of convenience, and to the extent there are insufficient GrossRevenues to meet the payment obligations in paragraphs FIRST through NINTH below, anysuch amounts that are withheld solely as a matter of convenience shall be made immediatelyavailable, and sent, by the Issuer to the Trustee for payment of the required deposits and/or thepayment of amounts due and payable in such order of priority set forth in the Trust Agreementupon written demand by the Trustee (which written demand by the Trustee may be for extendedperiods of time, such as “until further notified in writing”) and (b) as provided for in paragraphEIGHTH below:
FIRST: Except as may be otherwise provided in a Supplemental TrustAgreement, the Trustee shall deposit monthly into the Interest Subaccount, no later thanfirst day (or if such a day is not a Business Day, then then next succeeding Business Daythereafter) of each month, commencing December 1, 2014, an amount which, togetherwith any other funds available in the Interest Subaccount to pay interest, is equal to one-sixth (1/6) of the interest payable on the Bonds on the next succeeding Interest PaymentDate (for payment of interest due on the Series 2014 Bonds on March 1, 2015, theTrustee shall make a deposit into the Interest Subaccount on the first Business Day ofDecember, 2014 and monthly thereafter to and including February 1, 2015 in an amountequal to one-third (1/3rd) of interest payable on March 1, 2015); provided that said ratiosshall be adjusted as necessary for the first Interest Payment Date immediately followingissuance of any series of Bonds.
SECOND: Except as may be otherwise provided in a Supplemental TrustAgreement, the Trustee shall deposit monthly into the Principal Subaccount, no later thanfirst day (or if such a day is not a Business Day, then then next succeeding Business Day
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thereafter) of each month, commencing December 1, 2014, an amount which, togetherwith any other funds available in the Principal Subaccount to pay Principal or mandatorysinking fund redemption due, which is equal to one-twelfth (1/12th) of the Principal ormandatory sinking fund redemption due on the Bonds on the next succeeding PrincipalPayment Date (for payment of Principal or mandatory sinking fund redemption due onthe Series 2014 Bonds on September 1, 2015, the Trustee shall make a deposit into thePrincipal Subaccount on the first Business Day of December, 2014 and monthlythereafter to and including August 1, 2015 in an amount equal to one-ninth (1/9th ) ofPrincipal or mandatory sinking fund redemption due on September 1, 2015); providedthat said ratios shall be adjusted as necessary for the first Principal Payment Date ormandatory sinking fund redemption immediately following issuance of any series ofBonds.
THIRD: Payments no later than the fifteenth (15th) day (or if such a day isnot a Business Day, then then next succeeding Business Day thereafter) of each month inan amount equal to the lesser of (a) one-twelfth (1/12) of the applicable unfunded BondReserve Requirement or (b) one-twelfth (1/12) of the difference between the applicableunfunded Bond Reserve Requirement and the balance in the applicable Common ReserveFund or Series Reserve Fund, if at any time said balance is less than the applicable BondReserve Requirement and shall continue until said Bond Reserve Requirement is attained.The Common Reserve Fund or Series Reserve Fund shall be held by the Trustee and shallbe used only for the payment of principal and interest on the applicable series of Bonds.Moneys in any Common Reserve Fund or Series Reserve Fund shall be invested, at thewritten direction of an Authorized Officer of the Issuer, to the extent possible, in EligibleInvestments. After the balance in any Common Reserve Fund and/or Series Reserve Fundequals the applicable Bond Reserve Requirement, any surplus in said fund, includinginterest earnings thereon, shall be transferred in accordance with the provisions set forthin the Trust Agreement. Nothing in this provision shall prohibit the Issuer fromproviding for the initial funding of a Bond Reserve Requirement relating to a CommonReserve Fund or a Series Reserve Fund over a period of time not to exceed three years, asprovided for in connection with Additional Bonds pursuant to Section 2.08 hereof.
FOURTH: Upon written notice by the Trustee to the Issuer, Gross Revenuesshall be applied by the Trustee in an amount, in addition to any of the foregoingallocations, as may be necessary and available, after meeting the requirements of thepreceding Paragraphs First, Second, and Third to make up any previous deficiency in anysuch monthly allocation.
FIFTH: On the 15th day of September of each year commencingSeptember 15, 2015, the Trustee shall deposit or transfer to the Issuer, if such Fund isheld by the Issuer, an amount equal to all available Gross Revenues to the RateStabilization Fund until the balance in the Rate Stabilization Fund is equal to the RateStabilization Fund Required Balance (if any such balance is required to be maintained),which amount shall be paid for so long, and resumed as often, and to the extent only, tomaintain said Rate Stabilization Fund Required Balance, if any; or alternatively, theTrustee shall deposit or transfer to the Issuer, if such Fund is held by the Issuer, monthlypayments to the Rate Stabilization Fund no later than the fifteenth (15th) day (or if such a
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day is not a Business Day, then the next succeeding Business Day thereafter) of eachmonth, an equal (or substantially equal) amount necessary to maintain the RateStabilization Fund Required Balance, which equal (or substantially equal) monthlyamount shall be paid over a period of time not exceed 18 months.
SIXTH: Upon written notice by the Trustee to the Issuer, Gross Revenuesshall be applied by the Trustee to pay when due, the administrative costs of carrying orredeeming the Bonds, including, without limitation, the fees and expenses of the Trustee(such as Ordinary Expenses, Ordinary Services, Extraordinary Expenses, andExtraordinary Services), letter of credit fees, remarketing fees, credit enhancement fees,and similar fees and charges, as set forth in such notice.
SEVENTH: As and when required, the Issuer shall provide the Trustee with,and the Trustee shall transmit, at the written direction of the Issuer, from GrossRevenues, such sums as are required to pay any rebate liability due and payable fordeposit into the Rebate Fund.
EIGHTH: The Issuer shall provide the Trustee with written direction as to theamounts to be set aside and deposited into a General Obligation Bonds or Notes and otherObligations Fund (the “General Obligation Bonds or Notes and other Obligations Fund”)in order to make the requisite principal, interest, and redemption payments, when due, onGeneral Obligation Bonds or Notes and other Obligations incurred for Sewer Systempurposes, in separate accounts that correlate to such General Obligation Bonds or Notesand other Obligations, which amounts shall be set aside and deposited on a periodic basis,determined in the sole discretion of the Issuer, in anticipation of the requisite principal,interest, and redemption payments, the frequency of such payment set asides to be nolater than when such payments are due and payable. Upon written authorization by theIssuer to the Trustee, to the extent that the Trustee is serving in the capacity of trusteeand/or paying agent and registrar with respect to General Obligation Bonds or Notesand/or other Obligations incurred for Sewer System purposes, the Trustee is herebyauthorized and directed to transmit for payment from the General Obligation Bonds orNotes and other Obligations Fund the principal, interest, and redemption sums as arerequired to be paid, when due, on any General Obligations Bonds or Notes or otherObligations of the Issuer incurred for Sewer System purposes. To the extent that theTrustee is (a) not the trustee or paying agent and registrar on General Obligation Bondsand Notes and/or other Obligations incurred for Sewer System purposes and (b) nototherwise directed in writing by the Issuer to pay the appropriate trustee or paying agentor registrar of General Obligation Notes or Bonds or other Obligations incurred for SewerSystem purposes, the Issuer may withhold from Gross Revenues principal, interest, andredemption amounts due and payable on such General Obligation Notes or Bonds and/orother Obligations incurred for Sewer System purposes and make such payments directlyto the appropriate trustee or paying agent and registrar; provided, however, thewithholding of such principal, interest, and redemption amounts for payment of GeneralObligation Bonds and Notes and/or other Obligations shall not change the priority of thepayment of such General Obligation Bonds and Notes and/or other Obligations under thisparagraph, as the withholding of such principal, interest, and redemption amounts issolely a matter of convenience, and to the extent there are insufficient Gross Revenues to
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meet the payment obligations in any prior paragraphs, any such amounts that are withheldshall be made immediately available for the required deposits and/or the paymentamounts due and payable in such prior paragraphs under the Trust Agreement. TheIssuer may provide the Trustee with written instructions, whether continuing or periodic,to pay, when due, principal, interest, and redemption amounts on General ObligationBonds and Notes or other Obligations incurred for Sewer System purposes directly to theappropriate trustee or paying agent and registrar. The Trustee shall be fully protected inrelying upon the Issuer’s written directions delivered pursuant to this section and shallnot be required to make any investigations in connection therewith.
NINTH: After making the requisite deposits required in paragraphs FIRSTthrough EIGHTH (including specific instructions to make such deposits in accordancewith the instructions provided in any Supplemental Trust Agreement), the remainingGross Revenues shall be deposited into the Surplus Account. Amounts in the SurplusAccount may be transferred in accordance with the provisions set forth in the TrustAgreement.
As further provided in the Master Trust Agreement, the Surplus Account and the moneysand the Eligible Investments therein shall, to the extent necessary from time to time, betransferred from the Trustee to the Issuer (i) for Improvements to, the Sewer System (includingreplacements) and that the procedures of the Act have been complied with and that theLegislative Authority of the Issuer has approved the expenditure of funds for suchImprovements, (ii) for Operating and Maintenance Expenses, (iii) for debt service payments onGeneral Obligation Bonds or Notes of the Issuer and/or the payment of other Obligations, allrelated to Sewer System purposes, (iv) for application to the Bond Account, a Common ReserveFund, or a Series Reserve Fund, or (v) for application to other legally permissible purposes of theSewer System, which purposes should be specified.
Events of Default
Each of the following events is an Event of Default under the Trust Agreement:
(a) Failure in the payment of any interest on any Bond when and as the sameshall have become due and payable;
(b) Failure in the payment of the principal of or any premium on any Bondwhen and as the same shall have become due and payable, whether at stated maturity orby acceleration or redemption;
(c) Failure by the Issuer to perform or observe any other covenant, agreementor condition on the part of the Issuer contained in the Trust Agreement or in the Bonds,which failure or default shall have continued for a period of 90 days after written notice,by registered or certified mail, to the Issuer specifying the failure or default and requiringthe same to be remedied, which notice may be given by the Trustee in its discretion andwhich notice shall be given by the Trustee at the written request of the Holders of not lessthan 25% in aggregate principal amount of Bonds then outstanding provided, however,that if the Issuer shall proceed to take such curative action which, if begun and prosecuted
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with due diligence, cannot be completed within that period of 90 days, then such periodshall be increased to such extent as shall be necessary to enable the Issuer to diligentlycomplete such curative action; and provided further, that if the performance, observationor compliance with any of the terms, covenants, conditions or provisions referred to inthis paragraph shall be prevented by the application of federal or laws of theCommonwealth of Kentucky, wage and price controls, economic stabilization, costscontainment requirements, or restrictions on rates, charges and/or Pledged Revenues ofthe Sewer System which may be imposed by governmental authorities, and the Issuershall have complied in full with its obligations contained in the Trust Agreement, itsinability to perform, observe or comply with any such term, covenant, condition orprovision shall not itself constitute an Event of Default under the Trust Agreement;
(d) The abandonment of the Sewer System or any substantial portion thereofor the discontinuance of the operations therein, and the continuance thereof for ten daysafter receipt by the Issuer of a written notice from the Trustee specifying such default andrequesting that it be corrected;
(e) The Issuer shall: (i) become insolvent or the subject of insolvencyproceedings; (ii) be unable, or admit in writing its inability, to pay its debts as theymature; (iii) make a general assignment for the benefit of creditors or to an agentauthorized to liquidate any substantial amount of its property; (iv) file a petition or otherpleading seeking reorganization, composition, readjustment, or liquidation of assets, orrequesting similar relief; (v) apply to a court for the appointment of a receiver for any ofits assets; (vi) have a receiver or liquidator appointed for any of its assets (with or withoutthe consent of the Issuer) and such receiver shall not be discharged within 90 consecutivedays after his appointment; (vii) become the subject of an “order for relief” within themeaning of the United States Bankruptcy Code; or (viii) file an answer to a creditor’spetition admitting the material allegations thereof for liquidation, reorganization,readjustment or composition or to effect a plan or other arrangement with creditors or failto have such petition dismissed within 60 consecutive days after the same is filed againstthe Issuer; or
(f) To the extent that an Interest Rate Hedge Agreement is executed inconnection with Bonds, failure to make a payment due and payable under an Interest RateHedge Agreement or to perform or observe any covenant, agreement, or condition on thepart of the Issuer under an Interest Rate Hedge Agreement.
The Trustee shall give prompt telephonic notice of an Event of Default and shall confirmin writing within five Business Days after notice of the occurrence of an Event of Default (exceptin the case of an Event of Default as provided in paragraphs (a) and (b) above in which event twoBusiness Days shall be substituted for five Business Days) by registered or certified mail to theIssuer. If an Event of Default occurs of which the Trustee has notice pursuant to the TrustAgreement, the Trustee shall give written notice thereof, within 30 days after the Trustee’s noticeof its occurrence, to the Holders of all Bonds then outstanding as shown by the registration booksat the close of business fifteen days prior to the mailing of that notice; provided, that except inthe case of an Event of Default as defined in paragraphs (a) and (b) above, the Trustee shall beprotected in withholding such notice if and so long as the board of directors, the executive
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committee or a trust committee of directors or responsible officers of the Trustee in good faithdetermine that the withholding of notice to the Holders is in the interests of the Holders.
Acceleration
Upon the occurrence of an Event of Default, the Trustee shall, at the direction of 25% ofthe Holders, by written notice to the Issuer, declare the principal of the Bonds to be immediatelydue and payable, whereupon that portion of the principal of the Bonds thereby coming due andthe interest thereon accrued to the date of payment shall, without further action, become and beimmediately due and payable, anything in the Trust Agreement or in the Bonds to the contrarynotwithstanding.
Subject to the preceding paragraph and the provisions of the Trust Agreement, if anEvent of Default shall occur, at any time during the continuance of such Event of Default, theTrustee may, and upon the written request of the Holders of at least 25% in principal amount ofthe Bonds then outstanding shall, by notice in writing to the Issuer, declare the principal of allthe Bonds then outstanding (if not then due and payable) to be due and payable immediately andmay proceed to take any actions which may be available to it under the Trust Agreement, and,upon such declaration, the principal of all Bonds then outstanding shall become and beimmediately due and payable, and all the Bonds then outstanding shall be secured ratably by theTrust Agreement irrespective of their specified maturity dates.
Provided, however, that nothing contained in the preceding paragraph or elsewhere in theTrust Agreement shall in any way interfere with, but shall be in addition to the rights of theHolders of the Bonds then outstanding upon any default in the payment of the principal, interest,or premium, if any, on the Bonds, to have a receiver appointed by a court of competentjurisdiction to operate the Sewer System and apply the income and revenues to the payment ofthe Bonds and the interest thereon, all as provided in the Bond Legislation.
If, at any time after such principal and any premium and interest shall have been sodeclared due and payable and prior to (a) the entry of a judgment in a court of law or equity forenforcement hereunder or (b) the appointment, and the confirmation thereof, of a receiver afteran opportunity for hearing by the Issuer, all sums payable hereunder on the Bonds which havenot reached their stated maturity dates and which are due and payable solely by reason of saiddeclaration shall have been duly paid or provided for by deposit with the Trustee and all existingdefaults shall have been made good, including without limitation reasonable fees, charges andexpenses of the Trustee and its counsel and of the Holders of the Bonds, including reasonablefees of counsel paid or incurred, then and in every case such payment or provisions for paymentshall ipso facto constitute a waiver of such default and its consequences and an automaticrescission and annulment of such declaration under the above paragraph, but no such waiver orrescission shall extend to or affect any subsequent Event of Default or impair any rightsconsequent thereon.
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Other Remedies; Rights of Holders
Upon the happening and continuance of an Event of Default, the Trustee may, in additionto the rights of acceleration described above, pursue any available remedy, including withoutlimitation actions at law or in equity, to enforce the payment of principal, interest or premium, ifany, on the Bonds or to remedy any Event of Default.
Upon the happening and continuance of an Event of Default, and if requested so to do bythe holders of at least twenty-five percent (25%) in aggregate principal amount of the Bonds thenoutstanding, and upon being indemnified to its satisfaction, the Trustee shall exercise such of therights and powers conferred by the Trust Agreement as the Trustee, being advised by counsel,shall deem most effective to enforce and protect the interests of the Holders.
Right of Holders to Direct Proceedings
Anything in the Trust Agreement to the contrary notwithstanding, upon the occurrenceand continuance of an Event of Default, the Holders shall be entitled to control and direct theenforcement of all rights and remedies under the Trust Agreement, including, without limitation:(a) the right to accelerate the principal of the Bonds as described in the Trust Agreement, and (b)the right to annul any declaration of acceleration, and the Holders shall also be entitled toapprove all waivers of Events of Default.
Subject to the preceding paragraph and other provisions within the Trust Agreement, theHolders of at least 50% in aggregate principal amount of Bonds then outstanding shall have theright at any time, by an instrument or instruments in writing executed and delivered to theTrustee, to direct the method and place of conducting all proceedings to be taken in connectionwith the enforcement of the terms and conditions of the Trust Agreement, or for the appointmentof a receiver or any other proceedings hereunder; provided, that such direction shall not beotherwise than in accordance with the provision and of the Trust Agreement, provided that theTrustee shall be indemnified to its satisfaction and provided that the Trustee shall have the rightto decline to follow any direction which in its opinion would unjustly prejudice the Holders notparties to such declaration.
Appointment of Receivers
Upon the occurrence of an Event of Default, and upon the filing of a suit or othercommencement of judicial proceedings to enforce the rights of the Trustee and of the holders ofthe Bonds under the Trust Agreement, the Trustee will be entitled, as a matter of right, to theappointment of a receiver or receivers, pending such proceedings, with such power as the courtmaking such appointment shall confer.
Upon the occurrence of an Event of Default, to the extent such rights may then lawfullybe waived, neither the Issuer, nor anyone claiming through or under the Issuer, will set up, claim,or seek to take advantage of any stay, extension moratorium or redemption laws now or hereafterin force, in order to prevent or hinder the enforcement of the Trust Agreement, but the Issuer, foritself and all who may claim through or under it, will waive, to the extent it may lawfully do so,the benefit of all such laws and all right of redemption to which it may be entitled.
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Waivers of Events of Default
The Trustee shall waive any Event of Default hereunder and its consequences and rescindany declaration of accelerated maturity of principal upon the written request of the Holders of (a)at least 50% in aggregate principal amount of all the Bonds then outstanding in respect of whichan Event of Default in the payment of principal, interest, or premium, if any, exists, or (b) at least25 % in aggregate principal amount of all Bonds then outstanding in case of any other Event ofDefault; provided, however, that there shall not be waived any Event of Default described inparagraphs (a) or (b) of Events of Default described above or any such declaration in connectiontherewith rescinded, unless at the time of such waiver or rescission, payment of the amountsprovided in under “Acceleration” above for waiver and automatic rescission in connection withacceleration of maturity have been made or provided for. In case of any such waiver orrescission, or in case any proceeding taken by the Trustee on account of any such Event ofDefault shall have been discontinued or abandoned or determined adversely, then and in everysuch case the Issuer, the Trustee and the Holders shall be restored to their former positions andrights hereunder respectively, but no such waiver or rescission shall extend to any subsequent orother Event of Default, or impair any right consequent thereon.
Supplemental Trust Agreements Not Requiring Consent of Holders
The Trust Agreement also contains appropriate provisions whereby the Issuer and theTrustee, without the consent of or notice to any of the holders of the Bonds, may enter into trustagreements supplemental to the Trust Agreement if the supplemental trust agreements are notinconsistent with the terms and provisions of the Trust Agreement. Such supplemental trustagreements may be entered into for anyone or more of the following purposes:
(a) to cure any ambiguity, inconsistency or formal defect or omission in theTrust Agreement;
(b) to grant to or confer upon the Trustee for the benefit of the holders of theBonds any additional rights, remedies, powers or authority that may lawfully be grantedto or conferred upon the holders or the Trustee;
(c) to subject additional revenues to the lien and pledge of the TrustAgreement;
(d) to add to the covenants and agreements of the Issuer contained in the TrustAgreement other covenants and agreements thereafter to be observed for the protection ofthe holders of the Bonds, or to surrender or limit any right, power or authority reserved toor conferred upon the Issuer in the Trust Agreement, including the limitation of rights ofredemption so that in certain instances Bonds of a different series will be redeemed insome prescribed relationship to one another;
(e) to evidence any succession to the Issuer and the assumption by thesuccessor of the covenants and agreements of the Issuer contained in the TrustAgreement and the Bonds;
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(f) to modify, amend or supplement the Trust Agreement in such manner asto permit the qualification thereof under the Trust Indenture Act of 1939, as amended, orto comply with any similar requirements of any other law;
(g) in connection with the issuance of Additional Bonds in accordance withthe Bond Legislation;
(h) to evidence or provide for the delivery of a letter of credit or other creditenhancement securing any series of Bonds, so long as such letter of credit or other creditenhancement does not result in the downgrading of any credit rating assigned to anyoutstanding Bonds by the Rating Agency or any other rating agencies which have ratedany such outstanding Bonds upon application of the Issuer;
(i) to permit the exchange of Bonds, at the option of the holder or holdersthereof, for coupon Bonds payable to bearer, in an aggregate principal amount notexceeding the unmatured and unredeemed principal amount of the predecessor Bonds,bearing interest at the same rate or rates and maturing on the same date or dates, withcoupons attached representing all unpaid interest due or to become due thereon if, in theopinion of nationally recognized bond counsel selected by the Trustee, that exchangewould not result in the interest on any of the Bonds outstanding becoming subject tofederal income taxation;
(j) to permit the use of a book entry system to identify the owner of aninterest in an obligation issued by the Issuer under the Trust Agreement, whether thatobligation was formerly or could be, evidenced by a tangible security;
(k) to permit the Trustee to comply with any obligations imposed upon it bylaw;
(l) to modify any of the provisions of the Trust Agreement or any previouslyadopted Supplemental Trust Agreement in any other respect, provided that suchmodifications shall not be effective until after all Bonds of any series of Bondsoutstanding as of the date of adoption of such Supplemental Trust Agreement (orordinance or resolution) shall cease to be outstanding, and all Bonds issued under suchSupplemental Trust Agreement (or ordinance or resolution) shall contain a specificreference to the modifications contained in such subsequent Supplemental TrustAgreement (or ordinance or resolution)
(m) to achieve compliance of the Trust Agreement with any applicable federalsecurities or tax law;
(n) to modify any of the provisions of the Trust Agreement in any otherrespect whatsoever, provided that such modification does not materially adversely affectthe rights of the Holders of the Bonds
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Supplemental Trust Agreements Requiring Consent of Holders
The Trust Agreement contains appropriate provisions whereby the Issuer, with thewritten consent of the holders of not less than a majority in aggregate principal amount ofoutstanding Bonds (excluding Bonds held or owned by the Issuer), may modify or amend anycovenant, condition or provision of the Trust Agreement or any supplement thereto so long assuch action shall not result in a supplemental trust agreement providing for (a) an extension ofthe maturity of the principal of or the interest on any Bond, or a reduction in the principalamount of any Bond or the rate of interest or redemption premium thereon, or a reduction in theamount or extension of the time of any payment required by any mandatory sinking fundrequirements provided for in the Bond Legislation, without the consent of the holder of eachBond so affected, or (b) a privilege or priority of any Bond or Bonds over any other Bond orBonds, or a reduction in the aggregate principal amount of the Bonds required for consent tosuch supplemental agreement without the consent of the holders of all of the then outstandingBonds, or (c) the imposition upon the Pledged Revenues or the Revenue Fund of a lien rankingprior to the lien of the Trust Agreement, without the consent of the holders of all of theoutstanding Bonds.
Release of Trust Agreement
If the Issuer shall pay or cause to be paid and discharged all the outstanding Bonds orthere shall otherwise be paid to the Holders of the outstanding Bonds all Bond Service Charges(including any applicable redemption premium) due or to become due thereon, and provisionshall also be made for paying all other sums payable hereunder by the Issuer, then and in thatevent the Trust Agreement (except for certain limited sections thereof) shall cease, determine andbecome null and void, and the covenants, agreements, and other obligations of the Issuerhereunder shall be discharged and satisfied, and thereupon the Trustee shall release the TrustAgreement, including the cancellation and discharge of the pledge of and lien upon the PledgedRevenues and the Revenue Fund hereof, and execute and deliver to the Issuer such instrumentsin writing as shall be requisite to satisfy the pledge of and lien upon the Pledged Revenues andthe Revenue Fund hereof and to enter on the records such satisfaction and discharge and suchother instruments to evidence such release and discharge as may be reasonably required by theIssuer; and the Trustee shall assign and deliver to the Issuer any property at the time subject tothe pledge of and lien upon the Pledged Revenues and the Revenue Fund of the Trust Agreementwhich may then be in their possession except amounts to be held by the Trustee under the TrustAgreement or otherwise for the payment of Bond Service Charges due on the Bonds.
Payment and Discharge of Bonds
All the outstanding Bonds of one or more series or of one or more maturities within anyseries shall be deemed to have been paid and discharged within the meaning of the TrustAgreement, if:
(a) the Trustee shall hold, in trust for and irrevocably committed hereto,sufficient moneys, or
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(b) the Trustee or an escrow agent appointed in connection with the refundingof Bonds shall have received, in trust for and irrevocably committed thereto, DefeasanceObligations which are certified by an independent public accounting firm of nationalreputation (and in accordance with applicable provisions of the laws of theCommonwealth of Kentucky) to be of such maturities or redemption or payment datesand to bear such interest, as will be sufficient together with any moneys to whichreference is made in subparagraph (a) above, without further investment or reinvestmentof either the principal amount thereof or the interest earnings therefrom (which earningsare to be held likewise in trust and so committed, except as provided in the TrustAgreement), be sufficient together with moneys (if any) referred to in (a), above,
for the payment, at their maturities or redemption dates, of all Bond Service Charges on theBonds to the date of maturity or redemption, as the case may be, or if default in such paymentshall have occurred on such date then to the date of the tender of such payment; provided, that ifany of such Bonds are to be redeemed prior to the maturity thereof, notice of such redemptionshall have been duly given or irrevocable provision satisfactory to the Trustee shall have beenduly made for the giving of such notice.
Any moneys held by the Trustee in accordance with the provisions of this Section may beinvested by the Trustee, at the written direction of an Authorized Officer of the Issuer, but onlyin Defeasance Obligations, the maturities or redemption dates of which, at the option of theHolder, shall coincide as nearly as is practicable with, but not later than, the time or times atwhich said moneys will be required for the aforesaid purposes. Any income or interest earned by,or increment to, the investments held under this Section shall, to the extent determined from timeto time by the Trustee to be in excess of the amount required to be held by it for the purposes ofthis Section, be transferred at the time of such determinations to the Revenue Fund. In the eventof non-presentment as referred to in the Trust Agreement, the moneys held pursuant to thisSection to which the applicable section of the Trust Agreement would apply but for the release ofthe Trust Agreement shall be held and paid as provided for in such section of the TrustAgreement. Bonds so paid and discharged shall thereafter be secured solely by the moneys andinvestments so deposited and held for their payment, and shall no longer be secured by thepledge of and lien upon the Pledged Revenues as provided in the Trust Agreement.
If any Bonds shall be deemed paid and discharged pursuant to this Section, then within15 days after such Bonds are so deemed paid and discharged, the Trustee shall cause a writtennotice to be given to each Holder as shown on the Register on the date on which such Bonds aredeemed paid and discharged. Such notice shall state the numbers of the Bonds deemed paid anddischarged, set forth a description of the obligations held pursuant to subsection (a) and specifythe date or dates on which any of the Bonds are to be called for redemption pursuant to notice ofredemption given or irrevocable provisions made for such notice pursuant to subsection (a)above.
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Covenants of the Issuer
In addition to the other covenants of the Issuer contained in the Bond Legislation and theTrust Agreement, the Issuer further covenants with the Holders and the Trustee as follows:
(a) Payment of Principal and Interest. The Issuer will, solely from thesources provided in the Trust Agreement, pay the principal of and premium, if any, andinterest on every Bond on the dates and at the places and in the manner mentioned in theBonds, according to the true intent and meaning thereof.
(b) Rate Covenant. The Issuer will at all times prescribe and charge suchrates for the services of the Sewer System, and will so restrict Operating andMaintenance Expenses, as shall result in Net Revenues at least adequate to provide for (i)the payments required by the Bond Legislation to be made into the Revenue Fund, (ii)sufficient funds to pay the Principal and Interest Requirements on any General ObligationBonds and Notes and all other Obligations of the Issuer incurred for Sewer Systempurposes, (iii) sufficient earnings coverage to permit the issue of the Additional Bondsrequired for the construction of necessary or advisable extensions or improvements of theSewer System and (iv) to provide for the normal growth and sound operation of theSewer System.
In no event shall the sum of Net Revenues with respect to each Fiscal Year be lessthan 120% of the aggregate amount of Principal and Interest Requirements on the Bondspayable during such Fiscal Year and the Issuer will be responsible for delivering to theTrustee evidence of compliance therewith in accordance with the applicable subsection ofthe Trust Agreement; provided, however, that the required deposits are being made to theapplicable funds as set forth in the Trust Agreement on an ongoing basis; provided,however, that if Additional Bonds are issued to pay the cost of Improvements, the portionof the Principal and Interest Requirements thereon that shall be included in thecalculation in each Fiscal Year during the estimated construction period of theImprovements shall equal the portion of the interest on said Additional Bonds payableduring that Fiscal Year that has not been funded.
In the event of a failure to meet the rate covenant in the preceding paragraph, theIssuer shall notify the Trustee and shall immediately employ a Consultant to prepare andsubmit a written report and recommendations with respect to the rates and charges of theSewer System necessary to meet the above-stated rate requirements and with respect toimprovements or changes in the operations of the Sewer System, stating the extent towhich prior recommendations of consultants or engineers may not have been compliedwith by the Issuer. If a report requested of such Consultant is not provided within areasonable time (determined by reference to then-prevailing industry standards for thepreparation of similar reports), but in no case longer than 60 days, the Trustee may, at itsoption, require the Issuer to employ a different Consultant to provide such report. A copyof such report and recommendations shall be filed with the Issuer, the Trustee, therepresentative and any Holders of record requesting the same. The Issuer shall, within 60days of receipt of such report, revise its rates and charges in conformity with suchrecommendations and otherwise follow such recommendations. If such
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recommendations are followed, then a failure to meet the rate covenant set forth in thepreceding paragraph shall not constitute an event of default under the Trust Agreement solong as Net Revenues are adequate to provide for sufficient funds to pay the Principal andInterest Requirements on any Bonds, and General Obligation Bonds and Notes and allother Obligations of the Issuer incurred for Sewer System purposes. The sole authority toadjust rates shall at all times remain with the Legislative Authority, subject to therequirements of the covenants set forth in this Bond Legislation and the Trust Agreement.
(c) Performance of Covenants, Authority and Actions. The Issuer willfaithfully observe and perform at all times all agreements, covenants, undertakings,stipulations and provisions contained in the Bond Legislation, the Trust Agreement andthe Bonds, and in all proceedings of the Legislative Authority pertaining to the Bonds orthe Sewer System. The Issuer represents and warrants that it is duly authorized by theConstitution and the laws of the Commonwealth of Kentucky and the Kentucky RevisedStatutes, to issue the Bonds authorized hereby and to execute the Trust Agreement, and topledge the Pledged Revenues and the Revenue Fund in the manner and to the extent setforth in the Trust Agreement; that all actions on its part for the issuance of Bonds andexecution and delivery of the Trust Agreement, including those preliminary proceedingsrequired by the Kentucky Revised Statutes, have been duly and effectively taken and, ifAdditional Bonds are issued pursuant hereto, will be duly taken as provided in the TrustAgreement, and that the Bonds in the hands of the Holders and owners thereof are andwill be legal, valid, and binding special obligations of the Issuer enforceable according tothe terms thereof. All of the obligations and duties of the Issuer and its officers in itsbehalf, under the Bonds, the Bond Legislation and the Trust Agreement are herebyestablished as duties specifically enjoined by law and resulting from an office, trust, orstation of the Issuer and its officers as provided for in the Kentucky Revised Statutes.
(d) Title to Sewer System. The Issuer represents and warrants that it is, or willbe upon delivery of Bonds, the owner of title to the Sewer System and upon delivery ofBonds will have good right, full power, and lawful authority to pledge the PledgedRevenues and Revenue Fund as provided in the Trust Agreement.
(e) Other Pledges. The Issuer has not heretofore made or suffered to exist anypledges of or liens on the Pledged Revenues. The Issuer has not made and will not makeany pledge or assignment of or create any lien or encumbrance upon the PledgedRevenues or the Revenue Fund having a priority higher than or equal to that of the Bondsexcept as provided in the Trust Agreement with regard to the issuance of AdditionalBonds.
(f) Payment of Taxes, Charges, Etc. The Issuer will cause to be paid fromthe Revenue Fund all lawful taxes, assessments and charges at any time lawfully leviedor assessed upon or against the Sewer System, or any part thereof, provided, however,that nothing contained in this Section shall require the payment of any such taxes,assessments or charges if the same are not required to be paid under the provisions of theTrust Agreement.
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(g) Maintenance and Repair. The Issuer will cause the Sewer System to bekept in good repair and good operating condition, and the Issuer may, at its own expense,from time to time undertake additions, remodeling, modifications and improvements tothe Sewer System under the terms and conditions set forth in this Article of the TrustAgreement and shall maintain fire and other extended coverage insurance in amounts notless than the full insurable value of the Sewer System as provided in the TrustAgreement.
(h) Public Records. The Issuer will cause the Trust Agreement and anyamendments or supplements thereto and all necessary financing statements, amendmentsthereto, continuation statements and instruments of similar character relating to thepledges made by it to secure the Bonds, to be recorded and filed in such manner and insuch places as may be required by law in order to fully preserve and protect the securityof the Holders of any Bonds and the rights of the Trustee under the Trust Agreement.
(i) Annual Reports; Inspection of Books and Records. The Sewer Systemand all books and documents in the Issuer’s possession or control relating to the SewerSystem, the Revenue Fund, and the Pledged Revenues, shall at all times be open toinspection by such accountants or other agents as the Trustee, the Original Purchasers, orthe Holder or Holders of 25% or more in principal amount of Bonds then outstandingmay from time to time designate. The Issuer will, within nine months after the end ofeach Fiscal Year (or if unavailable by such date, then as soon as possible upon release),furnish to the Trustee, the Original Purchasers and to any Holder requesting the same andreimbursing the Issuer for the cost thereof an annual report of the operation and incomeof the Sewer System for such year. Such annual reports must be audited by anindependent Certified Public Accountant selected by the Issuer.
(j) Compliance with Laws. The Issuer shall comply with all laws, rules andregulations of governmental agencies, including the Treasury Department of the UnitedStates of America, applicable to the Sewer System and the Bonds. In particular, butwithout limiting the generality of the foregoing, the Issuer shall comply with therequirements of Section 103 of the Code.
Insurance
Until the Bonds shall be fully paid, the Issuer shall insure and at all times keep insured, atits own expense, or cause to be insured, but solely from Gross Revenues derived from the SewerSystem, the property and equipment from time to time comprising the Sewer System, which areof an insurable nature. Such insurance policies shall be payable to the Issuer and the Trustee, astheir interests shall appear, and such insurance policies shall be deposited or on file with theTrustee, and such insurance shall be of a kind and in an amount which normally would be carriedby private companies operating similar properties and businesses. As an alternative to separatepolicies, the Sewer System may be insured under a blanket insurance policy or policies withother properties and operations of the Issuer. The Issuer shall have no duty to maintain saidinsurance if, in the judgment of an Authorized Officer, which judgment must be supported bywritten correspondence, recommendations, and/or a study of an Independent Engineer or
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insurance Consultant (who may be an insurance agent with whom the Issuer transacts business),such insurance is cost prohibitive or unavailable at a reasonable cost.
All insurance policies shall be open to the inspection of the Holders and theirrepresentatives at any reasonable time. Any appraisal or adjustment of any loss or damage andany settlement or payment of indemnity therefor which may, with the approval of anIndependent Engineer or insurance Consultant be agreed upon between the Issuer and theinsurer, shall be evidenced to the Trustee by a certificate signed by an Authorized Officer, whichcertificate may be relied upon by the Trustee as conclusive. The Trustee shall in no way beliable or responsible for the collection of insurance moneys in case of any loss or damage.
The Issuer shall provide the Trustee annually, commencing in July 1 2015 with acertificate as to compliance with the provisions of this Section. The Trustee shall be entitled toconclusively rely upon said Issuer certificate as the Issuer’s compliance with the insurancerequirements. The Trustee makes no representations as to, and shall have no responsibility for,the sufficiency or adequacy of insurance.
Notwithstanding the foregoing provisions of this Section, if at any time (a) it shall beunlawful to carry any insurance referenced above, (b) the Issuer shall be unable to obtain suchinsurance or as to the risks covered thereby or the deductible provisions thereof, or (c) the Issuerdesires to maintain self-insurance, it will not constitute an Event of Default under the provisionsof the Trust Agreement if the Issuer shall carry or cause to be carried Qualified Self Insurance,provided that the requirements set forth in the Trust Agreement are satisfied.
As part of its participation in any plan of Qualified Self Insurance, the Issuer shall assess(or have an assessment performed), either through an independent insurance consultant orinternally through an employee or agent of the Issuer professionally qualified to make insurancedeterminations, or alternatively through a certification provided by the Legal Officer, that theamount and scope of coverage of such Qualified Self Insurance will be of a kind of self-insurance and in an amount that will meet or exceed coverage standards established by theCommonwealth of Kentucky for Qualified Self Insurance plans. Each plan of Qualified SelfInsurance shall be in written form and the Trustee shall be provided with a copy thereof.
The Issuer covenants that, upon the termination of such plan of Qualified Self Insurance,reserves will be established or insurance acquired in an amount or amounts adequate to meetCommonwealth of Kentucky standards for adequate reserves or other legally permissibleinsurance coverage, 25% or more of the Holders or the Trustee, at the written request of 25% ormore of the Holders, may request, at the expense of the Issuer, evidence that any such reserves orother legally permissible insurance coverage satisfies Commonwealth of Kentucky standards foradequate insurance coverage as such coverage pertains to the Sewer System, and may requestthat such evidence of adequate insurance be provided by an independent insurance consultant oran employee or agent of the Issuer professionally qualified to make insurance determinations. Ifsuch independent insurance consultant or employee or agent of the Issuer professionallyqualified to make insurance determinations, makes a determination that such reserves or otherlegally permissible insurance is inadequate in light of the Commonwealth of Kentucky insurancestandards, such person shall make recommendations as to the amount of reserves or alternatetypes of legally permissible insurance that should be established and maintained or obtained, and
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the Issuer shall comply with such recommendations, unless it can establish to the satisfaction ofthe respective Holders or the Trustee making the request for evidence of adequate insurance thatsuch recommendations are unreasonable in light of the nature of the risks incurred. After thesteps set forth have been taken, to the extent that 25% or more of the Holders or the Trustee, atthe written request of 25% or more of the Holders, continue to require evidence of adequatereserves or other legally permissible insurance as determined by the Commonwealth of Kentuckystandards for adequate insurance, a certification from the Legal Officer as to the adequacy ofreserves or other legally permissible insurance shall satisfy the Issuer’s obligations for insuranceunder this Section. The Trustee makes no representations as to, and shall have no responsibilityfor, the sufficiency or adequacy of insurance.
Application of Proceeds of Insurance.
All insurance moneys received by the Issuer or the Trustee pursuant to an insurancepolicy or policies, or distributions from a plan of Qualified Self Insurance, or distributions fromlegally permissible insurance reserves, on account of damages to or partial or total destruction ofthe Sewer System shall be provided to the Trustee and held by the Trustee as security for theBonds and shall be disbursed, from time to time by the Trustee, upon the order of the Issuer toreimburse the Issuer for expenditures made, or to pay indebtedness incurred, in respect of thecost of repairing, replacing, or rebuilding the damaged or destroyed property, upon receipt by theTrustee of:
(a) A written instrument signed in the name of, and on behalf of the Issuer byan Authorized Officer or Director of Water Quality, requesting the disbursement of aspecified amount of such moneys, describing in reasonable detail the work done andmaterials purchased by way of repairing, replacing, or rebuilding the damaged ordestroyed property, and stating that such amount is required to reimburse the Issuer forexpenditures made on account of the cost thereof, or that immediately upon its receipt bythe Issuer, such amount will be applied by it to the payment of indebtedness incurred inrespect of the cost thereof, and, further, that no reimbursement or advance has been madepreviously by the Trustee, for the expenditures made or to be made, on account of whichsuch request is made. In lieu of the above mentioned certificates as to work done andmoneys theretofore expended in the event the repairing, replacing, or rebuilding of suchdamaged or destroyed property is to be done under contract pursuant to the receipt ofbids, as provided by law, and the Issuer does not have sufficient funds available for thepayment of such contract costs, then in such event the instrument to be furnished incompliance with this paragraph (a) shall request the immediate certification as toavailability of such specified amount of such moneys and the description as to the workand materials shall refer to the work and materials to be done by the contractor and statethat bids have been called for in accordance with law and received covering such workand materials, and that contracts will be entered into by the Issuer for such work andmaterials as soon as funds can be certified as available therefor, and that such sums whenreceived will be applied by it to the payment of such contract cost, in which event theTrustee shall, if it shall have been furnished with the remaining certificate and opinioncalled for by this Section, issue to an Authorized Officer its certificates as to theavailability of such specified amount of moneys, and thereafter pay the same to the Issuer
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upon the order of an Authorized Officer, as amounts become due under the said contractor contracts, as certified by said Authorized Officer;
(b) A certificate signed by the Director of Water Quality, an engineer, or otherprofessional qualified to make determinations as to the adequacy and appropriateness ofthe repair, replacement, or rebuilding the damaged or destroyed property to the SewerSystem not unsatisfactory to the Trustee approving the work and materials described inthe instrument required by the foregoing paragraph (a) stating that the amount specifiedin such instrument is not in excess of the reasonable cost of such work and materials, andspecifying the additional amount, if any, required to complete the repairing, replacing orrebuilding of the damaged or destroyed property, and further, that, in his opinion, theSewer System will not be worth substantially less upon completion thereof than beforesuch damage or destruction; and
(c) A certificate, signed in the name and on behalf of the Issuer certifying thatthe Issuer has appropriated, and has available for the purposes of the above mentionedrepairing, replacing, or rebuilding, and free from appropriation for any other purposes,sufficient moneys, so that, when added to the available insurance moneys then in thehands of the Trustee, there will be sufficient funds to complete the proposed repairing orrebuilding (this certificate may be omitted if the certificate described in the foregoingparagraph (b) shows that no funds will be required in addition to the available insurancemoneys in the hands of the Trustee).
If the Issuer shall not have begun within 60 days after such damage or destruction to sorepair, replace or rebuild, and shall not proceed, continuously and with all reasonable dispatch, tocomplete such work, the Trustee may, and upon the written request of the Holders of at least25% of the principal amount of the Bonds at the time outstanding and upon being indemnified toits satisfaction shall, repair, replace, or rebuild the damaged or destroyed property, or cause thesame to be done. In such event the Trustee shall apply to the cost thereof the insurance moneysheld by it pursuant to the provisions of this Section; provided, however, that before applying anysuch moneys, the Trustee shall obtain the certificate of the Director of Water Quality, or anengineer or contractor satisfactory to it, approving the work and materials, the cost of which is tobe paid with such moneys, stating that the amount proposed so to be paid is not in excess of thereasonable cost of such work and materials and specifying the additional amount, if any, requiredto complete the repair, replacement or rebuilding of the damaged or destroyed property.
If upon completion of such work any moneys received by the Trustee pursuant to theprovisions of this Section shall remain in its hand undisbursed, the Trustee shall apply suchmoneys, first, to the reimbursement of itself for any fees and expenses incurred or advancedhereunder; second, to the reimbursement of any moneys advanced by any Holder or Holders ofoutstanding Bonds, and third, to the payment of any surplus to the Bond Account created by theBond Legislation.
Notwithstanding any provision hereinbefore in this Section contained, the Trustee shallnot release or apply any insurance moneys received on account of damage to or partial or totaldestruction of the Sewer System or on account of the repairing, replacing or rebuilding thedamaged or destroyed property if such release or application would reduce the balance of all
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insurance moneys received by the Trustee pursuant to the provisions of this Section, thenremaining on deposit with it, below the amount specified in a certificate of an engineer orcontractor satisfactory to the Trustee, to be the amount required (after application to the cost ofsuch repair, replacement or rebuilding of the amount to be so released or applied) to pay the costof such portion of such repair, replacement or rebuilding as shall then remain to be completed,except as provided in paragraph (c) hereof.
If the Issuer shall fail to repair, replace, or rebuild the damaged or destroyed property asin this Section provided, and if the Trustee shall not proceed with such repair, replacement orrebuilding, moneys received by the Trustee shall be paid by the Trustee into the Bond Account.
Summary of the First Supplemental Trust Agreement
The First Supplement provides for the execution and delivery by the Issuer of its Series2014 Bonds, the terms of which are summarized in "DESCRIPTION OF THE SERIES 2014BONDS" in the body of this Official Statement.
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APPENDIX CCERTAIN OPERATING DATA REGARDING THE SEWER SYSTEM
OPERATING INFORMATION
Customer History
Listed below are customer statistics of the Sewer System broken down by Residential,Commercial and Wholesale customers for the last five fiscal years.
Customer History: Overall (FY 2010-2014)
Fiscal Year Number of CustomersVolume
(in 1,000 gallons) Revenue2010 104,926 8,513,707 $47,100,3032011 107,028 8,572,155 47,963,3052012 107,583 8,255,846 46,894,3772013 111,847 8,086,361 48,924,8352014 117,053 8,304,192 49,680,370*
_______*UnauditedSource: Division of Water Quality
Customer History: Residential and Non-Residential Customers (FY 2010-2014)
Fiscal Year
ResidentialNumber ofCustomers % Change
Non-ResidentialNumber ofCustomers % Change
2010 97,232 1.1% 7,694 -0.5%2011 99,211 2.0% 7,817 1.6%2012 99,746 0.5% 7,837 0.3%2013 103,224 3.5% 8,623 10.0%2014 108,430 5.0% 8,623 0.0%
[Remainder of page intentionally left blank]
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Largest Customers of the Sewer System for Fiscal Year 2014
Rank Company Usage/Gallons† Revenue1 University of Kentucky* 629,920,655 $3,921,9872 St. Joseph Hospital* 82,900,840 508,1293 Central Baptist Hospital* 70,585,252 430,1684 LFUCG Detention Center 67,529,336 355,8915 Kentucky Horse Park 64,292,059 391,9416 Federal Medical Center 53,100,340 323,4517 Lexmark* 47,161,392 308,0908 Suburban Trailer Park 43,657,020 266,1649 Federal Government VA Hospital* 28,457,384 171,593
10 Lexington Marriott Resort 24,743,520 229,638TOTALS 1,112,347,798 $6,907,052
_______† As measured by water consumption on the basis of sanitary sewer rates.*Multiple AccountsSource: Division of Water Quality
Rates and Charges
The Lexington-Fayette Urban County Government’s rate schedule is broken into twotiers. Schedule A (residential) and Schedule B (non-residential).
Schedule A(Applies to single family dwellings or multi-unit dwellings which are individually metered)
Unit As of July 1, 2014
First unit (0-100 cubic feet) $5.09Each additional unit (100 cubic feet) $3.83
Schedule B(Applies to all users not classified under Schedule A)
Unit As of July 1, 2014
First unit (0-100 cubic feet) $6.17Each additional unit (100 cubic feet) $4.65
Schedule B users may be charged for extra-strength loading of conventional pollutants asfollows:
Unit In excess of Per Lb Charge as of July 1, 2014
Biochemical Oxygen Demand (BOD) 250 mg/l $0.839Suspended Solids 250 mg/l $0.694Ammonia Nitrogen 25 mg/l $2.108
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Historical Debt Service Coverage
The table set forth below presents historical debt service coverage for Fiscal Years 2009-2014, applying the debt service coverage provisions of the Trust Agreement retroactively to thecalculation of the Net Revenues of the Sewer System available for the payment of debt servicefor the Fiscal Years 2009-2014, all as outstanding at the end of such respective Fiscal Years, asprepared by the Issuer’s Division of Water Quality.
ActualFiscal Year
2009
ActualFiscal Year
2010
ActualFiscal Year
2011
ActualFiscal Year
2012
ActualFiscal Year
2013
UnauditedFiscal Year
2014Gross Revenues
Sewer User Fees $35,144,436 $45,573,537 $45,513,175 $44,305,075 $45,921,141 $46,362,035Tap-on Fees 993,375 928,087 1,528,415 1,768,371 2,202,326 2,017,004Other 217,622 194,770 221,511 260,183 231,417 853,966
Total Revenues $36,355,433 $46,696,393 $47,263,100 46,333,629 $48,354,884 $49,233,005
ExpensesOperating
Personnel $9,760,577 $10,574,004 $11,232,861 $10,405,902 $10,014,774 $10,468,631Operating 13,577,651 16,170,553 14,642,808 13,933,579 13,561,872 16,688,521Insurance 1,275,387 1,181,520 414,125 2,219,282 1,677,387 1,088,430Capital 2,586,981 3,846,550 5,908,141 3,581,321 3,584,770 4,804,830
Total Operating Expenses $27,200,596 $31,772,628 $32,197,937 $30,140,083 $28,838,803 $33,050,413
Operating Income(Net Revenues Available for Debt Service) $9,154,836 $14,923,766 $15,065,164 $16,193,546 $19,516,081 $16,182,592
Debt ServiceRevenue Bonds (Senior) $5,561,138 $5,889,017 $7,118,615 $13,878,356+ $4,957,821 $4,915,285Other Sewer System Obligations 419,264 856,127 855,860
Aggregate Debt Service $5,561,138 $5,889,017 $7,118,615 $14,297,620+ $5,813,948 $5,771,144
Debt Service CoverageDebt Service Coverage Ratio for RevenueBonds (Senior)1 165% 253% 212% 117%+ 394% 329%Aggregate Debt Service Coverage Ratio(Revenue Bonds and Other Sewer SystemObligations)2 165% 253% 212% 113%+ 336% 280%
NOTES TO THE HISTORICAL DEBT SERVICE COVERAGE TABLE______+The debt service for FY 2012 reflects accelerated debt payments with respect to the Issuer’s Sewer System Revenue Bonds,Series A of 2001 and Sewer System Refunding Revenue Bonds, Series B of 2001 B due to a timing issue between the scheduleddue date of the debt payments and the fiscal year end.
1Equal to Net Revenues divided by Principal and Interest Requirements on the Revenue Bonds which were outstanding at the endof the respective Fiscal Years.
2Equal to Net Revenues divided by Principal and Interest Requirements on the Revenue Bonds and Other Sewer SystemObligations which were outstanding at the end of the respective Fiscal Years.
APPENDIX DCOMPREHENSIVE ANNUAL FINANCIAL REPORT
FOR THE FISCAL YEAR ENDED JUNE 30, 2013
(See pages 43-48 and page 138 for Financial InformationRegarding the Sewer System)
[SEE ATTACHED]
COMPREHENSIVE ANNUAL FINANCIAL REPORT
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT
FISCAL YEAR ENDED JUNE 30, 2013
COMPREHENSIVE ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED JUNE 30, 2013
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT LEXINGTON, KENTUCKY
PREPARED BY THE DEPARTMENT OF FINANCE AND ADMINISTRATION
Paid for with Lexington-Fayette Urban County Government Funds
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TABLE OF CONTENTS LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT Comprehensive Annual Financial Report Year Ended June 30, 2013 INTRODUCTORY SECTION Mayor’s Letter of Transmittal .................................................................................................................................. 1
Elected Officials ..................................................................................................................................................... 2 Commissioner of Finance and Administration Letter of Transmittal ...................................................................... 3 GFOA Certificate of Achievement for Excellence in Financial Reporting ............................................................. 9 Organizational Chart .............................................................................................................................................. 10 Directory of Government Officials ........................................................................................................................ 11 FINANCIAL SECTION Report of the Independent Auditors ....................................................................................................................... 13 Management’s Discussion and Analysis................................................................................................................ 15 Basic Financial Statements .................................................................................................................................... 29 Government–wide Financial Statements Statement of Net Position ........................................................................................................................... 30 Statement of Activities ............................................................................................................................... 32 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet – Governmental Funds .................................................................................................. 34 Reconciliation of the Balance Sheet to the Statement of Net Position – Governmental Funds ............ 35 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds .......... 36
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities ................................................................... 37
Statement of Revenues, Expenditures, and Changes in Fund Balance – Budgetary Comparison – General Fund ........................................................................................................... 38
Statement of Revenues, Expenditures, and Changes in Fund Balances – Budgetary Comparison – Full Urban Services District Fund ........................................................................... 41
Proprietary Fund Financial Statements Statement of Net Position ..................................................................................................................... 43
Statement of Revenues, Expenses, and Changes in Net Position ......................................................... 45 Statement of Cash Flows ...................................................................................................................... 47 Fiduciary Fund Financial Statements Statement of Net Position ..................................................................................................................... 49 Statement of Changes in Net Position .................................................................................................. 50 Component Unit Financial Statements Statement of Net Position ..................................................................................................................... 51 Statement of Activities ......................................................................................................................... 52 Notes to Financial Statements .................................................................................................................... 54 Combining and Individual Fund Statements and Schedules Combining Balance Sheet – Nonmajor Governmental Funds .................................................................. 104 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance – Nonmajor
Governmental Funds ..................................................................................................................... 106 Schedule of Expenditures of Federal Awards .......................................................................................... 108 Schedule of Expenditures of State Awards .............................................................................................. 111 Combining Statement of Net Position – Nonmajor Enterprise Funds ...................................................... 113
Combining Statement of Revenues, Expenses, and Changes in Net Position – Nonmajor Enterprise Funds ........................................................................................................................... 114
Combining Statement of Cash Flows – Nonmajor Enterprise Funds ....................................................... 115
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Combining Statement of Net Position – Internal Service Funds .............................................................. 118 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal
Service Funds ................................................................................................................................ 119 Combining Statement of Cash Flows – Internal Service Funds ............................................................... 120 Combining Statement of Net Position – Agency Funds ........................................................................... 122 Combining Statement of Changes in Assets and Liabilities – Agency Funds .......................................... 123 Combining Statement of Net Position – Nonmajor Component Units ..................................................... 126 Combining Statement of Activities – Nonmajor Component Units ......................................................... 128 STATISTICAL SECTION Net Position .................................................................................................................................................... 132 Changes in Net Position ................................................................................................................................. 133 Fund Balances, Governmental Funds............................................................................................................. 135 Changes in Fund Balances, Governmental Funds .......................................................................................... 136 Changes in Fund Balance, General Fund ....................................................................................................... 137 Sanitary Sewer System, Summary of Revenues and Expenses ...................................................................... 138 Net Assessed Value – Real, Tangible & Intangible Property......................................................................... 139 Property Tax Levies and Collections ............................................................................................................. 140 Direct and Overlapping Property Tax Rates .................................................................................................. 141 Principal Property Tax Payers ........................................................................................................................ 142 Direct and Overlapping License Fee Rates .................................................................................................... 143 Ten Major Occupational Tax Withholders ..................................................................................................... 144 Ratios of Outstanding Debt by Type .............................................................................................................. 145 Ratios of General Bonded Debt Outstanding ................................................................................................. 146 Schedule of Direct and Overlapping Indebtedness ........................................................................................ 147 Legal Debt Margin Information ..................................................................................................................... 148 Revenue Bond Coverage ................................................................................................................................ 149 Demographic and Economic Statistics ........................................................................................................... 150 Principal Employers, Fayette County............................................................................................................. 151 Employment by Industry, Fayette County ..................................................................................................... 152 U.S. Census Bureau Statistics ........................................................................................................................ 153 LFUCG Employees by Function/Program ..................................................................................................... 154 Operating Indicators by Function/Program .................................................................................................... 155 Capital Asset Statistics by Function/Program ................................................................................................ 156
Lexington-Fayette Urban County Government
OFFICE OF THE MAYOR
FOLLOW MAYOR GRAY: www.facebook.com/JimGrayLexKY www.twitter.com/JimGrayLexKY
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
Jim Gray Mayor
November 15, 2013
Dear Citizen,
The Comprehensive Annual Financial Report for the fiscal year ended June 30, 2013, reflects the strong steps we have taken to improve the financial health of the Lexington-Fayette Urban County Government through sound financial management.
We have made efficient operation of government a top priority, creating a leaner, smarter city hall. By
questioning expenditures in regular meetings held throughout the year with division directors … a new practice for this city … we are successfully controlling costs.
The full impact of our largely successful efforts to move employee health insurance toward a cost-of-
service model, and of our decision to establishment an employee health clinic and pharmacy, which saves money for both the city and employees, are evident in this report.
This report also reflects savings gained through successful negotiations with public safety unions. We
appreciate the dedication of our public safety officers, the service they offer our citizens and their willingness to make sacrifices to help our government recover from tough financial times. Because our employees worked with us we did not have to lay off public safety employees during the worst of the recession, unlike many cities across the country. Now we are restoring the strength of our police, fire and corrections divisions.
In March 2013 sustainable reform of our Police and Firefighter pension fund was signed into state law
and, while its impact is not directly felt in this budget, it puts Lexington on the path to long-term financial stability.
We continue to build our budget around preserving government’s core services, like public safety and public works. Investments in our Rainy Day Fund have also continued.
Lexington is ready to compete through strategic investments and strong financial management. We
look forward to a bright future for our Great American City.
Sincerely,
Jim Gray Mayor
1 Chris Ford 2 Shevawn Akers 3 Diane Lawless 4 Julian Beard 5 Bill Farmer, Jr. 6 Kevin Stinnett 7 Jennifer Scutchfield 8 George Myers 9 Jennifer Mossotti 10 Harry Clarke 11 Peggy Henson 12 Ed Lane
ELECTED OFFICIALS
MAYOR Jim Gray
COUNCILMEMBERS-AT-LARGE
Linda S. Gorton – Vice Mayor Charles W. Ellinger, II
Steve Kay DISTRICT COUNCILMEMBERS
Lexington-Fayette Urban County Government DEPARTMENT OF FINANCE
Jim Gray William O’Mara Mayor Commissioner
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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November 15, 2013 Citizens of Lexington-Fayette Urban County Honorable Mayor Jim Gray Members of the Urban County Council Lexington-Fayette Urban County Government Dear Citizens, Mayor and Members of the Urban County Council: As Commissioner of Finance, I present the Comprehensive Annual Financial Report (CAFR) of the Lexington-Fayette Urban County Government (the Government) for the fiscal year ended June 30, 2013 (FY2013). The CAFR has been prepared in accordance with Generally Accepted Accounting Principles (GAAP) and the reporting standards of the Governmental Accounting Standards Board (GASB). The CAFR includes all funds of the Government and its component units. The report is organized into three sections: an introductory section, a financial section and a statistical section. This introductory section provides general information on the Government’s structure, as well as information useful in assessing the Government’s financial condition. The financial section contains the report of the independent auditors on the financial statement audit, management’s discussion and analysis, the basic financial statements, required supplementary information, and information on individual funds not separately provided in the basic financial statements. The statistical section provides a broad range of trend data covering financial, demographic and economic activity useful in assessing the Government’s financial condition. This CAFR was prepared by the Division of Accounting, with assistance from staff in the Divisions of Finance, Revenue, and Budgeting. These divisions are responsible for both the accuracy of the data presented and the completeness and fairness of the presentation. To provide a reasonable basis for making these representations, management has established a comprehensive internal control framework that is designed to protect the Government’s assets from loss, theft or misuse and to compile sufficient reliable information for preparation of the financial statements in conformance with GAAP. The internal control structure is designed to provide reasonable, but not absolute, assurance that these objectives are met. The concept of reasonable assurance recognizes that the cost of internal controls should not exceed the benefits likely to be derived from their use and that such cost-benefit evaluation requires estimates and judgment by management. State statute and the Charter of the Government both require that an independent financial audit be conducted annually. The accounting firm of Dean Dorton Allen Ford, PLLC performed the audit for the fiscal year ended June 30, 2013. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Government for the fiscal year ended June 30, 2013 are free of material misstatements. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded that there was a reasonable basis for rendering an unmodified opinion that the Government’s financial statements for the fiscal year ended June 30, 2013, are fairly presented in conformity with GAAP. The report of the independent auditors is presented as the first component in the financial section of this report.
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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Additionally, the audit engagement also included an audit of federal grants meeting the requirements of federal grantor agencies, as outlined by the Federal Single Audit Act of 1984, the Single Audit Act Amendment of 1996, and the related OMB Circular A-133. These standards require the auditor to report not only on the fairness of the representation of the financial statement, but also on the internal controls and compliance with legal requirements of the federal awards. These reports will be available in the Government’s separately issued Single Audit Report. Profile of the Government (As of November 15, 2013) The Government is an urban county with the powers of both a city of the second class and a county created from the merger of the City of Lexington and the County of Fayette in 1974. The Government operates pursuant to Chapter 67A of the Kentucky Revised Statutes. The Government operates under a Mayor-Council form of government, where executive and administrative functions are vested with the Mayor, and legislative authority is vested with the Urban County Council. The Mayor is the chief executive officer and is elected to a four-year term. The Urban County Council has 15 members, including 12 members elected from districts, who serve two-year terms, and three at-large members who serve four-year terms. The Vice-Mayor is the at-large member who receives the most votes in the general election. The Mayor is assisted in the administration of the Government by two senior advisors, a Chief Administration Officer (CAO) and seven Department Commissioners. The senior advisors, CAO, and Commissioners are appointed by the Mayor with the approval of the Urban County Council. This senior leadership team is responsible for administering programs and implementing policies. Each department is divided into divisions that are managed by division directors who are civil service employees. The CAO is charged with the responsibility of providing supervision, direction and management to the seven Departments of the Urban County Government. The seven Departments of the Government are: Environmental Quality and Public Works; Finance; General Services; Law; Planning, Preservation, and Development; Public Safety; and Social Services. The CAO ensures that policies established by the Mayor, Urban County Council and Charter are followed and develops programs to meet current and future organizational and community needs. Additionally, the Offices of Risk Management, Computer Services, Government Communications, Enterprise Solutions, and Grants and Special Programs report to the CAO. The CAO is charged with providing leadership to all of government in technology and communications. The Office includes the Division of Computer Services and the Division of Government Communications. Computer Services provides mainframe and microcomputer support, database development and information services to the Government and some outside agencies. Government Communications prepares and distributes information about the city in a variety of ways including LexCall (a one-stop call for city hall services), GTV3 (the city’s cable television station) and the city’s website. The Department of Environmental Quality and Public Works was first established as part of the July 1, 2007, reorganization and includes the Divisions of Environmental Policy, Water Quality, Waste Management, Engineering, Streets and Roads, and Traffic Engineering. The Department consolidates environmental functions together under one umbrella, allowing the Government to take a more streamlined, focused and effective approach to protecting the environment. The Department of Finance includes the Divisions of Accounting, Central Purchasing, Revenue and Budgeting. This Department is responsible for the custody, investment and disbursement of all funds; debt management; retirement fund administration; coordination of the annual financial audit; and publication of the CAFR. The Division of Budgeting works with the Mayor and other executive leadership to prepare the annual operating budget and the Capital Improvement Plan that the Mayor recommends to the Urban County Council each year, coordinates with the Urban County Council as they review the Mayor’s recommendations and ultimately authorize revenue and expenditure levels for the Government for the fiscal year. The Division also monitors the spending of the various Departments throughout the fiscal year and ensures all units stay within the expenditure levels adopted by the Urban County Council.
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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The Department of General Services includes the Divisions of Facilities and Fleet Management and Parks and Recreation. The Division of Fleet and Facilities Management handles the acquisition, maintenance and repair of more than 1500 vehicles and pieces of equipment owned by the Government. Additionally it maintains the city’s primary buildings and performs minor renovations. The Government’s real estate holdings comprise approximately 4 million square feet of space under roof. The Division of Parks and Recreation operates 103 parks consisting of more than 4,500 acres with green space areas, 5 golf courses, 6 community centers and 7 aquatic facilities. In addition, the Commissioner’s Office oversees the management of the Government’s telephone system and utilities. The Department of Law provides legal services for the Government. The Corporate Counsel Division prepares all legal instruments of the Government and provides advice to its elected officials, employees and agencies. The Litigation Division represents the Government in civil cases and administrative hearings and coordinates representation of cases handled by outside attorneys. Claims management, insurance procurement and administration of the self insurance fund are also handled in the Department of Law. The Commissioner also oversees the Division of Human Resources, which manages all hiring of employees and benefits administration. The Department of Planning, Preservation and Development centralizes the different functions involved in the urban planning and development process and consists of these organizations: Division of Planning, Division of Historic Preservation and Purchase of Development Rights. The Department of Public Safety is the largest in the Government. It includes the Divisions of Community Corrections, Police, Fire and Emergency Services, Emergency Management, Enhanced 911, Code Enforcement, and Building Inspection. Readers should be familiar with the services provided by Corrections, Police and Fire, but may not be as familiar with the other Divisions, which provide a variety of services including emergency communications and management, disaster preparedness, inspections of properties for code violations and nuisance abatement. The Department of Social Services provides services to Fayette County residents by helping families become self sufficient, offering specialized programs to help Lexington youth and providing financial and social services to eligible senior citizens in the community. The Divisions in this Department include Adult Services, Family Services and Youth Services. Other programs in the Department include Aging Services and management of the Cardinal Valley Center, which works to bridge cultural gaps among neighbors. Significant Events (as of November 15, 2013) Infrastructure Highlights The project to renovate and restore the Main Street Annex Parking Garage was completed on schedule and under
budget. The garage re-opened on May 6 and has been named the Helix Garage because of its distinctive circular exit ramp. Features of the Helix Garage are an upgraded lighting system, new entry and exit system using recyclable tokens rather than paper tickets, and a real time display of open parking space counts at the entrances.
Installation of a Police radio system compliant with current FCC requirements was completed in FY2013. The new equipment improves coverage throughout Fayette County and will allow all Government Public Safety divisions to be on one system by FY2015.
The Government began the systematic resurfacing of approximately 57 miles of roadway in Fayette County in FY2013. Work is expected to be completed in the coming year.
In August, the Urban County Council unanimously approved the construction of a new senior citizens’ center in Idle Hour Park on land already owned by the Government. Planning is underway and construction is expected to begin in FY2014. The facility could be open within two years.
Bluegrass Economic Advancement Movement In a new approach to economic development, the mayors of Lexington and Louisville partnered with the Brookings Institute to pursue a regional approach to boosting central Kentucky’s advanced manufacturing sector. Called the Bluegrass Economic Advancement Movement, or BEAM, the initiative has recently received approval for a plan from
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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its board, which includes leaders of the state’s largest manufacturers and research universities. The plan largely focuses on efforts to increase exports, workforce development and innovation. While the full plan will be introduced in the fall of 2013, elements are already underway. Health Center and Pharmacy The Samuel Brown Health Center and City Employee Pharmacy have completed their first full year of operations. Response has been positive and Health Center and Pharmacy employees have actively sought to participate in departmental meetings and after-hours town hall sessions to ensure that eligible members are informed of the services offered. The Health Center and Pharmacy have delivered significant savings to both the Government and it’s employees. During FY2013 some occupational health services were transferred to the Health Center which has resulted in additional savings for the Government. Consent Decree The Government is required to reduce sanitary sewer overflows (SSOs) as part of its court ordered settlement with the United States Department of Justice, the United States Environmental Protection Agency and the Commonwealth of Kentucky’s Energy and Environmental Protection Cabinet (the “Consent Decree”). The Consent Decree requires Lexington to address structural, operational, and procedural issues within its storm and sanitary sewer systems in accordance with the schedule developed jointly with the United States Environmental Protection Agency. To date Lexington has met every Consent Decree deadline and has not been assessed any stipulated penalties. In FY2013 the Remedial Measures Plan (RMP) for Group 3 was completed and submitted to the United States Environmental Protection Agency. The RMP is the master plan for over 80 capital improvement projects intended to rehabilitate the sanitary sewer system to prevent recurring SSOs/unpermitted bypasses. The cost estimate for the RMP projects is $591 million, and the Government must complete these projects over the next 11-13 years. In FY2013 engineering firms were retained and work began on six new RMP projects with construction to follow in FY2014. Also in FY2013 construction of the Expansion Area 2A and Wolf Run Force Mains and Pump Stations began. These are expected to be completed in FY2014. While RMP outlines structural changes required for Consent Decree compliance the Capacity, Management, Operations and Maintenance Plan (CMOM) is also a requirement of the Consent Decree. CMOM outlines the operational changes that must be undertaken. In FY2013 the Division of Water Quality completed thirteen required CMOM program elements. LEXserv Utility Billing Effective September 1, 2012 the Kentucky American Water Company made a corporate decision to discontinue their long standing service of billing for sewer, landfill, and water quality fees on the water bill. The Government entered into a four year agreement with Greater Cincinnati Water Works to furnish billing services and collection of these fees. The Government has conducted an aggressive campaign to encourage payment of fees by automatic debit (currently 16% of customers use this method). LEXserve is currently on track to calculate and assess penalty and interest charges beginning October 1, 2013. Strengthening Fiscal Management Introduction FY2013 continued to be a challenging year due to the dynamic and volatile nature of the economy. Like many American cities Lexington faced compressed revenue growth and continued to identify opportunities to operate more efficiently and effectively through prudent financial management. Local Economy The unemployment rate in Fayette County was 7.1% in June 2013, up from 6.5% in June 2012. The June 2013 rate is below the national and state rates which were 7.6% and 8.4% respectively. Employment as measured by a household survey, which is by place of residence, was 183,674 for the quarter ended December 31, 2012. The number of people employed as of December 31, 2011 was 179,578.
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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Budget Control and Financial Management The Mayor of the Government submits a proposed annual operating budget and a five-year capital improvement budget to the Urban County Council at least sixty days prior to the beginning of each fiscal year. The Urban County Council, upon receipt of the proposed budget, conducts a series of public hearings on the proposed budget. The Charter of the Government provides that the Urban County Council may amend the budget; however, the adopted budget shall provide for all expenditures required by law and for all debt service requirements. Other budgeting polices include that the budget must be balanced for each fund, and total available funds must equal or exceed total anticipated expenditures. The Urban County Council adopts a line-item budget ordinance and must approve all budget amendments moving money within the personnel category or from one category to another (personnel, operating, or capital). Budgetary control is maintained at the division level and is facilitated by the use of encumbrance accounting. As purchase orders are issued, corresponding amounts of divisional appropriations are reserved for later payment. Requests for disbursements which will result in an overrun of budgeted expenditures must be accompanied by a request for a budget amendment. The Government conducts monthly departmental budget reviews. Supplemental information on budget amendments, upcoming issues and long-term plans are discussed. These meetings, along with the standing Urban County Council Committee of Budget and Finance, give the Government the platform to discuss critical questions related to programs, policies and priorities in addition to the more routine aspects of governmental budget management. Police and Fire Pension Fund A large-scale reform of the Policemen’s and Firefighters’ Retirement Fund (the Fund) was completed in FY2013. The reform significantly reduced the Fund’s unfunded liability. Driving the reduction in the unfunded liability was a combination of higher payments by the Government in order to pay down the liability in thirty years and benefit changes for new, active and retired police and firefighters. The consensus-driven plan was approved with a 76% affirmative vote by active and retired public safety officers and was signed into law by the Governor of Kentucky. Long-Term Financial Policies Annually the Government adopts a Capital Improvement Plan prior to the completion of the annual operating budget. The development of the capital improvement plan budget is coordinated with the development of the operating budgets. Requests for capital projects are accompanied by estimates of project impact on annual operating costs and revenues. Additionally, multi-year forecasts of revenues and expenditures, including operating and capital expenditures, are prepared throughout the year to monitor the adequacy of funding resources and debt capacity. Cash Management and Investment Policy The Department of Finance is responsible for the custody, investment and disbursement of all funds of the Government in accordance with the procedures and standards adopted by the Urban County Council. It is the policy of the Government to invest funds in a manner that will provide the highest investment return with the maximum security of principal while meeting the daily cash flow demands of the Government. The Government’s investments are governed by State Statue (KRS 66.480) and an investment policy approved by the Urban County Council. In FY2013 all funds were invested in either obligations of the United States and its agencies and instrumentalities, mutual funds comprised of those securities, repurchase agreements, collateralized Certificates of Deposit or commercial paper. Awards and Acknowledgements For the 20th consecutive year, the Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the Government for its CAFR for the fiscal year ended June 30, 2012. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, the Government must publish an easily readable and efficiently organized CAFR whose contents conform to the program standards. The report must also satisfy generally accepted accounting principles and applicable legal requirements.
200 East Main Street • Lexington, KY 40507 • (859) 425-2255 • www.lexingtonky.gov HORSE CAPITAL OF THE WORLD
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A Certificate of Achievement is valid for the period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program requirement, and we are submitting it to the GFOA to determine our eligibility for another certificate. Preparation of this report could not have been accomplished without the professional, efficient and dedicated services of the staff of the Divisions of Accounting, Finance, Revenue and Budgeting. Further appreciation is extended to the Mayor, the members of the Urban County Council, Commissioners and Division Directors for their cooperation and support. Respectfully submitted,
William O’Mara, Commissioner Department Of Finance
Lexington-Fayette Urban County GovernmentOrganizational Chart
Internal Audit
Division of
Citizens’ Advocate
Council
Council Clerk
CouncilUrban County Government
Mayor
Lexington-Fayette County
Citizens
Urban County Government
Council
Chief of Staff
AdministrationCAO
Administration
Revised March 13, 2012
Public Safety
Department of
Building Inspection
Code Enforcement
Community Corrections
Emergency Management/
E 911
Fire & Emergency
Services
Police
Divisions of
Social Services
Department of
Adult Services
Family Services
Youth Services
Divisions of
Chief Development Officer
Administration
Economic Development
Office of
Risk Management
Computer Services
Government Communications
Enterprise Solutions
Divisions of
Environmental Quality &
Public Works
Department of
Environmental Policy
Waste Management
Water Quality
Engineering
Streets & Roads
Traffic Engineering
Divisions of
General Services
Department of
Facilities & Fleet
Management
Parks & Recreation
Divisions of
FinanceDepartment of
Accounting
Purchasing
Revenue
Budgeting
Payroll
Divisions of
LawDepartment of
Corporate Counsel
Litigation
Claims Management
Human Resources
Divisions of
Grants & Special Programs
Division of
Divisions of
Planning, Preservation and
Development
Department of
Historic Preservation
Planning
Purchase of Development
Rights
Divisions of
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DIRECTORY OF GOVERNMENTAL OFFICIALS Council Office Stacey Maynard, Council Administrator Citizens' Advocate Office Penny McFadden, Citizen’s Advocate Council Clerk's Office Susan Lamb, Council Clerk Office of the Mayor Jim Gray, Mayor Chief Development Officer Kevin Atkins Internal Audit Bruce Sahli, Director Office of the Chief Administrative Officer Sally Hamilton, Chief Administrative Officer Grants and Special Programs Irene Gooding, Director Risk Management Patrick R. Johnston, Director Computer Services Mike Nugent, Director Enterprise Solutions Chad Cottle, Director Government Communications Vacant Planning, Preservation, and Development Derek Paulsen, Commissioner Planning Chris King, Director Purchase of Development Rights Billy Van Pelt, Program Manager Historic Preservation Bettie L. Kerr, Director Finance William O'Mara, Commissioner Accounting and Payroll Phyllis Cooper, Director Purchasing Todd Slatin, Director Revenue Vacant Budgeting Melissa Lueker, (Acting) Director Environmental Quality and Public Works Richard Moloney, Commissioner Engineering Brad Frazier, Director Environmental Policy Susan Bush, Director Water Quality Charles H. Martin, Director Waste Management Steve Feese, Director Streets and Roads Albert Miller, (Acting) Director Traffic Engineering Jim Woods, (Acting) Director Law Janet Graham, Commissioner Corporate Counsel Keith Horn Litigation Vacant Human Resources John Maxwell, Director Claims Management Tom Sweeney Public Safety Clay Mason, Commissioner Building Inspection Dewey Crowe, Director Code Enforcement David Jarvis, Director Community Corrections Rodney Ballard, Director Division of Emergency Management/E911 Patricia Dugger, Director of Emergency Management Division of Emergency Management/E911 David Lucas, Director of Enhanced 911 Fire and Emergency Services Keith Jackson, Chief Police Ronnie Bastin, Chief Social Services Beth Mills, Commissioner Adult Services Connie Godfrey, Director Family Services Joanna Rodes, Director Youth Services Stephanie Hong, Director General Services Geoff Reed, Commissioner Facilities and Fleet Management Jamshid Baradaran, Director Parks and Recreation Jerry Hancock, Director
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MANAGEMENT’S DISCUSSION AND ANALYSIS The Management’s Discussion and Analysis of Lexington-Fayette Urban County Government’s Comprehensive Annual Financial Report (CAFR) presents a discussion and analysis of the Government’s financial performance for the fiscal year ended June 30, 2013. It is supplementary information required by the Governmental Accounting Standards Board (GASB) and is intended to provide a readable explanation of the information within the basic financial statements. It should be read in conjunction with the Letter of Transmittal (which can be found preceding this narrative on page 3) and the financial statements immediately following the analysis. FINANCIAL HIGHLIGHTS – PRIMARY GOVERNMENT Government–Wide Highlights The assets of the Primary Government exceeded its liabilities at the close of the fiscal year by $1.12 billion (net position).
Total assets of the Primary Government exceeded total liabilities by approximately $1,120.89 million at the close of fiscal year 2013. This amount includes a deficit of approximately $67.05 million in unrestricted net assets.
The Government adopted GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflow of Resources and Net Position. The Statements of Net Position, previously referred to as the Statements of Net Assets, now reflect interest rate caps as deferred outflows and deferred inflows of resources for reporting the Government’s discretely presented Component Units. The adoption of GASB Statement No. 63 had no financial impact on the net position of the Government.
GASB Statement No. 65, Items Previously Reported as Assets and Liabilities was early implemented during fiscal year 2013. The accounting for bond issuance costs has been changed from deferring the costs and amortizing them over the lives of the related bonds to expensing them in the year incurred. The change in accounting for bond issuance costs resulted in a decrease of net position in the amount of $2.1 million.
Governmental Activities’ net position was $809.95 million at the end of fiscal year 2013. Of this amount, $877.69 million was invested in capital assets, net of related debt. The investments in capital assets, net of related debt comprises 108.4% of total net position.
Business-Type Activities held a balance of $310.94 million in net position. The unrestricted fund
balance at June 30, 2013 is $27.43 million, or 40.5% of Business-Type Activity expenses.
Fund Highlights
As of June 30, 2013, the Government’s governmental funds reported combined ending fund balances of $120.69 million, an increase of $22.23 million compared to the previous fiscal year. Of this total amount, $66.22 million is restricted for various projects: public works, public safety, capital projects, grants, urban services, and energy improvements.
The General Fund, the primary operating fund of the Government, held an unassigned fund balance of
$4.31 million or 1.5% of General Fund expenditures. There are two categories of committed fund balance; general government and economic stabilization. Committed funds represent amounts restricted for use by the highest level of governing authority, an ordinance passed by the Urban County Council. The total committed fund balance is $29.90 million. The committed fund balance designation for economic stabilization held a balance of $23.29 million, available for spending in the event of an economic downturn or unforeseen event. There are two categories of assigned fund balance; general government and capital projects. Assignments for general government and capital
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projects represent planning for various projects. These assignments total $18.39 million for fiscal year 2013.
OVERVIEW OF THE FINANCIAL STATEMENTS Three key elements comprise the basic financial statements, including:
A) Government-Wide Financial Statements; B) Fund Financial Statements, and; C) Notes to the Financial Statements
A. Government-Wide Financial Statements The Government-Wide Financial Statements are designed to provide readers with a broad overview of the Government’s finances in a manner similar to a private-sector business. These statements report financial information about the entire Government, except for fiduciary activities and provide both short-term and long-term information about the Government’s financial position, and assist in the assessment of the Government’s economic condition at the end of the fiscal year. The statements are prepared using the flow of economic resources measurement focus and the accrual basis of accounting. They take into account all revenues and expenses of the fiscal year regardless of when cash is received or paid. The Government-Wide Financial Statements include two statements: The Statement of Net Position and the Statement of Activities. The Statement of Net Position reflects the financial position of the Government at fiscal year ended June 30, 2013. Accordingly, the Government’s net position, the difference between assets (what the citizens own) and liabilities (what the citizens owe) are one way to determine the financial condition of the Government. Over time, increases or decreases in net position are one indicator of whether the financial health of the Government is improving or deteriorating. However, additional factors such as changes in the Government’s revenue structure, its tax base, and its level of assets held, should be considered in order to assess thoroughly the overall financial condition of the Government. The Statement of Activities reflects the Government’s revenues and expenses, as well as other transactions that increase or decrease net position. Program revenues are offset by program expenses in order to provide better information regarding program costs financed by general government revenues. The Government-Wide Financial Statements divide the Government’s activities into three types:
1. Governmental Activities – The activities in this section are mostly supported by taxes and intergovernmental revenues (federal grants), namely occupational license fees, property taxes, and service charges. Most services normally associated with local government fall into this category, including police, fire, solid waste, parks and general administration. Internal Service Fund balances are reported as part of Governmental Activities.
2. Business-Type Activities – These activities normally are intended to recover all or a significant portion
of costs through user fees and charges to external users of goods and services provided by the Government. The Business-Type Activities of the Government include the operations of various Enterprise Funds, including sanitary sewer services, landfill and disposal costs, and leases and operating costs for public facilities related to debt issues.
3. Discretely Presented Component Units – The Government includes eight separate legal entities in its
reports. Although legally separate and possessing independent qualities, the Government maintains financial accountability for these entities.
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B. Fund Financial Statements A fund is a grouping of related accounts used to maintain control over resources that have been segregated for specific activities or objectives. The Fund Financial Statements report the operations of the Government in greater detail than the Government-Wide Financial Statements by providing information about the Government’s most significant funds. Local ordinance or bond covenants may require the creation of some funds; others may be created at the discretion of the Administration for management and fiscal control of financial resources. All funds of the Government can be divided into three types of funds: Governmental Funds, Proprietary Funds, and Fiduciary Funds.
1. Governmental funds – Governmental funds are used to account for essentially the same functions reported as Governmental Activities in the Government-Wide Financial Statements. However, unlike the Government-Wide Financial Statements, governmental fund financial statements focus on near-term inflows and outflows of expendable resources, as well as on balances of expendable resources available at the end of the fiscal year. Most of the basic services performed by the Government are reported in the governmental funds category. These funds are reported using the modified accrual basis of accounting, which measures cash and all other financial assets that can be readily converted to cash. Because the focus of governmental funds is narrower than that of the Government-Wide Financial Statements, it is useful to compare the information presented for governmental funds with similar information presented for Governmental Activities in the Government-Wide Financial Statements. By doing so, readers may better understand the long-term impact of the Government’s near term funding decisions. The governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and Governmental Activities.
2. Proprietary funds – When the Government charges a fee for services which is intended to cover the
cost of providing those services – whether to outside customers or to other units of the Government – those services are generally reported in the proprietary funds category. The subcategories of the proprietary funds include enterprise funds and internal service funds.
Enterprise funds are used to report the same functions presented as Business-Type Activities in the Government-Wide Financial Statements. Internal service funds are used to accumulate and allocate costs internally among the various functions of the Government. The Government uses internal service funds to account for its health, general liability, auto, property and worker’s compensation self-insurance. These services predominantly benefit Governmental Activities rather than Business-Type Activities; hence, they have been included with Governmental Activities in the Government-Wide Financial Statements. The proprietary funds are reported in the same way that all activities are reported in the Government-Wide Financial Statements but the fund statements provide more detail. The Government considers the Sanitary Sewer Fund, the Public Facilities Corporation Fund, the Landfill Fund, and the Water Quality Fund as its major proprietary funds.
3. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties
outside the Government. Fiduciary funds are not reflected in the Government-Wide Financial Statements because the resources of those funds are not available to support the programs of the Government. The accounting used for the fiduciary funds is similar to that used for proprietary funds. The Government is trustee, or fiduciary, for two employees’ pension funds, the City Employees’ Pension Fund and the Policemen’s and Firefighters’ Retirement Fund.
18
C. Notes to the Financial Statements The notes to the financial statements provide information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. They are an integral part of the financial statements and focus on the primary government and its activities. GOVERNMENT-WIDE FINANCIAL ANALYSIS Analysis of Net Position Net position may serve as a useful indicator of a government’s financial position. In Table 1 below, the Government’s combined net position (Governmental and Business-Type Activities) totaled $1.12 billion as of June 30, 2013, a decrease of $3.45 million from the previous year. Total depreciation expense government wide was $60.52 million. The largest proportion of the Government’s net position, $1.10 billion, is invested in capital assets (e.g. land, infrastructures, buildings and improvements, and machinery and equipment), minus any related debt, which is still outstanding and used to acquire those assets. The Government uses these capital assets to provide services to its citizens. As such, these assets are not available for future spending.
RestatedFY 2013 FY 2012 Change
ASSETSCurrent and other assets $351,316 $312,328 $38,988Capital assets 1,371,678 1,403,130 (31,452)
Total assets 1,722,994 1,715,458 7,536
LIABILITIESCurrent and other liabilities 70,142 53,237 16,905Long-term liabilities 531,966 537,884 (5,918)
Total liabilities 602,108 591,121 10,987
NET POSITIONInvested in capital assets 1,095,005 1,116,784 (21,779)
net of related debtRestricted for:
Capital Projects 69,034 57,996 11,038Energy Improvement Projects 419 419Debt Service 8,772 9,610 (838)Capital Replacement 2,338 2,479 (141)Water Quality Incentive Program 4,031 4,031Grants 1,262 1,262 0Maintenance and Operations 7,235 6,655 580
Unrestricted (67,209) (70,449) 3,240
Total net position $1,120,887 $1,124,337 ($3,450)
Table 1Lexington-Fayette Urban County Government
Summary of Net PositionFor Years As Stated
(in thousands)
Total Net Position
19
Approximately $92.93 million, or 8.3% of total net position, is subject to external restrictions regarding its use. Restricted amounts within Governmental Activities include fund balances of the general fund, the urban services fund and various special revenue funds. Please refer to the fund analysis beginning on page 24 for more information. Table 2 indicates that the net position of Governmental Activities totaled $809.95 million, or 63.6% of total assets, a decrease of $9.43 million from the previous year. Of this total, $877.69 million is invested in capital assets (e.g. land, infrastructures, buildings and improvements, and machinery and equipment), minus any related debt, which is still outstanding and used to acquire those assets.
Restated
FY 2013 FY 2012 Change
ASSETS
Current and other assets $229,763 $194,548 $35,215
Capital assets 1,043,357 1,069,069 (25,712)
Total assets 1,273,120 1,263,617 9,503
LIABILITIES
Current and other liabilities 57,898 44,562 13,336
Long-term liabilities 405,274 399,679 5,595
Total liabilities 463,172 444,241 18,931
NET POSITION
Invested in capital assets
net of related debt 877,691 899,350 (21,659)
Restricted for:
Capital Projects 25,215 19,027 6,188
Energy Improvement Projects 419 419
Grants 1,262 1,262 0
Unrestricted (94,638) (100,263) 5,625
Total net position $809,949 $819,376 ($9,427)
Table 2
Lexington-Fayette Urban County Government
Summary of Net Position
For Years as Stated
(in thousands)
Governmental Activities
Table 3 shows the net position of Business-Type Activities totaled $310.94 million at the end of fiscal year 2013, an increase of $5.98 million from the previous fiscal year. Of total net position, $217.31 million, or 69.9%, is invested in capital assets, minus related debt which is still outstanding and used to acquire those assets. The Government uses these capital assets in the same way as the capital assets held by Governmental Activities.
20
Restated
FY 2013 FY 2012 Change
ASSETS
Current and other assets $121,552 $117,779 $3,773
Capital assets 328,321 334,061 (5,740)
Total assets 449,873 451,840 (1,967)
LIABILITIES
Current and other liabilities 12,245 8,675 3,570
Long-term liabilities 126,691 138,204 (11,513)
Total liabilities 138,936 146,879 (7,943)
NET POSITION
Invested in capital assets
net of related debt 217,313 217,434 (121)
Restricted for:
Capital Projects 43,819 38,969 4,850
Debt Service 8,772 9,610 (838)
Capital Replacement 2,338 2,479 (141)
Water Quality Incentive Program 4,031 4,031
Maintenance and Operations 7,235 6,655 580
Unrestricted 27,429 29,814 (2,385)
Total net position $310,937 $304,961 $5,976
Table 3
Lexington-Fayette Urban County Government
Summary of Net Position
For Years as Stated
(in thousands)
Business-Type Activities
Governmental Activities As indicated in Chart 1, the Government funds its Governmental Activities from revenue received from four significant categories. A clear majority, 61%, of the Government’s revenue is provided through licenses and permits. This category includes fees placed on Employee Withholdings, Business Returns, Insurance Premiums, and Franchise Fees. Charges for Services were 20%, which was the second largest contributing category to governmental activity revenues. Revenues collected in this category include charges collected from the Detention Center, EMS charges, golf course collections, fees for building permits, and fees associated with parks and recreation programs. Property Taxes comprised 14% of governmental revenues just ahead of Federal and State grant funding which represents 5%. The remaining Other category represents miscellaneous revenues collected by the Government.
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Grants5%
Property Taxes14%
Charges for Services20%Licenses and Permits
61%
Other>1%
Chart 1
Distribution of Governmental Activity Revenues
As indicated by Table 4, revenues from Governmental Activities totaled $393.05 million, which was an increase of $10.45 million, or 2.7%, from the previous fiscal year. Licenses and permits totaled $238.92 million, representing 60.9 % of total revenues. As stated earlier, this category includes Employee Withholdings in the form of an occupational license fee (OLF). This fee is comprised of an assessment of 2.25% on the total wages received by individuals employed in Lexington-Fayette County and an assessment of 2.25% on the net profits of businesses operating in the Lexington-Fayette County area. Licenses and permits increased by $8.34 million, or 3.6% from the previous fiscal year. This is primarily due to increases in occupational license and franchise fees collected during the fiscal year of $7.25 million and $1.09 million, respectively. Property taxes increased slightly, $0.74 million from the previous fiscal year, up 1.4% which was due to an increase in property valuations. Charges for services increased by $5.61 million, or 7.6%, primarily due to a decrease in insurance subsidy requirements and an increase in premiums. As noted on Table 4, total expenses of Governmental Activities were $401.37 million; a decrease of $5.35 million from the previous fiscal year. This is primarily due to decreases in personnel and insurance expenditures of $20.13 million, offset by increases in capital and operating expenditures of $14.77 million. Business-Type Activities Also indicated on Table 4, revenues from Business-Type Activities increased $1.83 million from the previous fiscal year. This is primarily due to an increase in revenues collected for services provided by the Government. Total expenses of Business-Type Activities decreased when compared to FY2012, by $4.38 million. There were expense reductions in most categories, most notably Public Facilities, Public Parking, Landfill and Water Quality in the amounts of $1.61 million, $0.76 million, $1.17 million and $0.81 million respectively. The largest program among these activities is the Sanitary Sewer system, with expenses of $39.01 million during the fiscal year, representing 57.6% of all Business-Type Activities expenses.
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Restated Restated Restated
2013 2012 2013 2012 2013 2012
Revenues
Program Revenues:
Charges for Services $79,235 $73,623 $85,840 $82,757 $165,075 $156,380
Operating Grants and Contributions 13,066 14,139 13,066 14,139
Capital Grants and Contributions 6,273 8,316 6,273 8,316
General Revenues:
Property Taxes 53,597 52,861 53,597 52,861
Licenses and Permits 238,924 230,580 238,924 230,580
Grants and Unrestricted Contributions 2,176 2,172 2,176 2,172
Other General Revenues (226) 901 (215) 1,038 (441) 1,939
Total Revenues 393,045 382,592 85,625 83,795 478,670 466,387
Program Expenses
General Government 23,693 22,985 23,693 22,985
Administrative Services* 11,761 21,143 11,761 21,143
Health, Dental, Vision, Workers Comp,
General Insurance 25,007 26,211 25,007 26,211
Chief Development Officer 621 470 621 470
Finance 14,744 20,761 14,744 20,761
Environmental Quality & Public Works 83,879 80,706 83,879 80,706
Planning, Preservation, & Development* 3,767 3,767
Public Safety 14,666 13,042 14,666 13,042
Police 69,945 68,164 69,945 68,164
Fire and Emergency Services 62,781 66,413 62,781 66,413
Community Corrections 32,632 31,286 32,632 31,286
Social Services 10,195 9,781 10,195 9,781
General Services 10,899 10,042 10,899 10,042
Parks and Recreation 19,654 19,386 19,654 19,386
Law and Risk Management 4,006 3,497 4,006 3,497
Interest on Long-Term Debt 13,116 12,836 13,116 12,836
Sanitary Sewer System 39,014 38,832 39,014 38,832
Public Facilities 9,420 11,033 9,420 11,033
Public Parking 85 848 85 848
Landfill 4,100 5,272 4,100 5,272
Right of Way 284 299 284 299
Extended School Program 2,199 2,339 2,199 2,339
Prisoners' Account System 1,394 1,374 1,394 1,374
Enhanced 911 2,930 2,973 2,930 2,973
LexVan Program 11 29 11 29
Water Quality 8,309 9,120 8,309 9,120
Total Expenses 401,366 406,723 67,746 72,119 469,112 478,842
Increase (Decrease) in Net Position before (8,321) (24,131) 17,879 11,676 9,558 (12,455)
Transfers
Transfers (1,106) (347) (11,903) 347 (13,009) 0
Increase (Decrease) in Net Position (9,427) (24,478) 5,976 12,023 (3,451) (12,455)
Net Position, July 1 (as restated) 819,376 843,854 304,961 292,938 1,124,337 1,136,792
Net Position, June 30 $809,949 $819,376 $310,937 $304,961 $1,120,886 $1,124,337
*The following Divisional organizational changes took place in FY2013:
Historic Preservation, Planning and Purchase of Development Rights moved from Administrative Services to Planning, Preservation & Developm
TABLE 4
Lexington-Fayette Urban County Government
Summary of Statement of Activities
For Year as Stated
(in thousands)
Governmental Business-Type Total Primary
Activities Activities Government
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PERSONNEL COSTS During the year personnel related expenses for Police, Fire, and Community Corrections, which are covered by collective bargaining agreements, decreased approximately $30.35 million. This decrease is primarily due to a payment of $31 million to the Police and Firefighters’ Retirement Fund that was financed through the Government’s issuance of pension bonds and an additional contribution paid to the Retirement plan of $1.52 million in the prior fiscal year. Salary and wage costs, including benefits, for non-collective bargaining employees decreased 8.3%. See Chart 2 for more information on personnel costs for Governmental Activities during FY2013.
$-
$10,000,000.00
$20,000,000.00
$30,000,000.00
$40,000,000.00
$50,000,000.00
$60,000,000.00
Dol
lars
Chart 2Governmental Activities Personnel Costs with Benefits
Benefits
Salaries and Wages
Chart 3 displays the distribution of total costs by governmental activity.
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Percentof Total
Program
Chart 3Distribution of Governmental Activity Expenses
24
FUNDS OF THE LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT As discussed earlier, the Government uses fund accounting to ensure and demonstrate compliance with Generally Accepted Accounting Principles (GAAP) and other finance-related legal requirements. Governmental Funds The Government’s total governmental funds for the year ended June 30, 2013 reflect a combined ending fund balance of $120.69 million, an increase of $22.23 million from the previous fiscal year. The Government reports fund balance as nonspendable, restricted, committed, assigned, or unassigned (refer to Note 1 to the financial statements for detailed information on the fund balance classifications). The increase is primarily due to revenues in excess of expenditures of $7.06 million and other financing sources of $16.03 million. The Government had $4.31 million of unassigned fund balance available in the General Fund at June 30, 2013. Unassigned fund balance of the General Fund (the Government’s main operating fund) represents approximately 1.5% of total general fund expenditures for FY2013. At the end of FY2013, the fund balance held by the General Fund totaled $54.41 million, an increase of $10.15 million, or 22.9%, from the previous fiscal year. This was primarily due to revenues in excess of expenditures of $12.48 million, offset by other financing uses of $2.33 million. The Urban Services Fund is used to finance solid waste collection, streetlights, and street cleaning services for properties within designated property tax districts. At the end of the fiscal year, the Urban Services Fund held a total fund balance of $28.64 million, an increase of $5.87 million over the prior fiscal year. This increase is primarily due to revenues in excess of expenditures of $3.46 million and transfers of $2.42 million. Revenues of the Urban Services Fund remained stable compared to the prior fiscal year, increasing $0.01 million. Expenditures decreased $1.18 over the prior fiscal year. This was primarily due to a decrease in capital expenditures of $0.81 million. In addition, personnel and operating expenditures decreased by $0.26 million and $0.11 respectively. The Federal and State Grants Fund held a balance of $1.26 million for fiscal year ended June 30, 2013, stable when compared to the prior fiscal year. This fund balance represents grant revenues received, but not spent, that are restricted for specific activities. During FY2012, an outstanding loan receivable balance was paid in full. The funding will be used in the future for urban development projects. The Other Governmental Funds primarily relate to costs associated with various capital bond projects. During FY2013, $16.21 million was expended on these projects. Bonds in the amount of $14.73 million were issued to reimburse these expenditures and cover any additional costs associated with the projects. An additional issuance of $6.01 million partially refunded prior year bonds. For more details on long term debt, please see Note 3.D. to the financial statements. Proprietary Funds The Government’s proprietary fund statements provide the same type of information found in the Government-Wide Financial Statements, but in more detail. Total net position for the Government’s proprietary funds totaled $310.94 million as of June 30, 2013, an increase of $5.98 million from the prior fiscal year. The Sanitary Sewer Fund held total net position of $231.95 million, an increase of $13.92 million over the prior year. Revenues in excess of expenses primarily contributed to this increase. Of the total net position held by the Sanitary Sewer Fund, $60.69 million is restricted by bond covenants for maintenance, capital replacement and projects, and debt service. The Public Facilities Corporation (PFC) was created by the Government to act as an agency and instrumentality of the Government to finance and operate public projects. The net position of the Public Facilities Corporation was $27.45 million, a decrease of $3.06 million from the prior fiscal year. This is primarily due to operating expenses in excess of revenues of $1.00 million and non-operating expenses of $2.59 million.
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The Water Quality Fund was established to account for the revenues and expenses of developing and operating storm water related activities. The net position of the Water Quality Fund totaled $14.02 million, an increase of $4.09 million from the prior fiscal year. Revenues in excess of expenses primarily contributed to this increase. As of June 30, 2013, the total net position of the Landfill Fund held a balance of $28.06 million, an increase of $2.66 million from the prior fiscal year, a 10.5% increase. Revenues in excess of expenses primarily contributed to this increase. The other enterprise funds were established to account for the acquisition, operation and maintenance of the Government’s facilities and services which are entirely or predominantly self-supported by user charges or where the Government has decided that periodic determination of revenues earned, expenses incurred, and net income is appropriate for capital maintenance, public policy, management control, accountability and other purposes. As of June 30, 2013 the other enterprise funds held total net position of $9.13 million, a decrease of $11.64 million over the previous fiscal year. During FY2013, assets totaling $12.44 million were transferred from Public Parking Corporation (PPC) to the component unit Parking Authority of Lexington. The transfer agreement was established in the prior fiscal year. Public Parking Corporation (PPC), with a net position of $3.81 as of June 30, 2013, is now presented as a non major enterprise fund. In addition, the Water Quality Fund was established as a major enterprise fund and accordingly moved for appropriate presentation on the financial statements. Also, during FY2013, the Government transferred the LexVan Program to the Lexington Transit Authority, a component unit, with a net position of $223,981. GENERAL FUND BUDGETARY HIGHLIGHTS The General Fund is the primary operating fund of the Government. Over the course of the year, the Urban County Council revises the budget numerous times; thus, exercising one of the primary duties of the Urban County Council as guardian of the Government’s funds. Supplemental appropriations are approved to reflect actual beginning fund balances and to re-appropriate funds for capital projects. As the year progresses and actual revenue collections and budgetary experience is known, amendments are processed in order to reflect the actual results and revised expectations of future revenue and expenditures. For FY2013, General Fund revenues totaled $292.13 million, an increase of 3.0% from the previous fiscal year. Total revenues were $1.67 million above the final budgeted amount. This increase in actual revenue is the result of a continued rebound in the U.S. economy, which positively affects both employee withholdings and business returns. Revenues received for services provided were $2.62 million above the final budgeted amount. This is primarily due to detention center fees and excess fee collections of $1.93 million and $1.06 million respectively. General Fund expenditures of the Government totaled $279.65 million, a decrease of $20.83 million, or 6.9% over the previous fiscal year. Expenditures were $13.07 million below the final budgeted amount. Operating expenditures were $8.95 million below the final budgeted amount. Personnel expenditures, accounting for 64.4% of General Fund expenditures, were $4.29 million below the final budgeted amount. Divisions with collective bargaining agreements had personnel expenditures $3.86 million over the final budgeted amount. Personnel expenditures from these divisions account for 44.9% of the general fund expenditures. In addition, these expenditures decreased by $30.80 million when compared to the prior fiscal year. This is primarily due to the payment of $31 million to the Police and Firefighter’s Retirement Fund during FY2012. The increase was offset by personnel savings in the divisions covered by non-collective bargaining agreements of $8.15 million. Please see the Table 5 below for more details regarding the distribution of General Fund personnel cost and the changes from prior year.
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Departments 2013 2012 Change % Change
% General Fund
Expeditures
Non-Collective Bargaining Divisions
Administrative Services $5,678 $7,921 ($2,243) -28.3% 2.0%
Chief Development Officer 164 159 5 3.1% 0.1%
Department of Finance 4,333 4,706 (373) -7.9% 1.5%
Department of General Services 6,168 6,862 (694) -10.1% 2.2%
Department of Law 2,967 2,901 66 2.3% 1.1%
Department of Public Safety 6,437 7,223 (786) -10.9% 2.3%
Department of Social Services 4,901 4,943 (42) -0.8% 1.8%
Department of Environmental Quality & PW 5,315 5,713 (398) -7.0% 1.9%
Department of Planning, Preservation & Dev 2,497 2,497 0.9%
General Government 4,705 5,036 (331) -6.6% 1.7%
Parks and Recreation 11,357 11,999 (642) -5.4% 4.1%
Total Non-Collective Bargaining Divisions 54,522 57,463 (2,941) -5.1% 19.5%
Divisions with Collective Bargaining
Police 54,426 69,124 (14,698) -21.3% 19.5%
Community Corrections 20,909 21,627 (718) -3.3% 7.5%
Fire and Emergency Services 50,317 65,700 (15,383) -23.4% 18.0%
Total Collective Bargaining Divisions 125,652 156,451 (30,799) -19.7% 44.9%
Total Personnel Costs with Benefits $180,174 $213,914 ($33,740) -15.8% 64.4%
Table 5
Lexington-Fayette Urban County Government
Summary of General Fund Personnel Costs with Benefits
For Years Stated
(in Thousands)
CAPITAL ASSETS The Government’s capital assets totaled $1.37 billion as of June 30, 2013, details of which are in Note 3.B. of the financial statements. This investment includes land, buildings, equipment, park facilities, roads, bridges, and sewer systems. For Governmental Activities, the recorded capital investments, net of related debt totaled $877.69 million. Governmental Activities capital assets, net of related debt decreased by $21.66 million from the prior fiscal year. The capital assets, net of related debt of Business-Type Activities totaled $217.31 million, remaining stable compared to the previous fiscal year. This year’s major changes in capital assets included:
The decrease in infrastructure and sewer line assets of $23.69 million over the prior year was primarily responsible for the overall decrease in capital assets in the Governmental Activities. The decrease was primarily due to depreciation and transfers of $33.10 million, offset by capital additions of $0.70 million and completed capital projects of $8.72 million. Infrastructure includes roads, bridges, storm water, fiber optics, traffic signals and similar items. In addition, buildings, construction in progress, and vehicles, equipment and furniture assets decreased by $2.07 million, $3.24 million, and $4.24 million respectively, from the previous fiscal year. This was offset by an increase in developments in progress and purchase of development rights for $7.46 million and $2.10 million respectively.
Capital assets for Business-Type Activities decreased by $5.74 million. The decrease was primarily due to building assets, decreasing by $8.50 million. The decrease was due to depreciation of $4.29
27
million and transfers of $5.02 million, offset by additions and completed capital projects of $0.11 million and $0.70 million. Land and infrastructure and sewer lines also decreased by $7.59 million and $4.4 million. This was offset by increases in construction and developments in process of $9.96 million and $3.56 million respectively.
Infrastructure assets totaled $730.01 million in the Governmental Activities and $197.89 million in Business-Type Activities. The overall decrease from the previous year in infrastructure assets totaled $28.08 million. The decrease was primarily due to depreciation of $39.47 million and transfers of $0.22 million, offset by net additions of $11.61 million.
2013 2012 2013 2012 2013 2012
Land $59,354 $59,174 $41,525 $49,110 $100,879 $108,284
Purchase of Developmental Rights 72,187 70,087 72,187 70,087
Intangibles 4,975 5,790 883 956 5,858 6,746
Buildings 96,485 98,550 48,568 57,071 145,053 155,621
Vehicles, Equipment and Furniture 27,785 32,026 5,632 3,006 33,417 35,032
Land and Leasehold Improvements 10,748 12,158 11,560 12,881 22,308 25,039
Infrastructure and Sewer Lines/Plants 730,013 753,699 * 197,891 202,287 * 927,904 955,986
Construction in Progress 21,308 24,543 14,562 4,605 * 35,870 29,148
Developments in Progress 20,502 13,042 7,700 4,145 28,202 17,187
Total $1,043,357 $1,069,069 $328,321 $334,061 $1,371,678 $1,403,130
* Restated beginning balance due to prior period adjustment, see Note 2.D.
Governmental Activities Business-Type Activities Total Primary Government
TABLE 6
Lexington-Fayette Urban County Government
Summary of Capital Assets
For Years as Stated
(in thousands)
Additional information on the Government’s capital assets activity can be found in Note 3.B. to the financial statements beginning on page 73 of the report. DEBT ADMINISTRATION The Government began issuing General Obligation (GO) bonds in FY1999 because of changes in state law that had previously precluded this type of financing. Since GO bonds are backed by the full faith and credit of the Government, they carry a higher credit rating than other forms of debt and have lower interest rates. As a result, future debt issues on behalf of the Government will be GO debt unless such debt is secured by Enterprise Fund activities. Prior to the issuance of GO bonds, mortgage revenue bonds were issued through various public corporations in order to finance public projects. For mortgage revenue bonds, the Government enters into annual renewable lease agreements automatically with the corporations whereby lease payments from the Government, combined with revenues generated by the operation of the facilities, are sufficient to meet debt service obligations. The underlying security for the bond is the annual lease agreements and the underlying mortgages on the property. Revenue bonds, where only the revenues from the operation of the facilities are pledged as security for the bonds, are issued to finance improvements to the sanitary sewer system. At the end of FY2013, the Government had $429.18 million in bonds and notes outstanding; Governmental Activities’ debt decreased by $1.17 million and total debt decreased by $6.14 million. The decrease in debt for Governmental Activities resulted primarily from the issuance of GO bonds totaling $14.73 million, offset by
28
principal payments, bond refunding and amortized bond costs in the current fiscal year on outstanding debt of $15.90 million. The Business-Type Activities debt decreased $4.96 million due primarily to principal payments. Despite recent legal changes that provide for the issuance of GO debt, legal limits remain on the total amount of GO indebtedness that may be incurred. The Kentucky Constitution provides that the total principal amount of GO debt cannot exceed 10% of the value of taxable property in the county, or $2.80 billion. State law provides the same limitation as set forth in the constitution except that the limitation applies to “net indebtedness”, which excludes self-supporting obligations, revenue bonds, special assessment debt and non-tax supported debt issued prior to July 15, 1996 (the effective date of the previously discussed statutory change). The total amount of debt subject to the legal limitation is $194.41 million.
2013 2012 2013 2012 2013 2012
General Obligation Bonds, Notes, Leases $314,541 $315,715 $14,404 $14,767 $328,945 $330,482
Mortgage Revenue Bonds 54,831 56,709 54,831 $56,709
Revenue Bonds 45,400 48,121 45,400 $48,121
Total $314,541 $315,715 $114,635 $119,597 $429,176 $435,312
Governmental Business-Type Activities Total Primary Government
Summary of Outstanding Debt
For Years as Stated
(in thousands)
The Government maintains a general obligation bond rating of “Aa2” from Moody’s and “AA” from Standard & Poor’s. The revenue bonds of the sanitary sewer system have a bond rating of “Aa3” from Moody’s and “AA” from Standard & Poor’s. The rating of the Government’s lease revenue debt is “AA3” from Moody’s and “AA-” from Standard & Poor’s. The Government has not issued lease revenue debt since 1998 due to changes in state law that provided for the issuance of general obligation debt. Additional information regarding the Government’s long-term debt can be found in Note 3.D. to the financial statements beginning on page 76 of the report. NEXT YEAR’S BUDGET The Lexington-Fayette Urban County Government Fiscal Year 2014 Budget, for all funds combined, net of interfund transfers, is $525,341 million. Significant initiatives in the budget include:
A commitment of $103.33 million for storm sewer projects and programs as required by the U.S. Environmental Protection Agency Consent Decree.
GO bonds were approved as part of the FY2014 budget for $17.51 million. The bonds will fund projects for Purchase of Development Rights conservation easements, Public Safety, traffic signal upgrades, renovation and construction of Parks, Facilities and Fleet Management vehicle replacement and repairs, a new senior citizens center, and funding for the Arts and Entertainment District.
REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the Government’s finances. Questions concerning any of the information provided in this report or requests for additional information should be addressed to the Commissioner of Finance, 200 East Main Street, Lexington-Fayette Urban County Government, Lexington, Kentucky, 40507.
Governmental Activities
Business-Type Activities Total
Component Units
ASSETS Cash $64,084,079 $27,243,016 $91,327,095 $29,265,403 Investments 54,896,669 65,871,972 120,768,641 12,878,868 Receivables (net) 21,776,219 6,375,016 28,151,235 3,243,770 Due from Other Governments 5,599,526 5,599,526 1,313,722
Due from Fidicuciary Funds 279,833 279,833 Due from Component Units 718,884 718,884 82,000 Due from Primary Government 1,290,466 Other Current Assets 738,713 Inventories and Prepaid Expenses 1,796,562 108,884 1,905,446 849,819 Net Pension Asset 54,324,982 54,324,982 Restricted Assets:
Cash 7,817,827Receivables (net) 2,872,411Grants Receivable
Investments 26,286,522 21,953,584 48,240,106 23,286,080 Other 56,049
Pension Asset 768,005 Capital Assets: Non-depreciable 176,456,083 63,931,415 240,387,498 34,698,975 Depreciable (Net) 866,901,132 264,389,396 1,131,290,528 226,904,966
Other Assets 85,040
Total Assets $1,273,120,491 $449,873,283 $1,722,993,774 $346,152,114
DEFERRED OUTFLOWS OF RESOURCESFair Value of Interest Rate Caps $0 $0 $0 $18,738
LIABILITIES Accounts, Contracts Payable and Accrued Liabilities $20,256,817 $7,082,976 $27,339,793 $7,316,478 Interest Payable 3,792,897 597,784 4,390,681 29,423 Internal-Balances 671,610 (671,610) Due to Component Units 1,290,466 1,290,466 82,000
Due to Other Governments 908,899 908,899 Due to Primary Government 718,884 Unearned Revenue and Other 1,212,890 43,664 1,256,554 160,852 Claims Liabilities 29,764,197 29,764,197 Liabilities Payable from Restricted Assets: Accounts, Contracts and Retainage Payable 854,974 854,974 Bonds and Notes Payable 3,505,220 3,505,220 Interest Payable 831,646 831,646 1,191,000 Non-Current Liabilities: Due Within One Year: Bonds and Notes Payable 21,925,000 2,189,208 24,114,208 2,764,725 Compensated Absences 2,821,916 418,536 3,240,452 554,798 Landfill Closure and Postclosure Care Costs 435,251 435,251 Due in More Than One Year: Unearned Revenue and Other 4,141,931 658,381 4,800,312 714,294 Bonds and Notes Payable 292,616,343 108,940,449 401,556,792 91,640,369 Compensated Absences 17,334,625 895,420 18,230,045 827,617 Landfill Closure and Postclosure Care Costs 13,153,961 13,153,961
Unfunded Other Post Retirement Benefit Liability 64,980,406 64,980,406
Unfunded Pension Liability 1,453,739 1,453,739 Total Liabilities $463,171,736 $138,935,860 $602,107,596 $106,000,440
DEFERRED INFLOWS OF RESOURCESFair Value of Interest Rate Caps $0 $0 $0 $18,738
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF NET POSITION
June 30, 2013
Primary Government
30
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF NET POSITION
June 30, 2013
Governmental Activities
Business-Type Activities Total
Component Units
NET POSITION Investment in Capital Assets,
Net of Related Debt $877,691,469 $217,313,258 $1,095,004,727 $166,909,485Restricted for:
Governmental and Program Funds 255,446Capital Projects 25,214,697 43,818,826 69,033,523 1,000,330Energy Improvement Projects 418,610 418,610Debt Service 8,772,069 8,772,069 23,120,143Capital Replacement 2,337,730 2,337,730Pension 768,005Water Quality Incentive Program 4,031,475 4,031,475Grants 1,262,100 1,262,100Maintenance and Operations 7,234,703 7,234,703
Unrestricted (Deficit) (94,638,121) 27,429,362 (67,208,759) 48,098,265
Total Net Position $809,948,755 $310,937,423 $1,120,886,178 $240,151,674
Primary Government
The accompanying notes are an integral part of the financial statements.
31
Fu
nct
ion
/Pro
gram
Act
ivit
ies
Exp
ense
sC
har
ges
for
Ser
vice
sO
per
atin
g G
ran
ts
and
Con
trib
uti
ons
Cap
ital
Gra
nts
an
d C
ontr
ibu
tion
sG
over
nm
enta
l A
ctiv
itie
sB
usi
nes
s-T
ype
Act
ivit
ies
Tot
alC
omp
onen
t U
nit
s
Pri
mar
y G
over
nm
ent:
Gov
ernm
enta
l Act
ivit
ies:
Gen
eral
Gov
ernm
ent
$23,
692,
990
$23,
141,
015
$77,
709
$128
,260
($34
6,00
6)$0
($34
6,00
6)$0
Adm
inis
trat
ive
Ser
vice
s11
,761
,053
559,
050
1,34
1,45
437
,440
(9,8
23,1
09)
(9,8
23,1
09)
Hea
lth,
Den
tal,
and
Vis
ion
25,0
06,6
3425
,006
,634
C
hief
Dev
elop
men
t Off
icer
620,
665
450,
000
(170
,665
)(1
70,6
65)
Fin
ance
14,7
44,0
872,
413,
363
(12,
330,
724)
(12,
330,
724)
Env
iron
men
tal Q
uali
ty &
Pub
lic
Wor
ks83
,878
,537
2,75
7,40
52,
358,
032
3,85
6,19
8(7
4,90
6,90
2)(7
4,90
6,90
2)P
lann
ing,
Pre
serv
atio
n, &
Dev
elop
men
t3,
767,
295
240,
168
1,
917,
249
(1,6
09,8
78)
(1,6
09,8
78)
Pub
lic
Saf
ety
14,6
66,4
371,
857,
059
1,02
1,07
8(1
1,78
8,30
0)(1
1,78
8,30
0)P
olic
e69
,945
,322
1,94
2,29
73,
427,
166
274,
350
(64,
301,
509)
(64,
301,
509)
Fir
e an
d E
mer
genc
y S
ervi
ces
62,7
81,2
396,
952,
394
2,20
2,70
1(5
3,62
6,14
4)(5
3,62
6,14
4)C
omm
unit
y C
orre
ctio
ns32
,631
,937
8,28
6,56
555
,392
(24,
289,
980)
(24,
289,
980)
Soc
ial S
ervi
ces
10,1
94,7
451,
857,
123
2,13
0,80
450
,277
(6,1
56,5
41)
(6,1
56,5
41)
Gen
eral
Ser
vice
s10
,898
,533
28,8
27(1
0,86
9,70
6)(1
0,86
9,70
6)P
arks
and
Rec
reat
ion
19,6
53,6
774,
156,
325
1,42
28,
765
(15,
487,
165)
(15,
487,
165)
Law
and
Ris
k M
anag
emen
t4,
006,
240
36,9
44(3
,969
,296
)(3
,969
,296
)In
tere
st o
n L
ong-
Ter
m D
ebt
13,1
16,2
05(1
3,11
6,20
5)(1
3,11
6,20
5)T
otal
Gov
ern
men
tal A
ctiv
itie
s40
1,36
5,59
679
,235
,169
13,0
65,7
586,
272,
539
(302
,792
,130
)0
(302
,792
,130
)
Bus
ines
s-T
ype
Act
ivit
ies :
San
itar
y S
ewer
Sys
tem
39,0
14,0
1652
,927
,780
13,9
13,7
6413
,913
,764
Pub
lic
Fac
ilit
ies
9,41
9,88
65,
830,
285
(3,5
89,6
01)
(3,5
89,6
01)
Pub
lic
Par
king
84,8
664,
560
(80,
306)
(80,
306)
Lan
dfil
l4,
099,
770
6,84
5,32
92,
745,
559
2,74
5,55
9R
ight
of
Way
284,
470
392,
466
107,
996
107,
996
Ext
ende
d S
choo
l Pro
gram
2,19
8,55
52,
379,
751
181,
196
181,
196
Pri
sone
rs' A
ccou
nt S
yste
m1,
393,
543
1,61
9,62
622
6,08
322
6,08
3E
nhan
ced
911
2,93
0,37
93,
517,
634
587,
255
587,
255
Lex
Van
Pro
gram
10,6
6825
,738
15,0
7015
,070
Wat
er Q
uali
ty8,
308,
501
12,2
96,4
763,
987,
975
3,98
7,97
5
Tot
al B
usi
nes
s-T
ype
Act
ivit
ies
67,7
44,6
5485
,839
,645
00
018
,094
,991
18,0
94,9
91
Tot
al P
rim
ary
Gov
ernm
ent
$469
,110
,250
$165
,074
,814
$13,
065,
758
$6,2
72,5
39($
302,
792,
130)
$18,
094,
991
($28
4,69
7,13
9)
32
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
For
th
e Y
ear
En
ded
Ju
ne
30, 2
013
Net
(E
xpen
ses)
Rev
enu
e an
dC
han
ges
in N
et A
sset
s
Pro
gram
Rev
enu
esP
rim
ary
Gov
ern
men
t
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
Fu
nct
ion
/Pro
gram
Act
ivit
ies
Exp
ense
sC
har
ges
for
Ser
vice
sO
per
atin
g G
ran
ts
and
Con
trib
uti
ons
Cap
ital
Gra
nts
an
d C
ontr
ibu
tion
sG
over
nm
enta
l A
ctiv
itie
sB
usi
nes
s-T
ype
Act
ivit
ies
Tot
alC
omp
onen
t U
nit
s
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
For
th
e Y
ear
En
ded
Ju
ne
30, 2
013
Net
(E
xpen
ses)
Rev
enu
e an
dC
han
ges
in N
et A
sset
s
Pro
gram
Rev
enu
esP
rim
ary
Gov
ern
men
t
Com
pon
ent
Un
its:
Lex
ingt
on C
ente
r C
orpo
rati
on$1
8,66
2,16
4$1
4,55
4,86
5$8
48,0
00$3
,526
,938
$267
,639
Lex
ingt
on A
irpo
rt B
oard
21,0
94,5
3016
,625
,757
4,
295,
303
(173
,470
)F
ayet
te C
ount
y D
epar
tmen
t of
Hea
lth
15,6
66,7
674,
014,
861
5,75
0,81
0(5
,901
,096
)P
arki
ng A
utho
rity
of
Lex
ingt
on2,
327,
095
3,21
7,19
3
89
0,09
8N
onm
ajor
com
pone
nt u
nits
45,5
15,6
923,
915,
666
5,24
2,55
02,
241,
043
(34,
116,
433)
Tot
al C
omp
onen
t U
nit
s$1
03,2
66,2
48$4
2,32
8,34
2$1
1,84
1,36
0$1
0,06
3,28
4$0
$0$0
($39
,033
,262
)
Gen
eral
Rev
enu
es:
Pro
pert
y T
axes
$53,
597,
311
$0$5
3,59
7,31
1$4
5,50
4,01
5L
icen
ses
Fee
s -
Wag
es a
nd N
et P
rofi
ts T
axes
238,
924,
158
238,
924,
158
Gra
nts
and
Con
trib
utio
ns N
ot R
estr
icte
d to
Spe
cifi
c P
rogr
ams:
Com
mun
ity
Dev
elop
men
t Blo
ck G
rant
2,17
6,03
52,
176,
035
Inco
me
on I
nves
tmen
ts(5
09,8
90)
(215
,314
)(7
25,2
04)
(116
,267
)
Gai
n (L
oss)
on
Sal
e of
Cap
ital
Ass
ets
283,
406
283,
406
26,3
73M
isce
llan
eous
26
1,23
9D
ebt I
ssua
nce
Cos
ts(3
57,5
43)
Pay
men
t to
Lex
ingt
on-F
ayet
te U
rban
Cou
nty
Gov
ernm
ent
227,
560
Tra
nsfe
rs(9
47,1
84)
947,
184
T
otal
Gen
eral
Rev
enue
s an
d T
rans
fers
293,
523,
836
731,
870
294,
255,
706
45,5
45,3
77
Tra
nsfe
r of
Ass
ets
(To)
/ F
rom
Com
pone
nt U
nits
(159
,401
)(1
2,85
0,16
5)(1
3,00
9,56
6)13
,009
,566
293,
364,
435
(12,
118,
295)
281,
246,
140
58,5
54,9
43
Cha
nge
in N
et P
osit
ion
(9,4
27,6
95)
5,97
6,69
6(3
,450
,999
)19
,521
,681
Net
Pos
itio
n, B
egin
ning
820,
925,
201
304,
582,
552
1,12
5,50
7,75
322
2,88
0,71
8A
djus
tmen
t to
Ope
ning
Net
Pos
itio
n (N
ote
2.D
.)(1
,548
,751
)37
8,17
5(1
,170
,576
)(2
,250
,725
)N
et P
osit
ion,
Beg
inni
ng-R
esta
ted
819,
376,
450
304,
960,
727
1,12
4,33
7,17
722
0,62
9,99
3
Net
Pos
itio
n, E
ndin
g$8
09,9
48,7
55$3
10,9
37,4
23$1
,120
,886
,178
$240
,151
,674
33
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
GeneralUrban
ServicesFederal and State Grants
Other Governmental
Funds
Total Governmental
Funds
ASSETSCash $23,488,566 $8,991,589 $385,578 $6,350,159 $39,215,892Investments 24,962,988 21,328,405 8,605,276 54,896,669Receivables:
Loans 3,384,441 3,384,441License Fees 16,233,772 16,233,772Other 9,271,024 197,114 77,729 9,545,867Less Allowance for Uncollectible Amounts (4,341,956) (3,384,441) (7,726,397)
Due from Other Governments 5,599,526 5,599,526Due from Component Units 718,884 718,884Due from Fiduciary Funds 279,833 279,833Due from Other Funds 2,747,488 2,747,488Inventories and Prepaid Expenses 1,405,198 175 22,376 1,427,749Restricted Investments 901 27,920 26,257,701 26,286,522
Total Assets $72,019,210 $30,517,283 $6,013,024 $44,060,729 $152,610,246
LIABILITIES AND FUND BALANCESLiabilities:
Accounts and Contracts Payable $6,838,626 $962,958 $2,196,827 $3,873,084 $13,871,495Accrued Payroll & Related Liabilities 5,718,143 300,348 124,576 5,797 6,148,864Due to Other Funds 2,937,772 611,565 2,039,022 2,897,855 8,486,214Due to Other Governments 908,899 908,899Due to Component Units 1,290,466 1,290,466Unearned Revenue and Other 822,391 390,499 1,212,890Total Liabilities 17,607,398 1,874,871 4,750,924 7,685,635 31,918,828
Fund Balances:Nonspendable 1,405,198 175 22,376 1,427,749Restricted for:
9,032,953 9,032,9531,659,378 1,659,378
25,214,697 25,214,6971,262,100 1,262,100
28,631,854 28,631,854408,227 10,383 418,610
Committed for: General Government 6,612,684 6,612,684 Economic Stabilization 23,290,466 23,290,466
Assigned to: General Government 10,325,000 445,690 10,770,690
8,060,560 8,060,560Unassigned 4,309,677 4,309,677Total Fund Balances 54,411,812 28,642,412 1,262,100 36,375,094 120,691,418
Total Liabilities and Fund Balances $72,019,210 $30,517,283 $6,013,024 $44,060,729 $152,610,246
Capital Projects Grants Projects Urban Services
Capital Projects
Energy Improvement Projects
Public Safety
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTBALANCE SHEET
GOVERNMENTAL FUNDSJune 30, 2013
Public Works
The accompanying notes are an integral part of the financial statements.
34
Total Fund balances - Governmental Funds $120,691,418
Amounts reported for Governmental Activities in the Statement ofNet Position is different because:
Capital assets used in Governmental Activities are not financial resources and, therefore, are not reported in the funds.
Governmental capital assets 1,472,235,908Less accumulated depreciation (428,878,693) 1,043,357,215
The net pension asset is not an available resource and, therefore, is not reported in the funds. 54,324,982
Long-term liabilities, including bonds and notes payable, are not due and payablein the current period and, therefore, are not reported in the funds.
Bonds and notes payable (314,541,343)Unearned revenue and other (4,141,931)Interest payable (3,792,897)Compensated absences (20,156,541)Unfunded pension liability and other post retirement benefits (66,434,146) (409,066,858)
Internal service funds are used by management to charge the costs of insurance to individual funds. The assets and liabilities of the internal service funds are included in Governmental Activities in the Statement of Net Assets. 973,175
Internal balances due to non-governmental activities related to items listed above (331,177)
Net Position of Governmental Activities $809,948,755
RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDSTO THE STATEMENT OF NET POSITION
June 30, 2013
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT
The accompanying notes are an integral part of the financial statements.
35
GeneralUrban
ServicesFederal and State Grants
Other Governmental
Funds
Total Governmental
FundsREVENUES
License Fees and Permits $242,304,633 $1,350,665 $0 $0 $243,655,298Taxes 21,368,326 32,228,985 53,597,311Charges for Services 24,202,174 2,126,243 37,432 26,365,849Fines and Forfeitures 309,442 2,488 311,930Intergovernmental 1,978,891 64,877 21,514,334 8,807,389 32,365,491Exactions 532,410 532,410Property Sales 137,719 317,956 6,895 462,570Income on Investments (556,777) (19,070) 24,862 41,200 (509,785)Other 2,388,300 111,867 604,886 331,893 3,436,946
Total Revenues 292,132,708 36,184,011 22,144,082 9,757,219 360,218,020
EXPENDITURESCurrent:
General Government 3,460,430 2,052,315 134,662 5,647,407Administrative Services 8,112,087 738,892 1,519,993 10,370,972Chief Development Officer 163,743 450,000 613,743Finance 5,100,413 13,729 1,360 5,115,502Environmental Quality & Public Works 8,047,857 28,380,110 593,613 15,731 37,037,311Planning, Preservation, & Development 2,672,927 986,974 3,659,901Public Safety 12,479,722 887,516 106,489 13,473,727Police 62,496,329 3,376,450 690,337 66,563,116Fire and Emergency Services 59,227,409 2,090,036 61,317,445Community Corrections 31,005,597 53,673 31,059,270Social Services 6,566,634 1,656,030 8,222,664General Services 7,817,833 50,940 7,868,773Parks and Recreation 18,634,002 15,015 18,649,017Law 3,920,600 60,022 13,705 3,994,327Outside Agencies 17,121,904 3,138,192 20,260,096
Debt Service:Principal 16,887,264 749,806 217,930 17,855,000Interest 12,784,592 163,936 19,690 12,968,218Other Debt Service 76,340 64,182 140,522
Capital:Equipment 2,642,579 507,674 767,190 3,638,191 7,555,634Acquisitions and Construction 435,676 8,519 8,890,802 11,446,286 20,781,283
Total Expenditures 279,653,938 32,725,943 24,560,146 16,213,901 353,153,928
Excess (Deficiency) of RevenuesOver (Under) Expenditures 12,478,770 3,458,068 (2,416,064) (6,456,682) 7,064,092
OTHER FINANCING SOURCES (USES)Issuance of Debt 14,730,000 14,730,000Premium on Bonds 1,938,656 1,938,656Discount on Bonds (71,653) (71,653)Issuance of Refunding Debt, par 6,005,000 6,005,000Issuance of Refunding Debt, premium 442,299 442,299Payment to Refunded Debt Escrow Agent (6,416,028) (6,416,028)Transfers In 2,030,614 2,529,224 2,666,434 7,226,272Transfers Out (4,363,161) (113,054) (250,370) (3,096,110) (7,822,695)
Total Other Financing Sources (Uses) (2,332,547) 2,416,170 2,416,064 13,532,164 16,031,851
Net Change in Fund Balances 10,146,223 5,874,238 0 7,075,482 23,095,943
Fund Balances, Beginning 44,265,589 22,768,174 1,262,100 30,162,710 98,458,573Adjustment to Opening Fund Balance (Note 2.D.) (863,098) (863,098)
Fund Balances, Beginning - Restated 44,265,589 22,768,174 1,262,100 29,299,612 97,595,475
Fund Balances, Ending $54,411,812 $28,642,412 $1,262,100 $36,375,094 $120,691,418
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES
GOVERNMENTAL FUNDSFor the Year Ended June 30, 2013
The accompanying notes are an integral part of the financial statements.
36
Net change in fund balances - Governmental Funds $23,095,943
Amounts reported for Governmental Activities in the Statementof Activities are different because:
Governmental Funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is depreciated over their estimated useful lives.
Expenditure for capital assets 15,060,135Less current year depreciation (47,264,720) (32,204,585)
The net effect of various miscellaneous transactions involving capital assets(i.e. sales, trade-ins, and donations) is to decrease net position. (1,145,457)
Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds:
Exaction fees 7,637,848
Bond proceeds provide current financial resources to Governmental Funds, but issuing debt increases long-term liabilities in the Statement of Net Assets. Repayment of bond principal is an expenditure in the Governmental Funds, but the repayment reduces long-term liabilities in the Statement ofNet Position.
Issuance of debt (14,730,000)Issuance of refunding debt (6,005,000)Premium on bonds (1,938,656)Premium on refunding bonds (442,299)Discount on bonds 71,653Loss on refunding 671,028Principal payment to refunded bond escrow agent 5,745,000Principal payments 17,855,000 1,226,726
Some expenses in the Statement of Activities do not require the use ofcurrent financial resources and, therefore, are not reported as expenditures in the Governmental Funds.
Change in net pension asset (205,249)Amortization of current year bond (discounts) premiums (53,419)Change in unfunded pension liability 60,249Change in unfunded other post retirement benefit liability (8,017,550)Unearned revenue and other (771,939)Change in accrued interest payable (147,987)Change in compensated absences 1,097,725 (8,038,170)
Change in net assets of Governmental Activities ($9,427,695)
AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSTO THE STATEMENT OF ACTIVITIES
For the Year Ended June 30, 2013
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,
The accompanying notes are an integral part of the financial statements.
37
Variance withFinal Budget-Positive
Original Final Actual (Negative)REVENUES
Licenses and Permits:Employee Withholdings $162,000,000 $162,000,000 $162,487,723 $487,723Business Returns 32,970,000 32,970,000 31,936,132 (1,033,868)Insurance Premiums 23,280,000 23,280,000 25,684,002 2,404,002Bond Deposits 2,000 2,000 30,500 28,500Regulated License Fee 844,300 844,300 909,630 65,330Franchise Fee 21,164,224 21,169,624 17,876,171 (3,293,453)Bank Franchise Fee 1,327,000 1,327,000 1,350,665 23,665Vehicle License 185,000 185,000 199,594 14,594Deed Tax Fee 1,100,000 1,100,000 1,205,622 105,622Contractor Registration Fee 300,000 300,000 410,296 110,296Filing Fee - Planning & Zoning 122,000 122,000 130,526 8,526Animal License 43,400 43,400 44,832 1,432Certificates of Occupancy 10,000 10,000 10,870 870Hotel - Motel License Fee 23,000 23,000 28,070 5,070
Total Licenses and Permits 243,370,924 243,376,324 242,304,633 (1,071,691)
Taxes:Realty Taxes 17,898,000 18,035,000 17,911,311 (123,689)Personal Taxes 1,576,000 1,634,000 1,696,858 62,858PSC Taxes 736,000 782,000 873,670 91,670Property Tax Discount (331,000) (334,000) (342,389) (8,389)Property Tax Commission (828,000) (836,000) (861,056) (25,056)Delinquent - Realty & Personal 53,000 92,147 231,173 139,026Motor Vehicle Ad Valorem Tax 1,535,000 1,603,000 1,706,695 103,695County Clerk Com - Motor Vehicle (61,000) (64,000) (58,732) 5,268Supplementary Tax Bills 8,000 8,000 453 (7,547)Omitted Tax 77,000 210,343 210,343
Total Taxes 20,663,000 21,130,490 21,368,326 237,836
Charges for Services:Accident Report Sales 15,000 15,000 85,481 70,481Administrative Collection Fees 13,520 13,520 12,652 (868)Adult Probation Fees 150,000 150,000 84,788 (65,212)Animal Shelter Collections 20,000 20,000 18,475 (1,525)Building Permits 907,800 907,800 1,050,461 142,661Computer Services Fees 7,127 7,127Detention Center 5,681,950 5,681,950 7,609,144 1,927,194Developer Landscape Fees 5,500 5,500 1,950 (3,550)District Court Jail Fees 740,000 740,000 592,635 (147,365)Domestic Relations Collection 6,000 6,000 2,429 (3,571)EMS 6,800,000 6,800,000 6,749,363 (50,637)Excess Fees and Collections 2,300,000 2,300,000 3,359,336 1,059,336Golf Course Collections 3,108,094 3,108,094 2,713,755 (394,339)Park Land Acquisition 150,000 150,000 226,321 76,321Parks & Recreation Programs 1,091,760 1,091,760 1,045,811 (45,949)Rent or Lease Income 590,990 591,190 642,446 51,256
Total Charges for Services 21,580,614 21,580,814 24,202,174 2,621,360
Fines and Forfeitures 175,300 175,300 309,442 134,142
Intergovernmental 1,958,930 1,958,930 1,978,891 19,961
Property Sales 110,000 137,719 27,719
Investments 68,000 68,000 (556,777) (624,777)
Other Income:Contributions 180,343 189,147 8,804Other Income 14,000 25,264 11,264Penalties and Interest 1,620,000 1,620,000 1,323,323 (296,677)School Board Tax Fee 12,000 12,000 12,000 Tourist Commission Fee 173 173Miscellaneous 81,200 235,776 838,393 602,617
Total Other Income 1,713,200 2,062,119 2,388,300 326,181Total Revenues 289,529,968 290,461,977 292,132,708 1,670,731
continued
Budgeted Amounts
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGETARY COMPARISONGENERAL FUND
For the Year Ended June 30, 2013
The accompanying notes are an integral part of the financial statements.
38
Variance withFinal Budget-Positive
Original Final Actual (Negative)Budgeted Amounts
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGETARY COMPARISONGENERAL FUND
For the Year Ended June 30, 2013
EXPENDITURESGeneral Government:
Council Office 2,511,820 2,491,355 2,420,790 (70,565)Office of the Mayor 1,442,660 1,679,163 1,544,685 (134,478)Special Programs 719,545 673,289 658,485 (14,804)Board of Elections 669,330 669,330 581,076 (88,254)Clerk of the Urban County Council 464,039 457,903 411,252 (46,651)County Attorney 801,312 801,312 801,312 Coroner 657,660 657,660 705,376 47,716Property Valuation Administrator 335,400 335,400 335,400 Contingency 5,821,200 3,821,200 (3,821,200)Circuit Judges 327,680 327,680 327,976 296County Court Clerk 132,700 132,700 68,830 (63,870)Citizens' Advocate 38,670 38,670 30,381 (8,289)Commonwealth Attorney 154,325 154,325 134,967 (19,358)County Judge Executive 19,750 19,750 12,778 (6,972)Indirect Cost Allocation (4,917,000) (4,917,000) (4,556,578) 360,422
Total General Government 9,179,091 7,342,737 3,476,730 (3,866,007)
Administrative Services:Office of the Chief Administrative Officer 759,580 770,134 779,375 9,241Computer Services 5,347,861 5,226,056 4,537,705 (688,351)Enterprise Solutions 973,740 973,740 967,618 (6,122)Government Communications 831,855 831,855 762,513 (69,342)Grants & Special Projects 418,130 405,124 414,883 9,759Internal Audit Office 697,735 697,735 649,993 (47,742)
Total Administrative Services 9,028,901 8,904,644 8,112,087 (792,557)
Chief Development OfficerChief Development Officer 156,290 156,290 163,743 7,453
Total Chief Development Officer 156,290 156,290 163,743 7,453
Department of Finance:Accounting 1,360,070 1,360,070 1,296,635 (63,435)Office of Policy and Budget 487,310 487,310 428,386 (58,924)Central Purchasing 585,880 585,880 482,862 (103,018)Revenue 2,351,640 2,351,640 2,233,716 (117,924)Finance Administration 855,060 842,560 659,559 (183,001)
Total Finance 5,639,960 5,627,460 5,101,158 (526,302)
Division of Environmental Quality & Public Works:Environmental Quality & PW Admin 266,460 195,838 212,607 16,769Division of Environmental Policy 254,090 513,615 220,481 (293,134)Engineering 1,314,450 1,291,506 1,278,224 (13,282)Streets & Roads 4,485,260 3,984,719 2,716,714 (1,268,005)Traffic Engineering 3,524,450 3,635,201 3,675,724 40,523
Total Environmental Quality & Public Works 9,844,710 9,620,879 8,103,750 (1,517,129)
Department of Planning, Preservation, & Development:Planning, Preservation, & Dev 542,980 438,287 240,722 (197,565)Historic Preservation 382,500 397,187 393,879 (3,308)Planning 2,006,760 2,031,760 1,959,803 (71,957)Purchase of Development Rights 140,760 146,549 143,607 (2,942)
Total Planning, Preservation & Development 3,073,000 3,013,783 2,738,011 (275,772)
Department of Public Safety:Building Inspection 2,152,410 2,145,749 1,969,012 (176,737)Police 61,423,220 61,469,416 64,116,501 2,647,085Fire & Emergency Services 54,967,375 56,033,633 60,219,284 4,185,651Community Corrections 31,169,967 31,144,150 31,005,597 (138,553)Public Safety Administration 1,583,245 11,911,145 5,789,350 (6,121,795)Code Enforcement 1,839,985 1,839,985 1,605,008 (234,977)DEEM/Enhanced 911 3,525,534 3,482,177 3,116,352 (365,825)
Total Public Safety 156,661,736 168,026,255 167,821,104 (205,151)
Department of Social Services:Youth Services 2,141,575 1,951,635 1,791,989 (159,646)Family Services 2,442,820 2,503,913 2,299,605 (204,308)Adult Services 1,294,735 1,281,858 1,266,074 (15,784)Social Services Administration 1,185,615 1,271,587 1,208,966 (62,621)
Total Social Services 7,064,745 7,008,993 6,566,634 (442,359)continued
The accompanying notes are an integral part of the financial statements.
39
Variance withFinal Budget-Positive
Original Final Actual (Negative)Budgeted Amounts
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGETARY COMPARISONGENERAL FUND
For the Year Ended June 30, 2013
EXPENDITURES, continuedDepartment of General Services:
Parks and Recreation 19,776,009 19,633,338 18,831,780 (801,558)Fleet and Facilities Management 8,619,821 8,553,959 4,760,034 (3,793,925)General Services Administration 2,852,120 2,818,685 3,182,799 364,114
Total General Services 31,247,950 31,005,982 26,774,613 (4,231,369)
Department of Law:Human Resources 1,991,900 1,997,652 1,751,970 (245,682)Law 2,119,850 2,110,737 2,174,038 63,301
Total Law 4,111,750 4,108,389 3,926,008 (182,381)
Outside Agencies:Commerce Lexington 457,000 457,000 457,000 Downtown Arts Center 91,310 91,310 91,310 Downtown Lexington Corporation 42,710 42,710 42,710 Environmental Commission 2,910 2,910 1,256 (1,654)World Trade Center 110,000 110,000 110,000 Grants & Special Projects Agencies 387,032 387,032 387,032 Social Service Agencies 1,631,256 1,651,256 1,651,256 Lexington Public Library 13,385,240 13,746,810 13,746,810 Explorium of Lexington 169,000 169,000 169,000 Carnegie Literacy Center 54,300 54,300 54,300 Downtown Development Authority 211,230 261,230 261,230 Lyric Theatre 150,000 150,000 150,000
Total Outside Agencies 16,691,988 17,123,558 17,121,904 (1,654)
Debt Service:Principal 20,987,260 17,188,985 16,887,265 (301,720)
Interest 12,103,070 13,101,345 12,784,591 (316,754)
Other Debt Service 490,320 490,320 76,340 (413,980)
Total Debt Service 33,580,650 30,780,650 29,748,196 (1,032,454)
Total Expenditures 286,280,771 292,719,620 279,653,938 (13,065,682)
Excess (Deficiency) of Revenues Over (Under) Expenditures 3,249,197 (2,257,643) 12,478,770 14,736,413
OTHER FINANCING SOURCES (USES)Transfers In 250,000 2,712,239 2,030,614 (681,625)Transfers Out (4,328,124) (3,466,758) (4,363,161) (896,403)
Total Other Financing Sources (4,078,124) (754,519) (2,332,547) (1,578,028)
Net Change in Fund Balances (828,927) (3,012,162) 10,146,223 13,158,385
Fund Balance, Beginning 1,500,000 1,500,000 44,265,589 42,765,589
Fund Balance, Ending $671,073 ($1,512,162) $54,411,812 $55,923,974
The accompanying notes are an integral part of the financial statements.
40
Variance withFinal Budget-Positive
Original Final Actual (Negative)REVENUES
Licenses and Permits:Bank Franchise Fee $1,327,000 $1,327,000 $1,350,665 $23,665
Total Licenses and Permits 1,327,000 1,327,000 1,350,665 23,665
Taxes:Realty Taxes 32,305,000 32,649,000 32,501,969 (147,031)PSC Taxes 216,000 216,000 283,884 67,884Property Tax Discount (549,000) (555,000) (569,134) (14,134)Property Tax Commission (350,000) (350,000) (350,000) Delinquent - Realty & Personal 6,000 6,000 361,322 355,322Supplementary Tax Bills 10,000 10,000 944 (9,056)
Total Taxes 31,638,000 31,976,000 32,228,985 252,985
Charges for Services:Rent or Lease Income 2,500 2,500 3,000 500Commodities 1,915,400 1,915,400 2,112,843 197,443Dumpster Permit Fees 6,250 6,250 10,400 4,150
Total Charges for Services 1,924,150 1,924,150 2,126,243 202,093
Property Sales 317,956 317,956
Fines and Forfeitures 1,400 1,400 2,488 1,088
Intergovernmental 84,250 84,250 64,877 (19,373)
Investments (19,070) (19,070)
Other Income:Penalties and Interest 103,200 103,200 95,420 (7,780)Miscellaneous 12,585 16,447 3,862
Total Other Income 103,200 115,785 111,867 (3,918)Total Revenues 35,078,000 35,428,585 36,184,011 755,426
EXPENDITURESGeneral Government:
Contingency 236,100 236,100 (236,100)Indirect Cost Allocation 2,224,000 2,224,000 2,052,315 (171,685)
Total General Government 2,460,100 2,460,100 2,052,315 (407,785)
Administrative Services:Office of the Chief Administrative Officer 32,240 32,240 32,664 424Computer Services 141,260 126,758 122,761 (3,997)Government Communications 583,860 583,860 583,466 (394)
Total Administrative Services 757,360 742,858 738,891 (3,967)
Department of Finance:Finance 17,391 17,391 13,729 (3,662)
Total Finance 17,391 17,391 13,729 (3,662)
Division of Environmental Quality & Public WorksWaste Management 24,299,120 23,556,212 20,793,371 (2,762,841)Office of Compliance 828,590 872,879 695,390 (177,489)Environmental Quality 258,860 253,805 173,147 (80,658)Streets & Roads 1,868,710 1,866,416 1,976,485 110,069Traffic Engineering 5,949,500 5,658,019 5,175,735 (482,284)Environmental Quality & Public Works Administration 167,700 167,100 82,176 (84,924)
Total Environmental Quality & Public Works 33,372,480 32,374,431 28,896,304 (3,478,127)
Department of General Services:Fleet and Facilities Management 2,080,810 80,810 50,940 (29,870)
Total General Services 2,080,810 80,810 50,940 (29,870)continued
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGETARY COMPARISONFULL URBAN SERVICES DISTRICT FUND
For the Year Ended June 30, 2013
Budgeted Amounts
The accompanying notes are an integral part of the financial statements.
41
Variance withFinal Budget-Positive
Original Final Actual (Negative)
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE
BUDGETARY COMPARISONFULL URBAN SERVICES DISTRICT FUND
For the Year Ended June 30, 2013
Budgeted Amounts
EXPENDITURES, continuedDepartment of Law:
Human Resources 11,730 11,730 3,039 (8,691)Law 31,040 363,040 56,983 (306,057)
Total Law 42,770 374,770 60,022 (314,748)
Debt Service:Principal 749,810 749,810 749,806 (4)Interest 202,530 202,530 163,936 (38,594)
Total Debt Service 952,340 952,340 913,742 (38,598)Total Expenditures 39,683,251 37,002,700 32,725,943 (4,276,757)
Excess (Deficiency) of Revenues Over (Under) Expenditures (4,605,251) (1,574,115) 3,458,068 5,032,183
OTHER FINANCING SOURCES (USES)Transfers In 2,529,224 2,529,224 2,529,224 Transfers Out (38,109) (113,054) (74,945)
Total Other Financing Sources (Uses) 2,529,224 2,491,115 2,416,170 (74,945)
Net Change in Fund Balances (2,076,027) 917,000 5,874,238 4,957,238
Fund Balance, Beginning 17,686,842 17,686,842 22,768,174 5,081,332
Fund Balance, Ending $15,610,815 $18,603,842 $28,642,412 $10,038,570
The accompanying notes are an integral part of the financial statements.
42
San
itar
y S
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S
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Cor
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and
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,961
$8,9
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$27,
243,
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$24,
868,
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39,2
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232,
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8,88
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107,
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1,59
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7,23
4,70
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234,
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4,37
6,55
94,
376,
559
Tot
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63,3
32,5
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837
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85,9
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7,02
4,65
411
3,15
2,32
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,973
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:R
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627,
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7,31
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319,
500
2,31
9,50
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4,39
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509
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825,
534
32,5
78,6
465,
194,
637
1,52
6,46
940
0,00
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4,47
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,678
16,5
72,2
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7,78
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207,
206
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4,57
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7,53
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9,44
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120,
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3,26
9,36
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9,36
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181,
976,
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11,5
70,8
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111,
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19,9
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310
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tang
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811,
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3,23
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(100
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(269
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13,4
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5,92
439
6,08
314
,562
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699,
957
7,69
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7
Tot
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236,
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80,8
08,6
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1,20
72,
685,
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338,
663,
133
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3,09
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6,07
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,643
$451
,815
,460
$30,
973,
829
43
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PR
OP
RIE
TA
RY
FU
ND
SJu
ne
30, 2
013
Bu
sin
ess-
Typ
e A
ctiv
itie
sE
nte
rpri
se F
un
ds
San
itar
y S
ewer
S
yste
mP
ub
lic
Fac
ilit
ies
Cor
por
atio
nL
and
fill
Wat
er Q
ual
ity
Oth
er
En
terp
rise
F
un
ds
Tot
al
Gov
ern
men
tal
Act
ivit
ies
Inte
rnal
S
ervi
ce F
un
ds
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F N
ET
PO
SIT
ION
PR
OP
RIE
TA
RY
FU
ND
SJu
ne
30, 2
013
Bu
sin
ess-
Typ
e A
ctiv
itie
sE
nte
rpri
se F
un
ds
LIA
BIL
ITIE
SC
urre
nt L
iabi
liti
es:
Acc
ount
s, C
ontr
acts
and
Ret
aina
ge P
ayab
le$4
,458
,870
$170
,108
$1,0
21,9
32$6
07,4
45$3
46,5
96$6
,604
,951
$236
,457
Acc
rued
Pay
roll
236,
441
18,4
6995
,274
127,
841
478,
025
Due
to O
ther
Fun
ds1,
592,
622
8,13
299
01,
601,
744
Cla
ims
Pay
able
29,7
64,1
97B
onds
Pay
able
2,13
0,00
059
,208
2,18
9,20
8In
tere
st P
ayab
le59
5,77
82,
006
597,
784
Une
arne
d R
even
ue a
nd O
ther
43,6
64
43,6
64C
ompe
nsat
ed A
bsen
ces
327,
301
1,16
958
,507
31,5
5941
8,53
6L
andf
ill C
losu
re a
nd P
ostc
losu
re C
are
Cos
ts43
5,25
143
5,25
1P
ayab
le f
rom
Res
tric
ted
Inve
stm
ents
:A
ccou
nts,
Con
trac
ts a
nd R
etai
nage
Pay
able
854,
974
854,
974
Bon
ds a
nd N
otes
Pay
able
3,50
5,22
03,
505,
220
Inte
rest
Pay
able
831,
646
831,
646
Tot
al C
urr
ent
Lia
bil
itie
s11
,850
,738
2,89
5,88
61,
476,
821
830,
572
506,
986
17,5
61,0
0330
,000
,654
Non
-Cur
rent
Lia
bili
ties
:U
near
ned
Rev
enue
and
Oth
er25
7,65
840
0,00
072
365
8,38
1B
onds
and
Not
es P
ayab
le55
,075
,205
52,7
00,7
521,
164,
492
108,
940,
449
Com
pens
ated
Abs
ence
s75
5,04
210
,525
58,5
0771
,346
895,
420
Lan
dfil
l Clo
sure
and
Pos
tclo
sure
Car
e C
osts
13,1
53,9
6113
,153
,961
Tot
al N
on-C
urr
ent
Lia
bil
itie
s56
,087
,905
52,7
00,7
5213
,564
,486
1,22
2,99
972
,069
123,
648,
211
0T
otal
Lia
bil
itie
s$6
7,93
8,64
3$5
5,59
6,63
8$1
5,04
1,30
7$2
,053
,571
$579
,055
$141
,209
,214
$30,
000,
654
NE
T P
OS
ITIO
NIn
vest
ed in
Cap
ital
Ass
ets,
Net
of
Rel
ated
Deb
t$1
71,2
61,4
31$2
5,97
7,86
8$1
3,51
0,46
0$3
,877
,508
$2,6
85,9
91$2
17,3
13,2
58$0
Res
tric
ted
for:
Cap
ital
Pro
ject
s42
,363
,108
42,3
63,1
08C
apit
al P
roje
cts
- P
ark
Acq
uisi
tion
1,45
5,71
81,
455,
718
Deb
t Ser
vice
8,77
2,06
98,
772,
069
Cap
ital
Rep
lace
men
t2,
319,
500
18,2
302,
337,
730
Wat
er Q
uali
ty I
ncen
tive
Pro
gram
4,03
1,47
54,
031,
475
Mai
nten
ance
and
Ope
rati
ons
7,23
4,70
37,
234,
703
Unr
estr
icte
d
14
,544
,597
6,10
7,99
16,
445,
597
27,0
98,1
8597
3,17
5
Tot
al N
et P
osit
ion
$231
,950
,811
$27,
451,
816
$28,
055,
057
$14,
016,
974
$9,1
31,5
8831
0,60
6,24
6$9
73,1
75
Adj
ustm
ent t
o re
flec
t the
con
soli
dati
on o
f in
tern
al s
ervi
ce f
und
acti
viti
es r
elat
ed to
ent
erpr
ise
fund
s33
1,17
7N
et A
sset
s of
Bus
ines
s-T
ype
Act
ivit
ies
$310
,937
,423
44
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
Sani
tary
Sew
er
Syst
em
Pub
lic
Fac
ilit
ies
Cor
pora
tion
Lan
dfil
lW
ater
Qua
lity
Oth
er
Ent
erpr
ise
Fun
dsT
otal
Gov
ernm
enta
l A
ctiv
itie
s In
tern
al S
ervi
ce
Fun
dsO
PE
RA
TIN
G R
EV
EN
UE
SU
ser
Cha
rges
$45,
990,
027
$0$6
,464
,242
$12,
278,
465
$0$6
4,73
2,73
4$3
7,11
5,08
2Fe
es2,
325,
787
181,
087
725,
922,
091
8,42
9,03
7E
xact
ions
4,00
2,94
54,
002,
945
Lic
ense
Fee
s an
d Pe
rmit
s39
2,46
639
2,46
6R
enta
l Inc
ome
5,14
4,53
41,
278
5,14
5,81
2Pa
rkin
g R
even
ues
1,29
43,
282
4,57
6T
heat
er R
even
ues
684,
457
684,
457
Gro
ss P
rofi
t - C
omm
issa
ry1,
051,
233
1,05
1,23
3O
ther
609,
021
200,
000
17,9
3956
9,42
51,
396,
385
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
STA
TE
ME
NT
OF
RE
VE
NU
ES,
EX
PE
NSE
S, A
ND
CH
AN
GE
S IN
NE
T P
OSI
TIO
NP
RO
PR
IET
AR
Y F
UN
DS
For
the
Yea
r E
nded
Jun
e 30
, 201
3
Bus
ines
s-T
ype
Act
ivit
ies
Ent
erpr
ise
Fun
ds
,,
,,
,,
Tot
al O
pera
ting
Rev
enue
s52
,927
,780
5,83
0,28
56,
845,
329
12,2
96,4
767,
939,
775
85,8
39,6
4537
,115
,082
OP
ER
AT
ING
EX
PE
NSE
ST
reat
men
t Pla
nt8,
217,
471
8,21
7,47
1C
olle
ctio
n Sy
stem
4,40
5,02
04,
405,
020
Prop
erty
Man
agem
ent
1,68
2,43
31,
682,
433
The
ater
Man
agem
ent
622,
280
622,
280
Lan
dfil
l 1,
778,
921
1,77
8,92
1R
ight
of
Way
277,
112
277,
112
Ext
ende
d Sc
hool
Pro
gram
1,98
5,80
91,
985,
809
Pris
oner
s' A
ccou
nt42
7,94
842
7,94
8In
mat
e T
rust
Acc
ount
962,
928
962,
928
Enh
ance
d 91
12,
920,
070
2,92
0,07
0L
exV
an P
rogr
am10
,668
10,6
68A
dmin
istr
atio
n16
,216
,619
1,47
2,30
68,
117,
204
205,
539
26,0
11,6
682,
074,
969
Dep
reci
atio
n7,
683,
896
4,52
6,91
084
8,54
387
,890
112,
407
13,2
59,6
46C
laim
s an
d B
enef
it P
aym
ents
35,0
40,1
13
Tot
al O
pera
ting
Exp
ense
s36
,523
,006
6,83
1,62
34,
099,
770
8,20
5,09
46,
902,
481
62,5
61,9
7437
,115
,082
Ope
rati
ng I
ncom
e (L
oss)
16,4
04,7
74(1
,001
,338
)2,
745,
559
4,09
1,38
21,
037,
294
23,2
77,6
710
45
Sani
tary
Sew
er
Syst
em
Pub
lic
Fac
ilit
ies
Cor
pora
tion
Lan
dfil
lW
ater
Qua
lity
Oth
er
Ent
erpr
ise
Fun
dsT
otal
Gov
ernm
enta
l A
ctiv
itie
s In
tern
al S
ervi
ce
Fun
ds
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
STA
TE
ME
NT
OF
RE
VE
NU
ES,
EX
PE
NSE
S, A
ND
CH
AN
GE
S IN
NE
T P
OSI
TIO
NP
RO
PR
IET
AR
Y F
UN
DS
For
the
Yea
r E
nded
Jun
e 30
, 201
3
Bus
ines
s-T
ype
Act
ivit
ies
Ent
erpr
ise
Fun
ds
NO
N-O
PE
RA
TIN
G R
EV
EN
UE
S (E
XP
EN
SES)
Inco
me
on In
vest
men
ts(1
58,7
05)
382,
652
(60,
319)
1,02
0(2
15,3
14)
In
tere
st E
xpen
se a
nd F
isca
l Age
nt F
ees
(2,3
81,9
40)
(2,4
16,1
74)
(25,
041)
(4
,823
,155
)A
mor
tiza
tion
of
Bon
d C
osts
(109
,070
)(1
72,0
89)
(281
,159
)G
ain
(Los
s) o
n Sa
le o
f C
apit
al A
sset
s
(78,
366)
(7
8,36
6)
Tot
al N
on-O
pera
ting
Rev
enue
s (E
xpen
ses)
(2,6
49,7
15)
(2,5
88,2
25)
2,65
2(1
63,7
26)
1,02
0(5
,397
,994
)0
Inco
me
(Los
s) B
efor
e C
ontr
ibut
ions
and
Tra
nsfe
rs13
,755
,059
(3,5
89,5
63)
2,74
8,21
13,
927,
656
1,03
8,31
417
,879
,677
T
rans
fers
In1,
208,
935
706,
030
108,
000
181,
019
2,
203,
984
Tra
nsfe
rs O
ut(1
,039
,194
)(2
00,0
00)
(17,
606)
(1,2
56,8
00)
Tra
nsfe
rs O
ut(1
,039
,194
)(2
00,0
00)
(17,
606)
(1,2
56,8
00)
Tra
nsfe
rs o
f A
sset
s to
Com
pone
nt U
nits
(171
,758
)(1
2,67
8,40
7)(1
2,85
0,16
5)
Cha
nge
in N
et P
osit
ion
13,9
24,8
00(3
,055
,291
)2,
656,
211
4,09
1,06
9(1
1,64
0,09
3)5,
976,
696
0
Net
Pos
itio
n, B
egin
ning
217,
012,
388
31,2
05,7
5025
,398
,846
9,86
2,71
020
,771
,681
973,
175
Adj
ustm
ent
to O
peni
ng N
et P
osit
ion
(Not
e 2.
D.)
1,01
3,62
3(6
98,6
43)
63,1
95
Net
Pos
itio
n, B
egin
ning
- R
esta
ted
218,
026,
011
30,5
07,1
0725
,398
,846
9,92
5,90
520
,771
,681
973,
175
Net
Pos
itio
n, E
ndin
g$2
31,9
50,8
11$2
7,45
1,81
6$2
8,05
5,05
7$1
4,01
6,97
4$9
,131
,588
$973
,175
C
hang
e in
net
ass
ets
of B
usin
ess-
Typ
e A
ctiv
itie
s $5
,976
,696
46
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
Cas
h F
low
s fr
om O
per
atin
g A
ctiv
itie
s:R
ecei
pts
from
Cus
tom
ers
$45,
948,
448
$1,8
67,5
84$6
,443
,271
$11,
847,
121
$8,1
45,9
20$7
4,25
2,34
4$0
Rec
eipt
s fr
om E
mpl
oyee
s an
d O
ther
Sou
rces
28,0
97,3
42
Rec
eipt
s fr
om I
nter
fund
Ser
vice
s P
rovi
ded
3,99
5,60
63,
995,
606
24,8
43,6
03
Pay
men
ts to
Sup
plie
rs(1
3,03
9,33
0)(2
,100
,043
)(7
,312
,158
)(3
,969
,640
)(1
,904
,913
)(2
8,32
6,08
4)(2
,210
,484
)P
aym
ents
to E
mpl
oyee
s(1
0,12
2,14
5)(7
78,8
04)
(4,1
25,6
01)
(3,6
69,6
70)
(18,
696,
220)
Pay
men
ts f
or I
nter
fund
Ser
vice
s U
sed
(1,9
08,2
48)
(125
,536
)(6
49,8
35)
(218
,409
)(2
,902
,028
)P
aym
ents
for
Cla
ims
(28,
724,
461)
Net
Cas
h P
rovi
ded
by
(Use
d in
) O
per
atin
g A
ctiv
itie
s20
,878
,725
3,76
3,14
7(1
,773
,227
)3,
102,
045
2,35
2,92
828
,323
,618
22,0
06,0
00
Cas
h F
low
s fr
om N
onca
pit
al F
inan
cin
g A
ctiv
itie
s:T
rans
fers
In
1,20
8,93
570
6,03
010
8,00
018
1,01
9
2,20
3,98
4T
rans
fers
Ou t
(1,0
39,1
94)
(200
,000
)(1
7,60
6)(2
39,0
51)
(1,4
95,8
51)
Net
Cas
h P
rovi
ded
by
(Use
d in
) N
onca
pit
al F
inan
cin
g
Act
ivit
ies
169,
741
706,
030
(92,
000)
163,
413
(239
,051
)70
8,13
30
Cas
h F
low
s fr
om C
apit
al a
nd
Rel
ated
Fin
anci
ng
Act
ivit
ies:
Pur
chas
e of
Cap
ital
Ass
ets
(15,
017,
917)
(38,
400)
(1,0
29,0
74)
(396
,083
)(1
6,48
1,47
4)P
rinc
ipal
Pai
d on
Bon
ds(3
,413
,492
)(2
,050
,000
)(5
8,04
1)
(5,5
21,5
33)
Inte
rest
and
Fis
cal A
gent
Fee
s P
aid
on B
ond s
(2,4
00,4
56)
(2,4
16,1
74)
(25,
041)
(4
,841
,671
)
Net
Cas
h U
sed
in C
apit
al a
nd
Rel
ated
Fin
anci
ng
Act
ivit
ies
(20,
831,
865)
(4,4
66,1
74)
(38,
400)
(1,1
12,1
56)
(396
,083
)(2
6,84
4,67
8)0
Cas
h F
low
s fr
om I
nve
stin
g A
ctiv
itie
s:
Pur
chas
e of
Inv
estm
ents
(38)
(2,6
52)
(944
)(5
89)
(4,2
23)
Pro
ceed
s fr
om S
ales
and
Mat
urit
ies
of I
nves
tmen
ts1,
972,
412
1,97
2,41
2
Inco
me
on I
nves
tmen
ts71
8,09
338
2,65
215
,625
1,02
073
7,42
8
Net
Cas
h F
low
s P
rovi
ded
by
Inve
stin
g A
ctiv
itie
s2,
690,
505
00
14,6
8143
12,
705,
617
0
Net
In
crea
se (
Dec
reas
e)2,
907,
106
3,00
3(1
,903
,627
)2,
167,
983
1,71
8,22
54,
892,
690
22,0
06,0
00
Cas
h a
t B
egin
nin
g of
Yea
r5,
044,
605
1,59
5,93
56,
629,
588
6,77
1,70
72,
308,
491
22,3
50,3
262,
862,
187
Cas
h a
t E
nd
of
Yea
r$7
,951
,711
$1,5
98,9
38$4
,725
,961
$8,9
39,6
90$4
,026
,716
$27,
243,
016
$24,
868,
187
Gov
ern
men
tal
Act
ivit
ies
Inte
rnal
Ser
vice
F
un
ds
47
San
itar
y S
ewer
S
yste
mP
ub
lic
Fac
ilit
ies
Cor
por
atio
nL
and
fill
Wat
er Q
ual
ity
Oth
er
En
terp
rise
F
un
ds
Tot
al
En
terp
rise
Fu
nd
s
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F C
AS
H F
LO
WS
PR
OP
RIE
TA
RY
FU
ND
S
For
th
e Y
ear
En
ded
Ju
ne
30, 2
013
Bu
sin
ess-
Typ
e A
ctiv
itie
s
Gov
ern
men
tal
Act
ivit
ies
Inte
rnal
Ser
vice
F
un
ds
San
itar
y S
ewer
S
yste
mP
ub
lic
Fac
ilit
ies
Cor
por
atio
nL
and
fill
Wat
er Q
ual
ity
Oth
er
En
terp
rise
F
un
ds
Tot
al
En
terp
rise
Fu
nd
s
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F C
AS
H F
LO
WS
PR
OP
RIE
TA
RY
FU
ND
S
For
th
e Y
ear
En
ded
Ju
ne
30, 2
013
Bu
sin
ess-
Typ
e A
ctiv
itie
s
Rec
onci
liat
ion
of
Op
erat
ing
Inco
me
(Los
s) t
o N
et C
ash
Pro
vid
ed b
y (U
sed
in)
Op
erat
ing
Act
ivit
ies:
Op
erat
ing
Inco
me
(Los
s)$1
6,40
4,77
4($
1,00
1,33
8)$2
,745
,559
$4,0
91,3
82$1
,037
,294
$23,
277,
671
$0
Ad
just
men
ts t
o R
econ
cile
Op
erat
ing
Inco
me
(Los
s)to
Net
Cas
h P
rovi
ded
by
(Use
d in
) O
per
atin
g A
ctiv
itie
s:D
epre
ciat
ion
7,68
3,89
64,
526,
910
848,
543
87,8
9011
2,40
713
,259
,646
All
owan
ce f
or B
ad D
ebt s
1,10
9,68
089
,541
145,
832
1,34
5,05
3(I
ncr
ease
) D
ecre
ase
in A
sset
s:A
ccou
nts
Rec
eiva
ble
(2,9
38,8
15)
(253
,805
)(4
49,3
55)
(3,6
41,9
75)
Oth
er R
ecei
vabl
es2,
999
32,9
0551
,747
210,
716
298,
367
(164
,287
)In
vent
orie
s an
d P
repa
id E
xpen
ses
(3,7
56)
(442
)9,
198
26,4
7231
,472
(122
,132
)
Tra
nsfe
r A
sset
s to
Oth
er F
unds
8,00
0(1
81,0
18)
(173
,018
)D
ue f
rom
Oth
er F
und s
28
5,49
1(1
07,3
39)
1,28
0,55
11,
458,
703
15,9
90,1
50D
evel
opm
ents
in P
rogr
ess
(3,5
54,4
97)
(3,5
54,4
97)
Incr
ease
(D
ecre
ase)
in L
iab
ilit
ies:
Acc
ount
s P
ayab
l e4,
216,
243
(61,
072)
513,
955
(127
,612
)(2
40,5
96)
4,30
0,91
8(1
3,38
3)A
ccru
ed P
ayro
l l(7
4,18
9)3,
087
(38,
907)
(31,
729)
(141
,738
)C
laim
s P
ayab
l e6,
315,
652
Due
to O
ther
Fun
d s(8
61,9
73)
(1
03,1
35)
(381
,194
)(4
4,54
3)(1
,390
,845
)
Une
arne
d R
even
u e(4
89,0
19)
(2
00,0
00)
(3
,848
)(6
92,8
67)
Oth
er L
iabi
liti
e s(5
52,1
85)
(19,
749)
(5,3
65,3
70)
(305
)
(5
,937
,609
)C
ompe
nsat
ed A
bsen
ces
(72,
433)
4,43
2(5
3,86
6)6,
204
(115
,663
)
Tot
al A
dju
stm
ents
4,47
3,95
14,
764,
485
(4,5
18,7
86)
(989
,337
)1,
315,
634
5,04
5,94
722
,006
,000
Net
Cas
h P
rovi
ded
by
(Use
d I
n)
Op
erat
ing
Act
ivit
ies
$20,
878,
725
$3,7
63,1
47($
1,77
3,22
7)$3
,102
,045
$2,3
52,9
28$2
8,32
3,61
8$2
2,00
6,00
0
48
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
Pension Trust Funds
Agency Funds
ASSETSCash and Cash Equivalents $16,816,268 $660,875Receivables:
Interest Receivable 1,660,652Investments, at Fair Value:Debt Securities:
US Agencies 35,016,945US Government Obligations 21,126,338Municipal Obligations 5,933,303International Bonds 14,025,710Corporate Debt 80,270,352Repurchase Agreements 12,174,347
Other Investments:Equity Mutual Funds 164,552,201Equity Real Estate 52,746,107Equity Securities - Domestic 94,038,556Equity Securities - International 98,862,748
Total Investments 578,746,607 0Total Assets $597,223,527 $660,875
LIABILITIESAccounts Payable and Accrued Expenses $11,227 $0Securities Lending Transactions 12,174,347Compensated Absenses - Current 2,534Compensated Absenses - Non Current 2,534Due to Other Funds 279,833Payable to Others 660,875
Total Liabilities $12,470,475 $660,875
NET POSITIONAmounts Held in Trust for Pension Benefits $584,753,052 $0
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF NET POSITION
FIDUCIARY FUNDSJune 30, 2013
The accompanying notes are an integral part of the financial statements.
49
Pension Trust Funds
ADDITIONSContributions:
Employer $22,322,068Employer - Administration 4,218,146Plan Members 7,242,128Other 81,122
Total Contributions 33,863,464
Investment Income:Net Change in Fair Value of Investments 57,458,431Interest 7,771,288Dividends 3,732,444
Total Investment Income 68,962,163Less Investment Expense 2,862,512
Net Investment Income 66,099,651
Income from Securities Lending Activities:Securities Lending Income 31,693Securities Lending Expenses: Borrower Rebates (85,620) Management Fees 46,871
Total Securities Lending Expenses (Income) (38,749)Net Income on Securities Lending Activities 70,442
Total Additions 100,033,557
DEDUCTIONSBenefit Payments 50,939,013Administrative Expense 627,118
Total Deductions 51,566,131
Net Increase 48,467,426
Net Position, Beginning 536,285,626
Net Position, Ending $584,753,052
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT STATEMENT OF CHANGES IN NET POSITION
FIDUCIARY FUNDSFor the Year Ended June 30, 2013
The accompanying notes are an integral part of the financial statements.
50
Lexington Lexington Fayette County Parking NonmajorCenter Airport Department Authority of Component
Corporation* Board of Health Lexington Units** TotalASSETS
Cash $1,986,071 $3,000,208 $2,844,356 $2,367,120 $19,067,648 $29,265,403Investments 6,597,048 6,281,820 12,878,868Receivables:
Accounts Receivable 983,510 1,860,877 266,850 3,111,237Other 24,792 5,607 103,343 133,742Less Allowance for Uncollectible Accounts (1,209) (1,209)
Due from Component Units 82,000 82,000Due from Primary Government 282,298 1,008,168 1,290,466Due from Other Governments 1,313,722 1,313,722Other Current Assets 356,652 382,061 738,713Inventories and Prepaid Expenses 35,519 496 813,804 849,819Restricted Current Assets:
Cash 6,699,712 1,118,115 7,817,827 Accounts Receivable 443,202 2,429,209 2,872,411 Investments 2,099,192 11,489,131 3,048,839 510,090 17,147,252 Other 56,049 56,049 Pension Assets 768,005 768,005
Restricted Non-Current Investments 6,138,828 6,138,828Capital Assets:
Non-depreciable 12,422,120 6,088,579 8,502,464 7,685,812 34,698,975Depreciable (Net) 44,613,842 134,276,601 3,800,391 8,933,434 35,280,698 226,904,966
Other Assets 85,040 85,040
Total Assets $68,963,304 $170,918,260 $9,109,475 $22,857,960 $74,303,115 $346,152,114
DEFERRED OUTFLOWS OF RESOURCESFair Value of Interest Rate Caps $0 $18,738 $0 $0 $0 $18,738
LIABILITIES Accounts, Contracts Payable and Accrued Liabilities $992,848 $1,231,431 $1,226,798 $1,469,697 $2,395,704 $7,316,478 Interest Payable 7,711 21,712 29,423 Due to Primary Government 645,155 73,729 718,884 Due to Component Units 82,000 82,000 Unearned Revenue and Other 152,775 4,371 3,706 160,852 Liabilities Payable from Restricted Assets:
Interest Payable 1,191,000 1,191,000 Non-Current Liabilities:Due Within One Year
Compensated Absences 3,904 550,894 554,798Bonds and Notes Payable 1,935,000 115,000 358,526 356,199 2,764,725
Due in More Than One YearCompensated Absences 515,927 3,904 307,786 827,617Bonds and Notes Payable 18,280,270 59,427,035 400,000 5,611,331 7,921,733 91,640,369Other 714,294 714,294
Total Liabilities $21,360,893 $62,563,760 $2,257,725 $8,104,599 $11,713,463 $106,000,440
DEFERRED INFLOWS OF RESOURCESFair Value of Interest Rate Caps $0 $18,738 $0 $0 $0 $18,738
NET POSITION Investment in Capital Assets,
Net of Related Debt 36,518,775 80,950,700 3,285,391 11,466,041 34,688,578 166,909,485 Restricted for:
Governmental and Program Funds 70,633 184,813 255,446Capital Projects 951,743 48,587 1,000,330Debt Service 5,187,085 17,484,539 448,519 23,120,143Pension 768,005 768,005
Unrestricted 4,944,808 9,919,261 3,495,726 2,790,214 26,948,256 48,098,265
Total Net Position $47,602,411 $108,354,500 $6,851,750 $14,753,361 $62,589,652 $240,151,674
* Restated to conform to the Government's implementation of GASB 65** Certain categories have been reclassified to conform to the Government-Wide Financial Statement presentation
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSTATEMENT OF NET POSITION
COMPONENT UNITSJune 30, 2013
The accompanying notes are an integral part of the financial statements.
51
Op
erat
ing
Cap
ital
Lex
ingt
onL
exin
gton
Fay
ette
Cou
nty
Par
kin
gN
onm
ajor
Ch
arge
s fo
rG
ran
ts a
nd
Gra
nts
an
dC
ente
rA
irp
ort
Dep
artm
ent
Au
thor
ity
ofC
omp
onen
tE
xpen
ses
Ser
vice
sC
ontr
ibu
tion
sC
ontr
ibu
tion
sC
orp
orat
ion
*B
oard
of H
ealt
hL
exin
gton
Un
its*
*T
otal
Lex
ingt
on C
ente
r C
orp
orat
ion
Lex
ingt
on C
ente
r O
pera
tion
s$1
3,23
7,96
5$1
4,55
4,86
5$8
48,0
00$3
,526
,938
$5,6
91,8
38$5
,691
,838
Dep
reci
atio
n4,
553,
330
(4,5
53,3
30)
(4,5
53,3
30)
Inte
rest
on
Lon
g-T
erm
Deb
t87
0,86
9(8
70,8
69)
(870
,869
)T
otal
Lex
ingt
on C
ente
r C
orpo
rati
on18
,662
,164
14,5
54,8
6584
8,00
03,
526,
938
267,
639
Lex
ingt
on A
irp
ort
Boa
rdA
irpo
rt O
pera
tion
s9,
577,
388
16,6
25,7
574,
295,
303
$11,
343,
672
11,3
43,6
72D
epre
ciat
ion
9,42
5,22
8(9
,425
,228
)(9
,425
,228
)In
tere
st o
n L
ong-
Ter
m D
ebt
2,09
1,91
4(2
,091
,914
)(2
,091
,914
)T
otal
Lex
ingt
on A
irpo
rt B
oard
21,0
94,5
3016
,625
,757
04,
295,
303
(173
,470
)F
ayet
te C
oun
ty D
epar
tmen
t of
Hea
lth
Dep
artm
ent o
f H
ealt
h O
pera
tion
s15
,241
,042
4,01
4,86
15,
750,
810
($5,
475,
371)
(5,4
75,3
71)
Dep
reci
atio
n37
0,04
8(3
70,0
48)
(370
,048
)In
tere
st o
n L
ong-
Ter
m D
ebt
55,6
77(5
5,67
7)(5
5,67
7)T
otal
Fay
ette
Cou
nty
Dep
artm
ent
of
Hea
lth
15,6
66,7
674,
014,
861
5,75
0,81
00
(5,9
01,0
96)
Par
kin
g A
uth
orit
y of
Lex
ingt
o nP
arki
ng O
pera
tion
s2,
132,
716
3,21
7,19
3$1
,084
,477
1,08
4,47
7D
epre
ciat
ion
194,
379
(194
,379
)(1
94,3
79)
Tot
al P
arki
ng A
utho
rity
of
Lex
ingt
o n2,
327,
095
3,21
7,19
30
089
0,09
8
Non
maj
or C
omp
onen
t U
nit
s45
,515
,692
3,91
5,66
65,
242,
550
2,24
1,04
3($
34,1
16,4
33)
(34,
116,
433)
Tot
al C
ompo
nent
Uni
ts$1
03,2
66,2
48$4
2,32
8,34
2$1
1,84
1,36
0$1
0,06
3,28
4$2
67,6
39($
173,
470)
($5,
901,
096)
$890
,098
($34
,116
,433
)($
39,0
33,2
62)
Gen
eral
Rev
enue
s:
Tax
es$2
,822
,631
$0$7
,446
,422
$0$3
5,23
4,96
2$4
5,50
4,01
5
Pay
men
t fro
m L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t(3
3,67
0)26
1,23
022
7,56
0
Inco
me
on I
nves
tmen
ts36
,102
(299
,643
)53
,767
1,95
291
,555
(116
,267
)G
ain
(Los
s) o
n S
ale
of C
apit
al A
sset
s16
,347
10,0
2626
,373
Issu
ance
of
Deb
t(3
57,5
43)
(3
57,5
43)
M
isce
llan
eous
5,32
72,
070
253,
842
261,
239
Tot
al G
ener
al R
even
ues
2,85
8,73
3(6
40,8
39)
7,50
5,51
6(2
9,64
8)35
,851
,615
45,5
45,3
77T
rans
fer
of a
sset
s fr
om L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t12
,627
,057
382,
509
13,0
09,5
66C
hang
e in
Net
Pos
itio
n3,
126,
372
(814
,309
)1,
604,
420
13,4
87,5
072,
117,
691
19,5
21,6
81N
et P
osit
ion,
Beg
inni
ng44
,777
,956
111,
738,
072
4,45
7,52
51,
265,
854
60,6
41,3
1122
2,88
0,71
8A
djus
tmen
t to
Ope
ning
Net
Pos
itio
n (N
ote
2.D
.)(3
01,9
17)
(2,5
69,2
63)
789,
805
(169
,350
)(2
,250
,725
)N
et P
osit
ion,
Beg
inni
ng-R
esta
ted
44,4
76,0
3910
9,16
8,80
95,
247,
330
1,26
5,85
460
,471
,961
220,
629,
993
Net
Pos
itio
n, E
ndin
g$4
7,60
2,41
1$1
08,3
54,5
00$6
,851
,750
$14,
753,
361
$62,
589,
652
$240
,151
,674
*R
esta
ted
to c
onfo
rm to
the
Gov
ernm
ent's
impl
emen
tati
on o
f G
AS
B 6
5* *
Cer
tain
cat
egor
ies
have
bee
n re
clas
sifi
ed to
con
form
to th
e G
over
nmen
t-W
ide
Fin
anci
al S
tate
men
t pre
sent
atio
n
52
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
ST
AT
EM
EN
T O
F A
CT
IVIT
IES
CO
MP
ON
EN
T U
NIT
SF
or t
he
Yea
r E
nd
ed J
un
e 30
, 201
3
Net
(E
xpen
ses)
Rev
enu
e an
dP
rogr
am R
even
ues
Ch
ange
s in
Net
Ass
ets
The
acc
ompa
nyin
g no
tes
are
an in
tegr
al p
art o
f th
e fi
nanc
ial s
tate
men
ts.
53
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS
INDEX NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ............................................................. 54 A. Reporting Entity ........................................................................................................................... 54 B. Related Organization .................................................................................................................... 56 C. Jointly Governed Organizations ................................................................................................... 56 D. Basic Financial Statements ........................................................................................................... 57 E. Budgetary Control ......................................................................................................................... 60
F. Assets, Liabilities and Fund Equity ............................................................................................... 60 G. Net Position/Fund Balances .......................................................................................................... 63 H. Use of Estimates ............................................................................................................................ 65 I. Revenues, Expenditures and Expenses ......................................................................................... 65
NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY ............................................................ 65 A. Compliance With Finance Related Legal and Contractual Provisions ......................................... 65 B. Excess of Expenditures over Appropriations ............................................................................... 66 C. Fund Deficits ................................................................................................................................ 66 D. Prior Period Adjustments ............................................................................................................. 66
NOTE 3. DETAIL NOTES ON ALL FUNDS ...................................................................................................... 67 A. Cash, Investments, and Securities Lending ................................................................................. 67
B. Capital Assets ............................................................................................................................... 73 C. Interfund Receivables, Payables and Transfers ............................................................................ 75 D. Long-term Debt ............................................................................................................................ 76
NOTE 4. SELF-INSURANCE PROGRAM .......................................................................................................... 84 A. Health, Dental, and Vision Care ................................................................................................... 84 B. Insurance and Risk Management ................................................................................................. 85
NOTE 5. CONTINGENT LIABILITIES AND COMMITMENTS ...................................................................... 86 A. Litigation ...................................................................................................................................... 86 B. United States Environmental Protection Agency Consent Decree ............................................... 87 C. Federal and State Grants .............................................................................................................. 87 D. Lexington Center Corporation ..................................................................................................... 87 E. Lexington-Fayette Urban County Airport Corporation (Airport Corporation) ............................ 88 F. Lexington Public Library ............................................................................................................. 88 G. Lexington Downtown Housing Fund, LLC ................................................................................. 88 H. Liens and Encumbrances.............................................................................................................. 89 I. Conduit Debt ............................................................................................................................... 89 J. Encumbrances ............................................................................................................................. 89
NOTE 6. THE SINGLE AUDIT ACT ................................................................................................................... 90 NOTE 7. SUBSEQUENT EVENTS ...................................................................................................................... 90 NOTE 8. TRANSFER OF ASSETS ...................................................................................................................... 90 NOTE 9. DEFINED BENEFIT PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS ............ 90 A. Plan Descriptions ........................................................................................................................ 90 B. Summary of Significant Accounting Policies and Plan Asset Matters ........................................ 91
C. Contributions ............................................................................................................................... 92 D. Supplemental Information ........................................................................................................... 92
E. Other Post Employment Benefit ................................................................................................. 94 F. Pension Plan Financial Statements ............................................................................................... 97
G. The County Employees' Retirement System ............................................................................... 99 NOTE 10. RECENT GASB PRONOUNCEMENTS ............................................................................................ 100
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS
June 30, 2013
54
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Lexington-Fayette Urban County Government (the Government) have been prepared in accordance with generally accepted accounting principles (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the standard-setting body for government accounting and financial reporting. The GASB periodically updates its codification of the existing Governmental Accounting and Financial Reporting Standards, which, along with subsequent GASB pronouncements (Statements and Interpretations), constitutes GAAP for governmental units. The more significant of these accounting policies are described below and, where appropriate, subsequent pronouncements will be referenced. A. Reporting Entity – The Government is a merged city-county government governed by an elected mayor and a fifteen-member council. The accompanying financial statements present the Government and its component units (traditionally separate reporting entities), for which the Government is considered to be financially accountable. The Government (the primary government) is financially accountable if it appoints a voting majority of the organization’s governing board and (1) is able to impose its will on the organization or (2) there is a potential for the organization to provide specific financial benefit to or impose specific financial burden on the Government. Additionally, the Government is required to consider other organizations for which the nature and significance of their relationship with the Government are such that exclusion would cause the Government’s financial statements to be misleading or incomplete. The financial statements are formatted to allow the user to clearly distinguish between the primary government and its component units. 1. Blended Component Units – The agencies and organizations listed below are, in substance, the same as the Government, despite being legally separate from the Government. Therefore, they are reported as part of the primary government. They have a governing body that is substantially the same as the governing body of the Government; provide services entirely, or almost entirely, to the Government; or otherwise exclusively, or almost exclusively, benefit the Government even though they do not provide services directly to the Government; and whose total debt outstanding is expected to be repaid entirely, or almost entirely, with resources of the Government.
The Public Library Corporation (PLC) is an instrumentality of the Government created solely for acquiring, constructing, equipping, and financing public projects to be used for public library purposes. The board consists of the Mayor, Vice Mayor, two members appointed by the Lexington Public Library, and one member appointed by the other four board members. The Policemen's and Firefighters' Retirement Fund and the City Employees’ Pension Fund are single employer, defined benefit pension plans that cover eligible Government personnel. Members of both boards are comprised of officials, employees and retirees of the Government.
The Public Facilities Corporation (PFC) was created to act as an agency and instrumentality of the Government in acquiring, developing and financing public improvements and public projects. The Mayor, Vice Mayor and Commissioner of Finance serve ex officio on the board. The Public Parking Corporation (PPC) was created to act as an agency and instrumentality of the Government in the acquisition and financing of public parking projects. The Mayor, Vice Mayor and Commissioner of Finance serve ex officio on the board.
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2. Discretely Presented Component Units – The agencies described below are included in the Government's reporting entity because the Government appoints the governing body or a financial benefit or burden relationship exits. Additionally, the agencies are fiscally dependent on the Government. All of these agencies are reported as discretely presented component units since the governing body is not substantively the same as the governing body of the Government, and they provide services to the citizens of Fayette County and the surrounding area as opposed to only the primary government. To emphasize that they are legally separate from the Government, they are reported in a separate column in the financial statements. Fund information for the component units, if applicable, may be found in their separately issued financial statements. Requests for separately issued financial statements should be directed to the attention of those respective entities.
The Lexington Public Library’s (Library) primary mission is to maintain a free public library in Lexington-Fayette County. The Mayor appoints all seven members of the board with approval by the Urban County Council and they may be removed by the vote of the Urban County Council. The Government provides financial support in the form of annual appropriations based upon property tax collections. The Lexington-Fayette Urban County Department of Health (Board of Health) has the general statutory responsibility of promoting and protecting the health of Fayette County residents. This entity provides critical services to the citizens of Fayette County on behalf of the Government. The Government appoints the nine members of the Board of Health. In addition, the Lexington-Fayette Urban County Council approves their Ad Valorem tax rate annually. The Lexington Downtown Development Authority, Inc. (DDA) is a non-profit government corporation created in fiscal year 2002 to act as an agency of the Government in various economic development, redevelopment and physical improvement activities associated with downtown. The DDA is governed by a nine-member board that is appointed by the Mayor and approved by the Urban County Council. The Government provides in-kind and financial support to the DDA by providing accounting and payroll services and annual appropriations to help meet operating expenses.
The Lexington Transit Authority (LexTran) was organized to provide unification and coordination of a mass transportation system for Fayette County. This entity provides critical services to the citizens of Fayette County on behalf of the Government. The business activities and affairs of LexTran are directed by an eight-member board appointed by the Government. In addition, the Lexington-Fayette Urban County Council approves the annual budget for LexTran. The Lexington Convention and Visitors Bureau (Visitors Bureau) was established by the Government for the purpose of promoting recreational, convention and tourist activity in Fayette County. The Government may abolish the Visitors Bureau by repealing the ordinance that created it. All nine members of the Visitors Bureau are appointed by the Mayor and may be removed by a majority vote of the Urban County Council. The Government has a statutory authority to provide funds for the operation of the Visitors Bureau by imposing a transient room tax not exceeding four percent of qualified occupancy rental. The Lexington Center Corporation (LCC) is a non-profit, non-stock corporate agency and instrumentality of the Government. The purpose of the LCC is to plan, finance, develop and operate a convention, trade show, performing arts and a sports facility. The thirteen-member board is appointed by the Mayor and approved by the Urban County Council. The Government has statutory authority to impose a transient room tax, not exceeding two percent of qualified occupancy rental, to provide funds for payment of debt service. As discussed in Note 5.D., the Government entered into a Lease Agreement that provides for an annual rental to be paid by the Government if net revenues are not sufficient to pay all debt service costs. The Lexington-Fayette Urban County Airport Board (Airport Board) is responsible for the operation, maintenance, and planning of airport facilities designed to serve the general public of the Central Kentucky area. The ten board members are appointed by the Mayor and approved by the Urban County Council. The
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Government has entered into a Contract Lease and Option Agreement, discussed in Note 5.E., which requires an annual rental to be paid by the Government if net revenues are not sufficient to pay all debt service costs. Parking Authority of Lexington (Parking Authority) was established to centralize all public parking functions into one entity, to improve parking operations and ultimately to improve the availability of parking in downtown Lexington. The Parking Authority has a five-member board of commissioners appointed by the Mayor. The Parking Authority is financially dependent on the Government for both accounting and administrative services. The Parking Authority and the DDA are included in the comprehensive audit of the Government and do not issue separate financial statements. The Parking Authority and the DDA each have one fund for financial reporting. Complete audited financial statements for the other component units may be obtained from the Commissioner of Finance of the Government or from the respective agencies.
B. Related Organization – A related organization is an entity for which the Government is not financially accountable. It does not impose will or have a financial benefit or burden relationship, even if the Government appoints a voting majority of the related organization’s governing board.
The Lexington-Fayette Urban County Housing Authority (Housing Authority) was created in order to develop and operate decent, safe and sanitary housing for low income, elderly and disabled residents. The appointment of the governing board by the Mayor and the scope of public service are not considered an adequate demonstration of oversight and control. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Housing Authority is not considered to be a component unit of the Government.
Explorium of Lexington was established to provide a unique educational opportunity for Fayette County and Central Kentucky children. The Government has no responsibility for their budget, debt, financing deficits, or fiscal management. Additionally, the Government does not influence their operations in any respect. Therefore, the Explorium is not considered to be a component unit of the Government.
C. Jointly Governed Organizations – The Government has some level of representation in the following organizations. Since the Government does not retain an ongoing financial interest or an ongoing financial responsibility for these organizations, these are not joint ventures and are not presented in the financial statements.
The Bluegrass Regional Recycling Center (BRRC) is a non-profit Kentucky corporation whose purpose is to reduce the volume of solid waste being placed in landfills and engage in activities that promote recycling. Pursuant to an Interlocal Agreement, the BRRC is operated by the Government and fourteen counties. The Government has no legal interest in or access to the resources of the BRRC. Neither does it have any legal responsibility for the deficits or debts of, or financial support to, the BRRC. The Valley View Ferry Authority is a legally separate entity that operates and maintains the Ferry on the Kentucky River at Valley View. The board consists of seven members, two appointed by the Government, three appointed by the Madison County Fiscal Court and two appointed by the Jessamine County Fiscal Court. The Government is not legally responsible for the Valley View Ferry Authority’s finances. The Government contributed $14,000 to support the Ferry’s operations in fiscal year 2013.
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D. Basic Financial Statements Government-Wide and Fund Financial Statements The basic financial statements include both the government-wide and the fund financial statements. The reporting model focus is either on the Government as a whole or on major individual funds. The government-wide financial statements report information on all of the non-fiduciary activities of the Government and its component units. Both the government-wide and fund financial statements categorize primary activities as either governmental or business-type. Governmental Activities normally are supported by taxes and intergovernmental revenues. Business-Type Activities rely to a significant extent on fees and charges for support. In the Government-Wide Statement of Net Position, both the Governmental and Business-Type Activities are presented on a consolidated basis by column. The Government-Wide Statement of Activities demonstrates the degree to which the direct expenses of a function (Public Works, Police, Fire and Emergency Services, Parks and Recreation, etc.) are offset by program revenues. Direct expenses (including depreciation) are those that are clearly identifiable with a specific function. Program revenues are directly associated with the function and include charges for services and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function. Operating grants include operating-specific and discretionary (either operating or capital) grants while capital grants are capital-specific. Occupational license fees applied to gross wages and net profits, other license fees and permits, taxes, interest income and other revenues not included in program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though fiduciary funds are excluded from the government-wide financial statements. Major individual governmental and enterprise funds are reported as separate columns in the fund financial statements. Non-major funds (by category) are summarized into a single column. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide, proprietary, and fiduciary fund (with the exception of the agency fund, which has no measurement focus) financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. With this measurement focus, all assets and all liabilities, including long-term assets as well as long-term debt and obligations, are included in the Statement of Net Position. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the Government considers revenues to be available if they are collected within 60 days of the end of the period. Revenues susceptible to accrual are intergovernmental revenues, investment earnings, emergency medical services (EMS), insurance revenues and license fees. Major revenue sources not susceptible to accrual include charges for services (other than EMS), fines and forfeitures and miscellaneous revenues. Such revenues are recorded as revenues when received because they are generally not measurable or available until actually received. Intergovernmental revenues received for specific purposes or projects are recognized when the applicable eligibility requirements are met. Revenues received before the eligibility requirements are met are reported as unearned revenue. Expenditures are recorded when the liability is incurred except: (1) principal and interest on long-term debt is recorded when due and (2) compensated absences are accounted for as expenditures in the period used. Agency fund financial statements report only assets and liabilities and accordingly have no measurement focus. Agency funds use the accrual basis of accounting to recognize receivables and payables.
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Since the governmental fund statements are presented on a different measurement focus and basis of accounting than the government-wide statements’ governmental column, a reconciliation is presented on the page following each statement which briefly explains the adjustments necessary to transform the fund based financial statements into the governmental column of the government-wide presentation. Internal service funds provide services primarily to other funds of the Government and are presented in summary form as part of the proprietary fund statements. Since the principal users of the internal services are the Government’s governmental activities, the internal service funds’ financial statements are consolidated into the governmental activities column in the government-wide financial statements. To the extent possible, the costs of these services are reflected in the appropriate functional activity. The internal service funds also provide services to the proprietary funds. Therefore, a portion of the net position of the internal service funds is allocated to Business-Type Activities and is reported as an adjustment on the Statement of Net Position of the proprietary funds. The Government’s fiduciary funds are presented in the fund financial statements by type (pension and agency). Since these assets are being held for the benefit of a third party (private parties, pension participants, etc.) and cannot be used for activities or obligations of the Government, these funds are not incorporated into the government-wide financial statements. The Government reports the following major governmental funds:
The General Fund is the primary operating unit of the Government and accounts for the revenues and expenditures not specifically provided for in other funds. Most of the essential governmental services such as police and fire protection, community services, and general administration are reported in this fund. The Urban Services Fund accounts for the taxes that are assessed on property within designated areas, or taxing districts, based on the type of services available to property owners. These services include solid waste collection, streetlights and street cleaning. Property taxes raised from the urban services taxing districts can only be used to finance these services. The Federal and State Grants Fund accounts for the receipts of intergovernmental funds that are restricted for operational and capital use of a particular function.
The Government reports the following major proprietary funds: The Sanitary Sewer System Fund accounts for the construction activities, operation and maintenance, and the payment of principal and interest for bond issues of the Government’s sanitary sewer system. The Public Facilities Corporation Fund accounts for the acquisition, construction and operation of government-owned facilities. The Landfill Fund accounts for the operations, closure, and postclosure care costs of the Government’s landfill. The Water Quality Fund accounts for the revenues and expenses of developing and operating storm water related activities.
Additionally, the Government reports the following fund types:
Internal Service Funds account for the Government’s insurance programs for employee health, dental and vision care insurance benefits. Workers’ compensation, vehicle liability and physical damage, general liability, and property damage insurance coverage are also accounted for in Internal Service Funds.
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Fiduciary Funds are used to account for assets held on behalf of outside parties, including other governments, or on behalf of other funds within the Government. Trust funds account for assets held by the Government under the terms of a formal trust agreement. Agency funds generally are used to account for assets that the Government holds on behalf of others as their agent, are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Fiduciary funds are as follows: Pension Trust Funds account for the revenues received, expenses incurred and the net position available for retirement benefits of the Policemen's and Firefighters' Retirement Fund and the City Employees' Pension Fund. Agency Funds account for assets held by the Government for others in an agency capacity. These are funds collected from juvenile and adult offenders and disbursed to victims in accordance with court decrees, funds collected from and disbursed for inmates who are on work release, funds collected from special assessments for payment of debt service for neighborhood capital projects, and funds collected from noncustodial parents for child support and disbursed to the custodial parents.
As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the Government’s sewer, landfill and public facilities and parking functions and various other functions of the Government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 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. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include occupational license fees on wages and net profits, taxes and interest income. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Government’s enterprise and internal service funds are charges to customers for services. Operating expenses for enterprise and internal service 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 Government administers the Expansion Area Master Plan as follows:
The Government established a program in 1996, called the Expansion Area Master Plan (EAMP), to ensure uniform development of the Urban Services Area in Fayette County. The EAMP allows for the collection of exaction fees on new construction. The Government requires that those who develop property bear the cost of improvements in rough proportion to the need generated by the development. Ordinance 196-96 acknowledges that it is in the best interest of the Government to encourage developers to build the system improvements identified in the Infrastructure Element of the EAMP and to provide developers who “front end” public improvements with credits against fair share fees and repayment for costs incurred in excess of their fair share. Generally credits are granted to developers via a resolution passed by the Urban County Council. The Chief Administrative Officer has the authority to grant credits outside the resolution process and has occasionally done so. Exaction fees are assessed according to the guidelines established in the EAMP. They are due and payable when a developer applies for a building permit. Fees may be satisfied either with a cash payment or the surrender of exaction credits.
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E. Budgetary Control Budget Policy – The Urban County Council annually approves the budget ordinance for all operating funds of the Government, which includes governmental, proprietary, fiduciary, and agency funds. Federal and State Grant funds and capital projects funds adopt project-length budgets. Additional special revenue funds which are not budgeted include the Industrial Revenue Bond Fund, Police Confiscated Funds and the Public Safety Fund. Budgets are adopted on a basis consistent with GAAP except that budgetary basis expenditures include purchase orders and contracts (encumbrances). Budgetary control is maintained at the division level, e.g. Division of Police, Division of Parks and Recreation, etc. The Mayor may authorize transfers within a division; however, the Urban County Council must approve by ordinance any other amendments to the budget. All budgeted amounts presented in the financial statements reflect the original budget and the amended budget (which have been adjusted for legally authorized revisions of the annual budgets during the year). Appropriations lapse at year-end; however, uncompleted capital projects may be re-appropriated at the beginning of each fiscal year. The Council made several supplemental budgetary appropriations throughout Fiscal Year 2013. The net effect of these supplemental appropriations was an increase of $6,438,847 in the General Fund and a decrease of $2,680,551 in the Urban Services Fund, which included re-appropriations of encumbrances from prior fiscal years and various waste management and street light re-appropriations to the following fiscal year 2014, respectively. F. Assets, Liabilities and Fund Equity Cash and Investments – Management has adopted written policies and procedures for cash and investment management. Cash and cash equivalents include cash on hand, demand deposits and cash with fiscal agents. Cash balances of most Government funds are pooled and invested. Interest earned from investments purchased with pooled cash is allocated to each of the funds based on the fund's average monthly cash balance, except as required by ordinance for various restricted reserves. Funds that incur a negative balance in pooled cash and investments during the year are not allocated interest. The Government has adopted GASB Statement No. 31, Accounting and Financial Reporting for Certain Investments and for External Investment Pools. This statement requires that investments in interest-earning investment contracts, external investment pools, open-end mutual funds and debt and equity securities be reported at fair value. Investments in the Pension Trust Funds and investments with a maturity of more than one year at the time of purchase are stated at fair value. Fair value for securities traded on a national exchange is determined by the last reported sales price. All other investments are stated at cost. Receivables – Receivables are amounts due representing revenues earned or accrued in the current period. Allowances for uncollectible loans in the Federal and State Grants Fund fully reserve loan balances due to the nature of the individual projects and terms of the loans. Accounts receivable from other governments include amounts due from grantors for grants for specific programs and capital projects. The majority of other receivables in the General Fund are for taxpayer-assessed revenues that are collected 30 days after year end. Franchise fee revenues are recognized if collected within 60 days after year end. Property taxes for fiscal year 2013 were levied on August 30, 2012 on the assessed valuation of property located in Fayette County as of the preceding January 1, the lien date. The due date and collection periods for all taxes exclusive of vehicle taxes are as follows: Description Per KRS 134.020 Due date for payment of taxes Upon receipt 2% discount period By November 1 Face value amount payment dates November 2 to December 31 Delinquent date, 5% penalty January 1 to January 31 10% penalty plus 10% add on fee date April 15
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Per Kentucky statute, the county sheriffs are responsible for collection of property taxes. Vehicle taxes, collected by the County Clerk of Fayette County, are due and collected in the birth month of the vehicle's licensee. During the year, property tax revenues are recognized when cash is received. At year-end, a receivable is recorded for delinquent property taxes but revenues are only recognized for taxes collected within 60 days of the close of the fiscal year. Allowance for Uncollectable Amounts – An allowance for uncollectable amounts relates to the estimated uncollectable balance of the revenues earned or accrued that have been included in accounts receivable at year end. An allowance is recorded on receivable balances based on historical bad debt experience related to the nature of each receivable balance. Interfund Receivables/Payables – During the course of its operations, the Government has numerous transactions between funds to finance operations, provide services, construct assets and service debt. To the extent that certain transactions between funds have not been paid or received as of June 30, 2013, balances of interfund amounts receivable or payable have been recorded as “due to/from other funds”. Any residual balances outstanding between the Governmental Activities and Business-Type Activities are reported in the government-wide financial statements as “internal balances.” Inventories and Prepaid Items – Fuel and vehicle parts inventories are stated at average cost. Other inventories are valued using the first-in, first-out method. The costs of inventory items are recognized as expenditures or expenses when used. Payments made to vendors for goods and services that will benefit periods beyond June 30, 2013 are recorded in assets as prepaid items. In the governmental fund financial statements, reported inventories and prepaid items are equally offset in the fund balance as nonspendable, which indicates that they do not constitute “available spendable resources” even though they are a component of total assets. Restricted Assets – Restricted assets are liquid assets that have third-party (statutory, bond covenant, or granting agency) limitations on their use. Certain proceeds of revenue bonds, as well as certain resources set aside for their payment, are classified as restricted assets on the balance sheet and statement of net position since their use is limited by applicable bond indentures. The other restricted assets are required to be maintained until the related bonds mature. The Construction and Capital Acquisitions account is used to report proceeds of general obligation and revenue bonds and notes that are restricted for use in construction and capital acquisitions. The Government uses the Construction and Capital Acquisitions assets for their intended purpose before using unrestricted assets. The Maintenance and Operations account represents the resources set aside to operate, maintain and insure the Sanitary Sewer System for three full months. The Capital Replacement account represents the resources set aside to provide reasonable reserves for renewals, replacements, improvements, extensions, extraordinary major repairs and contingencies in the operation of the Sanitary Sewer System. The Debt Service account is used to report resources set aside to prevent a default in payment of principal or interest on the bonds. The Sinking Fund account represents the resources accumulated for debt service payments over the next twelve months. The balances of the restricted asset’s accounts in the governmental funds are as follows: Various purpose general obligation notes account $25,997,776Equipment general obligation notes account 259,925Federal Grants and Contracts 27,920Pension bonds 901
Total restricted assets $26,286,522
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The balances of the restricted asset’s accounts in the enterprise funds are as follows:
Sanitary sewer system maintenance and operations account $7,234,703Sanitary sewer revenue bond sinking fund account 4,376,559Sanitary sewer revenue bonds construction account 3,627,313Sanitary sewer capital replacement account 2,319,500Sanitary sewer debt service reserve account 4,395,509
Total restricted assets $21,953,584
Unrestricted Assets – Unrestricted assets represent unrestricted liquid assets. While Government management may have categorized and segmented portions for various purposes, the Urban County Council has the unrestricted authority to revisit or alter these management decisions. Capital Assets – Capital assets, which include property, plant, equipment and infrastructure (e.g. roads, bridges, traffic signals and similar items) and intangible assets, are reported in the applicable Governmental or Business-Type Activities columns in the government-wide financial statements and in the proprietary funds. Expenditures for items having a useful life greater than one year and having a cost greater than $5,000 for equipment and $25,000 for land, buildings, infrastructure and related improvements are capitalized. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair market value and recorded as donations at the date received. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Capital assets of the Government are depreciated using the straight-line method over the following estimated useful lives:
Buildings 10-40 years Land and leasehold improvements 10-50 years Infrastructure 10-50 years Sanitary sewer system lines and plants 50 years Vehicles, equipment, and furniture 5-25 years Intangibles 3-5 years Construction in progress (CIP) represents construction projects for capital assets that have not yet been placed in service. Developments in progress (DIP) represent fees accrued on urban development projects in the EAMP currently underway that have not yet been completed, where settlement of the fees by the respective developer is expected to be made through contributing infrastructure type assets (e.g. roads, sewer systems, etc.) to the Government. CIP and DIP are not depreciated until the projects are complete and placed in service. For more information on the EAMP plan, please see page 59. Land, purchase of development rights and permanent easements are not depreciated. Compensated Absences – Compensated absences include accumulated unpaid vacation, sick and holiday leave. Government employees are granted vacation and sick leave in varying amounts in accordance with administrative policy. In the event of termination, an employee is reimbursed for accumulated holiday and vacation days. Employees receive annual compensation for accumulated unused sick leave in excess of 600 hours (or 840 hours for firefighters). Employees are reimbursed for all accumulated unused sick leave upon retirement. All accumulated leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. In governmental funds, compensated absences are not payable with available and spendable resources, and, therefore, are only recorded when they have matured, for example, as a result of employee resignations and retirements. Long-Term Obligations – In the government-wide and proprietary fund financial statements, long-term debt and obligations are reported as liabilities in the applicable Governmental Activities, Business-Type Activities, or
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proprietary fund Statement of Net Position. The discounts and premiums related to bonds and notes issued are amortized over the life of the bond or note using the straight-line method. Bonds and notes payable are reported net of the applicable bond premium or discount. Issuance costs are expensed when incurred. In the fund financial statements, governmental funds recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are reported as debt service expenditures. The difference between the re-acquisition price (new debt) and the net carrying value of the old debt on refunded debt of the proprietary funds is amortized as a component of interest expense over the life of the old or new bonds, whichever is shorter, using the straight-line method. Long-term liabilities include the following: Compensated absences, which is the accrual for vacation time earned but not taken by employees. Principal outstanding on general obligation bonds, general obligation notes, and revenue bonds. Unfunded Post-Retirement Health Benefits, which is the net retirement health benefit obligation for the
Policemen’s and Firefighters’ Retirement Fund and the City Employees’ Pension Fund. Landfill closure and postclosure care liability, which is the estimated total current cost to place a final cover on
the Government’s landfill sites and to perform certain maintenance and monitoring functions for thirty years after closure.
Unearned revenue and other liabilities, which is the cash received in advance of being earned, and other long
term liabilities.
Unfunded pension liability, which is the net retirement obligation for the Policemen’s and Firefighters’ Retirement Fund.
G. Net Position/Fund Balances The government-wide and proprietary financial statements utilize a net position presentation. Net position is categorized as follows:
Invested in Capital Assets, Net of Related Debt – is intended to reflect the portion of net position associated with capital assets (net of accumulated depreciation), less outstanding capital assets related debt, net of unspent bond proceeds.
Restricted Net Position – represents amounts that are restricted to specific purposes when constraints placed on the use of resources are either (a) externally imposed by creditors, grantors, contributors, laws/regulations of other governments or constitutional provisions, or (b) resources resulting from enabling legislation.
Unrestricted Net Position – This category represents amounts not appropriated for expenditures or legally segregated for a specific future use.
In the balance sheet of governmental funds the difference between the assets and liabilities of governmental funds is reported as fund balance. The Government's fund balance is divided into the following classifications, as applicable:
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Nonspendable – These resources include amounts that cannot be spent because they are either not spendable in form or are legally or contractually required to be maintained intact. The Government’s nonspendable funds consisted of prepaid expenses and inventories as of June 30, 2013.
Restricted – Restricted amounts represent resources that are constrained for a specific purpose by external parties, constitutional provisions or enabling legislation. The Government had restricted funds for various projects: public works, public safety, capital projects, grants, urban services, and energy improvement as of June 30, 2013. Committed – Committed amounts are constrained for a specific purpose by the Government using its highest level of decision-making authority. For resources to be considered committed, the Urban County Council issues an ordinance that can only be changed with another corresponding ordinance. The Government has committed funds for general government and economic stabilization as of June 30, 2013. The Government developed and adopted an Unrestricted General Fund Balance (“Economic Stabilization Fund” or “Economic Contingency Fund”) Policy on December 5, 1996. It is the Government’s policy to:
Maintain an Economic Contingency Fund balance of not less than $4,000,000. Interest earned on monies will accrue to the Economic Contingency Fund.
Budget a deposit of $50,000 per month, for each fiscal year until the Economic Contingency Fund is at least equal to 10% of the last completed fiscal year total General Fund revenues, beginning with the 2007 fiscal year.
Examine the General Fund Unassigned Fund Balance on an annual basis, following the annual audit
report, and allocate 25% of the available balance above the Budgeted Fund Balance Carry forward and a reserve for Capital Re-appropriations to be deposited into the Economic Contingency Fund.
The Economic Contingency Fund balance may only be used for an unanticipated emergency of an extreme nature that cannot be remedied by reasonable budget changes and/or the use of budgeted ending fund balance. The Government has made a complete and rational analysis, with justifying evidence that the Economic Contingency Fund can be maintained in the future. Assigned – Assigned amounts represent resources that the Government intends to use for a specific purpose, but do not meet the definition of restricted or committed fund balance. Amounts may be assigned by the Urban County Council or by the Commissioner of Finance under the authorization of the Mayor. The Government has assigned funds for general government and capital projects as of June 30, 2013. Unassigned – Unassigned amounts represent resources that have not been assigned to other funds or restricted, committed, or assigned to a specific purpose within the General Fund.
When both restricted and unrestricted resources are available for use, it is the Government’s policy to use restricted resources first, then unrestricted resources as they are needed. Likewise, fund balances that are committed or assigned would be used first for their approved purposes. Unassigned fund balances would be used as needed.
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H. Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates.
I. Revenues, Expenditures and Expenses Property taxes are billed and collected within the same fiscal year in which the taxes are levied. Emergency medical service fees are billed and collected by Software Development, Inc. (SDI) as an agent for the Government. Cash collected by SDI is remitted daily to the Government. The Government records all revenues (net of an allowance for doubtful accounts) billed through the end of the fiscal year by SDI. The majority of the sanitary sewer and landfill user fees, together with the water quality management fees, are billed and collected by Greater Cincinnati Water Works (GCWW), the third party vendor hired September 2012 to replace Kentucky American Water Company (KAWC). Cash collected by GCWW is remitted to the Government daily. All revenues (net of an allowance for doubtful accounts) billed by GCWW are recorded by the Government. Expenditures are recognized when the related fund liability is incurred except for the following permitted by GAAP:
General obligation long-term debt principal and interest are reported when due.
Inventory costs are reported in the period when inventory items are consumed, rather than when purchased.
Compensated absences are recorded when payable rather than when earned.
Interfund transactions that would be treated as revenues or expenditures/expenses if they involved organizations external to the Government are similarly treated when involving funds of the Government. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the reimbursed fund. Transfers from funds receiving revenues to funds through which the resources are to be expended and operating subsidies are classified as transfers. Transfers between governmental and proprietary funds are netted as part of the reconciliation to the government-wide columnar presentation. NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Compliance with Finance Related Legal and Contractual Provisions The Government has no material violations of finance related legal and contractual provisions.
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B. Excess of Expenditures over Appropriations - The following divisions, in funds that have budgets adopted annually, had excess expenditures over appropriations for the fiscal year ended June 30, 2013:
ExcessExpenditures
General Fund:
Chief Development Officer $7,453
Circuit Judges 296
Coroner 47,716
Environmental Quality & Public Works Admin 16,769
Fire & Emergency Services 4,185,651
General Services Administration 364,114
Grants & Special Projects 9,759
Office of the Chief Administrative Officer 9,241
Law 63,301
Police 2,647,085
Traffic Engineering 40,523
Urban Services Fund:
Office of the Chief Administrative Officer 424
Streets & Roads $110,069 Excess expenditures over appropriations were funded by available fund balances. C. Fund Deficits There were no fund deficits to report at June 30, 2013. D. Prior Period Adjustments Primary Government In fiscal year 2013, the Government early implemented GASB Statement No. 65, Items Previously Reported as Assets and Liabilities (GASB 65). The accounting for bond issuance costs has been changed from amortizing the costs over the lives of the related bonds to expensing them in the year incurred. The change in accounting resulted in a reduction in the government-wide net position of $2,101,495. Governmental Activities net position was decreased by $1,402,852. Business-Type Activities net position was decreased by $698,643. Capital assets for Governmental Activities on the government-wide Statement of Net Position were decreased by $145,899 in fiscal year 2013 for amounts incorrectly recorded as capital expenditures in the year 2008. Capital assets for Business-Type Activities were increased by $1,292,354 as a result of expenses in fiscal year 2012 not capitalized for construction in progress in the Sanitary Sewer System Fund for the remedial measures costs incurred in the prior year. Capital assets for Business-Type Activities were increased by $63,195 from prior years as a result of expenses not capitalized for Water Quality. Expenses were incurred prior to fiscal year 2012. Notes Payable for Business-Type Activities were increased by $278,731 to correctly reflect loan funds received by the Sanitary Sewer System Fund during the prior fiscal year for completion of the upgrade of the South Elkhorn pump station and construction of a new 36 inch force main.
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Revenues were incorrectly recognized in prior years related to the Police Confiscated Funds. A prior period adjustment in the amount of $863,098 has been made to the Governmental Fund financial statements to derecognize revenues representing funds not yet spent. Component Units
In FY 2013, the Lexington Airport adopted GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflow of Resources and Net Position and GASB 65. The Statements of Net Position, previously referred to as the Statements of Net Assets, now reflect interest rate caps as deferred outflows and deferred inflows of resources. Also, the accounting for bond issuance costs has been changed from amortizing them over the lives of the related bonds to expensing them in the year incurred. The change in accounting for bond issuance costs resulted in a reduction of net position of $2,569,263. The Lexington Public Library early implemented GASB 65 during fiscal year 2013, which resulted in a decrease of net position in the amount of $169,350 due to the change in accounting for debt issuance costs. The Lexington Center Corporation financial statements for fiscal year 2013 have been restated to conform to the Government’s financial statements to reflect implementation of GASB 65. This resulted in a decrease of net position in the amount of $301,917 due to the change in accounting for debt issuance costs. In fiscal year 2013, the Board of Health has restated certain items from the prior year as follows: Previously reported net position $4,457,525Increase in accounts receivable 228,739 Increase in HealthFirst Bluegrass receivable 164,318 Decrease in accounts payable 235,548 Decrease in accrued payroll and fringes 39,175 Decrease in accrued leave 122,025 Net position, June 30, 2012 $5,247,330
These asset and liability changes also affected corresponding line items in the statements of revenues, expenditures and changes in net position and cash flows. NOTE 3. DETAIL NOTES ON ALL FUNDS A. Cash, Investments, and Securities Lending Primary Government The Government’s bank balances at June 30, 2013 are entirely insured by the Federal Deposit Insurance Corporation (FDIC) and/or collateralized with securities held by the Government’s agent in the Government’s name. In accordance with Kentucky Revised Statute (KRS) 66.480 and the Government’s investment policy, the Government is allowed to invest in obligations of the U.S. Treasury and U.S. agencies and instrumentalities, repurchase agreements, bankers’ acceptances, commercial paper, obligations of the Commonwealth of Kentucky and its agencies and instrumentalities, shares of mutual funds or interest bearing deposits of insured national or state banks. In addition, the Pension Trust Funds are allowed to invest in equity securities, corporate bonds and international stocks listed as American Depository Receipts (ADR).
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Investments of the Government as of June 30, 2013 are summarized and categorized in the following table:
Investment Maturities (in years)
Investment Type Fair Value Less Than 1Year 1 to 5 6 to 10 More Than 10Money Market Mutual Funds $126,845,313 $126,845,313 $0 $0 $0Certificates of Deposit 10,266,129 1,819,044 1,116,433 6,396,635 934,017 U.S. Government Agency Obligations 26,207,310 1,976,678 8,085,748 16,144,884 Repurchase Agreements 5,689,995 5,689,995 Total Investments $169,008,747 $134,354,352 $3,093,111 $14,482,383 $17,078,901
Interest Rate Risk – The risk that changes in interest rates will adversely affect the fair value of an investment. While the Government has adopted an investment policy that recommends controlling interest rate risk through maturity diversification, the policy does not place any formal limits of investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk – The risk that an issuer or other counterparty to an investment will not fulfill its obligations. Investments are made under the “prudent person rule” outlined in the Government’s investment policy. This rule is defined to mean “investments shall be made with judgment and care, under circumstances then prevailing, which persons of prudence, discretion, and intelligence exercise in the management of their own affairs, not for speculation, but for investment, considering the probable safety of capital as well as the probable income to be derived.” The prudent investor standard shall be applied in the context of managing the overall portfolio. In accordance with its investment policy, the Government is permitted to invest in the following:
1. Obligations of the United States and of its agencies and instrumentalities, including obligations subject to repurchase agreements, provided that delivery of these obligations subject to repurchase agreements is taken either directly or through an authorized custodian.
2. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency.
3. Obligations of any corporation of the United States government. 4. Certificates of deposit issued by or other interest-bearing accounts of any bank or savings and loan
institution which are insured by the FDIC or similar entity or which are collateralized, to the extent uninsured.
5. Bankers’ acceptances for banks rated in one (1) of the three (3) highest categories by a nationally recognized rating agency.
6. Commercial paper rated in the highest category by a nationally recognized rating agency. 7. Bonds or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and
instrumentalities. 8. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United
States, and rated in one (1) of the three (3) highest categories by a nationally recognized rating agency. 9. Shares of mutual funds, each of which shall have the following characteristics:
a. The Mutual Fund shall be an open-end diversified investment company registered under the Federal Investment Company Act of 1940, as amended
b. The management company of the investment company shall have been in operation for at least five (5) years; and
c. All of the securities in the mutual fund shall be eligible investments under this section.
Concentration of Credit Risk – The risk of loss attributed to the magnitude of the Government’s investment in a single issuer. Government securities and investments in mutual funds are excluded from this risk. In order to reduce
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the credit risk, the investments held by a financial institution in the Government’s name should be limited to no more than 35% of the total investments, excluding that held in a Money Market Mutual Fund.
Pension Trust Funds
The Government’s Pension Trust Funds are made up of the Policemen’s and Firefighters’ Retirement Fund (PFRF) and the City Employee’s Pension Fund (CEPF). The disclosures below are separate as the pension funds have different investment policies and different objectives. The PFRF is an active growing fund, while the CEPF has been closed since 1983.
Investments of the PFRF as of June 30, 2013 are summarized and categorized in the following table:
Investment Type Fair Value Less Than 1 1 to 5 6 to 10 More Than 10Debt Securities US Agencies $28,840,779 $721,553 $4,036,103 $4,955,455 $19,127,668 US Government Obligations 18,193,115 5,552,473 3,166,997 2,239,555 7,234,090 Municipal Obligations 5,933,303 2,797,723 1,788,420 1,347,160 International Bonds 13,362,360 747,166 6,249,214 5,237,654 1,128,326 Corporate Debt 76,927,344 3,122,703 46,885,030 23,101,366 3,818,245 Repurchase Agreements 12,174,347 12,174,347
155,431,248 $22,318,242 $63,135,067 $37,322,450 $32,655,489
Other Investments: Equity Mutual Funds 164,552,201 Equity Real Estate 52,746,107 Equity Securities - Domestic 81,039,311 Equity Securities - International 97,641,022
$551,409,889
Policemen's and Firefighters' Retirement Fund
Investment Maturities (in years)
The PFRF has contracted with external investment managers to manage all of the funds. The Board has adopted an investment policy that recommends the following target allocations based on asset class:
Asset Class Target
AllocationPassive Large Cap Core 5.0%Active Large Cap Growth 10.0%Active Large Cap Value 10.0%Small Cap Equity 15.0%International Growth Equities 9.25%International Value Equities 9.25%Emerging Markets 4.5%Total Equities 63.0%
US Core Fixed Income 15.5%US High Yield Fixed Income 7.5%Total Fixed Income 23.0%
Real Estate 9.0%
Real Return 5.0%
Total Plan 100.0%
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Interest Rate Risk – The PFRF does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair market losses arising from increasing interest rates.
Credit Risk – The PFRF investment policy manages credit risk by the limitation of certain investments within the above asset classes. For US Equity asset classes up to 15% of US Small Cap Value, 7.5% of US Large Cap Growth, 7.5% of US Large Cap Value and 10% of Passive Large Cap Core portfolio’s current market value may be invested in ADR's. The US Broad Market Fixed Income manager’s debt securities must have a minimum quality rating of Baa/BBB or above, while the overall portfolio weighted average credit quality rating must not fall below AA- or equivalent. The US High Yield Fixed Income manager’s portfolio may have, on average, no more than 20% of the portfolio in debt securities with a quality rating of CCC/Caa and below, while the overall portfolio rating must not fall below Baa3, BBB-, A2 or P2.
US Agencies
US Government Obligations
Municipal Obligations
International Bonds
Corporate Debt Total %
Quality Ratings:AAA $0 $0 $1,825,577 $643,935 $3,016,552 $5,486,064 4%AA 9,545,236 9,155,214 2,876,800 2,857,194 5,597,258 30,031,702 21%A 573,581 2,371,139 16,661,137 19,605,857 14%BBB 1,271,866 13,439,811 14,711,677 10%BB 2,837,338 15,366,252 18,203,590 13%B 3,166,013 18,710,638 21,876,651 15%CCC 214,875 2,104,099 2,318,974 2%D 225,700 225,700 < 1%NR 19,295,543 9,037,901 657,345 1,805,897 30,796,686 21%
$28,840,779 $18,193,115 $5,933,303 $13,362,360 $76,927,344 $143,256,901 100%
Debt Securities by Investment Type
Concentration of Credit Risk – Government securities and investments in mutual funds are excluded from this risk. The PFRF places a restriction on equity managers that at the time of purchase they may not invest in more than 5% of the outstanding securities of one issuer nor invest more than 5% of their portfolios’ assets in the outstanding securities with one issuer. The US Broad Market Fixed Income manager may not invest more than 5% of the outstanding securities with one issuer nor invest more than 5% of the portfolio's assets in the outstanding securities of one issuer, except for Treasury and Agency securities. The US High Yield Fixed Income manager may not invest more than the greater of 1.5 times the index weight or 20% of the portfolio in any one industry. The US High Yield Fixed Income manager may not invest more than 5% of the Plan’s assets in the outstanding securities of any one issuer. Securities Lending – The PFRF has a securities lending agreement with J.P. Morgan, a national banking association (the agent). J.P. Morgan, also the custodian for the retirement fund, acts as an agent to lend securities held in the retirement fund portfolios. Per the agreement, the PFRF has authorized the lending of domestic bonds and securities in return for collateral. Collateral for loaned securities may be in the form of cash, securities issued or guaranteed by the United States Government or its agencies or irrevocable letters of credit. The broker/dealer collateralizes their borrowing to 102% of the security value, plus accrued interest. If the broker/dealer fails to return the security upon request, then the agent will utilize the collateral to replace the security loaned. The Government does not have the ability to pledge or sell collateral securities without a borrower default. Investment of the cash collateral may be in commercial paper that is rated in the highest category of at least two nationally recognized security agencies, short-term obligations of banks, short-term obligations of the United States Government or its agencies, repurchase agreements, funding agreements issued by insurance companies rated “A”
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or higher by A. M. Best & Company or money market mutual funds. The investments of the collateral do not generally match the maturities of the securities lending arrangements themselves; they are typically very short-term in nature and mostly invested in overnight repurchase agreements. The agent agrees to indemnify the retirement fund for losses resulting directly or indirectly from the failure of the borrower to return the loaned securities in accordance with the terms of the loan agreement, limited to an indemnification amount equal to the difference between the market value of the loaned securities and the value of the collateral. There are no restrictions in the agreement that limit the amount of securities that can be lent at one time or to one borrower. As of June 30, 2013, the securities loaned in the portfolio did not have credit risk, and the fair value of securities on loan is $12,174,347.
Investments of the CEPF as of June 30, 2013 are summarized and categorized in the following table:
Investment Type Fair Value Less Than 1 1 to 5 6 to 10 More Than 10Debt Securities: US Agencies $6,176,166 $3,286 $1,143,329 $1,059,459 $3,970,092 US Government Obligations 2,933,223 1,516,603 567,420 849,200 International Bonds 663,350 36,253 296,492 162,662 167,943 Corporate Debt 3,343,008 133,472 1,801,037 554,457 854,042
13,115,747 $173,011 $4,757,461 $2,343,998 $5,841,277
Other Investments: Equity Securities - Domestic 12,999,245 Equity Securities - International 1,221,726
$27,336,718
City Employees Pension Fund
Investment Maturities (in years)
The CEPF has contracted with external investment managers to manage all of the funds. The Board has adopted an investment policy that recommends the following target allocations based on asset class:
Asset Class Target AllocationUS Equities 40%US Broad Market Fixed Income 60%Total Plan 100%
Interest Rate Risk – The CEPF does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair market losses arising from increasing interest rates.
Credit Risk – The CEPF investment policy limits its equity manager to investments in ADR’s to 10% of the equity portfolio’s current market value. The fixed income manager's debt securities must have a minimum quality rating of Baa/BBB or above, while the overall fixed income portfolio rating must be A+ or above. No more than 10% of the equity portfolio can be of quality rating Baa/BBB and below.
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US Agencies US Government
ObligationsInternational
BondsCorporate
Debt Total %Quality Ratings:AAA $0 $0 $20,488 $265,891 $286,379 2%AA 6,176,166 2,933,223 145,700 327,742 9,582,831 73%A 321,291 1,786,339 2,107,630 16%BBB 175,871 963,036 1,138,907 9%
$6,176,166 $2,933,223 $663,350 $3,343,008 $13,115,747 100%
Debt Securities by Investment Type
Concentration of Credit Risk – The CEPF investment policy places a restriction on equity managers that at the time of purchase, managers may not invest in more than 5% of the outstanding securities of one issuer nor invest more than 5% of their portfolios’ assets in the outstanding securities with one issuer. The fixed income manager may not invest in more than 5% of the outstanding securities of one issuer nor invest more than 5% of the fixed income portfolio assets in the outstanding securities of one issuer, except for Treasury and Agency securities. Component Units For complete information on custodial credit risk, interest rate risk, credit risk, and concentration of credit risk, refer to the individual reports on each component unit. Summarized investment information for the component units is included in the table below:
ReportedAmount/Fair Value
U.S. Government and Government Agency Obligations $21,185,146Investments not subject to categorization:
Certificates of Deposit 8,891,102Money Market Funds 6,088,700
Total Investments $36,164,948
As of June 30, 2013, LCC had $2,002,452 and $1,599,192 in deposits and investments, respectively that were uninsured and uncollateralized.
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B. Capital Assets
Capital asset activity for the year ended June 30, 2013 was as follows:
Beginning Ending Balance Increases Decreases Balance
Governmental Activities:Non-Depreciable Assets:
Land $59,174,341 $179,914 $0 $59,354,255Purchase of Development Rights 70,086,607 2,100,869 72,187,476Intangibles 3,008,387 96,000 3,104,387Construction in Progress 24,543,397 8,329,526 (11,565,371) 21,307,552Developments in Progress 13,042,410 7,460,108 (105) 20,502,413
Depreciable Assets:Buildings 143,607,378 2,394,197 (69,783) 145,931,792Intangibles 8,189,770 143,387 8,333,157Vehicles, Equipment and Furniture 102,338,310 3,211,644 (3,568,123) 101,981,831Land and Leasehold Improvements 25,921,675 425,634 26,347,309Infrastructure 997,929,718 7,387,950 (216,384) 1,005,101,284Sewer Lines * 6,054,178 2,030,274 8,084,452
Totals at Historical Cost 1,453,896,171 33,759,503 (15,419,766) 1,472,235,908 Less Accumulated Depreciation For:
Buildings (45,056,783) (4,409,340) 19,472 (49,446,651)Intangibles (5,408,062) (967,758) (86,876) (6,462,696)Vehicles, Equipment and Furniture (70,312,136) (7,129,380) 3,244,829 (74,196,687)Land and Leasehold Improvements (13,764,006) (1,835,255) (15,599,261)Infrastructure (249,997,835) (32,751,338) 35,366 (282,713,807)Sewer Lines (287,942) (171,649) (459,591)
Total Accumulated Depreciation (384,826,764) (47,264,720) 3,212,791 (428,878,693)Governmental Activities Capital Assets, Net 1,069,069,407 (13,505,217) (12,206,975) 1,043,357,215
Business-Type Activities:Non-Depreciable Assets:
Land 49,110,380 (7,585,094) 41,525,286Construction in Progress * 4,605,036 13,252,100 (3,295,058) 14,562,078Developments in Progress 4,145,460 3,554,804 (307) 7,699,957Intangibles 144,094 144,094
Depreciable Assets:Buildings 130,662,869 814,178 (10,633,276) 120,843,771Intangibles 3,088,807 3,088,807Vehicles, Equipment and Furniture 13,623,560 3,508,858 (232,505) 16,899,913Land and Leasehold Improvements 48,395,923 (566,388) 47,829,535Infrastructure * 6,746,076 1,404,256 8,150,332Sewer Lines 173,043,228 783,062 173,826,290Sewer Plants 163,269,363 163,269,363
Totals at Historical Cost 596,690,702 23,461,352 (22,312,628) 597,839,426Less Accumulated Depreciation For:Buildings (73,591,605) (4,291,778) 5,607,257 (72,276,126)Intangibles (2,132,813) (216,941) (2,349,754)Vehicles, Equipment and Furniture (10,617,874) (882,100) 232,505 (11,267,469)Land and Leasehold Improvements (35,515,128) (1,321,032) 566,387 (36,269,773)Infrastructure (387,032) (146,788) (35,365) (569,185)Sewer Lines (56,406,578) (3,333,703) (59,740,281)Sewer Plants (83,978,723) (3,067,304) (87,046,027)
Total Accumulated Depreciation (262,629,753) (13,259,646) 6,370,784 (269,518,615)Business-Type Activities Capital Assets, Net $334,060,949 $10,201,706 ($15,941,844) $328,320,811
* Restated beginning balance due to prior period adjustment
Primary Government
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Depreciation expense was charged to functions/programs of the primary government as follows:
Governmental Activities:General Government $647,591Administrative Services 1,114,021Finance 389,736Public Safety 311,695Environmental Quality & Public Works 36,741,733Police 865,796Fire and Emergency Services 1,440,609Law 1,791Community Corrections 1,616,294Social Services 257,714General Services 2,795,801Parks and Recreation 1,027,025Planning, Preservation & Development 54,914Total depreciation expense - Governmental Activities $47,264,720
Business-Type Activities:Sanitary Sewers $7,683,896Public Facilities 4,526,910Public Parking 81,248Landfill 848,543Right of Way 7,358Extended School Program 10,825Prisoners' Account System 2,667Enhanced 911 10,309Stormwater 87,890Total depreciation expense - Business-Type Activities $13,259,646
Beginning Ending Balance Increases Decreases Balance
Non-Depreciable Assets:Land $22,906,071 $7,585,094 $0 $30,491,165Construction in Progress * 3,853,406 9,152,314 (10,006,782) 2,998,938Other 491,544 717,330 1,208,874
Depreciable Assets:Buildings and Improvements * 306,140,455 16,644,579 (59,461) 322,725,573Vehicles, Equipment and Furniture 55,616,661 5,267,730 (2,035,745) 58,848,646Land and Leasehold Improvements 64,220,641 2,757,735 (605,189) 66,373,187Intangibles 58,540 1,915 60,455
Totals at Historical Cost 453,287,318 42,126,697 (12,707,177) 482,706,838Less Accumulated Depreciation (204,632,174) (18,675,218) 2,204,495 (221,102,897)
Component Unit Activities Capital Assets, Net $248,655,144 $23,451,479 ($10,502,682) $261,603,941
* Beginning balances restated.
Discretely Presented Component Units
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Construction Commitments The Government has active construction projects as of June 30, 2013. The projects include improvements to major roadways, government buildings, sanitary sewer and stormwater systems. At June 30, 2013, the Government had the following commitments on construction contracts:
Project CommitmentBuildings $226,549Capital Repairs and Maintenance 3,249,116Land Improvements 2,245,966Sanitary Sewer Collection System 10,375,200Sanitary Sewer Treatment System 12,368,207Street Lighting 291,481Storm Drainage 242,223Street Resurfacing Maintenance 11,648,472Streets and Roadways 3,273,587Traffic Control and Markings 99,389
$44,020,190
Intergovernmental revenues and local contributions provide funding for the major roadway improvements. The Urban Services Fund and intergovernmental revenues fund the renovations to government buildings. General obligation bonds finance the commitments for stormwater system improvements. Intergovernmental revenues and general obligation bonds fund the parks improvements. C. Interfund Receivables, Payables and Transfers The principal purpose of the Government’s interfund transfers is indicative of funding for capital projects or subsidies of various Government operations and reallocation of special revenues. Due to our practice of cash management by pooling the Government’s funds, interfund balances exist as of June 30, 2013. In addition, Federal and State Grants revenues are based on reimbursable expenditures. The composition of interfund balances as of June 30, 2013, is as follows:
Fund DescriptionDue from (to) General Fund
Sanitary Sewer System ($1,592,622)Public Facilities Corporation 283,239 Water Quality (8,132) Landfill 107,339 Other Enteprise Funds 1,550,609 Total due from Proprietary Funds 340,433
Urban Service (611,565)Federal and State Grants (2,039,022) Other Governmental Funds (150,367) Internal Service Funds 5,398,293 Total due from General Fund $2,937,772
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Receivable Entity Payable Entity AmountPrimary government - General fund Component unit - Downtown Development Authority $73,729Primary government - General fund Component unit - Parking Authority 645,155 Component unit - Lexington Convention and Visitor's Bureau Component unit - Lexington Center Corporation 82,000 Total 800,884
Component unit - Lexington Convention and Visitor's Bureau Primary government - General fund 1,008,168Component unit - Lexington Center Corporation Primary government - General fund 282,298Component unit - Lexington Center Corporation Component unit - Lexington Convention and Visitor's Bureau 82,000Total $1,372,466
Interfund transfers:
Transfers are indicative of 1) funding for capital projects, 2) moving unrestricted revenues collected in the General Fund to subsidize various programs accounted for in other funds in accordance with budgetary authorization, and 3) reallocation of special revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them. The following schedule briefly summarizes the Government’s transfer activity:
Non Major Total Major TotalGeneral Urban Services Fed St Grants Governmental Governmental Proprietary Proprietary
General $0 $2,529,224 $1,074,904 ($1,777,610) $1,826,518 $675,771 $675,771Urban Services (2,529,224) 5,054 (2,524,170) 108,000 108,000Fed St Grants (1,074,903) (5,054) (1,318,500) (2,398,457) (17,606) (17,606)Non-Major Governmental 1,777,610 1,318,500 3,096,110 181,019 181,019Major Proprietary (506,030) (108,000) 17,606 (596,424)Grand Total ($2,332,547) $2,416,170 $2,416,064 ($3,096,110) ($596,423) $947,184 $947,184
D. Long-term Debt
Revenue bonds and other directly related long-term liabilities, which are intended to be paid from proprietary funds, are included in the accounts of such funds. All other long-term indebtedness is accounted for in the governmental column of the Government-Wide Statement of Net Position.
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Primary Government Bonds payable, notes payable, compensated absences, landfill closure and postclosure care costs, and unfunded pension liabilities at June 30, 2013 are as follows:
Original Interest Final Amount Due WithinPurpose of Issue Issue Rates Maturity Outstanding One Year
Governmental ActivitiesBonds, Notes, Loans, and Leases:General Obligation, Series 2002C Storm Water & Road Construction $4,570,000 3.00% - 4.93% 1-Dec-2022 $125,000 $125,000General Obligation, Series 2004C Multi-Purpose Project 9,640,000 2.50% - 4.75% 1-Jul-2024 895,000 440,000General Obligation, Series 2005C PDR /Building Renovation 4,490,000 3.00% - 4.20% 1-Jun-2025 620,000 305,000General Obligation, Series 2006B Blvd/Stormwater/Fire Station/Cars 10,310,000 4.00% - 4.50% 1-Jun-2026 2,265,000 725,000General Obligation, Series 2006C Purchase of Development Rights 2,055,000 3.50% - 4.20% 1-Nov-2026 1,590,000 85,000General Obligation, Series 2006D Refunding 56,850,000 4.00% - 4.25% 1-May-2024 43,405,000 3,450,000General Obligation, Series 2008A Equipment/HVAC/Vehicles 13,520,000 3.50% 1-Feb-2014 1,935,000 1,935,000General Obligation, Series 2009A PDR /Building Renovation/CIP 24,830,000 2.25% - 5.00% 1-Feb-2029 19,175,000 1,490,000Pension Obligation,Series 2009B Police/Fire Pension Fund 70,610,000 3.50% - 6.00% 1-Apr-2029 60,590,000 2,580,000General Obligation, Series 2010A CIP projects 69,320,000 1.00% - 5.60% 1-Sep-2030 64,245,000 3,775,000General Obligation, Series 2010B Refunding of 1999B and 2000A 7,735,000 1.00% - 3.00% 1-Sep-2019 5,545,000 750,000General Obligation, Series 2010C Refunding of 2000E 6,635,000 1.00% - 3.00% 1-Dec-2020 4,905,000 570,000Pension Obligation,Series 2010D Police/Fire Pension Fund 35,825,000 .95%-5.45% 1-Jun-2030 32,040,000 1,330,000General Obligation, Series 2010F CIP projects 6,305,000 1.00%-2.90% 1-Dec-2016 5,000,000 1,275,000General Obligation, Series 2010G CIP projects 8,950,000 3.20%-5.40% 1-Dec-2025 8,950,000General Obligation, Series 2010H Refunding of 2001B 4,465,000 1.00%-3.80% 1-Dec-2021 4,325,000 440,000Pension Obligation,Series 2012A Police/Fire Pension Fund 31,000,000 2.50% - 4.00% 1-Oct-2032 31,000,000 1,170,000General Obligation, Series 2012B Refunding of 2002C and 2004C 6,275,000 2.00% - 4.00% 1-Jul-2024 6,275,000 20,000General Obligation, Series 2012C CIP projects 3,455,000 1.50% - 3.00% 1-Jul-2017 3,455,000 530,000General Obligation, Series 2013A Road Resurfacing 11,275,000 2.00% - 5.00% 1-Oct-2023 11,275,000 845,000General Obligation, Series 2013B Refunding of 2004,2005C,2006B $6,005,000 2.00% - 4.00% 1-Jul-2025 6,005,000 85,000Premiums, Discounts, and Unamortized Amounts on Bond Obligations 921,343
Total Bonds, Notes and Loans Payable 314,541,343 21,925,000Other Liabilities:
Compensated Absences 20,156,541 2,821,916Unfunded Other Post Employment Benefit Liability 64,980,406Unfunded Pension Liability 1,453,739
Total Other Liabilities 86,590,686 2,821,916Total Governmental Activities $401,132,029 $24,746,916
Business-Type ActivitiesBonds, Notes and Loans:
Sanitary Sewer, Series 2009A Sewer Rehabilitation $35,960,000 1.75% - 5.875% 1-Jul-2030 $33,170,000 $1,430,000Sanitary Sewer, Series 2010A Refunding 13,860,000 2.25% - 3.75% 30-Jun-2021 13,220,000 1,480,000Public Facilities, Series 2006 Refunding 66,725,000 3.88% - 4.25% 1-Oct-2031 57,970,000 2,130,000Radcliff road A209-09 SRF Loan 113,523 2.00% 1-Jun-2030 99,670 4,976KIA Streetscape A209-8 SRF Loan 1,254,980 2.00% 1-Dec-2030 1,124,030 54,232So. Elkhorn A09-01 SRF Loan $14,045,119 2.00% 1-Dec-2031 13,180,027 595,220
Premiums, Discounts, and Unamortized Amounts on Bond Obligations (4,128,850)
Total Bonds, Notes and Loans 114,634,877 5,694,428Other Liabilities:
Compensated Absences 1,313,956 418,536Landfill Closure & Postclosure Care Costs 13,589,212 435,251
Total Other Liabilities 14,903,168 853,787Total Business-Type Activities $129,538,045 $6,548,215
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Changes in Long-term Liabilities Long-term liability activity for the year ended June 30, 2013, was as follows:
Beginning Balance Additions Reductions
EndingBalance
Due Within One Year
Governmental ActivitiesBonds, Notes, Loans, and Leases:
General Obligation Bonds, Notes and Leases $316,485,000 $20,735,000 ($23,600,000) $313,620,000 $21,925,000Net of Bond Premiums, Discounts and
Unamortized Amounts on Refundings (770,350) 1,638,274 53,419 921,343Total Bonds, Notes, Loans and Leases Payable 315,714,650 22,373,274 (23,546,581) 314,541,343 21,925,000
Other Liabilities:Compensated Absences 21,254,266 2,371,365 (3,469,090) 20,156,541 2,821,916Unfunded Other Post Employment Benefit Liability 56,962,856 8,017,550 64,980,406Unfunded Pension Liability 1,513,988 (60,249) 1,453,739
Total Governmental Activities Long-Term Liabilities $395,445,760 $32,762,189 ($27,075,920) $401,132,029 $24,746,916
Business-Type ActivitiesBonds, Notes and Loans:
Revenue Bonds $49,220,000 $0 ($2,830,000) $46,390,000 $2,910,000Mortgage Revenue Bonds 60,020,000 (2,050,000) 57,970,000 2,130,000Notes and Loans 14,766,530 278,730 (641,533) 14,403,727 654,428
Bonds, Notes, and Loans Payable 124,006,530 278,730 (5,521,533) 118,763,727 5,694,428Net of Bond Premiums, Discounts and
Unamortized Amounts on Refundings (4,410,009) 281,159 (4,128,850)Total Bonds, Notes, and Loans Payable 119,596,521 278,730 (5,240,374) 114,634,877 5,694,428
Other Liabilities:Compensated Absences 1,429,619 88,210 (203,872) 1,313,956 418,536Landfill Closure and Postclosure Care Costs 18,954,582 (5,365,370) 13,589,212 435,251
Total Business-Type Activities Long-Term Liabilities $139,980,722 $366,940 ($10,809,616) $129,538,045 $6,548,215
Internal service funds predominately serve the governmental funds. Accordingly, long-term liabilities for them are included as part of the above totals for Governmental Activities. For the Governmental Activities, compensated absences are generally liquidated by the General Fund and the Urban Services Fund. The General Fund is used to liquidate both the net pension obligation and the net other postemployment benefit obligation. For Business-Type Activities, landfill closure and postclosure care costs are liquidated from fees charged for landfill services.
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Principal and interest requirements to maturity for the Primary Government’s bonds and notes are as follows:
Fiscal Year Interest Principal Interest Principal Interest Principal Interest Principal2014 $13,363,325 $21,925,000 2,308,603$ 3,564,428$ $2,354,938 $2,130,000 $18,026,866 $27,619,4282015 12,752,305 20,530,000 2,213,275 3,642,582 2,269,369 2,215,000 17,234,949 26,387,5822016 11,988,206 21,280,000 2,107,503 3,731,001 2,178,868 2,310,000 16,274,577 27,321,0012017 11,156,263 19,730,000 1,986,554 3,839,689 2,084,569 2,405,000 15,227,386 25,974,6892018 10,456,331 20,295,000 1,852,104 3,953,652 1,986,469 2,500,000 14,294,904 26,748,6522019 - 2023 40,170,983 98,160,000 7,045,785 17,752,731 8,308,028 14,125,000 55,524,796 130,037,7312024 - 2028 19,413,421 77,335,000 3,968,054 14,241,396 5,070,105 17,360,000 28,451,580 108,936,3962029 - 2033 2,901,359 34,365,000 743,055 10,068,248 1,264,481 14,925,000 4,908,895 59,358,248Total $122,202,193 313,620,000 22,224,933$ 60,793,727 $25,516,827 57,970,000 $169,943,953 432,383,727
Less principal payable within one year 21,925,000 3,564,428 2,130,000 27,619,428Long term principaldue after one year $291,695,000 $57,229,298 $55,840,000 $404,764,298
Total Primary Government
Governmental Activities Business-Type Activities
General Obligation Bonds, Notes and Leases
Revenue Bonds, Notes and Leases Mortgage Revenue Bonds
Component Units
The Government is contingently liable for the Lexington Center Corporation and Airport Board’s debt. Principal and interest requirements for Component Units’ debt are as follows:
Fiscal Year
Lexington Center
Corporation
Lexington Airport Board
Fayette County Board
of Health
Parking Authority of
Lexington
Nonmajor Component
Units Total2014 $1,935,000 $0 $115,000 $358,526 $356,199 $2,764,7252015 2,005,000 1,100,000 125,000 364,123 384,912 3,979,0352016 2,075,000 1,700,000 130,000 369,807 448,470 4,723,2772017 2,160,000 2,000,000 145,000 375,580 415,181 5,095,7612018 2,245,000 2,100,000 4,501,821 440,018 9,286,8392019-2023 9,950,000 11,750,000 2,563,422 24,263,4222024-2028 13,230,000 2,684,386 15,914,3862029-2033 15,110,000 811,095 15,921,0952034-2038 7,610,000 174,249 7,784,2492039 680,000 680,000Total 20,370,000 55,280,000 515,000 5,969,857 8,277,932 90,412,789Less payable within one year 1,935,000 115,000 358,526 356,199 2,764,725Less refinancing loss/premium-discount 154,730 (4,147,035) (3,992,305)
Long term principal due after one year $18,280,270 $59,427,035 $400,000 $5,611,331 $7,921,733 $91,640,369
Principal
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
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Fiscal Year
Lexington Center
Corporation
Lexington Airport Board
Fayette County Board
of Health
Parking Authority of
Lexington
Nonmajor Component
Units Total2014 $746,934 $2,431,550 $19,118 $89,993 $384,643 $3,672,2382015 677,372 2,376,550 13,480 84,396 349,444 3,501,2422016 601,468 2,325,686 7,599 78,712 293,484 3,306,9492017 517,215 2,260,550 600 72,939 296,884 3,148,1882018 428,265 2,176,550 61,712 301,165 2,967,6922019-2023 739,364 9,265,388 1,107,447 11,112,1992024-2028 6,038,024 667,073 6,705,0972029-2033 2,644,928 267,623 2,912,5512034-2038 511,833 5,631 517,464Total $3,710,618 $30,031,059 $40,797 $387,752 $3,673,394 $37,843,620
Interest
General Description of the Government's Bonds and Notes Payable Revenue and Mortgage Revenue Bonds The Sanitary Sewer System (the System) issues revenue bonds to finance improvements and expansions of the sanitary sewer system operated by the Government. The Sanitary Sewer System has issued the following bonds: 1. $35,960,000 of Sewer System Revenue Bonds, Series 2009A, (Taxable Build America Bonds) issued at a
discount and payable annually in principal installments ranging from $1,385,000 to $2,420,000 plus interest over 20 years, to be utilized along with other available funds of financing for the construction of major additions, betterment and extensions to the sanitary sewer system. The 2009A Bonds were issued under the guidelines provided under the American Recovery and Reinvestment Act (ARRA). Under the Guidelines set forth in the ARRA, the Government is eligible to apply for an interest subsidy payment from the United States Treasury of 35% for Build America Bonds (BABs). The Government received a subsidy for the year ended June 30, 2013 of $569,952.
2. $13,860,000 of Sewer System Refunding Revenue Bonds Series 2010A, issued at a premium, are payable annually in principal installments ranging from $125,000 to $1,860,000 plus interest over 12 years, to partially refund Revenue Bonds Series 2001A. The refunding provided for a cumulative savings of $1,101,593 over the life of the bonds resulting in a net present value savings of $934,076 or 6.739% of the refunded principal.
The bond ordinances provide that the gross income and revenues of the System be deposited into the Revenue and Operations Account. Monies in the Revenue and Operations Account are to be disbursed as follows: • Each month to the Sinking Fund, 1/6 of the next interest payment and 1/12 of the next principal payment and, if
necessary, 1/24th of the required Debt Service Reserve which is 125% of the average annual debt service on the 2009 Series A, 2010 Series A and any parity bonds until the Debt Service Reserve equals the requirement.
• Pay, as they accrue, the proper and necessary costs of operating, maintaining and insuring the System as set out
in the "Current Expenses" contained in the annual budget and to accumulate and maintain an amount sufficient to pay said costs for three months.
• Each month to the Capital Replacement Fund, 1/24th of the required Capital Replacement Reserve (defined as
5% of the outstanding bonds or such larger amount as required by an Independent Consulting Engineer) until the required Capital Replacement Reserve has been accumulated.
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• To the Capital Projects Fund any surpluses after the Sinking Fund, Debt Service Reserve and Capital Replacement Fund are fully funded and the Revenue and Operations Account contains an amount sufficient to operate, maintain and insure the System for three full months.
The bond ordinances also outline parity provisions for the issuance of additional bonds for the acquisition or construction of sewer system facilities. The "net income and revenues" of the System, as defined in the bond ordinance, must provide coverage of 125% of Maximum Annual Debt Service. The bonds are insured by Municipal Bond Insurance Association; and supplemental issues, if insured, must also be approved by the insurer. The Public Facilities Corporation (PFC) was created by the Government to act as the agency and instrumentality of the Government in acquiring, developing and financing public improvements and public projects. The PFC financed various projects through bank and mortgage notes and the issuance of revenue bonds. The debt is collateralized by the properties, a pledge of specified Government revenues and lease payments from the Government sufficient to retire the debt and to provide for the operation and maintenance of the facilities. The Government entered into various contracts, leases and option agreements with the PFC. These agreements provide that the PFC receives title to the properties mortgaged as security for the revenue bond issues, the proceeds of which have been used to finance the acquisition, construction and improvements to the properties. Upon payment of the outstanding bonds, title to the properties will be conveyed to the Government. The lease agreements are renewable annually, and the likelihood of the leases not being renewed is remote. The Public Facilities Corporation issued the $66,725,000 Mortgage Revenue Refunding Bonds, Series 2006, issued at a discount and payable annually in principal installments ranging from $1,005,000 to $3,820,000 plus interest over 25 years, to refund the $62,825,000 total principal remaining on the Series 1998 bonds. The refunded bonds were issued to finance a court facility that includes a Circuit Court Building, a District Court Building and an adjoining parking garage. The Government entered into a sublease with the Administrative Office of the Court (AOC) of the Commonwealth of Kentucky which provides for lease payments based on the percentage of space occupied by AOC functions in the courthouses and the AOC share of costs of the parking garage. The resulting AOC sublease payments will account for approximately 89% of the debt service payments; the remaining debt service payments will be paid by the Government. Kentucky Infrastructure Authority (KIA) State Revolving Fund (SRF) Loans SRF Loans are loans that are issued by the Commonwealth of Kentucky for infrastructure improvements. These loans are 20 year loans with a 2% interest rate. The Government has qualified and received the following KIA SRF Loans. 1. Radcliffe Road A209-09 issued in the amount of $113,523, payable annually in principal installments ranging
from $1,837 to $3,438 plus interest over 20 years. Financing improvements to the storm water system along Radcliffe Road in Fayette County.
2. KIA Streetscape A209-08 issued in the amount of $1,254,980, payable annually in principal installments
ranging from $25,671 to $37,843 plus interest over 20 years. Financing improvements to the storm water system in the city center of Lexington. These funds were used in conjunction with the Streetscape project that included upgrades to the sidewalks, sewer and storm water systems. This capital project included South Limestone, East and West Main Street and Vine Street.
3. South Elkhorn Pumpstation KIA A09-01 issued in the amount of $14,045,119, payable annually in principal
installments ranging from $281,600 to $423,692 plus interest over 20 years. Financing the upgrade of the South Elkhorn pump station and construction of a new 36 inch force main.
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General Obligation Bonds and Notes The Government issues general obligation bonds and notes to provide funds for the acquisition and construction of capital assets used by Governmental Activities. The Government has issued the following general obligation bonds and notes: 1. $4,570,000, Series 2002C, issued at a discount and payable annually in principal installments ranging from
$125,000 to $355,000 plus interest over 20 years, to finance the construction of various stormwater improvements and two lanes of a four-lane boulevard. Of the original issue Series 2002C, approximately $1,400,000 was partially refunded through the issuance of Series 2012B leaving a remaining balance of $480,000.
2. Series 2004C, issued at a discount and payable annually in principal installments ranging from $335,000 to $700,000 plus interest over 20 years, to finance the costs associated with the acquisition, construction, and equipping of a day treatment facility; the acquisition, renovation and equipping of a multi-use facility; and the acquisition of rights of way and construction of road improvements. Approximately $4,790,000 was partially refunded through the issuance of Series 2012B and $960,000 was partially refunded though the issuance of Series 2013B leaving a remaining balance of $895,000.
3. $4,490,000, Series 2005C, issued at a discount and payable annually in principal installments ranging from
$150,000 to $355,000 plus interest over 20 years, to finance the costs of the Purchase of Development Rights Program, renovating and upgrading space in two government office buildings, and making structural repairs to two parking garages owned and operated by the Government. Of the outstanding balance, $1,795,000 was partially refunded through the issuance of Series 2013B leaving a remaining balance of $620,000.
4. $10,310,000, Series 2006B, issued at a discount and payable annually in principal installments ranging from
$255,000 to $840,000 plus interest over 20 years, to finance stormwater improvements, neighborhood redevelopment projects, Bluegrass Aspendale Parkway, Veterans Park fire station and police cars. Of the outstanding balance, $2,990,000 was partially refunded through the issuance of Series 2013B leaving a remaining balance of $2,265,000.
5. $2,055,000, Series 2006C, issued at par and payable annually in principal installments ranging from $70,000 to $145,000 plus interest over 20 years, to finance the costs of the Purchase of Development Rights Program.
6. $56,850,000, Refunding Series 2006D, to refund the Public Facilities Corporation Series 1995 bonds for
$2,500,000 in principal and to partially refund the 1999 General Obligation Bonds, Series 1999A. Issued at a premium, the bonds are payable annually in principal installments ranging from $35,000 to $4,680,000 plus interest over 18 years. The refunding provided for a cumulative savings of $2,372,454 over the life of the bonds resulting in net present value savings of $1,756,185 or 3.319% of the refunded principal.
7. $13,520,000, Series 2008A, issued at a premium and payable annually in principal installments ranging from
$1,870,000 to $3,370,000 plus interest over 5 years, to finance acquisition of certain equipment and vehicles in addition to various parks projects.
8. $24,830,000, Series 2009A, issued at a premium and payable annually in principal installments ranging from
$745,000 to $1,725,000 plus interest over 20 years, to finance the cost of the Purchase of Development Rights Program, Street Resurfacing, Bluegrass Aspendale improvements and other various construction projects.
9. $70,610,000, Series 2009B, Taxable General Obligation Pension Funding Bonds issued at a discount and payable annually in principal installments ranging from $2,315,000 to $5,515,000 plus interest over 20 years, to finance additional contributions to the Policemen's and Firefighters' Retirement Plan.
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10. $69,320,000, Series 2010A, (Build America Bonds) Taxable General Obligation Public Project Bonds, to finance various projects for departments within the Government, including acquisition of equipment, infrastructure projects and the Purchase of Development Rights program. The 2010A Bonds were issued under the guidelines provided under the ARRA. Under the Guidelines set forth in the ARRA, the Government is eligible to apply for an interest subsidy payment from the United States Treasury of 35% for BABs. The Government received a subsidy for the year ended June 30, 2013 of $1,028,206.
11. $7,735,000, Series 2010B, General Obligation Refunding Bonds, for refunding the Series 1999B and 2000A
General Obligation Bonds. The Series 2010B bonds, issued at a discount, are payable annually in principal installments ranging from $715,000 to $850,000 plus interest over 10 years. The refunding provided for a cumulative savings of $1,394,276 over the life of the bonds resulting in a net present value savings of $1,189,304 or 15.376% of the refunded principal.
12. $6,635,000, Series 2010C, General Obligation Refunding Bonds, for refunding the Series 2000E General
Obligation Bonds. The Series 2010C bonds, issued at a discount, are payable annually in principal installments ranging from $60,000 to $675,000 plus interest over 12 years. The refunding provided for a cumulative savings of $675,874 over the life of the bonds resulting in net present value savings of $593,504 or 8.945% of the refunded principal.
13. $35,825,000, Series 2010D, Taxable General Obligation Pension Funding Bonds issued at a discount and payable annually in principal installments ranging from $1,195,000 to $2,700,000 plus interest over 20 years, to finance additional contributions to the Policemen’s and Firefighters’ Retirement Plan.
14. $6,305,000, Series 2010F, Various Purpose General Obligation Public Projects Build America Bonds issued at a
discount and payable annually in principal installments ranging from $45,000 to $1,305,000 plus interest over 5 years, to finance the acquisition of various equipment for Departments within the Government including but not limited to Computer Services, Public Safety, Parks and Recreation and Solid Waste. The 2010F Bonds were issued under the guidelines provided under the ARRA. Under the Guidelines set forth in the ARRA, the Government is eligible to apply for an interest subsidy payment from the United States Treasury of 35% for BABs. The Government received a subsidy for the year ending June 30, 2013 of $40,008.
15. $8,950,000, Series 2010G, Various Purpose General Obligation Public Projects Recovery Zone Economic
Development Bonds (RZEDB) issued at a discount and payable annually in principal installments ranging from $200,000 to $1,445,000 plus interest over 15 years, to finance the acquisition of various equipment for Departments within the Government including but not limited to Public Safety, Purchase of Development Rights, Recycling Center and Public Works utility design. The 2010G Bonds were issued under the guidelines provided under the ARRA. Under the Guidelines set forth in the ARRA, the Government is eligible to apply for an interest subsidy payment from the United States Treasury of 45% for RZEDB. The Government received a subsidy for the year ending June 30, 2013 of $167,439.
16. $4,465,000, Series 2010H, General Obligation Refunding Bonds, for refunding a portion of the General
Obligation Bond Series 2001B. The Series 2010H bonds, issued at a discount, are payable in annual principal payments ranging from $30,000 to $540,000 plus interest over 12 years. The refunding provided for a cumulative savings of $150,459 over the life of the bonds resulting in a net present value savings of $126,407 or 3.028% of the refunded principal.
17. $31,000,000, Series 2012A, Taxable General Obligation Pension Funding Bonds issued at a premium and
payable annually in principal installments ranging from $1,170,000 to $2,110,000 plus interest over 20 years, to finance additional contributions to the Policemen’s and Firefighters’ Retirement Plan.
18.$6,275,000, Series 2012B, General Obligation Refunding Bonds, for refunding a portion of the General
Obligation Bond Series 2002C and the General Obligation Bond Series 2004C. The Series 2012B, issued at a
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discount, are payable annually in principal installments ranging from $20,000 to $825,000 plus interest over 12 years. The refunding provided for a cumulative savings of $597,633 over the life of the bonds resulting in net present value savings of $545,403 or 8.759% of the refunded principal.
19. $3,445,000, series 2012C, Various Purpose General Obligation notes to finance various projects for
Departments within the Government, including construction, acquisition and installation of various projects including but not limited to street and sidewalk improvements, safety equipment, various park and recreation improvements and other equipment and vehicles for the benefit of numerous Departments of the Government. The 2012C Bonds, issued at a premium, are payable in annual principal payments ranging from $530,000 to $750,000 plus interest over 5 years.
20. $11,275,000, Series 2013A, Various Purpose General Obligation Bonds to finance various street and highway
improvements including the rehabilitation and paving of existing roads and streets throughout Lexington, Fayette County, Kentucky. The 2013A bonds, issued at a premium, are payable in annual principal payments ranging from $845,000 to $1,265,000 plus interest over 10 years.
21. $6,005,000, Series 2013B, Various Purpose General Obligation Refunding Bonds, for refunding a portion of the
General Obligation Bond Series 2004C, General Obligation Bond Series 2005C and General Obligation Bond Series 2006B. The Series 2013B, issued at a premium, are payable annually in principal installments ranging from $40,000 to $925,000 plus interest over 13 years. The refunding provided for a cumulative savings of $402,579 over the life of the bonds resulting in net present value savings of $293,222 or 5.103% of the refunded principal.
Landfill Closure and Postclosure Care Cost State and Federal laws and regulations require the Government to place final covers on its landfills and to perform certain maintenance and postclosure monitoring functions at its landfills for thirty years. Since the operations and maintenance of the Government’s landfills are accounted for in an Enterprise Fund, the accrued liability for these costs are reported in the Landfill Fund as required by GASB 18, Accounting for Municipal Solid Waste Landfill Closure and Postclosure Care Costs. The liability at June 30, 2013 is based on the estimated cost of maintaining and monitoring the Old Frankfort Pike Landfill (OFPLF) and the Haley Pike Landfill. Actual cost may be higher due to inflation, changes in technology, or changes in regulations and these costs will be funded by the Landfill Fund. The OFPLF ceased accepting waste decades ago. The Haley Pike Landfill ceased accepting waste in December 2011. Both of these landfills are at 100% capacity. The Haley Pike Landfill has been capped. Environmental monitoring and maintenance of the property will occur over the next 30 years, in accordance with Kentucky State Law. NOTE 4. SELF-INSURANCE PROGRAM
A. Health, Dental, and Vision Care – The Government offers health, dental, and vision care insurance options to employees of the Government. The self insured medical and pharmacy health plan is provided by Humana and City Pharmacy. The fully insured dental and vision plans are provided by Delta Dental and Eye Med respectively. Third party administrators are responsible for the processing of claims and cost containment. Premiums are paid through payroll deductions and may be funded fully or partially by the Benefit Pool provided by the Government. The Health, Dental, and Vision Care Insurance Fund accounts for these activities and is reported in an internal service fund.
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Changes in the balances of claims liabilities during the past two years are as follows: Surplus at June 30, 2011 $0Claims and changes in estimates 34,948,610Claims paid (34,948,610)Surplus at June 30, 2012 0Claims and changes in estimates 28,097,342Claims paid (28,097,342)Surplus at June 30, 2013 $0
B. Insurance and Risk Management – The Government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. These risks are covered through the Property and Casualty Claims Fund (the Fund), a self-insured program established in 1982. There are five types of coverage provided by the self-insured program: auto liability, auto physical damage, general liability, property (including boiler and machinery), and workers' compensation. All assets and employees of the primary government are covered by the Fund. Premiums are paid into the fund by the General Fund, the Urban Services Fund, and the Sanitary Sewer Fund and are based on both exposure and experience factors. Premiums include amounts needed to pay prior and current-year claims and administrative costs. Liabilities of the fund are reported when it is probable that a loss has occurred and the amount of the loss can be reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported (IBNR). The result of the process to estimate the claims liability depends on many complex factors, such as inflation, changes in legal doctrines, and damage awards. Accordingly, claims are reevaluated periodically to consider the effects of inflation, recent claim settlement trends, and other economic and social factors. Estimated recoveries, from subrogation and excess insurance policies, for example, are another component of the claims liability estimate. Annually, as of June 30, the Fund has a third party actuary review the claim histories for all claim years for which open claims are outstanding. The actuary projects the ultimate claim payment obligation (including the IBNR claims) for each year's claim experience. The Government elected to establish the liability for these claims and loss expenses at their present value with a discount rate of 3.5%. As of June 30, 2013 the undiscounted estimated liability was $33,834,737. The discounted estimated liability as of June 30, 2013 was $28,506,197. Changes in the balances of claims liabilities during the past two years are as follows:
Auto Liabilityand Physical General Workmens'
Damage Liability Property Compensation TotalLiability at June 30, 2011 $1,406,328 $6,495,436 $288,982 $13,854,847 $22,045,593Claims and changes in estimates 622,261 1,097,129 394,400 5,571,816 7,685,606Claims paid (1,049,206) (1,224,692) (547,150) (4,885,706) (7,706,754)Liability at June 30, 2012 979,383 6,367,873 136,232 14,540,957 22,024,445Claims and changes in estimates 5,483,185 5,784,985 420,511 3,656,313 15,344,994Claims paid (2,483,714) (2,649,710) (416,868) (3,312,950) (8,863,242)Liability at June 30, 2013 $3,978,854 $9,503,148 $139,875 $14,884,320 $28,506,197
The Fund uses excess insurance policies, purchased from various commercial carriers, to reduce its exposure to large losses on all types of insured events or for exposures that are difficult to self-insure. These insurance policies permit recovery of losses above the self-insured retention limits from the insurance carriers, although it does not discharge the primary liability of the Self-Insured Retention Fund as the direct source for payment of claims made against the Government. Workers' compensation self-insured retention was $750,000 and property self-insured retention was $250,000.
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The following schedule indicates the types of excess insurance purchased, the SIR (self-insured retention level) maintained by the Fund, limits and some of the sub-limits of the excess insurance coverage:
Line of coverage
Self-insured Retention Per Occurrence Excess Reinsurance Annual Limit
Property $250,000 $500,000,000 Per Occurrence Flood Loss 250,000 $100,000,000 Per Occurrence Flood Loss (Zones A,V, and 250,000 $2,000,000 Per Occurrence
all other 100 – year floodplains) Earthquake Loss 250,000 $100,000,000 Per Occurrence Electronic Data Processing 250,000 Included in Property Limits Traffic Control Equipment 250,000 Included in Property Limits Cyber Coverage –Third Party 100,000 $20,000,000 Aggregate Cyber Coverage – First Party 100,000 $2,000,000 AggregateBoiler and Machinery 100,000 $100,000,000 Per Occurrence Electronic Data Processing 100,000 $10,000,000 Per OccurrenceAuto Physical Damage 100,000 Included in Property LimitsAuto Liability 2,000,000 $5,000,000 Per OccurrenceGeneral Liability 2,000,000 $5,000,000 Per Occurrence Public Officials Liability 2,000,000 $5,000,000 Per OccurrenceWorkers' Compensation 750,000 Statutory Per Occurrence Employers' Liability $75,0000 with $250,000 corridor $1,000,000 Per Occurrence NOTE 5. CONTINGENT LIABILITIES AND COMMITMENTS A. Litigation – The Government is party to numerous legal proceedings where the ultimate outcome cannot be determined with certainty or cannot be reasonably estimated, many of which normally occur in government operations. The Government’s Department of Law estimates that there are pending cases in which there is a reasonably possible likelihood that the Government will incur some liability. As of June 30, 2013 the Government has accrued approximately $11,200,000 for potential liabilities for the cases covered by self-insurance (See Note 4.B.) and approximately $4,000,000 in the General Fund in the Government-Wide Financial Statements for matters not covered by the self-insurance program. In 2005, a case was filed by multiple firefighters alleging that their overtime wages, pension contributions, and benefits were not calculated accurately. They seek compensatory damages and attorneys’ fees. The Government filed a Motion for Judgment on the Pleadings on state wage and hour claims, and the Motion was granted by the Fayette Circuit Court. The Court granted the Government’s motion to make the judgment final and appealable, and the Plaintiffs appealed to the Court of Appeals. The Court of Appeals upheld the Circuit Court’s decision in favor of the Government. The Plaintiffs have filed a Motion for Discretionary Review with the Kentucky Supreme Court and the Government’s Response has been submitted. The Kentucky Supreme Court issued an Order holding in abeyance the Motion for Discretionary Review until another firefighter wage and hour case is decided. The Kentucky Supreme Court ultimately issued a decision in the other firefighter case, and the Lexington case was remanded to the Court of Appeals. The Court of Appeals issued a decision which necessitated further review at the Kentucky Supreme Court. Currently, the case is pending there on a Motion for Discretionary Review. The Plaintiffs’ claim could be in excess of $1,000,000, depending on the form of calculation of back overtime wages. The Government intends to vigorously defend the claims asserted in the lawsuit, but at the same time, and at the Plaintiffs’ counsels’ request, has indicated a willingness to attempt to mediate the parties’ differences while continuing to litigate the Government’s defenses.
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B. United States Environmental Protection Agency Consent Decree – The United States Environmental Protection Agency (EPA) and the Kentucky Environmental and Public Protection Cabinet (KYEPPC) filed suit in federal court against the Government in 2006 alleging various violations of the Clean Water Act. The Government completed negotiations with the EPA and KYEPPC to resolve the alleged violations. The resulting Consent Decree agreement was entered in the United States District Court – Eastern District of Kentucky on January 3, 2011. The settlement agreement requires the Government to undertake extensive studies, sewer improvement projects, and management plans to correct the problems that were alleged. The settlement affords the Government up to 13 years to correct the problems. The Government has estimated that the cost of remedial measures would approach $591 million over the life of the Consent Decree. The Government increased sanitary sewer rates to fund obligations under the Consent Decree and also adopted a storm water management fee. C. Federal and State Grants – The Government receives grant funds from various Federal and State government agencies to be used for specific designated purposes and are governed by various rules and regulations of the grantor agencies. The grant programs are subject to audit by agents of the granting authorities, the purpose of which is to ensure compliance with conditions surrounding the granting of funds. If a grantor’s review indicates that the funds have not been used for the intended purpose, the grantor may request a refund of monies advanced or refuse to reimburse the Government for its expenditures. In management’s opinion, any liability for any refunds or reimbursements which may arise as a result of audits of grant funds would not have a material impact on the financial position of the Government. Continuation of the Government’s grant programs is predicated upon the grantor’s satisfaction that the funds provided are being spent as intended and the grantor’s intent to continue their programs. D. Lexington Center Corporation – LCC is a non-profit, non-stock corporate agency and instrumentality of the Government. The Government entered into a lease agreement that provides for leasing the Lexington Center from LCC on an annual basis beginning June 15, 1993. This lease agreement replaces a contract lease and option agreement that began October 1, 1974. The annual rental to be paid by the Government to LCC is an amount equal to interest and principal paid on the Series 2008A Bonds and Capital Appreciation Bonds, less a credit for interest earned by investments in the Debt Service Reserve Account and Bonds Service Account, plus a credit for any revenues or assets of LCC constituting operation revenue. The agreement grants the Government an exclusive option to renew the lease for additional one-year periods through June 30, 2022, but the Government may elect not to renew the lease with written notice to LCC. The Government may acquire title to the facilities on any interest payment date by notifying LCC and the Trustee within sixty days before such date and by paying to the Trustee an amount equal to principal, interest and redemption premiums on bonds outstanding at that time, plus costs associated with the redemption of the bonds. On July 13, 2001, LCC and the University of Kentucky Athletic Association entered into a lease agreement through the 2017-18 basketball season for the use of Rupp Arena. An agreement between LCC and the Lexington Convention and Visitors Bureau, dated March 20, 2001, provides for annual contributions of $948,000 to LCC for the period beginning 2001 and ending 2021. Contributions shall decrease in the amount of $100,000 each successive fiscal year beginning in 2013, with a final contribution of $48,000 in 2021. On April 15, 2011, LCC and the Triangle Foundation entered into a lease agreement of the Triangle Park property through August 15, 2011 for the purpose of renovation of the property. On May 16, 2011, LCC and Triangle Foundation entered into a grant agreement in which the Triangle Foundation shall renovate Triangle Park in accordance with the lease agreement for an approximate value of $1,300,000. On May 29, 2012, the Blue Grass Community Foundation awarded LCC a grant in the amount of $2,500,000 for renovations and upgrades to student-athlete locker room facilities, dressing rooms for entertainment acts and artists and other public areas within Rupp Arena.
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E. Lexington-Fayette Urban County Airport Corporation (Airport Corporation) – The Airport Corporation is a non-profit, non-stock corporate agency and instrumentality of the Government and the Airport Board. The Government and the Airport Board have entered into a joint and severable Contract Lease and Option Agreement that provides for leasing the Bluegrass Airport from the Airport Corporation on an annual basis beginning October 1, 1976. The annual rental to be paid by the Government to the Airport Corporation is an amount equal to interest and principal on the bonds, plus costs of operating, maintaining and insuring the leased premises, less all receipts of the Airport Corporation that are not required to be otherwise applied. The agreement grants the Government the option to renew the lease for additional one-year periods through June 30, 2024, but the Government may elect not to renew the lease with written notice to the Airport Corporation. The Airport Corporation has had sufficient revenues to pay all debt service costs without a lease payment from the Government. The financial status is expected to remain the same. As of June 30, 2013, several uncompleted construction projects funded in-part by Federal grants remain open. Upon completion and final approval by the Inspector General, these projects will be closed out and a final account will be rendered. Outstanding construction contract commitments are $1,064,000 at June 30, 2013. The Airport Corporation is subject to federal, state, and local regulations in regards to the discharge of various materials into the environment. Costs are routinely incurred to remove, contain, and neutralize existing environmental contaminates and these costs are generally expensed as incurred. Future costs for existing conditions are not readily determinable and are not reflected in the financial statements. The Airport Corporation is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; general liability claims; and natural disasters. The Airport Corporatoin manages these risks through the purchase of commercial insurance. F. Lexington Public Library – The Library is a non-profit, non-stock corporate agency and instrumentality of the Government. The Lexington Public Library Board of Trustees is a defendant in a lawsuit filed by the Library’s former Director, for contract damages associated with her 2009 termination by the Board. This matter came before an American Arbitration Association panel that on May 17, 2013 issued an Order of Damages totaling $907,762. On each of the panel’s findings for damages a panel member dissented to the order except in the case of the salary remaining on the contract which totals $257,731. The Board of Director’s legal counsel has presented arguments against the Order on Damages before the Fayette Country District Court and is awaiting an opinion. It is probable that the damages awarded for salary remaining on the contract will be upheld as well as interest damages at 8% per annum per Kentucky statute. As such, the Lexington Public Library has recorded a liability of $316,253 for damages in the lawsuit filed by its former Director. G. Lexington Downtown Housing Fund, LLC – On December 9, 2004 the Government passed ordinance 319-2004 approving a lease and sublease for the purpose of creating, enhancing and extending market-rate housing in downtown Lexington (the Project). The Ordinance authorized entering into one or more leases with the Kentucky League of Cities Funding Trust to enable the Government to finance the Project for an aggregate principal amount of $2,000,000 outstanding at any one time. The leases are a general obligation pledge of the Government. The sublease agreement between the Government and the Lexington Downtown Housing Fund, LLC (DHL LLC) assigns administrative management and support of the loan programs to DHL LLC. Under the loan program, DHL LLC makes loans to developers of approved projects. The loans made by DHL LLC are funded in part by the sublease and in part from funds contributed or loaned from local participating banks. The interest on the loans are paid by the developers and the principal of the loans are subsequently repaid by the revenues from the projects. In the event of default by the developer on the loan payment, the portion of the loan funded by the sublease would become an obligation of the Government. As of June 30, 2013 the total principal outstanding was $1,005,000.
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H. Liens and Encumbrances – While the Government has satisfactory title to all owned assets, there may be some liens and encumbrances on such assets for matters unrelated to bond issues. Only a complete accurate title search of all properties would disclose such liens and encumbrances. I. Conduit Debt – The Government has issued Industrial Revenue Bonds to provide financial assistance to private sector and nonprofit entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private sector or nonprofit entity served by the bond issue. The Government is not obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. As of June 30, 2013, there were 28 series of Industrial Revenue Bonds outstanding with an aggregate amount payable of approximately $223,034,815. To provide for the construction of a hospital facility, the Public Facilities Corporation (PFC) issued Lease Revenue Bonds, Series 2011A (Eastern State Hospital Project). The bonds are a special limited obligation of the PFC, payable solely from and secured by a pledge of rentals to be received from a lease agreement between the PFC and the Commonwealth of Kentucky. The bonds do not constitute a debt or pledge of the faith and credit of the PFC or the Government, and accordingly have not been reported in the accompanying financial statements. At June 30, 2013, the Lease Revenue Bonds outstanding total approximately $138,635,000. J. Encumbrances – Encumbrance accounting is utilized during the year to facilitate effective budgetary control. Encumbrances are treated as budgeted expenditures in the year of incurrence of the commitment to purchase. Budgetary comparisons presented in this report are on this budgetary basis of accounting. Adjustments necessary to convert from the budgetary basis to GAAP are provided on the face of the budgetary comparison statements. In governmental funds, encumbrances outstanding at year-end represent commitments related to unperformed contracts for goods or services. Encumbrance accounting, under which purchase orders, contracts and other commitments for the expenditure of resources are recorded to reserve that portion of the applicable appropriations, is utilized in the governmental funds. Encumbrances are not treated as expenditures or liabilities because the commitments will be honored during the subsequent year. Outstanding encumbrances for the governmental funds at June 30, 2013 were as follows:
General Fund $2,195,173Urban Service Fund 3,516,473Nonmajor Governmental Funds $16,799,600
Encumbrances are not recorded in the financial statements for proprietary fund types and Pension Trust Funds. However, the purchase orders outstanding at June 30, 2013 for these funds are as follows:
Sanitary Sewer System $24,650,067Public Facilities Corporation 750Water Quality 3,510,936Landfill 769,732Nonmajor Enterprise Funds $863,347
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NOTE 6. THE SINGLE AUDIT ACT The U.S. Office of Management and Budget's Circular No. A-133 for Audits of States, Local Governments and Non-Profit Organizations (the Circular) requires non-federal entities that expend $500,000 or more a year in Federal awards to have an audit performed in accordance with the provisions of the Circular. A separate supplemental report will be issued on active grant programs of the Government in accordance with applicable provisions of the Single Audit Act of 1984, P.L. 98-502 and the Single Audit Act Amendments of 1996, P.L. 104-156. NOTE 7. SUBSEQUENT EVENTS Primary Government In April 2013, the Kentucky Infrastructure Authority Board approved low interest loans for the purpose of acquiring and constructing certain facilities and improvements to the Government’s Wastewater system. These projects are required as part of the EPA Consent Decree. The total amount is $56,167,393. As of June 30, 2013, the Government had not received proceeds. On October 22, 2013, the Government issued General Obligation bonds, series 2013C, with a par value of $17,035,000. The bonds will fund projects for the Purchase of Development Rights program, conservation easements, Public Safety, traffic signal upgrades, renovation and construction of parks, Facilities and Fleet Management vehicle replacement and repairs, a new senior citizens center, and funding for the Arts and Entertainment District. NOTE 8. TRANSFER OF ASSETS Primary Government Parking Authority of Lexington – Effective July 1, 2012, the Government entered into a transfer agreement with a component unit, Parking Authority of Lexington. The transfer agreement encompasses relinquishing management and control of four properties, formerly listed as assets of the Government. The net book value of the Governmental Activities capital assets transferred was $15,943. The net book value of the Business-Type Activities capital assets transferred was $12,611,114. The total net book value of the properties transferred was $12,627,057. Lexington Transit Authority – Effective April 1, 2013, the Government transferred the LexVan program to a component unit, Lexington Transit Authority. The net book value of the Governmental Activities capital assets transferred was $143,458. The Business-Type Activities other assets transferred were $239,051. The total value of assets transferred was $382,509. NOTE 9. DEFINED BENEFIT PENSION PLANS AND OTHER POST EMPLOYMENT BENEFITS The Policemen’s and Firefighters’ Retirement Fund and The City Employees’ Pension Fund A. Plan Descriptions The Government contributes to two single employer defined benefit pension plans: The PFRF and the CEPF. The sworn personnel of the divisions of Police and Fire are eligible to participate in the PFRF. For members whose participation date in the PFRF is prior to March 14, 2013, benefits vest after twenty years of service. The annuity is 2.5% of average salary multiplied by years of total service. For members whose participation date is on or after March 14, 2013, benefits vest after twenty-five years of service. The annuity is 2.25% of average salary multiplied by years of total service. Cost of living adjustments (COLA) will be granted on the following schedule for both current and future retirees beginning on the earlier of a member turning age 50 or being retired for five years until
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the PFRF, utilizing the current COLA provisions, is 85% funded. At that time, COLA’s will be granted each year by an amount, determined by the Board, of between 2% and 5% compounded annually. In addition, those receiving an annuity of over $100,000 will not be eligible to receive a COLA until the later of the proposed conditions or January 1, 2016.
Above $100,000 1% $75,000 to $99,000 1% $50,000 to $74,999 1.5% $40,000 to $49,999 1.5% $35,000 to $39,999 2% $30,000 to $24,999 2%
Under $30,000 2% Members may add unused sick leave to service credit and average annual salary for purposes of calculating retirement benefits. The costs of administering the PFRF are financed by a combination of additional contributions as well as investment income. Civil service employees of the City of Lexington were covered by the CEPF. In 1973, the governments of the City of Lexington and Fayette County merged to form the Government. In December 1973, the City of Lexington froze admission of new entrants into the CEPF, and in January 1974 the new merged Government assumed the City of Lexington's liability for covered employees and the CEPF was closed to any new members. A member who has attained age 60 and completed 20 years of service or completed 30 years of service regardless of age may apply for retirement. Members who are 45 years old or older with 10 years of service may request a deferred retirement benefit to be paid when they reach 60 years of age. Retirees receive 2.5% of their average salary for each year of service up to 20 years plus 1% of average salary for each year of service over 20 years, with a maximum benefit of 65% of average salary. Members may add unused sick leave to service credit and average annual salary for purposes of calculating retirement benefits. Death and disability benefits are also provided under certain conditions. In addition, the plan includes an annual cost of living adjustment of 3% for any member retiring after July 1, 1981 that has attained age 61 or has been retired for one year. The costs of administering the CEPF are financed by a combination of additional contributions as well as investment income. Both pension plans are included in the Government’s comprehensive annual report and do not issue stand-alone financial reports. Membership of each plan consisted of the following at June 30, 2013:
Number Inactive Plan Participants: Retirees and beneficiaries currently receiving benefits 1,135 Active Plan Participants: Active members 1,064 Total 2,199
B. Summary of Significant Accounting Policies and Plan Asset Matters Basis of Accounting – The preparation of the financial statements of the PFRF and CEPF conform to the provisions of GASB Statement No. 25. Benefits and refunds of both plans are recognized when due and payable in accordance with the terms of each plan. The financial statements are prepared on an accrual basis. Investments – Investments are stated at fair value. Securities traded on a national exchange are valued at the last reported sales price. Gains or losses on the sale of fixed income securities are recognized using the completed transaction method. There are no significant investments (other than U.S. Government and U.S. Government Agencies & Instrumentalities) in any one organization that represents 5% or more of net assets available for benefits.
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C. Contributions
The contribution requirements and benefit provisions for the PFRF and CEPF are established by state statute and Government ordinance. In fiscal year 2013, the Government contributed 24.70% to the PFRF and 17.5% to the CEPF. An additional contribution of $6,784,793 was made to the PFRF based on an actuarial determination of the annual required contribution (ARC) in June, 2013. Administrative costs were financed by a combination of additional contributions as well as investment income. The required contribution rates are shown in the following table:
PFRF CEPF Required Contribution Rates: Government 24.70% 17.5% Plan Member 11.0% 8.5%
D. Supplemental Information
Schedule of Funding Progress Actuarial Accrued
Actuarial Actuarial Value Liability (AAL) Unfunded AAL Funded Covered UAAL as a % of Valuation of Assets - Entry Age (UAAL) Ratio Payroll Covered Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a)/(c) Policemen's and Firefighters' Pension Fund (3% COLA)
7/1/08 $418,311,038 $664,935,356 $246,624,318 62.9% $61,368,960 401.9% 7/1/09 441,772,820 699,851,128 258,078,308 63.1% 65,765,448 392.4% 7/1/10 502,259,967 724,140,738 221,880,771 69.4% 60,512,412 366.7% 7/1/11 501,069,884 758,851,546 257,781,662 66.0% 64,258,162 401.2% 7/1/12 525,849,582 687,673,831 161,824,250 76.5% 54,595,799 296.4% 7/1/13 $533,892,554 $738,343,325 $204,450,771 72.3% $62,455,725 327.4%
City Employees' Pension Fund 7/1/08 $27,299,997 $22,917,270 $(4,382,727) 119.1% $42,972 (10,199.0)% 7/1/09 24,865,567 20,179,074 (4,686,493) 123.2% 43,416 (10,794.4)% 7/1/10 25,529,868 16,080,311 (9,449,557) 158.8% 0* NA 7/1/11 27,052,395 15,068,768 (11,983,627) 179.5% 0* NA 7/1/12 26,875,985 14,012,737 (12,863,248) 191.8% 0* NA 7/1/13 $28,029,242 $12,970,313 $(15,058,929) 216.1% 0* NA
*All city employees are currently retired, therefore covered payroll is $0.
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Annual Pension Cost and Net Pension Obligation (Asset) PFRF CEPF
Annual required contribution
$22,322,068
$0
Interest on net pension obligation (asset) (4,089,767) 105,979
Adjustment to annual required contribution (4,295,016) 166,228
Annual pension cost 22,527,317 (60,249)
Contributions made 22,322,068 0
Decrease in net pension obligation (asset) 205,249 (60,249)
Net pension obligation (asset), beginning of year (54,530,231) 1,513,988
Net pension obligation (asset), end of year $(54,324,982) $1,453,739
Six-Year Trend Information
Fiscal Year Ending
Annual Pension
Cost (APC)
Contribution
Percentage of APC
Contributed
Net Pension
Obligation (Asset)
Policemen's and Firefighters' Pension Fund
2008 $27,080,947 $18,791,796 69.4% $25,040,871 2009 28,839,699 84,023,573 291.3% (30,143,003) 2010 30,485,067 49,469,806 162.3% (49,127,742) 2011 27,923,223 14,408,809 51.6% (35,613,328) 2012 28,668,786 47,585,689 165.9% (54,530,231) 2013 $22,527,317 $22,322,068 99.1% $(54,324,982)
City Employees' Pension Fund
2008 $(71,777) $7,116 N/A $1,869,987 2009 (74,415) 7,864 N/A 1,787,708 2010 (71,141) $74,488 N/A 1,642,079 2011 (65,345) N/A 1,576,734 2012 (62,746) N/A 1,513,988 2013 $(60,249) N/A $1,453,739
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The information presented in the supplemental schedules was determined as part of the actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation is presented in the following table. Policemen's and Firefighters' Pension Fund City Employees' Pension Fund Valuation date July 1, 2013 July 1, 2013 Actuarial cost method Entry Age Normal Funding Entry Age Normal Funding Amortization method Level Dollar - Closed Level Dollar - Open Remaining amortization period 30 years open 15 years open Asset valuation method Actuarial Related Value Market Actuarial assumptions: Investment rate of return 7.5% 7.0% Projected salary increases 10.50 to 4.00% N/A Cost-of-living adjustments See Note 9.A. on page 90 3.0% Inflation 3.0% N/A The Government’s annual required contribution (ARC), amount contributed, and percentage of required contribution to actual contribution for the last six years are as follows:
Fiscal Year Ending
ARC Contribution
Percentage of ARC
Contributed
Policemen's and Firefighters' Retirement
2008 $26,980,795 $18,791,796 69.6%2009 28,689,989 84,023,573 292.9%2010 30,665,280 49,469,806 161.3%2011 28,216,938 14,408,809 51.1%2012 28,703,638 47,585,689 165.8%2013 $22,322,068 $22,322,068 100.0%
City Employees' Pension*
2008 $0 $7,1162009 7,8642010 $74,4882011 2012 2013
*Closed plan E. Other Post Employment Benefit (OPEB) Plan Description – In August 1999, the Urban County Council passed an ordinance that authorized the Government to provide a health insurance benefit to the retirees of both retirement funds, effective July 1, 1999 (the Plan). All retirees who continue to participate in the Government’s group health insurance plan are eligible for this benefit. Funding Policy – The Government pays the premiums for single coverage on a pay-as-you-go basis. In fiscal year 2013, 800 retirees of the PFRF received this benefit for a total cost of $4,156,970; and 16 retirees of the CEPF received this benefit for a total cost to the Government of $61,176. Annual OPEB Cost and Net OPEB Obligation – The Government’s annual OPEB cost (expense) is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis,
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is projected to cover normal cost each year and to amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the Government’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the Government’s net OPEB obligation:
Annual required contribution
$13,261,194
Interest on net OPEB obligation 2,563,329
Adjustment to annual required contribution 2,323,383
Annual OPEB cost (expense) 13,501,140
Contributions made (5,483,590)
Increase in net OPEB obligation 8,017,550
Net OPEB obligation, beginning of year 56,962,856
Net OPEB obligation, end of year $64,980,406
The Government’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for fiscal year 2013 and the two preceding fiscal years were as follows:
Fiscal Year
Ending
Annual OPEB Cost
Percentage of Annual OPEB
Cost Contributed
Net OPEB
Obligation 2011 $16,659,028 23.1% $44,645,362 2012 16,713,023 26.3% 56,962,856 2013 $13,501,140 40.6% $64,980,406
Funded Status and Funding Progress – The Government completed an actuarial valuation of the future unfunded actuarial accrued liability of these benefits and it was determined that as of July 1, 2012 the liability was $171,684,066. The annual required contribution to fund this liability over a period of 30 years is $13,261,194. These figures represent the amount needed to provide benefits for 876 current retirees and beneficiaries and 1,014 active members. To date there has not been any funding of this liability. Actuarial assumptions of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Methods and Assumptions – Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations.
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
96
The actuarial assumptions used for the calculations are listed below.
Valuation date July 1, 2012 Actuarial cost method Projected unit credit Amortization method Level Percent of Pay, Open
Remaining amortization period 30 years Asset valuation method Market Value of Assets Actuarial assumptions:
Investment rate of return* 4.5%
Medical cost trend rate* Pre-Medicare trend rate 9.5% - 5.0% Post-Medicare trend rate 7.0% - 5.0% Year of ultimate trend rate 2018
* Includes inflation at 3.0%
Schedule of Funding Progress
Actuarial Accrued Actuarial Actuarial Value Liability (AAL) Unfunded AAL Funded Covered UAAL as a % of Valuation of Assets - Projected Unit
Credit (UAAL) Ratio Payroll Covered Payroll
Date (a) (b) (b-a) (a/b) (c) (b-a)/(c)
7/1/08 $0 $181,181,934 $181,181,934 0.00% $61,409,904 295.0% 7/1/10 211,706,877 211,706,877 0.00% 60,512,412 349.9% 7/1/12 $171,684,066 $171,684,066 0.00% $54,595,799 314.5%
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
97
F. Pension Plan Financial Statements
CEPFTotal Pens ion Trust Funds
ASSETS
Cash and Cash Equivalents $16,215,973 $600,295 $16,816,268
Receivables :
Interes t Receivable 1,558,595 102,057 1,660,652
Inves tments , at Fair Value:
Debt Securities :
US Agencies 28,840,779 6,176,166 35,016,945
US Government Obligations 18,193,115 2,933,223 21,126,338
Municipal Obligations 5,933,303 5,933,303
International Bonds 13,362,360 663,350 14,025,710
Corporate Debt 76,927,344 3,343,008 80,270,352
Repurchase Agreements 12,174,347 12,174,347
Other Inves tments :
Equity Mutual Funds 164,552,201 164,552,201
Equity Real Es tate 52,746,107 52,746,107
Equity Securities - Domestic 81,039,311 12,999,245 94,038,556
Equity Securities - International 97,641,022 1,221,726 98,862,748
Total Investments 551,409,889 27,336,718 578,746,607
Total Assets $569,184,457 $28,039,070 $597,223,527
LIABILITIES
Accounts Payable and Accrued Expenses $11,227 $0 $11,227
Securities Lending Transactions 12,174,347 12,174,347
Compensated Absenses - Current 2,534 2,534
Compensated Absenses - Non Current 2,534 2,534
Due to Other Funds 270,005 9,828 279,833
Total Liabilities $12,460,647 $9,828 $12,470,475
NET POSITION
Amounts Held in Trus t for Pension Benefits $556,723,810 $28,029,242 $584,753,052
STATEMENT OF NET POSITION
June 30, 2013
PFRF
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
98
PFRF CEPF Total
ADDITIONSContributions:
Employer $22,322,068 $0 $22,322,068Employer - Administration 4,156,970 61,176 4,218,146Plan Members 7,242,128 7,242,128Other 81,122 81,122
Total Contributions 33,802,288 61,176 33,863,464
Investment Income:Net Change in Fair Value of Investments 55,487,547 1,970,884 57,458,431Interest 7,193,869 577,419 7,771,288Dividends 3,455,536 276,908 3,732,444
Total Investment Income 66,136,952 2,825,211 68,962,163Less Investment Expense 2,801,925 60,587 2,862,512
Net Investment Income 63,335,027 2,764,624 66,099,651
Income from Securities Lending Activities:Securities Lending Income 31,693 31,693Securities Lending Expenses: Borrower Rebates (85,620) (85,620) Management Fees 46,871 46,871
Total Securities Lending Expenses (Income) (38,749) 0 (38,749)Net Income on Securities Lending Activities 70,442 0 70,442
Total Additions 97,207,757 2,825,800 100,033,557
DEDUCTIONSBenefit Payments 49,296,681 1,642,332 50,939,013Administrative Expense 596,907 30,211 627,118
Total Deductions 49,893,588 1,672,543 51,566,131
Net Increase 47,314,169 1,153,257 48,467,426
Net Position, Beginning 509,409,641 26,875,985 536,285,626
Net Position, Ending $556,723,810 $28,029,242 $584,753,052
STATEMENT OF CHANGES IN NET POSITIONJune 30, 2013
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
99
G. The County Employees' Retirement System The Government contributes to the Commonwealth of Kentucky's County Employees' Retirement System (CERS) pursuant to KRS 78.530 administered by the Board of Trustees of the Kentucky Retirement System. CERS is a cost-sharing multi-employer public employee retirement system which covers substantially all regular full-time employees of each county and school board and any additional eligible local agencies electing to participate in the System. At June 30, 2013, there were over 1,400 local government agencies participating in CERS, which provides for retirement, disability and death benefits. Beginning October 27, 1975, all eligible full-time employees of the Government were required to participate in CERS. CERS issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained by writing to the Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, KY 40601, or by telephone at (502) 696-8800. Nonhazardous covered employees are required to contribute 5 percent of their salary to the plan. Nonhazardous covered employees who begin participation on or after September 1, 2008 are required to contribute 6 percent of their salary to the plan. The Government’s contribution rate for nonhazardous employees was 19.55 percent. Hazardous covered employees are required to contribute 8 percent of their salary to the plan. Hazardous covered employees who begin participation on or after September 1, 2008 are required to contribute 9 percent of their salary to be allocated as follows: 8 percent will go to the member’s account and 1 percent will go to the KRS insurance fund. The Government’s contribution rate for hazardous employees was 37.60 percent. The contribution requirements and the amounts contributed to CERS were $16,625,248, $16,388,805 and $15,277,032 respectively for the years ended June 30, 2013, 2012, and 2011. Benefits fully vest on reaching five years of service for nonhazardous employees. Aspects of benefits for nonhazardous employees include retirement after 27 years of service or age 65. Nonhazardous employees who begin participation on or after September 1, 2008 must meet the rule of 87 (member’s age plus years of service credit must equal 87, and the member must be a minimum of 57 years of age) or the member is age 65, with a minimum of 60 months service credit. Aspects of benefits for hazardous employees include retirement after 20 years of service or age 55. For hazardous employees who begin participation on or after September 1, 2008 aspects of benefits include retirement after 25 years of service or the member is age 60, with a minimum of 60 months of service credit. CERS also provides post retirement health care coverage as follows: For members participating prior to July 1, 2003, years of service and respective percentages of the maximum contribution are as follows:
Years of Service
% paid by Insurance Fund
% Paid by Member through Payroll Deduction
20 or more 100% 0% 15-19 75% 25% 10-14 50% 50%
4-9 25% 75% Less than 4 0% 100%
As a result of House Bill 290 (2004 General Assembly), medical insurance benefits are calculated differently for members who began participation on or after July 1, 2003. Once members reach a minimum vesting period of ten years, non-hazardous employees whose participation began on or after July 1, 2003, earn ten dollars per month for insurance benefits at retirement for every year of earned service without regard to maximum dollar amount.
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
100
Hazardous employees whose participation began on or after July 1, 2003, earn fifteen dollars per month for insurance benefits at retirement for every year of earned service without regard to maximum dollar amount. Upon the death of a hazardous employee, such employee’s spouse receives ten dollars per month for insurance benefits for each year of the deceased employee’s hazardous service. This dollar amount is subject to adjustment annually based on the retiree cost of living adjustment, which is updated annually due to changes in the Consumer Price Index. The Governor signed Senate Bill 2 into law on April, 4, 2013, which amends the state employee pension program. Effective July 1, 2013, several changes will take place as a result of Senate Bill 2. Some highlights are as follows: participation in the hybrid cash balance plan for both hazardous and non-hazardous participants; changes to the annual retirement allowance calculation; authorization to amend or suspend benefits and rights; new terms and conditions for receiving his or her retirement during the period of reemployment. NOTE 10. RECENT GASB PRONOUNCEMENTS In April 2013, the GASB approved Statement No. 70, Accounting and Financial Reporting for Nonexchange Financial Guarantees. The objective of this Statement is to improve accounting and financial reporting by state and local governments that extend and receive nonexchange financial guarantees. This Statement requires a government that extends a nonexchange financial guarantee to recognize a liability when qualitative factors and historical data, if any, indicate that it is more likely than not that the government will be required to make a payment on the guarantee. This Statement specifies the information required to be disclosed by governments that extend nonexchange financial guarantees. In addition, this Statement requires new information to be disclosed by governments that receive nonexchange financial guarantees. The provisions of this Statement are effective for reporting periods beginning after June 15, 2013. Except for disclosures related to cumulative amounts paid or received in relation to a financial guarantee, the provisions of this Statement are required to be applied retroactively. The Government does not expect this Statement to have a significant effect on its financial statements. In January 2013, the GASB approved Statement No. 69, Government Combinations and Disposals of Government Operations. This Statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. As used in this Statement, the term government combinations includes a variety of transactions referred to as mergers, acquisitions, and transfers of operations. This Statement provides specific accounting and financial reporting guidance for combinations in the governmental environment. This Statement also improves the usefulness of financial reporting by requiring that disclosures be made by governments about combination arrangements in which they engage and for disposals of government operations. The requirements of this Statement are effective for government combinations and disposals of government operations occurring in financial reporting periods beginning after December 15, 2013. The Government does not expect this Statement to have a significant effect on its financial statements. In June 2012, the GASB approved Statement No. 68, Accounting and Financial Reporting for Pensions. This Statement replaces the requirements of Statement No. 27, Accounting for Pensions by State and Local Governmental Employers and Statement No. 50, Pension Disclosures, as they relate to governments that provide pensions through pension plans administered as trusts or similar arrangements that meet certain criteria. Statement 68 requires governments providing defined benefit pensions to recognize their long-term obligation for pension benefits as a liability for the first time, and to more comprehensively and comparably measure the annual costs of pension benefits. Cost-sharing governmental employers will also be required to report a net pension liability, pension expense and pension-related assets and liabilities based on their proportionate share of the collective amounts for all governments in the plan.
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENT NOTES TO FINANCIAL STATEMENTS (Continued)
June 30, 2013
101
All governments participating in the defined benefit pension plan would also have the following in their note disclosures:
Descriptions of the plan and benefits provided Significant assumptions employed in the measurement of the net pension liability Descriptions of benefit changes and changes in assumptions Assumptions related to the discount rate and impact on the total pension liability of a 1 percentage point
increase and decrease in the discount rate Net pension assets and liabilities
The provisions of this Statement are effective for fiscal years beginning after June 15, 2014. The Government is currently evaluating the effects of this statement on its financial statements.
102
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
The Special Revenue Funds are used to account for specific revenues that are legally restricted to expenditure for particular purposes. The County Aid Program Fund accounts for the allocation of county road funds from the Commonwealth of Kentucky as provided by HB 973 and adopted by the 1980 General Assembly based upon the motor fuels taxes collected. The Municipal Aid Program Fund accounts for the allocation from the Commonwealth of Kentucky as provided by KRS 174 for design, right-of-way acquisitions, utilities, construction and other municipal road expenditures. The Industrial Revenue Bond Fund accounts for receipts and disbursements of IRB issuance fees. The Mineral Severance Fund and Coal Severance Fund account for receipts and disbursements of the Coal and Mineral Severance Tax received from the Commonwealth of Kentucky. The Police Confiscated Fund accounts for recoveries from federal criminal case settlements awarded to the LFUCG Division of Police. Expenditures are restricted to police law enforcement programs. The Police Confiscated State Fund accounts for recoveries from state criminal case settlements awarded to the Government’s Division of Police. Expenditures are restricted to police law enforcement programs. The Public Safety Fund accounts for revenues and disbursements of the House Bill 413 fees received from the Commonwealth of Kentucky.
CAPITAL PROJECTS FUNDS
Capital projects funds are used to account for the acquisition and construction of major capital facilities and equipment other than those financed by proprietary funds. The Lexington Cultural Center is a project to construct performing arts and exhibit facility in downtown Lexington. The 2003 Bond Projects are for acquisition of vehicles, equipment, the next phase of replacement of the Government Center HVAC system and fire trucks. The Equipment Lease Notes are general obligation notes used for the acquisition of vehicles and capital equipment for the various departments of the Government. The 2007, 2008, & 2009 Bond Projects are for park projects, computer equipment, and building renovations and improvements. The 2010 Bond Projects are to finance various projects for departments within the Government, including acquisition of equipment, infrastructure projects and the Purchase of Development Rights program.
103
The 2011 & 2012 Bond Projects to finance the acquisition of various equipment for departments within the Government including but not limited to Computer Services, Public Safety, Parks and Recreation, Solid Waste, Purchase of Development Rights, Recycling Center and Public Works utility design. The 2013 Bond Projects to finance the acquisition of vehicles and equipment, various parks projects, and complete renovation of the Emergency Operations Center. The 2014 Bond Projects will fund projects for Purchase of Development Rights, conservation easements, Public Safety radios, renovation and construction of Parks, and funding for the Arena, Arts, and Entertainment District. The Public Works Bond Projects are for storm water and road improvement projects. The Public Library Corporation is for the acquisition, construction, equipping and financing of public projects to be used for public library purposes. The Roads, Parks, Open Space, Storm Water Exactions are for improvements necessary to provide roads, parks, open space and storm water management in the Expansion Area Master Plan funded by developer and property owner exaction fees.
Cou
nty
A
id
Pro
gram
M
un
icip
al
Aid
Pro
gram
In
du
stri
al
Rev
enu
e B
ond
M
iner
al
Sev
eran
ce
Coa
l S
ever
ance
Pol
ice
Con
fisc
ated
F
un
ds
Pol
ice
Con
fisc
ated
S
tate
Fu
nd
sP
ub
lic
Saf
ety
Fu
nd
Tot
al
Lex
ingt
on
Cu
ltu
ral
Cen
ter
200
3 B
ond
P
roje
cts
Eq
uip
men
t L
ease
Not
es
AS
SE
TS
Cur
rent
Cas
h$2
,468
,111
$10
$154
,661
$407
,358
$512
,651
$452
,001
$790
,836
$4
,785
,628
$4,3
08$0
$0
Cur
rent
Inv
estm
ents
189,
609
6,56
2,26
163
,203
1,06
2,56
77,
877,
640
348,
211
Rec
eiva
bles
:
Oth
er26
,476
17
,631
44
,107
Inve
ntor
ies
and
Pre
paid
Exp
ense
s7,
940
123
8,06
3
Due
fro
m O
ther
Fun
ds22
914
,689
9590
905,
030
920,
133
63,4
61R
estr
icte
d In
vest
men
ts0
347,
054
259,
925
Tot
al A
sset
s$2
,684
,425
$6,5
62,2
71$1
69,3
50$4
70,6
56$5
12,7
41$1
,540
,139
$790
,959
$905
,030
$13,
635,
571
$352
,519
$347
,054
$323
,386
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
ES
Lia
bili
ties
:A
ccou
nts
and
Con
trac
ts P
ayab
le$3
2,85
7$7
0,87
9$0
$24,
966
$0$8
35$2
5,31
7$0
$154
,854
$0$0
$0A
ccru
ed P
ayro
ll &
Rel
ated
Lia
bili
ties
1,93
03,
867
5,79
7D
ue to
Oth
er G
over
nmen
ts90
8,89
990
8,89
9D
ue to
Oth
er F
unds
790,
168
618,
598
11,1
711,
419,
937
311,
089
113,
547
Tot
al L
iab
ilit
ies
32,8
5786
2,97
70
24,9
660
1,53
2,19
936
,488
02,
489,
487
311,
089
113,
547
0
Fun
d B
alan
ces:
Non
spen
dabl
e7,
940
123
8,06
3R
estr
icte
d fo
r:2,
651,
568
5,69
9,29
416
9,35
051
2,74
19,
032,
953
754,
348
905,
030
1,65
9,37
8 041
,430
233,
507
323,
386
Ass
igne
d44
5,69
044
5,69
0
Tot
al F
un
d B
alan
ces
2,65
1,56
85,
699,
294
169,
350
445,
690
512,
741
7,94
075
4,47
190
5,03
011
,146
,084
41,4
3023
3,50
732
3,38
6
Tot
al L
iab
ilit
ies
and
Fu
nd
Bal
ance
s$2
,684
,425
$6,5
62,2
71$1
69,3
50$4
70,6
56$5
12,7
41$1
,540
,139
$790
,959
$905
,030
$13,
635,
571
$352
,519
$347
,054
$323
,386
Con
tinu
ed
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CO
MB
ININ
G B
AL
AN
CE
SH
EE
TN
ON
MA
JOR
GO
VE
RN
ME
NT
AL
FU
ND
SJu
ne
30, 2
013
Sp
ecia
l Rev
enu
e F
un
ds
Cap
ital
Pro
ject
s F
un
ds
104
Loc
al E
con
omic
Ass
ista
nce
Pub
lic
Wor
ks P
ubli
c S
afet
y C
apit
al P
roje
cts
2007
, 200
8,
& 2
009
Bon
d P
roje
cts
2010
Bon
d P
roje
cts
2011
& 2
012
Bon
d P
roje
cts
2013
Bon
d P
roje
cts
2014
Bon
d P
roje
cts
Pub
lic
Lib
rary
C
orpo
rati
on
Roa
ds, P
arks
, O
pen
Spac
e,
Stor
m W
ater
E
xact
ions
Tot
al
Tot
al
Non
maj
or
Gov
ernm
enta
l F
unds
ASS
ET
SC
urre
nt C
ash
$0$0
$0$0
$0$5
13,0
25$1
,047
,198
$1,5
64,5
31$6
,350
,159
Cur
rent
Inv
estm
ents
311,
362
68,0
6372
7,63
68,
605,
276
Rec
eiva
bles
:O
ther
33,6
2233
,622
77,7
29In
vent
orie
s an
d P
repa
id E
xpen
ses
8,35
45,
959
14,3
1322
,376
Due
fro
m O
ther
Fun
ds14
4,34
955
0,87
491
0,78
415
7,88
71,
827,
355
2,74
7,48
8R
estr
icte
d In
vest
men
ts1,
340,
191
6,23
9,07
83,
887,
326
2,73
8,01
111
,446
,116
26,2
57,7
0126
,257
,701
Tot
al A
sset
s$1
,492
,894
$6,7
89,9
52$4
,804
,069
$2,7
38,0
11$1
1,60
4,00
3$8
24,3
87$1
,148
,883
$30,
425,
158
$44,
060,
729
LIA
BIL
ITIE
S A
ND
FU
ND
BA
LA
NC
ES
Lia
bilit
ies:
Cap
ital
Pro
ject
s F
unds
CO
MB
ININ
G B
AL
AN
CE
SH
EE
T, C
onti
nued
NO
NM
AJO
R G
OV
ER
NM
EN
TA
L F
UN
DS
June
30,
201
3
1
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
Acc
ount
s an
d C
ontr
acts
Pay
able
$253
,163
$799
,657
$146
,524
$330
,781
$2,1
88,1
05$0
$0$3
,718
,230
$3,8
73,0
84A
ccru
ed P
ayro
ll &
Rel
ated
Lia
bilit
ies
05,
797
Due
to O
ther
Gov
ernm
ents
090
8,89
9D
ue to
Oth
er F
unds
45,9
9721
,430
985,
855
1,47
7,91
82,
897,
855
Tot
al L
iabi
litie
s25
3,16
379
9,65
714
6,52
437
6,77
82,
188,
105
21,4
3098
5,85
55,
196,
148
7,68
5,63
5
Fund
Bal
ance
s:N
onsp
enda
ble
8,35
45,
959
14,3
1322
,376
Res
tric
ted
for:
09,
032,
953
01,
659,
378
1,23
1,37
75,
990,
295
4,65
1,58
62,
361,
233
9,41
5,89
880
2,95
716
3,02
825
,214
,697
25,2
14,6
97A
ssig
ned
044
5,69
0T
otal
Fun
d B
alan
ces
1,23
9,73
15,
990,
295
4,65
7,54
52,
361,
233
9,41
5,89
880
2,95
716
3,02
825
,229
,010
36,3
75,0
94
Tot
al L
iab
iliti
es a
nd F
und
Bal
ance
s$1
,492
,894
$6,7
89,9
52$4
,804
,069
$2,7
38,0
11$1
1,60
4,00
3$8
24,3
87$1
,148
,883
$30,
425,
158
$44,
060,
729
Cap
ital P
roje
cts
Pub
lic W
orks
Pub
lic S
afet
y
105
Cou
nty
A
id
Pro
gram
M
un
icip
al
Aid
Pro
gram
In
du
stri
al
Rev
enu
e B
ond
M
iner
al
Sev
eran
ce
Coa
l Sev
eran
ce
Pol
ice
Con
fisc
ated
F
un
ds
Pol
ice
Con
fisc
ated
S
tate
Fu
nd
s P
ub
lic S
afet
y F
un
d
Tot
al
Lex
ingt
on
Cu
ltu
ral
Cen
ter
200
3 B
ond
P
roje
cts
Eq
uip
men
t L
ease
Not
es
RE
VE
NU
ES
Cha
rges
for
Ser
vice
s$2
5,42
5$0
$12,
007
$0$0
$0$0
$0$3
7,43
2$0
$0$0
Inte
rgov
ernm
enta
l85
4,30
16,
857,
371
64,0
0357
,407
518,
474
122,
436
333,
397
8,80
7,38
9P
rope
rty
Sal
es
6,89
56,
895
Oth
er75
,681
75,6
81In
com
eon
Inve
stm
ents
1983
96
138
100
243
626
469
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CO
MB
ININ
G S
TA
TE
ME
NT
OF
RE
VE
NU
ES
, EX
PE
ND
ITU
RE
S, A
ND
CH
AN
GE
S I
N F
UN
D B
AL
AN
CE
SN
ON
MA
JOR
GO
VE
RN
ME
NT
AL
FU
ND
SJu
ne
30, 2
013
Sp
ecia
l Rev
enu
e F
un
ds
Cap
ital
Pro
ject
s F
un
ds
Loc
al E
con
omic
Ass
ista
nce
Inco
me
on I
nves
tmen
ts19
839
6
13
8
1,00
243
626
469
Tot
al R
even
ues
879,
745
6,93
3,89
112
,007
64,0
0957
,407
518,
612
129,
331
333,
397
8,92
8,39
943
626
469
EX
PE
ND
ITU
RE
SC
urre
nt:
Env
iron
men
tal Q
ualit
y &
Pub
lic W
orks
15,7
3115
,731
Pol
ice
490,
852
199,
485
690,
337
Cap
ital:
Equ
ipm
ent
16
4,61
522
,539
187,
154
Acq
uisi
tions
and
Con
stru
ctio
n38
4,03
24,
119,
425
65,9
2464
,636
19,8
2011
6,88
753
,140
4,82
3,86
4
76,3
34
Tot
al E
xpen
dit
ure
s38
4,03
24,
135,
156
065
,924
64,6
3651
0,67
248
0,98
775
,679
5,71
7,08
60
76,3
340
Exc
ess
(Def
icie
ncy
) of
Rev
enu
esov
er (
un
der
) E
xpen
dit
ure
s49
5,71
32,
798,
735
12,0
07(1
,915
)(7
,229
)7,
940
(351
,656
)25
7,71
83,
211,
313
43(7
5,70
8)46
9
OT
HE
R F
INA
NC
ING
SO
UR
CE
S (
US
ES
)T
rans
fers
Out
(2,5
04,9
94)
(2
00,0
00)
(2,7
04,9
94)
Tot
al O
ther
Fin
anci
ng
Sou
rces
(U
ses)
0(2
,504
,994
)0
00
00
(200
,000
)(2
,704
,994
)0
00
Net
Ch
ange
in F
un
d B
alan
ces
495,
713
293,
741
12,0
07(1
,915
)(7
,229
)7,
940
(351
,656
)57
,718
506,
319
43(7
5,70
8)46
9
Fu
nd
Bal
ance
s (D
efic
its)
, Beg
inn
ing
2,15
5,85
55,
405,
553
157,
343
447,
605
519,
970
863,
098
1,10
6,12
784
7,31
211
,502
,863
41,3
8730
9,21
532
2,91
7A
dju
stm
ent
to O
pen
ing
Fu
nd
Bal
ance
(N
ote
2.D
.)(8
63,0
98)
(863
,098
)F
un
d B
alan
ces,
Beg
inn
ing
- R
esta
ted
2,15
5,85
55,
405,
553
157,
343
447,
605
519,
970
01,
106,
127
847,
312
10,6
39,7
6541
,387
309,
215
322,
917
Fu
nd
Bal
ance
s (D
efic
its)
, En
din
g$2
,651
,568
$5,6
99,2
94$1
69,3
50$4
45,6
90$5
12,7
41$7
,940
$754
,471
$905
,030
$11,
146,
084
$41,
430
$233
,507
$323
,386
Con
tinue
d
106
2007
, 200
8,
& 2
009
Bon
d
Pro
ject
s20
10 B
ond
P
roje
cts
2011
& 2
012
Bon
d P
roje
cts
201
3 B
ond
P
roje
cts
201
4 B
ond
P
roje
cts
Pu
blic
Lib
rary
C
orp
orat
ion
Par
ks, O
pen
S
pac
e, S
torm
W
ater
E
xact
ion
s T
otal
Tot
al
Non
maj
orG
over
nm
enta
lF
un
ds
RE
VE
NU
ES
Cha
rges
for
Ser
vice
s$0
$0$0
$0$0
$0$0
$0$3
7,43
2In
terg
over
nmen
tal
08,
807,
389
Exa
ctio
ns53
2,41
053
2,41
053
2,41
0P
rope
rty
Sal
es0
6,89
5O
ther
256,
212
256,
212
331,
893
Inco
me
on I
nves
tmen
ts4,
664
14,8
639,
560
4,52
24,
167
563
721
40,1
9841
,200
Tot
al R
even
ues
4,66
414
,863
9,56
04,
522
4,16
725
6,77
553
3,13
182
8,82
09,
757,
219
EX
PE
ND
ITU
RE
SC
urre
nt:
Fina
nce
1,36
01,
360
1,36
0
Cap
ital
Pro
ject
s F
un
ds
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CO
MB
ININ
G S
TA
TE
ME
NT
OF
RE
VE
NU
ES
, EX
PE
ND
ITU
RE
S, A
ND
CH
AN
GE
S I
N F
UN
D B
AL
AN
CE
SN
ON
MA
JOR
GO
VE
RN
ME
NT
AL
FU
ND
SJu
ne
30, 2
013
Env
iron
men
tal Q
ualit
y &
Pub
lic W
orks
015
,731
Pub
lic S
afet
y10
6,48
910
6,48
910
6,48
9P
olic
e0
690,
337
Par
ks a
nd R
ecre
atio
n13
,705
13,7
0513
,705
Deb
t S
ervi
ce:
Pri
ncip
al21
7,93
021
7,93
021
7,93
0In
tere
st
19,6
9019
,690
19,6
90O
ther
Deb
t S
ervi
ce
64,1
8264
,182
64,1
82C
apita
l:E
quip
men
t95
9,90
674
4,08
41,
310,
517
436,
530
3,45
1,03
73,
638,
191
Acq
uisi
tions
and
Con
stru
ctio
n71
2,56
11,
476,
175
11,9
3773
6,32
93,
609,
086
6,62
2,42
211
,446
,286
Tot
al E
xpen
dit
ure
s1,
672,
467
2,22
0,25
91,
428,
943
1,18
6,56
43,
673,
268
238,
980
010
,496
,815
16,2
13,9
01
Exc
ess
(Def
icie
ncy
) of
Rev
enu
esov
er (
un
der
) E
xpen
dit
ure
s(1
,667
,803
)(2
,205
,396
)(1
,419
,383
)(1
,182
,042
)(3
,669
,101
)17
,795
533,
131
(9,6
67,9
95)
(6,4
56,6
82)
OT
HE
R F
INA
NC
ING
SO
UR
CE
S (
US
ES
)T
rans
fers
Out
(16,
116)
(375
,000
)
(3
91,1
16)
(3,0
96,1
10)
Issu
ance
of
Deb
t3,
455,
000
11,2
75,0
0014
,730
,000
14,7
30,0
00P
rem
ium
on
Bon
ds11
0,31
81,
828,
338
1,93
8,65
61,
938,
656
Dis
coun
t on
Bon
ds(2
2,04
3)(4
9,61
0)(7
1,65
3)(7
1,65
3)Is
suan
ce o
f R
efun
ding
Deb
t, p
ar6,
005,
000
6,00
5,00
06,
005,
000
Issu
ance
of
Ref
undi
ng D
ebt,
pre
miu
m44
2,29
944
2,29
944
2,29
9P
aym
ent
to R
efun
ded
Deb
t E
scro
w A
gent
(6,4
16,0
28)
(6,4
16,0
28)
(6,4
16,0
28)
Tot
al O
ther
Fin
anci
ng
Sou
rces
(U
ses)
(16,
116)
(375
,000
)0
3,54
3,27
513
,084
,999
00
16,2
37,1
5813
,532
,164
Net
Ch
ange
in F
un
d B
alan
ces
(1,6
83,9
19)
(2,5
80,3
96)
(1,4
19,3
83)
2,36
1,23
39,
415,
898
17,7
9553
3,13
16,
569,
163
7,07
5,48
2
Fu
nd
Bal
ance
s (D
efic
its)
, Beg
inn
ing
2,92
3,65
08,
570,
691
6,07
6,92
80
078
5,16
2(3
70,1
03)
18,6
59,8
4730
,162
,710
Ad
just
men
t to
Op
enin
g F
un
d B
alan
ce (
Not
e 2.
D.)
0(8
63,0
98)
Fu
nd
Bal
ance
s, B
egin
nin
g -
Res
tate
d2,
923,
650
8,57
0,69
16,
076,
928
00
785,
162
(370
,103
)18
,659
,847
29,2
99,6
12
Fu
nd
Bal
ance
s (D
efic
its)
, En
din
g$1
,239
,731
$5,9
90,2
95$4
,657
,545
$2,3
61,2
33$9
,415
,898
$802
,957
$163
,028
$25,
229,
010
$36,
375,
094
107
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ending June 30, 2013
Accrued AccruedFederal Direct/ (Deferred) (Deferred)CFDA Pass-through Revenue at Revenue Revenue at
Grantor/Program Title Number Grantor's Number July 1, 2012 Received Expenditures June 30, 2013
US Department of Agriculture:Direct Programs:
Child Care Food Program 10.558 034-L95-999 ($3,793) $13,068 $16,861 $0Child Care Food Program 10.558 11475 54,685 59,236 4,551Purchase of Development Rights (PDR) 10.913 68-5C16-11-128 1,000,000 1,000,000 Purchase of Development Rights (PDR) 10.913 68-5C16-11-128 144,767 1,017,107 872,340
Passed through Commonwealth of Kentucky: Emerald Ash Borer Treatment Site 10.664 PON2 128 1200003374 9,477 9,477
Total US Department of Agriculture 996,207 1,212,520 1,102,681 886,368
US Department of Housing and Urban Development:Direct Programs:
Community Dev Block Grant 14.218 B10MC210004 316,560 597,366 280,806 Community Dev Block Grant 14.218 B11MC210004 1,520,859 1,705,401 184,542Emergency Shelter 14.231 E11MC210003 1,126 1,126 Emergency Solutions 14.231 E11MC210003 27,944 26,778 (1,166)Emergency Solutions 14.231 E12MC210003 2,231 20,218 17,987HOME 14.239 M10MC210201 192,148 965,151 798,200 25,197Housing Opp for Pers with AIDS (HOPWA) 14.241 KY-H08-0007 931 6,205 5,274Housing Opp for Pers with AIDS (HOPWA) 14.241 KY-H11-0012 35,923 410,368 401,029 26,584Community Dev Block Grant-R - ARRA 14.253 B-08-MY-21-0004 37,113 226,942 189,829 HPRP_R_2010 - ARRA 14.257 S-09-MY-21-0003 2,363 2,363
Passed through Commonwealth of Kentucky: Neighborhood Stabilization Program-Land 14.228 09N-043 52,694 92,674 39,980 Neighborhood Stabilization Program-REACH 14.228 09N-042 35,252 455,079 419,827
Total US Department of Housing and Urban Development 674,110 4,308,308 3,887,342 253,144
US Department of Justice:Direct Programs:
Police Confiscated Funds 16.000 NA (863,097) 556,475 510,673 (908,899)Safe Havens 16.527 2010-CW-AX-K013 44,869 104,742 91,495 31,622Arrest Policy 16.590 2006-WE-AX-0053 63,861 63,861 Arrest Policy 16.590 2011-WE-AX-0011 69,436 203,229 189,622 55,829SCAAP 16.606 2011-AP-BX-0370 (18,404) 8,647 (9,757)SCAAP 16.606 2012-AP-BX-0690 65,503 (65,503)Bulletproof Vests 16.607 2010-BOBX-10051351 6,775 6,775 Bulletproof Vests 16.607 2011-BOBX-11055448 295 295Bulletproof Vests 16.607 2012-BOBX-12064748 345 345Project Safe Neighborhoods 16.609 2009-GP-BX-0020 16,925 49,349 32,424 Project Safe Neighborhoods 16.609 2010-GP-BX-0095 1,200 36,194 87,776 52,782Project Safe Neighborhoods 16.609 2011-GP-BX-0027 1,840 1,840Cops Hire 16.710 2011ULWX0015 284,024 408,910 124,886Justice Assistance Grant 16.738 2009-DJ-BX-0469 8,923 9,958 1,035 Justice Assistance Grant 16.738 2010-DJ-BX-1245 (275,872) 242,444 (33,428)Justice Assistance Grant 16.738 2011-DJ-BX-3120 (207,346) 77,579 (129,767)Justice Assistance Grant 16.738 2012-DJ-BX-0432 113,181 113,181Justice Assistance Grant (JAG) Recovery - ARR 16.804 2009-SB-BP-1627 (199,712) 199,712
Passed through Commonwealth of Kentucky: Juv Accountability Block Grant 16.523 JABG-2012-LFUCG-0008 4,501 10,546 6,045 Juv Accountability Block Grant 16.523 JABG-2013-LFUCG St-00007 2,220 12,927 10,707Sexual Assault Nurse Examiner (SANE) 16.588 VAWA-2011-LFUCG-ST-00220 11,220 29,158 17,938 Sexual Assault Nurse Examiner (SANE) 16.588 VAWA-2012-LFUCG-ST-00296 4,986 11,441 6,455Street Sales (Confiscated Funds) 16.738 2011-JAG-LFUCG STRE-00800 1,432 1,432 Street Sales 16.738 2012-JAG-LFUCG STRE-00919 23,278 49,192 25,914Street Sales (Confiscated Funds) 16.738 2012-JAG-LFUCG STRE-00919 23,813 23,813 PALYEP 16.726 2010-JU-FX-0025 8,411 12,238 3,827 PALYEP 16.726 2011-JU-FX-0015 2,579 11,949 11,197 1,827
Total US Department of Justice (1,325,731) 1,499,730 2,103,790 (721,671)
US Department of Labor:Passed through Commonwealth of Kentucky:
WIA 17.259 13-010Y 49,961 65,025 15,064Total US Department of Labor 49,961 65,025 15,064
108
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ending June 30, 2013
Accrued AccruedFederal Direct/ (Deferred) (Deferred)CFDA Pass-through Revenue at Revenue Revenue at
Grantor/Program Title Number Grantor's Number July 1, 2012 Received Expenditures June 30, 2013
US Department of Transportation: Direct Programs:Passed through Commonwealth of Kentucky:
Air Quality Planning 20.205 1200000158 4,000 4,000 Air Quality Planning 20.205 1300000048 42,635 53,350 10,715Alexander Drive/Stone 20.205 P02-628-0800020946 1,866 128,260 126,394Bicycle and Pedestrian Planning 20.205 1200000158 13,343 13,343 Bicycle and Pedestrian Planning 20.205 1300000048 28,383 28,383 Brighton East 20.205 1000001796 468 80,185 79,717Citation Boulevard 20.205 C-05396856 1,262 (103,599) (5,194) 99,667Clays Mill Road 20.205 C-03328686 1,163,440 1,299,029 765,260 629,671Congestion Management 20.205 1200000158 14,894 14,894 Congestion Management 20.205 1300000048 51,384 53,986 2,602Federal Highway Planning 20.205 1100004277 105,889 105,889 Federal Highway Planning 20.205 1200004765 206,866 335,200 128,334Fiber Optic Cable Installation 20.205 P02-628-0700013795 686 (686) Fiber Optic Cable Installation 20.205 P02-628-0900022383 107,217 307,620 200,403 Gainesway Trail CMAQ Project 20.205 PO2-628-0700013794 7,012 8,765 1,753Grimes Mill Bridge 20.205 C-05354512 642 642 Illuminated Street Signs 20.205 PO2-628-0900022381 24,694 347,599 322,905Intelligent Transpor. System (ITS) 20.205 1000002782 332,128 332,128 Intelligent Transpor. System (ITS) 20.205 1200000760 6,759 276,976 341,035 70,818Intelligent Transpor. System (ITS) 20.205 PO2-625-1300000653 8,172 8,172Legacy Trail Enhancements 20.205 PO2-625-1200003879 79 79Lexvan Program Project 20.205 P02-628-0900022384 105,600 105,600 Lexington Traffic 20.205 P02-625-1200001306 79,981 325,426 245,445 Liberty Road/Todds Road 20.205 C-00021586 (135,052) (135,052)Liberty Road/Todds Road 20.205 C-04073306 96,622 182,853 212,777 126,546Loudon Avenue Project 20.205 C-02279716 65,062 65,000 (62) Loudon Avenue Sidewalk Project 20.205 PO2-628-1100001626 13,597 20,018 6,421Newtown Landscape 20.205 PO2-628-1200005511 177,420 177,420 Newtown Pike 20.205 C-00343167 30,166 33,338 40,222 37,050Newtown Pike Supplement #1 20.205 C-00343167 283,074 329,139 59,173 13,108Newtown Pike Supplement #2 20.205 C-00343167 164,652 663,774 1,700,698 1,201,576Old Frankfort Pike Corridor 20.205 PO2-628-1200001790 24,960 37,440 12,480Rose Street Bike Lanes 20.205 C-01099430 3,200 3,200Share The Road 20.205 PO2-628-0900022380 22,012 22,012South Elkhorn Bike 20.205 KYTC Item 7-229 540 540 South Limestone Streetscape 20.205 P02-628-1100004324 16,976 48,193 31,217 Southland 20.205 P02-628-1100001374 2,094 13,548 28,320 16,866Tates Creek Sidewalks 20.205 PO2-628-1300001250 90,882 94,337 3,455 Town Branch 20.205 P02-628-1200004353 882 1,388 1,363 857West Hickman 20.205 C-04482975 59,417 59,417 Mobility Office 20.205 MA-1200000158 51,392 51,392 Mobility Office 20.205 MA-1300000048 22,555 67,417 44,862MCSAP 20.218 No Number 22,846 73,376 50,530 MCSAP 20.218 No Number 10,207 31,178 20,971Tact 20.218 No Number 12,403 28,159 15,756 Tact 20.218 No Number 14,126 15,151 1,025Cool Trail 20.219 1000003084 4,812 4,812Fed Transit Admin Section 5303 20.505 KY-80-0003-03 9,474 9,474 Fed Transit Admin Section 5303 20.505 KY-80-0003-04 39,845 48,400 8,555Traffic SP 20.600 PT-12-30 6,105 10,022 3,917 Traffic SP 20.600 PT-13-37 25,000 25,000 Traffic Safety Supplement 20.602 K2-12-38 19,741 19,741 Traffic Safety Supplement 20.602 K2-13-17 10,000 10,000Traffic Safety 20.600 AL-12-22 19,008 34,469 15,461 Traffic Safety 20.600 AL-13-16 79,808 107,358 27,550
Total US Department of Transportation 2,928,363 5,170,934 5,146,237 2,903,666
US Environmental Protection AgencyDirect Programs:
Brownfield Assessment Project 66.818 BF-95461610-0 6,830 37,400 41,328 10,758Passed through Commonwealth of Kentucky:
Wolf Run 66.460 C9994861-09 21,577 51,403 30,704 878Total US Environmental Protection Agency 28,407 88,803 72,032 11,636
109
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
For the year ending June 30, 2013
Accrued AccruedFederal Direct/ (Deferred) (Deferred)CFDA Pass-through Revenue at Revenue Revenue at
Grantor/Program Title Number Grantor's Number July 1, 2012 Received Expenditures June 30, 2013
US Department of Health and Human Services:Direct Programs:
Runaway Youth 93.623 90CY236403 62,488 161,819 99,331 Passed through Commonwealth of Kentucky:
Senior Citizens 93.044 AS-2012-2013-2015 98,397 109,899 11,502New Chance-Cab For Families 93.558 PON2 736 1000001890 27,218 27,218 New Chance-Cab For Families 93.558 PON2 736 1200001514 275,477 285,532 10,055Home Network 93.597 2010-2011-PUBLIC-R (46,577) 46,577 Home Network 93.597 2011-2012-PUBLIC-R (383,610) 63,110 273,768 (172,952)Home Network 93.597 2012-1013-PUBLIC-R 378,350 (378,350)
Total US Department of Health and Human Services (340,481) 1,004,371 815,107 (529,745)
US Department of Homeland Security Office of Domestic Preparedness:Passed through Commonwealth of Kentucky:
Hazard Mitigation Grant Prog.(HMGP_Fire) 97.039 PON209511000015692 97,125 97,125 Hazard Mitigation Grant Prog.(HMGP_Plan) 97.039 PON209511000015692 54,374 77,953 28,876 5,297Hazard Mitigation Grant Prog.(HMGP_South) 97.039 PON209511000014261 128,592 168,560 39,968 Chemical Stockpile Emergency (CSEPP) 97.040 PON209510000009494 145,299 176,876 51,530 19,953Chemical Stockpile Emergency (CSEPP) 97.040 PON209511000014052 214,593 204,018 157,362 167,937Chemical Stockpile Emergency (CSEPP) 97.040 PON209512000005372 612 35,524 258,054 223,142Chemical Stockpile Emergency (CSEPP) 97.040 PO209513000036521 28,783 28,783Emergency Management Assistance 97.042 PON209511000003831 62,614 99,840 37,226 Emergency Management Assistance 97.042 PON209513000006711 79,646 79,646Bomb Squad 97.067 PO209412000030072 156,295 156,295 State Homeland Police 97.067 P02 094 1200003009 2 38,800 50,285 11,485 State Homeland Training 97.067 PO2 094 1200003012 2 23,800 23,800 Metro Medical Response System (MMRS) 97.067 PO2 094 1100002296 5 564 77,502 114,448 37,510Metro Medical Response System (MMRS) 97.067 P02 094 1200003498 4 11,636 123,021 138,493 27,108Staffing for Adequate Fire & Emerg Response 97.083 EMW-2011-FH-00445 175,476 175,476
Total US Dept. of Homeland Security Office of Domestic Preparedness 657,084 1,290,799 1,398,567 764,852
US Department of EnergyDirect Programs:Energy Efficiency & Conservation Bl.Grt (EEBCG_R) - ARRA 81.128 DE-EE0000728 110,647 531,996 421,349 Total US Department of Energy 110,647 531,996 421,349 0
Total Federal Financial Assistance $3,728,606 $15,157,422 $15,012,130 $3,583,314
Note: Per generally accepted accounting principles, grant revenues received but not earned with purpose restrictions only are recognized as revenues and fund balance in the financial statements.
110
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For
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e Y
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30, 2
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Acc
rued
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(Def
erre
d)
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Gra
nto
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Rev
enu
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Rev
enu
eR
even
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atG
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tor/
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$8,7
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15,2
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2106
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Man
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2095
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PO
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20,5
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6,39
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t(6
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74,3
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(59,
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c M
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7,18
112
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7,16
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250
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N
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Dep
t. N
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(58,
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48,4
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Ken
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N
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Dep
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145,
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116,
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N/A
Ken
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N/A
Ken
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2 09
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0000
2728
1G
over
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Off
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for
Hom
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15,8
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L
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166
Ken
tuck
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21,6
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L
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ON
2 11
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375,
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d/T
odds
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port
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5)(3
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port
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3167
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541
8,33
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148,
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entu
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1,75
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3 (S
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atm
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WA
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0-L
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32K
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9,00
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1,80
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AN
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(Sex
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tuck
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Ken
tuck
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tate
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elan
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SP
O2
094
1100
0023
41 1
Gov
erno
r's O
ffic
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r H
omel
and
Sec
urit
y86
786
7
Tat
es C
reek
Rd/
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sdow
ne D
r T
raff
ic S
igN
/AK
entu
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Tra
nspo
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inet
2,60
02,
600
Uns
ewer
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reas
2S
X21
0670
01 &
SX
2106
7008
Ken
tuck
y In
fras
truc
ture
Aut
hori
ty2,
909
2,90
9
Was
te T
ire
N/A
Ken
tuck
y E
nerg
y &
Env
iron
men
t Cab
inet
3,00
03,
000
Tot
al S
tate
Fin
anci
al A
ssis
tan
ce$4
88,9
69$6
,351
,156
$6,9
69,4
96$1
,107
,309
Not
e:
Per
gen
eral
ly a
ccep
ted
acco
unti
ng p
rinc
iple
s, g
rant
rev
enue
s re
ceiv
ed b
ut n
ot e
arne
d w
ith
purp
ose
rest
rict
ions
onl
y ar
e re
cogn
ized
as
reve
nues
and
fun
d ba
lanc
e in
the
fina
ncia
l sta
tem
ents
.
111
112
NONMAJOR ENTERPRISE FUNDS Enterprise Funds are established to account for the acquisition, operation and maintenance of the Government's facilities and services which are entirely or predominantly self-supported by user charges or where the Government has decided that periodic determination of revenues earned, expenses incurred, and net income is appropriate for capital maintenance, public policy, management control, accountability and other purposes. The Right of Way program was established in 2003 to account for fees levied to monitor and manage public facilities located in public rights-of-way. The Extended School Program was established in 1994 to provide before and after school care for children in participating elementary and middle schools. The Prisoners’ Account System was transferred to the Government in 1994 and accounts for the operations of the commissary at the Fayette County Detention Center. The Enhanced 911 Fund was established in 1996 to account for the revenues and expenses of developing and operating an enhanced 911 system. The LexVan Program was transferred effective July 1, 2003 from the Transit Authority to the Government to provide commuter van pool service to the Lexington metropolitan area. The Small Business Development Fund was established in 2000 to promote and assist the growth and development of business concerns. This program was previously administered by the Urban County Development Corporation, a component unit of the Government, which was dissolved in March 2000. The Public Parking Corporation was established in 1984 to account for the construction and operation of government-owned parking facilities.
Right of Way
Extended School
Program
Prisoners' Account System
Enhanced 911
LexVan Program
Small Business
Development
Public Parking
Corporation Total
ASSETSCurrent Assets:
Cash $476,279 $15,576 $274,913 $2,112,576 $0 $132,085 $1,015,287 $4,026,716Investments 1,400,905 35,392 1,436,297Receivables:
Other Receivables 514 35,867 36,381Less Allowance for Uncollectible Accounts (35,867) (35,867)
Due from Other Funds 423,998 294,846 250,657 1,354 580,744 1,551,599Inventories and Prepaid Expenses 7,947 1,581 9,528
Total Current Assets 900,277 318,883 525,570 3,515,062 0 168,831 1,596,031 7,024,654Non-Current Assets:
Land 400,000 400,000Land Improvements 10,000 3,197,206 3,207,206Buildings 55,350 55,350Vehicles, Equipment, and Furniture 56,652 94,334 188,902 1,623,320 115,102 2,078,310Intangibles 152,726 1,382,183 1,534,909Less Accumulated Depreciation (44,422) (94,921) (339,828) (2,951,353) (1,555,345) (4,985,869)Construction in Progress 396,083 396,083
Total Non-Current Assets 12,230 9,413 1,800 450,233 0 0 2,212,313 2,685,989Total Assets $912,507 $328,296 $527,370 $3,965,295 $0 $168,831 $3,808,344 $9,710,643
LIABILITIESCurrent Liabilities:
Accounts, Contracts and Retainage Payable $3,139 $11,632 $307,006 $24,818 $0 $0 $0 $346,595Accrued Payroll 6,755 77,340 43,746 127,841Due to Other Funds 990 990Compensated Absences 6,033 1,270 24,256 31,559Unearned Revenue and Other 723 723
Total Current Liabilities 15,927 90,242 307,729 93,810 0 0 0 507,708Non-Current Liabilities:
Compensated Absences 6,033 41,057 24,256 71,346Total Non-Current Liabilities 6,033 41,057 0 24,256 0 0 0 71,346
Total Liabilities $21,960 $131,299 $307,729 $118,066 $0 $0 $0 $579,054
NET POSITIONInvested in Capital Assets, Net of Related Debt $12,230 $9,413 $1,800 $450,234 $0 $0 $2,212,314 $2,685,991Unrestricted (Deficits) 878,317 187,584 217,841 3,396,995 168,831 1,596,030 6,445,598Total Net Position $890,547 $196,997 $219,641 $3,847,229 $0 $168,831 $3,808,344 $9,131,589
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF NET POSITION
NONMAJOR ENTERPRISE FUNDSJune 30, 2013
113
Right of Way
Extended School
Program
Prisoners' Account System
Enhanced 911
LexVan Program
Small Business
Development
Public Parking
Corporation Total
Operating RevenuesUser Charges $0 $0 $0 $0 $0 $0 $0 $0Fees 2,378,719 3,517,634 25,738 5,922,091License Fees and Permits 392,466 392,466Rental Income 1,278 1,278Parking Revenues 3,282 3,282Gross Profit - Commissary 1,051,233 1,051,233Other 1,032 568,393 569,425
Total Operating Revenues 392,466 2,379,751 1,619,626 3,517,634 25,738 0 4,560 7,939,775
Operating ExpensesRight of Way 277,112 277,112Extended School Program 1,985,809 1,985,809Prisoners' Account 427,948 427,948Inmate Trust Account 962,928 962,928Enhanced 911 2,920,070 2,920,070LexVan Program 10,668 10,668Administration 201,921 3,618 205,539Depreciation 7,358 10,825 2,667 10,309 81,248 112,407
Total Operating Expenses 284,470 2,198,555 1,393,543 2,930,379 10,668 0 84,866 6,902,481
Operating Income (Loss) 107,996 181,196 226,083 587,255 15,070 0 (80,306) 1,037,294
Non-Operating Revenues (Expenses)Income on Investments 142 878 1,020
Total Non-Operating Revenues 0 0 0 142 0 878 0 1,020
107,996 181,196 226,083 587,397 15,070 878 (80,306) 1,038,314
Transfer of assets to Component Units (239,051) (12,439,355) (12,678,406)Change in Net Position 107,996 181,196 226,083 587,397 (223,981) 878 (12,519,661) (11,640,092)
Net Position, Beginning 782,551 15,801 (6,442) 3,259,832 223,981 167,953 16,328,005 20,771,681
Net Position, Ending $890,547 $196,997 $219,641 $3,847,229 $0 $168,831 $3,808,344 $9,131,589
Income (Loss) Before Contributions and Transfers
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION
NONMAJOR ENTERPRISE FUNDSFor the Year Ended June 30, 2013
114
Rig
ht
of W
ay E
xten
ded
Sch
ool
Pro
gram
Pri
son
ers'
A
ccou
nt
Sys
tem
En
han
ced
911
Lex
Van
P
rogr
amS
mal
l Bu
sin
ess
Dev
elop
men
tP
ub
lic
Par
kin
g C
orp
orat
ion
Tot
al
Cas
h F
low
s fr
om O
per
atin
g A
ctiv
itie
s:R
ecei
pts
from
Cus
tom
ers
$392
,466
$2,2
13,9
24$1
,649
,971
$3,8
61,9
11$2
6,00
2$0
$1,6
46$8
,145
,920
Pay
men
ts to
Sup
plie
rs(1
22,2
58)
(368
,537
)(1
,676
,372
)21
1,70
952
,491
(300
)(1
,646
)(1
,904
,913
)P
aym
ents
to E
mpl
oyee
s(2
70,2
08)
(1,6
56,5
45)
(1,7
42,9
17)
(3,6
69,6
70)
Pay
men
ts f
or I
nter
fund
Ser
vice
s U
sed
(201
,921
)(5
,820
)(1
0,66
8)(2
18,4
09)
Net
Cas
h P
rovi
ded
by
(Use
d in
) O
per
atin
g A
ctiv
itie
s0
(13,
079)
(26,
401)
2,32
4,88
367
,825
(300
)0
2,35
2,92
8
Cas
h F
low
s fr
om N
onca
pit
al F
inan
cin
g A
ctiv
itie
s:T
rans
fers
Out
(239
,051
)(2
39,0
51)
Net
Cas
h F
low
s P
rovi
ded
by
(Use
d in
) N
onca
pit
al F
inan
cin
g A
ctiv
itie
s0
00
0(2
39,0
51)
00
(239
,051
)
Cas
h F
low
s fr
om C
apit
al a
nd
Rel
ated
Fin
anci
ng
Act
ivit
ies:
Pur
chas
es o
f C
apit
al A
sset
s(3
96,0
83)
(396
,083
)N
et C
ash
Flo
ws
from
Cap
ital
an
d R
elat
ed F
inan
cin
g A
ctiv
itie
s0
00
(396
,083
)0
00
(396
,083
)
Cas
h F
low
s P
rovi
ded
by
In
vest
ing
Act
ivit
ies:
Pur
chas
es o
f In
vest
men
ts(1
42)
(447
)(5
89)
Inco
me
on I
nves
tmen
ts
142
87
8
1,02
0N
et C
ash
Flo
ws
Pro
vid
ed b
y (U
sed
in)
In
vest
ing
Act
ivit
ies
00
00
043
10
431
Net
In
crea
se (
Dec
reas
e)0
(13,
079)
(26,
401)
1,92
8,80
0(1
71,2
26)
131
01,
718,
225
Cas
h a
t B
egin
nin
g of
Yea
r47
6,27
928
,655
301,
314
183,
776
171,
226
131,
954
1,01
5,28
72,
308,
491
Cas
h a
t E
nd
of
Yea
r47
6,27
915
,576
274,
913
2,11
2,57
60
132,
085
1,01
5,28
74,
026,
716
Rec
onci
liat
ion
of
Op
erat
ing
Inco
me
(Los
s) t
o N
et C
ash
Pro
vid
ed b
y (U
sed
In
) O
per
atin
g A
ctiv
itie
s:
Op
erat
ing
Inco
me
(Los
s)10
7,99
618
1,19
622
6,08
358
7,25
515
,070
0(8
0,30
6)1,
037,
294
Ad
just
men
ts t
o R
econ
cile
Op
erat
ing
Inco
me
(Los
s)to
Net
Cas
h P
rovi
ded
by
(Use
d in
) O
per
atin
g A
ctiv
itie
s:D
epre
ciat
ion
7,35
810
,825
2,66
710
,309
81,2
4811
2,40
7(I
ncr
ease
) D
ecre
ase
in A
sset
s:O
ther
Rec
eiva
bles
(1
65,8
27)
30,3
4534
4,27
726
41,
657
210,
716
Inve
ntor
ies
and
Pre
paid
Exp
ense
s(7
,947
)34
,419
26,4
72D
ue f
rom
Oth
er F
unds
(118
,416
)(2
50,6
57)
1,43
4,19
752
,491
(300
)16
3,23
61,
280,
551
Incr
ease
(D
ecre
ase)
in L
iab
ilit
ies:
Acc
ount
s P
ayab
le1,
816
(15,
340)
9,97
1(7
5,77
9)(1
61,2
64)
(240
,596
)A
ccru
ed P
ayro
ll(2
72)
(17,
638)
(13,
819)
(31,
729)
Due
to O
ther
Fun
ds
(4
5,53
3)99
0(4
4,54
3)U
near
ned
Rev
enue
s &
Oth
er
72
3(4
,571
)(3
,848
)C
ompe
nsat
ed A
bsen
ces
1,51
81,
652
3,03
46,
204
Tot
al A
dju
stm
ents
(107
,996
)(1
94,2
75)
(252
,484
)1,
737,
628
52,7
55(3
00)
80,3
061,
315,
634
Net
Cas
h P
rovi
ded
by
(Use
d I
n)
Op
erat
ing
Act
ivit
ies
$0($
13,0
79)
($26
,401
)$2
,324
,883
$67,
825
($30
0)$0
$2,3
52,9
28
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CO
MB
ININ
G S
TA
TE
ME
NT
OF
CA
SH
FL
OW
SN
ON
MA
JOR
EN
TE
RP
RIS
E F
UN
DS
For
th
e Y
ear
En
ded
Ju
ne
30, 2
013
115
117
INTERNAL SERVICE FUNDS Internal Service Funds are used to account for the financing on a cost-reimbursement basis of services provided by one department to other departments within the Government and outside agencies associated with the Government. Individual funds included in this fund type are as follows: The Health, Dental and Vision Care Insurance Fund accounts for the Government’s self-insurance programs for employee medical, dental and vision care benefits. The Insurance and Risk Management Fund accounts for the Government's self-insurance programs for workers' compensation, vehicle liability and physical, general liability and property damage coverage.
Health InsuranceDental and and RiskVision Care Management Total
ASSETSCurrent Assets:
Cash $615,000 $24,253,187 $24,868,187Due from Other Funds 299,149 5,099,144 5,398,293Receivables 126,350 212,186 338,536Inventories and Prepaid Expenses 368,813 368,813
Total Current Assets $1,409,312 $29,564,517 $30,973,829
LIABILITIESCurrent Liabilities:
Accounts Payable $151,312 $85,145 $236,457Claims Payable:
Reported 14,730,195 14,730,195Incurred But Not Reported 1,258,000 13,776,002 15,034,002
Total Liabilities $1,409,312 $28,591,342 $30,000,654
NET POSITIONUnrestricted $0 $973,175 $973,175
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF NET POSITION
INTERNAL SERVICE FUNDSJune 30, 2013
118
Insuranceand Risk
Health Dental Vision Care Total Management Total
Operating RevenuesPremiums $26,077,752 $1,899,081 $120,509 $28,097,342 $9,017,740 $37,115,082
Total Operating Revenues 26,077,752 1,899,081 120,509 28,097,342 9,017,740 37,115,082
Operating ExpensesClaims and Benefit Payments 23,984,885 1,914,311 123,177 26,022,373 9,017,740 35,040,113Operating Supplies and Expense 2,074,969 2,074,969 2,074,969
Total Operating Expenses 26,059,854 1,914,311 123,177 28,097,342 9,017,740 37,115,082
Operating Income (Loss) 17,898 (15,230) (2,668) 0 0 0
Change in Net Position 17,898 (15,230) (2,668) 0 0 0
Net Position, Beginning 412,303 (422,538) 10,235 0 973,175 973,175
Net Position, Ending $430,201 ($437,768) $7,567 $0 $973,175 $973,175
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF REVENUES, EXPENSES, & CHANGES IN FUND NET POSITION
INTERNAL SERVICE FUNDSFor the Year Ended June 30, 2013
Health, Dental and Vision Care Insurance
119
Health InsuranceDental and and RiskVision Care Management Total
Increase (Decrease) in Cash and Cash Equivalents:
Cash Flows from Operating Activities:Receipts from Employees and Other Sources $28,097,342 $0 $28,097,342Receipts from Interfund Services Provided 854,759 23,988,844 24,843,603Refunds from/(Payments) to Suppliers (2,257,628) 47,144 (2,210,484)Payments for Claims (26,188,473) (2,535,988) (28,724,461)
Net Cash Used in Operating Activities 506,000 21,500,000 22,006,000
Net Increase (Decrease) in Cash and Cash Equivalents 506,000 21,500,000 22,006,000
Cash at Beginning of Year 109,000 2,753,187 2,862,187
Cash at End of Year $615,000 $24,253,187 $24,868,187
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF CASH FLOWS
INTERNAL SERVICE FUNDSFor the Year Ended June 30, 2013
120
Reconciliation of Operating Income to Net CashUsed In Operating Activities:
Operating Income $0 $0 $0
Adjustments to Reconcile Operating Incometo Net Cash Used in Operating Activities:(Increase) Decrease in Assets:
Due from Other Funds 978,594 15,011,556 15,990,150Other Receivables (123,835) (40,452) (164,287)Inventories and Prepaid Expenses (122,132) (122,132)
Increase (Decrease) in Liabilities:Accounts Payable (60,527) 47,144 (13,383)Claims Payable (166,100) 6,481,752 6,315,652
Total Adjustments 506,000 21,500,000 22,006,000
Net Cash Provided by Operating Activities $506,000 $21,500,000 $22,006,000
120
121
FIDUCIARY FUNDS
Fiduciary Funds are used to account for assets held by the Government in a trustee capacity or as an agent for individuals, private organizations, other governmental units, or other funds. These include pension trust, expendable trust, and agency funds. Individual funds included in this fund type are as follows:
AGENCY FUNDS
The Neighborhood Sewer Projects Fund is an agency fund that accounts for the collection of special assessments and debt service payments on financing for neighborhood capital projects. The Juvenile and Adult Probation Fund accounts for funds collected by the divisions of Youth Services and Detention Services from juvenile and adult offenders and disbursed to victims in accordance with court decrees and funds collected from and disbursed for inmates on work release. The Domestic Relations Fund accounts for the child support payments collected by the Government from non-custodial parents and disbursed to custodial parents. The Representative Payee Fund accounts for funds managed by the Government on behalf of adults who are unable to manage their own money in order to prevent the exploitation, abuse, and neglect of these citizens.
Balance BalanceJuly 1, 2012 June 30,2013
NEIGHBORHOOD SEWER PROJECTS FUNDCash and Short-Term Investments $714 $714
Payable to Property Owners $714 $714
JUVENILE AND ADULT PROBATION FUNDCash $328,582 $327,627
Accounts Payable $328,582 $327,627
DOMESTIC RELATIONS FUNDCash $314,032 $313,982
Accounts Payable $314,032 $313,982
REPRESENTATIVE PAYEE PROGRAMCash $6,090 $18,552
Accounts Payable $6,090 $18,552
TOTALS - AGENCY FUNDSCash and Short-Term Investments $649,418 $660,875
Liabilities $649,418 $660,875
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF NET POSITION
AGENCY FUNDSFor the Year Ended June 30, 2013
122
Balance BalanceJuly 1, 2012 Additions Deductions June 30,2013
NEIGHBORHOOD SEWER PROJECTS FUNDCash and Short-Term Investments $714 $0 $0 $714
Payable to Property Owners $714 $0 $0 $714
JUVENILE AND ADULT PROBATION FUNDCash $328,583 $25,496 $26,452 $327,627
Accounts Payable $328,583 $25,434 $26,390 $327,627Due to Other Funds 2,265 2,265 0
Total Liabilities $328,583 $27,699 $28,655 $327,627
DOMESTIC RELATIONS FUNDCash $314,032 $52 $102 $313,982
Accounts Payable $314,032 $52 $102 $313,982
REPRESENTATIVE PAYEE PROGRAMCash $6,090 $174,872 $162,410 $18,552
Accounts Payable $6,090 $174,872 $162,410 $18,552
TOTALS - AGENCY FUNDSCash and Short-Term Investments $649,419 $200,420 $188,964 $660,875
Liabilities $649,419 $202,623 $191,167 $660,875
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
AGENCY FUNDSFor the Year Ended June 30, 2013
123
125
NONMAJOR COMPONENT UNITS The Lexington Transit Authority is authorized to promote and develop mass transportation, including acquisition, operation and extension of the existing mass transit system. The Lexington Public Library provides educational, informational and recreational service needs to Lexington and Fayette County through circulating and reference materials. The Lexington Convention and Visitors Bureau promotes recreational, convention and tourist activity in Fayette County. The Downtown Development Authority acts as an agency of the Government in various economic development, redevelopment, and physical improvement activities associated with downtown.
Lexington Lexington LexingtonTransit Public Convention and
Authority** Library Visitors Bureau**ASSETSCash $14,093,662 $4,019,483 $716,270Investments 6,281,820Receivables:
Accounts Receivable 137,271 28,797 100,782Other 103,343
Due from Primary Government 1,008,168Due from Other Governments 1,313,722Inventories and Prepaid Expenses 728,289 7,824 77,334Restricted Current Assets:
Cash 1,118,115Investments 510,090Pension Assets 768,005
Restricted Non-Current InvestmentsCapital Assets:
Non-depreciable 3,650,287 4,017,023 18,502Depreciable (Net) 18,081,195 16,940,857 258,646
Other Assets 85,040
Total Assets $38,875,774 $31,380,844 $3,807,907
LIABILITIESAccounts, Contracts Payable and Accrued Liabilities $1,153,369 $1,050,536 $79,348Interest Payable 21,712Due to Primary GovernmentDue to Component Units 82,000Unearned Revenue and Other 501 3,205Non-Current Liabilities:
Due Within One Year:Compensated Absences 165,202 311,312 69,912Bonds and Notes Payable 356,199
Due in More Than One Year:Compensated Absences 306,805Bonds and Notes Payable 7,921,733
Total Liabilities $1,625,376 $9,661,993 $234,465
NET POSITION Investment in Capital Assets,
Net of Related Debt $21,731,482 $12,679,948 $277,148 Restricted for:
Pension 768,005Governmental and Program Funds 184,813
Unrestricted 14,750,911 8,854,090 3,296,294
Total Net Position $37,250,398 $21,718,851 $3,573,442
** Certain categories have been reclassified to conform to the Government-Wide Financial Statement presentation
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF NET POSITION
NONMAJOR COMPONENT UNITS
June 30, 2013
126
Downtown Total NonmajorDevelopment Component
Authority Units
$238,233 $19,067,6486,281,820
266,850103,343
1,008,1681,313,722
357 813,804
1,118,115510,090768,005
7,685,81235,280,698
85,040
$238,590 $74,303,115
$112,451 $2,395,70421,712
73,729 73,72982,000
3,706
4,468 550,894356,199
981 307,7867,921,733
$191,629 $11,713,463
$0 $34,688,578
768,005184,813
46,961 26,948,256
$46,961 $62,589,652
127
Operating CapitalCharges for Grants and Grants and
Expenses Services Contributions ContributionsLexington Transit Authority
Transit Operations $22,470,767 $2,974,283 $4,486,417 $2,136,043Depreciation 2,842,402
Total Lexington Transit Authority 25,313,169 2,974,283 4,486,417 2,136,043Lexington Public Library
Library Operations 12,610,514 885,442 277,441 105,000Depreciation 1,235,336Interest on Long-Term Debt 382,599
Total Lexington Public Library 14,228,449 885,442 277,441 105,000Lexington Convention and Visitors Bureau
Convention and Tourism Operations 5,443,106 55,941 478,692Depreciation 60,916
Total Lexington Convention and Visitors Bureau 5,504,022 55,941 478,692 0Downtown Development Authority
Downtown Design Center 470,052Total Downtown Development Authority 470,052 0 0 0Total nonmajor component units $45,515,692 $3,915,666 $5,242,550 $2,241,043
General Revenues: Taxes Payment from/to Lexington-Fayette Urban County Government Income on InvestmentsGain on Sale of Capital Assets
Miscellaneous Total General Revenues Transfer of assets from Lexington-Fayette Urban County GovernmentChange in Net Position
Net Position, BeginningAdjustment to Opening Net Position (Note 2.D.)
Net Position, Beginning - RestatedNet Position, Ending
** Certain categories have been reclassified to conform to the Government-Wide Financial Statement presentation
Program Revenues
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTCOMBINING STATEMENT OF ACTIVITIES
NONMAJOR COMPONENT UNITSFor the Year Ended June 30, 2013
128
TotalLexington Lexington Lexington Downtown Nonmajor
Transit Public Convention and Development ComponentAuthority** Library Visitors Bureau** Authority Units
($12,874,024) ($12,874,024)(2,842,402) (2,842,402)
(15,716,426)
($11,342,631) (11,342,631)(1,235,336) (1,235,336)
(382,599) (382,599)(12,960,566)
($4,908,473) (4,908,473)(60,916) (60,916)
(4,969,389)
($470,052) (470,052)(470,052)
($15,716,426) ($12,960,566) ($4,969,389) ($470,052) ($34,116,433)
$15,856,029 $13,746,809 $5,632,124 $0 $35,234,962261,230 261,230
87,255 4,268 32 91,55510,839 (813) 10,026
6,699 18,370 228,773 253,84215,866,868 13,840,763 5,653,949 490,035 35,851,615
382,509 382,509532,951 880,197 684,560 19,983 2,117,691
36,717,447 21,008,004 2,888,882 26,978 60,641,311(169,350) (169,350)
36,717,447 20,838,654 2,888,882 26,978 60,471,961$37,250,398 $21,718,851 $3,573,442 $46,961 $62,589,652
Changes in Net Assets Net (Expenses) Revenue and
129
131
The Lexington-Fayette Urban County Government’s Comprehensive Annual Financial Report presents detailed information as a context for understanding what the information in the financial statements, note disclosures and required supplementary information says about the Government’s overall financial health. Financial Trends: Tables 1 – 6
These schedules contain trend information to help the reader understand how the Government’s financial performance and well-being have changed over time.
Revenue Capacity: Tables 7 – 12
These schedules contain information to help the reader assess the Government’s most significant local revenue sources.
Debt Capacity: Tables 13 – 17
These schedules present information to help the reader assess the affordability of the Government’s current level of outstanding debt and the Government’s ability to issue additional debt in the future.
Demographic & Economic Indicators: Tables 18 – 21
These schedules offer demographic and economic indicators to help the reader understand the environment within which the Government’s financial activity takes place.
Operating Information: Tables 22 – 24
These schedules contain service and infrastructure data to help the reader understand how the information in the Government’s financial report relates to the services the government provides and the activities it performs.
TA
BL
E 1
LE
XIN
GT
ON
FA
YE
TT
EU
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Gov
ernm
enta
l Act
ivit
ies
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
NE
T P
OS
ITIO
NL
AS
T T
EN
FIS
CA
L Y
EA
RS
Fis
cal Y
ear
Inve
stm
ent i
n C
apit
al A
sset
s, n
et o
f re
late
d de
bt$1
08,1
87,7
66$1
28,5
33,8
98$9
64,0
32,5
56$9
65,6
83,9
82$9
63,8
23,7
28$9
34,7
89,3
42$9
20,9
38,9
45$9
21,2
36,8
76$8
99,3
50,3
44$8
77,6
91,4
69R
estr
icte
d1,
253,
571
1,31
6,49
510
,509
,131
19,9
18,5
002,
241,
711
6,25
5,43
2(3
1,49
4,18
1)32
,640
,718
20,2
89,1
3126
,895
,407
Unr
estr
icte
d (D
efic
it)
15,8
92,8
8129
,526
,571
50,3
90,0
8430
,807
,379
5,93
0,42
0(6
,454
,734
)(1
10,0
23,2
38)
(98,
714,
274)
(94,
638,
121)
Tot
al g
over
nmen
tal a
ctiv
itie
s ne
t pos
itio
n12
5,33
4,21
815
9,37
6,96
41,
024,
931,
771
1,01
6,40
9,86
197
1,99
5,85
993
4,59
0,04
088
9,44
4,76
484
3,85
4,35
682
0,92
5,20
180
9,94
8,75
5
Bus
ines
s-ty
pe A
ctiv
itie
sIn
vest
men
t in
Cap
ital
Ass
ets,
net
of
rela
ted
debt
245,
267,
827
243,
680,
021
245,
818,
433
244,
593,
588
239,
407,
215
254,
269,
159
239,
666,
463
209,
276,
568
217,
434,
369
217,
313,
258
Res
tric
ted
31,5
75,1
9433
,688
,305
34,5
65,9
4139
,914
,276
24,1
29,4
2224
,680
,839
35,2
49,0
9850
,637
,360
57,7
12,7
5966
,194
,803
Unr
estr
icte
d (D
efic
it)
(204
,318
)5,
634,
802
11,0
84,8
0414
,020
,822
24,6
15,5
737,
399,
034
14,7
02,0
0633
,023
,663
29,4
35,4
2427
,429
,362
Tot
al b
usin
ess-
type
act
ivit
ies
net p
osit
ion
276,
638,
703
283,
003,
128
291,
469,
178
298,
528,
686
288,
152,
210
286,
349,
032
289,
617,
567
292,
937,
591
304,
582,
552
310,
937,
423
Pri
mar
y G
over
nmen
tIn
vest
men
t in
Cap
ital
Ass
ets,
net
of
rela
ted
debt
353,
455,
593
372,
213,
919
1,20
9,85
0,98
91,
210,
277,
570
1,20
3,23
0,94
31,
189,
058,
501
1,16
0,60
5,40
81,
130,
513,
444
1,11
6,78
4,71
31,
095,
004,
727
Res
tric
ted
32,8
28,7
6535
,004
,800
45,0
75,0
7259
,832
,776
26,3
71,1
3330
,936
,271
3,75
4,91
783
,278
,078
78,0
01,8
9093
,090
,210
Unr
estr
icte
d (D
efic
it)
15,6
88,5
6335
,161
,373
61,4
74,8
8844
,828
,201
30,5
45,9
9394
4,30
014
,702
,006
(76,
999,
575)
(69,
278,
850)
(67,
208,
759)
Tot
al p
rim
ary
gove
rnm
ent n
et p
osit
ion
$401
,972
,921
$442
,380
,092
$1,3
16,4
00,9
49$1
,314
,938
,547
$1,2
60,1
48,0
69$1
,220
,939
,072
$1,1
79,0
62,3
31$1
,136
,791
,947
$1,1
25,5
07,7
53$1
,120
,886
,178
py
gp
$,
,$
,,
$,
,,
$,
,,
$,
,,
$,
,,
$,
,,
$,
,,
$,
,,
$,
,,
2006
was
the
firs
t yea
r L
FU
CG
rep
orte
d al
l cap
ital
ass
ets,
incl
udin
g in
fras
truc
ture
, pur
suan
t to
GA
SB
34.
132
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
TA
BL
E 2
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Exp
ense
sG
over
nmen
tal A
ctiv
itie
s:G
ener
al G
over
nmen
t$2
1,29
3,00
8$2
2,84
0,72
1$2
1,97
7,52
1$2
3,92
7,77
1$3
0,66
0,95
1$2
2,70
6,30
6$2
2,72
6,53
7$2
4,19
7,23
9$2
2,98
5,04
6$2
3,69
2,99
0A
dmin
istr
ativ
e S
ervi
ces
18,9
38,7
4623
,522
,220
27,6
74,3
2234
,445
,260
3,83
2,63
93,
315,
306
1,29
9,38
21,
386,
040
21,1
43,4
8011
,761
,053
Hea
lth,
Den
tal a
nd V
isio
n In
sura
nce
10,5
92,0
9014
,011
,082
14,7
40,1
8213
,301
,058
14,5
64,3
0625
,824
,211
26,7
11,4
9234
,755
,417
26,2
11,4
5725
,006
,634
Chi
ef I
nfor
mat
ion
Off
icer
11,2
16,3
1514
,522
,324
9,16
1,67
79,
713,
226
Chi
ef D
evel
opm
ent O
ffic
er47
0,01
862
0,66
5F
inan
ce6,
876,
648
6,67
0,05
06,
629,
421
10,4
64,2
0412
,376
,624
13,3
78,8
1924
,047
,223
28,5
15,6
5519
,357
,661
14,7
44,0
87P
ubli
c W
orks
33,9
60,9
3935
,320
,695
93,1
99,7
2268
,896
,198
71,6
95,7
0262
,907
,588
61,8
41,0
9663
,671
,436
Env
iron
men
tal Q
uali
ty &
Pub
lic
Wor
ks80
,559
,723
83,8
78,5
37
Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent*
3,76
7,29
5P
ubli
c S
afet
y7,
232,
363
9,00
1,07
98,
363,
244
11,9
37,5
9826
,717
,271
13,1
45,2
5111
,259
,687
11,1
62,7
6513
,042
,036
14,6
66,4
37P
olic
e42
,794
,170
47,3
20,6
5856
,588
,057
56,9
80,6
5763
,533
,856
69,5
07,6
8570
,694
,372
71,7
14,4
1568
,164
,371
69,9
45,3
22F
ire
and
Em
erge
ncy
Ser
vice
s36
,841
,543
39,3
90,5
4247
,469
,043
53,2
42,0
8258
,497
,360
66,0
77,1
8063
,116
,000
67,1
06,4
4166
,413
,015
62,7
81,2
39C
omm
unit
y C
orre
ctio
ns24
,478
,660
27,3
26,1
7228
,539
,978
29,0
28,3
2630
,686
,297
30,6
70,3
3930
,894
,261
31,1
04,7
8131
,286
,365
32,6
31,9
37B
uild
ing
Insp
ecti
onE
nvir
onm
enta
l Qua
lity
23,9
47,8
3124
,729
,110
21,5
16,0
3423
,500
,067
Soc
ial S
ervi
ces
9,07
0,44
210
,579
,394
13,3
79,4
7815
,493
,804
16,3
92,1
7314
,719
,158
11,8
36,7
0310
,672
,881
9,78
0,94
510
,194
,745
Gen
eral
Ser
vice
s16
,242
,299
16,9
98,0
8618
,493
,537
10,8
55,4
1211
,531
,344
13,9
44,8
3514
,629
,238
14,2
42,6
9810
,041
,709
10,8
98,5
33P
arks
and
Rec
reat
ion
13,3
80,4
3614
,840
,330
16,7
39,9
8019
,428
,046
21,9
61,7
1419
,955
,406
18,3
20,5
0619
,064
,298
19,3
86,2
5119
,653
,677
Law
and
Ris
k M
anag
emen
t1,
642,
220
2,04
1,71
91,
946,
786
2,11
5,34
112
,593
,109
10,8
03,4
139,
301,
249
10,2
27,2
683,
497,
483
4,00
6,24
0O
utsi
de A
genc
ies
27,7
18,6
4326
7,97
617
8,66
7S
peci
al P
roje
cts
Inte
rest
on
Lon
g-T
erm
Deb
t5,
739,
105
6,23
6,28
06,
291,
512
6,37
8,16
95,
727,
995
6,35
7,23
610
,692
,416
13,1
31,6
1712
,835
,920
13,1
16,2
05D
ebt S
ervi
ce -
Oth
er6,
444,
538
1,26
1,20
41,
040,
970
1,05
6,28
91,
056,
179
Tot
al g
over
nmen
tal a
ctiv
itie
s28
3,24
5,85
027
7,62
8,20
836
3,25
2,42
035
7,55
0,21
541
6,99
1,66
641
2,56
4,16
740
8,04
7,87
343
4,16
6,24
440
5,17
5,48
040
1,36
5,59
6B
usin
ess-
type
Act
ivit
ies:
San
itar
y S
ewer
Sys
tem
22,3
47,7
3823
,554
,596
24,5
53,3
0526
,703
,501
36,5
65,0
6935
,438
,026
41,4
53,3
6042
,472
,580
40,1
24,3
4639
,014
,016
Pub
lic
Fac
ilit
ies
13,5
00,5
6112
,121
,284
12,1
75,0
0510
,444
,503
11,3
59,2
9410
,971
,103
10,8
06,2
6710
,741
,225
10,3
33,3
209,
419,
886
Pub
lic
Par
king
941,
821
891,
857
909,
544
511,
198
463,
177
1,01
2,39
992
7,90
090
6,92
684
7,89
484
,866
Lan
dfil
l5,
423,
413
4,23
3,41
21,
391,
578
1,65
1,31
87,
250,
365
6,20
9,61
96,
641,
801
6,58
1,62
55,
271,
593
4,09
9,77
0R
ight
of
Way
261,
494
266,
933
292,
284
307,
012
333,
723
299,
598
313,
383
312,
770
298,
896
284,
470
Ext
ende
d S
choo
l Pro
gram
1,38
7,20
31,
452,
385
1,57
8,87
31,
967,
573
2,08
1,42
22,
333,
357
2,45
6,87
42,
207,
310
2,33
9,14
82,
198,
555
Pri
sone
rs' A
ccou
nt S
yste
m1,
360,
709
1,47
2,69
31,
363,
204
1,27
3,91
31,
724,
224
1,62
8,15
61,
421,
523
1,28
7,13
91,
373,
473
1,39
3,54
3E
nhan
ced
911
2,30
0,11
42,
112,
518
2,10
7,59
23,
057,
919
3,87
0,26
73,
314,
149
3,63
4,03
23,
083,
806
2,97
3,08
82,
930,
379
Lex
Van
Pro
gram
17,5
4540
,296
35,1
2262
,228
54,3
4763
,502
57,6
4484
,242
29,3
0710
,668
Sm
all B
usin
ess
Dev
elop
men
t10
8,34
33,
562
8,83
8W
ater
Qua
lity
1,84
1,97
54,
528,
403
6,28
0,08
19,
182,
669
8,30
8,50
1T
otal
bus
ines
s-ty
pe a
ctiv
itie
s47
,648
,941
46,1
49,5
3644
,415
,345
45,9
79,1
6563
,701
,888
63,1
11,8
8472
,241
,187
73,9
57,7
0472
,773
,734
67,7
44,6
54T
otal
pri
mar
y go
vern
men
t$3
30,8
94,7
91$3
23,7
77,7
44$4
07,6
67,7
65$4
03,5
29,3
80$4
80,6
93,5
54$4
75,6
76,0
51$4
80,2
89,0
60$5
08,1
23,9
48$4
77,9
49,2
14$4
69,1
10,2
50
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CH
AN
GE
S I
N N
ET
PO
SIT
ION
LA
ST
TE
N F
ISC
AL
YE
AR
S(A
ccru
al B
asis
of
Acc
ount
ing)
Fis
cal Y
ear
133
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Pro
gram
Rev
enu
esG
over
nmen
tal A
ctiv
itie
s:C
harg
es f
or S
ervi
ces
$33,
999,
515
$41,
277,
818
Gen
eral
Gov
ernm
ent
$3,1
03,0
58$8
,708
,357
$14,
562,
857
$14,
300,
517
$13,
541,
123
$15,
644,
382
$15,
086,
369
$23,
141,
015
Adm
inis
trat
ive
Ser
vice
s1,
577,
237
7,16
7,05
01,
000
1,60
3,45
355
9,05
0H
ealt
h, D
enta
l, an
d V
isio
n14
,676
,675
13,2
97,9
8414
,564
,306
25,8
24,2
1126
,711
,492
34,7
55,4
1726
,211
,457
25,0
06,6
34C
hief
Inf
orm
atio
n O
ffic
er77
,900
56,3
4414
,368
20,8
76C
hief
Dev
elop
men
t Off
icer
Fin
ance
866,
815
1,23
3,79
61,
526,
545
4,38
5,60
03,
807,
077
3,14
5,04
32,
511,
142
2,41
3,36
3P
ubli
c W
orks
1,57
4,35
51,
304,
217
14,3
88,4
143,
775,
946
5,77
0,60
84,
088,
338
Env
iron
men
tal Q
uali
ty &
Pub
lic
Wor
ks2,
912,
917
2,75
7,40
5
Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent*
240,
168
Pub
lic
Saf
ety
2,39
4,57
72,
419,
149
1,48
2,00
040
3,49
144
5,02
932
9,46
02,
045,
401
1,85
7,05
9P
olic
e1,
088,
235
309,
799
614,
408
2,03
1,64
32,
007,
988
2,40
2,84
01,
528,
342
1,94
2,29
7F
ire
and
Em
erge
ncy
Ser
vice
s3,
645,
180
4,16
6,74
14,
686,
614
6,77
3,04
06,
191,
913
6,47
8,10
87,
340,
946
6,95
2,39
4C
omm
unit
y C
orre
ctio
ns5,
995,
495
6,95
5,53
77,
822,
586
6,41
3,34
96,
319,
484
7,42
9,35
17,
707,
225
8,28
6,56
5E
nvir
onm
enta
l Qua
lity
2,15
5,40
71,
265,
393
1,85
0,48
72,
406,
997
Soc
ial S
ervi
ces
355,
936
2,07
1,45
63,
362,
329
3,75
4,79
32,
848,
473
3,54
2,91
51,
766,
790
1,85
7,12
3G
ener
al S
ervi
ces
69,4
8871
,059
104,
442
113,
498
97,8
9863
,132
28,8
27P
arks
and
Rec
reat
ion
4,33
8,29
54,
520,
111
4,56
6,55
85,
381,
956
4,69
1,53
34,
258,
091
4,81
0,53
54,
156,
325
Law
and
Ris
k M
anag
emen
t1,
145
475
2,93
521
,528
34,4
4418
,217
35,2
9336
,944
Out
side
Age
ncie
s92
3,42
0D
ebt S
ervi
ce -
oth
er48
5,30
473
,448
Ope
rati
ng G
rant
s an
d C
ontr
ibut
ions
33,1
01,3
9820
,838
,959
19,2
97,9
5231
,988
,064
17,5
00,9
0513
,251
,883
20,1
92,6
7213
,849
,522
14,1
39,4
2613
,065
,758
Cap
ital
Gra
nts
and
Con
trib
utio
ns13
,256
,243
12,9
70,7
1515
,349
,943
3,13
8,38
17,
838,
458
10,2
76,3
9310
,434
,599
7,07
8,72
98,
316,
236
6,27
2,53
9T
otal
gov
ernm
enta
l act
ivit
ies
80,3
57,1
5675
,087
,492
75,7
43,1
1087
,354
,565
95,2
23,2
8198
,020
,529
104,
974,
788
105,
547,
184
96,0
78,6
6498
,573
,466
Bus
ines
s-ty
pe A
ctiv
itie
s:C
harg
es f
or S
ervi
ces
54,4
21,0
1249
,825
,599
San
itar
y S
ewer
Sys
tem
28,4
71,9
4426
,199
,037
27,5
32,4
2236
,605
,347
47,4
70,3
0548
,803
,593
47,2
87,7
9152
,927
,780
Pub
lic
Fac
ilit
ies
7,25
1,00
95,
390,
398
6,23
7,83
66,
841,
271
6,40
5,53
17,
157,
088
7,15
6,66
65,
830,
285
Pub
lic
Par
king
1,30
3,99
859
3,99
51,
192,
523
1,37
3,03
71,
203,
102
859,
874
977,
414
4,56
0L
andf
ill
7,99
9,65
17,
870,
493
8,55
6,22
08,
499,
137
8,24
0,76
27,
203,
610
7,18
3,61
16,
845,
329
Rig
ht o
f W
ay41
2,29
241
3,70
531
0,95
040
3,77
147
9,01
248
3,19
641
9,67
639
2,46
6E
xten
ded
Sch
ool P
rogr
am1,
494,
955
2,22
0,50
92,
203,
771
1,80
8,12
12,
097,
145
2,03
8,39
12,
338,
243
2,37
9,75
1P
riso
ners
' Acc
ount
Sys
tem
1,45
2,15
61,
950,
786
2,06
6,36
12,
026,
429
1,91
5,91
01,
121,
799
1,52
4,12
71,
619,
626
Enh
ance
d 91
12,
365,
264
2,38
3,33
22,
621,
394
3,45
3,31
04,
069,
027
3,74
9,40
93,
999,
658
3,51
7,63
4L
exV
an P
rogr
am27
,449
26,6
0961
,360
84,0
4591
,090
140,
699
51,7
9825
,738
Sm
all B
usin
ess
Dev
elop
men
t6,
258
23,3
8418
8W
ater
Qua
lity
68,2
685,
581,
104
11,6
04,5
6912
,095
,514
12,2
96,4
76O
pera
ting
Gra
nts
and
Con
trib
utio
ns12
5,74
4T
otal
bus
ines
s-ty
pe a
ctiv
itie
s54
,546
,756
49,8
25,5
9950
,784
,976
47,0
72,2
4850
,783
,025
61,1
62,7
3677
,552
,988
83,1
62,2
2883
,034
,498
85,8
39,6
45T
otal
pri
mar
y go
vern
men
t13
4,90
3,91
212
4,91
3,09
112
6,52
8,08
613
4,42
6,81
314
6,00
6,30
615
9,18
3,26
518
2,52
7,77
618
8,70
9,41
217
9,11
3,16
218
4,41
3,11
1
Net
(E
xpen
se)/
Rev
enu
eG
over
nmen
tal a
ctiv
itie
s(2
02,8
88,6
94)
(202
,540
,716
)(2
87,5
09,3
10)
(270
,195
,650
)(3
21,7
68,3
85)
(314
,543
,638
)(3
03,0
73,0
85)
(328
,619
,060
)(3
09,0
96,8
16)
(302
,792
,130
)B
usin
ess-
type
act
ivit
ies
6,89
7,81
53,
676,
063
6,36
9,63
11,
093,
083
(12,
918,
863)
(1,9
49,1
48)
5,31
1,80
19,
204,
524
10,2
60,7
6418
,094
,991
Tot
al p
rim
ary
gove
rnm
ent
(195
,990
,879
)(1
98,8
64,6
53)
(281
,139
,679
)(2
69,1
02,5
67)
(334
,687
,248
)(3
16,4
92,7
86)
(297
,761
,284
)(3
19,4
14,5
36)
(298
,836
,052
)(2
84,6
97,1
39)
Gen
eral
Rev
enu
es a
nd
Oth
er C
han
ges
in N
et P
osit
ion
Gov
ernm
enta
l Act
ivit
ies:
Pro
pert
y T
axes
41,9
64,4
2543
,189
,707
44,8
89,9
6147
,791
,867
51,4
55,1
8554
,301
,749
51,1
43,1
9952
,548
,109
52,8
60,8
4053
,597
,311
Lic
ense
s an
d P
erm
its
178,
942,
755
188,
973,
285
197,
857,
140
210,
698,
736
220,
015,
258
218,
194,
593
215,
196,
838
224,
399,
866
230,
580,
201
238,
924,
158
Gra
nts
and
Con
trib
utio
ns N
ot R
estr
icte
d to
Spe
cifi
c P
rogr
ams:
Com
mun
ity
Dev
elop
men
t Blo
ck G
rant
3,56
7,31
52,
570,
656
2,26
4,41
92,
126,
818
2,46
3,74
62,
577,
631
2,25
0,77
92,
175,
565
2,17
1,90
12,
176,
035
Inco
me
on I
nves
tmen
ts50
7,86
81,
839,
509
3,39
5,52
76,
121,
269
3,58
2,70
980
4,51
030
0,14
912
9,83
958
9,96
7(5
09,8
90)
Sal
e of
Ass
ets
457,
849
523,
841
956,
340
(1,0
41,3
67)
457,
516
641,
460
(45,
882)
2,30
0,24
231
1,25
928
3,40
6B
ond
Ref
undi
ng(1
9,18
5,00
0)M
isce
llan
eous
918,
323
767,
547
827,
029
963,
926
Con
veya
nce
of A
sset
(2,1
16,8
80)
Tra
nsfe
rs(1
,136
,353
)(1
,281
,083
)67
0,25
4(3
,308
,054
)(6
20,0
31)
617,
876
1,73
7,85
41,
249,
888
(346
,507
)(1
,106
,585
)T
otal
gov
ernm
enta
l act
ivit
ies
206,
037,
182
236,
583,
462
250,
860,
670
261,
236,
315
277,
354,
383
277,
137,
819
270,
582,
937
282,
803,
509
286,
167,
661
293,
364,
435
Bus
ines
s-ty
pe A
ctiv
itie
s:In
com
e on
Inv
estm
ents
662,
485
1,39
7,92
92,
728,
854
2,80
2,63
41,
907,
250
669,
955
96,2
8554
0,69
21,
029,
866
(215
,314
)S
ale
of A
sset
s3,
587
9,35
017
,819
(183
,523
)15
,106
93,8
91(4
01,6
97)
39,1
497,
824
Bon
d R
efun
ding
18,7
60,0
00T
rans
fers
1,13
6,35
31,
281,
083
(670
,254
)3,
308,
054
620,
031
(617
,876
)(1
,737
,854
)(1
,249
,888
)34
6,50
7(1
1,90
2,98
1)T
otal
bus
ines
s-ty
pe a
ctiv
itie
s20
,562
,425
2,68
8,36
22,
076,
419
5,92
7,16
52,
542,
387
145,
970
(2,0
43,2
66)
(670
,047
)1,
384,
197
(12,
118,
295)
Tot
al p
rim
ary
gove
rnm
ent
226,
599,
607
239,
271,
824
252,
937,
089
267,
163,
480
279,
896,
770
277,
283,
789
268,
539,
671
282,
133,
462
287,
551,
858
281,
246,
140
Ch
ange
in N
et P
osit
ion
Gov
ernm
enta
l act
ivit
ies
3,14
8,48
834
,042
,746
(36,
648,
640)
(8,9
59,3
35)
(44,
414,
002)
(37,
405,
819)
(32,
490,
148)
(45,
815,
551)
(22,
929,
155)
(9,4
27,6
95)
Bus
ines
s-ty
pe a
ctiv
itie
s27
,460
,240
6,36
4,42
58,
446,
050
7,02
0,24
8(1
0,37
6,47
6)(1
,803
,178
)3,
268,
535
8,53
4,47
711
,644
,961
5,97
6,69
6
Pri
or P
erio
d A
djus
tmen
t - G
over
nmen
t Act
ivit
ies
(1,1
40,1
49)
902,
203,
447
437,
425
(12,
655,
128)
225,
143
(1,5
48,7
51)
Pri
or P
erio
d A
djus
tmen
t-B
usin
ess-
type
Act
ivit
ies
20,0
0039
,260
(5,2
14,4
53)
378,
175
Tot
al p
rim
ary
gove
rnm
ent
$29,
468,
579
$40,
407,
171
$874
,020
,857
($1,
462,
402)
($54
,790
,478
)($
39,2
08,9
97)
($41
,876
,741
)($
42,2
70,3
84)
($11
,284
,194
)($
4,62
1,57
5)
*Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent w
as a
dded
in F
Y13
and
was
pre
viou
sly
incl
uded
wit
h A
dmin
istr
atio
n.
(Acc
rual
Bas
is o
f A
ccou
ntin
g)
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CH
AN
GE
S I
N N
ET
AS
SE
TS
LA
ST
TE
N F
ISC
AL
YE
AR
S (
cont
d.)
Fis
cal Y
ear
134
TA
BL
E 3
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Gen
eral
Fun
dR
eser
ved
$3,4
73,2
24$4
,940
,741
$4,8
45,3
81$4
,637
,101
$5,2
54,2
46$1
2,17
7,43
0$1
2,01
9,89
3$0
$0$0
Unr
eser
ved
Des
igna
ted
for
Eco
nom
ic C
onti
ngen
cy5,
878,
356
5,99
6,71
08,
272,
087
11,8
94,1
4713
,219
,620
14,4
70,5
6914
,470
,569
Des
igna
ted
for
Pay
roll
3,30
0,41
84,
260,
723
556,
400
1,29
3,27
92,
116,
169
2,92
3,16
9D
esig
nate
d fo
r W
orki
ng C
apit
al3,
864,
830
3,39
4,25
07,
036,
780
9,63
4,60
2D
esig
nate
d fo
r P
ay A
djus
tmen
ts90
6,18
0U
ndes
igna
ted
12,1
77,0
6517
,468
,671
17,7
34,1
9015
,713
,298
4,62
0,50
14,
365,
746
2,10
6,48
3N
onsp
enda
ble
1,49
3,73
71,
461,
447
1,40
5,19
8R
estr
icte
d fo
r:E
nerg
y Im
prov
emen
t Pro
ject
s40
8,22
7C
omm
itte
d fo
r: G
ener
al G
over
nmen
t3,
931,
000
6,61
2,68
4 E
cono
mic
Sta
bili
zati
on18
,200
,738
18,4
82,9
7123
,290
,466
Ass
igne
d to
: C
apit
al P
roje
cts
6,97
2,22
48,
060,
560
Gen
eral
Gov
ernm
ent
11,5
83,0
7510
,325
,000
Urb
an S
ervi
ces
2,50
0,00
0
Una
ssig
ned
562,
360
3,26
5,87
24,
309,
677
Tot
al29
,600
,073
36,0
61,0
9537
,888
,438
42,4
35,5
4824
,387
,646
33,1
29,9
1431
,520
,114
24,1
87,8
3544
,265
,589
54,4
11,8
12
Urb
an S
ervi
ces
Res
erve
d1,
419,
156
3,79
6,31
32,
963,
095
1,66
1,41
41,
064,
326
5,61
2,28
88,
842,
245
Des
igna
ted
for
Pay
roll
302,
654
367,
505
45,7
0099
,401
127,
622
154,
622
Und
esig
nate
d18
,167
,725
17,6
37,2
8720
,771
,372
26,8
52,7
3831
,935
,168
28,2
37,7
5116
,986
,960
Non
spen
dabl
e4,
031
604
175
Res
tric
ted
for:
Urb
an S
ervi
ce P
roje
cts
20,4
20,7
4122
,767
,570
28,6
31,8
54 E
nerg
y Im
prov
emen
t Pro
ject
s10
,383
Una
ssig
ned
Tot
al19
,889
,535
21,8
01,1
0523
,734
,467
28,5
59,8
5233
,098
,895
33,9
77,6
6125
,983
,827
20,4
24,7
7222
,768
,174
28,6
42,4
12
All
Oth
er G
over
nmen
tal F
unds
Res
erve
d9,
770,
889
9,11
9,95
711
,641
,885
6,52
1,41
418
,430
,040
7,94
4,46
212
,702
,665
Und
esig
nate
d, r
epor
ted
in:
Non
spen
dabl
e36
96,
604
22,3
76R
estr
icte
d fo
r: P
ubli
c W
orks
10,3
57,1
768,
238,
721
9,03
2,95
3 P
ubli
c S
afet
y3,
117,
402
2,81
2,85
21,
659,
378
Spe
cial
Rev
enue
Fun
ds3,
486,
847
4,31
5,92
46,
789,
094
8,77
0,81
09,
269,
371
12,1
37,9
1413
,742
,070
Cap
ital
Pro
ject
s 1,
014,
962
19,4
10,9
3825
,849
,967
14,8
52,2
72(1
3,72
8,93
2)6,
138,
952
36,2
72,8
5732
,094
,257
19,0
27,0
3125
,214
,697
Gra
nts
Pro
ject
s32
9,49
351
4,98
323
5,30
331
3,46
011
9,18
410
0,84
211
6,48
554
6,46
11,
262,
100
1,26
2,10
0C
omm
itte
d fo
r: G
ener
al G
over
nmen
t41
0,54
444
7,60
5A
ssig
ned
to:
Gen
eral
Gov
ernm
ent
445,
690
Una
ssig
ned
(974
,484
)(3
70,1
03)
T
otal
$14,
602,
191
$33,
361,
802
$44,
516,
249
$30,
457,
956
$14,
089,
663
$26,
322,
170
$62,
834,
077
$45,
551,
725
$31,
424,
810
$37,
637,
194
LF
UC
G e
lect
ed to
impl
emen
t GA
SB
Sta
tem
ent N
o. 5
4, F
und
Bal
ance
Rep
orti
ng a
nd th
e G
over
nmen
tal F
und
Typ
e D
efin
itio
ns, i
n fi
scal
yea
r 20
11.
Thi
s st
atem
ent a
llow
s th
e en
tity
to a
pply
pro
spec
tive
ly in
the
stat
isti
cal s
ecti
on.
The
refo
re, L
FU
CG
has
not
rec
lass
ifie
d pr
ior
info
rmat
ion.
135
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
Fis
cal Y
ear
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
FU
ND
BA
LA
NC
ES
, GO
VE
RN
ME
NT
AL
FU
ND
SL
AS
T T
EN
FIS
CA
L Y
EA
RS
(Mod
ifie
d A
ccru
al B
asis
of
Acc
ount
ing)
TA
BL
E 4
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Rev
enu
esL
icen
ses
and
Per
mit
s$1
79,5
33,6
92$1
89,7
86,1
77$1
98,6
53,4
67$2
15,7
60,8
74$2
24,8
74,9
54$2
22,8
41,9
28$2
19,5
86,2
64$2
28,8
16,4
52$2
35,2
26,1
17$2
43,6
55,2
98T
axes
41,9
64,4
2543
,189
,707
44,8
89,9
6147
,791
,867
51,4
55,1
8554
,301
,749
51,1
43,1
9952
,548
,109
52,8
60,8
4053
,597
,311
Cha
rges
for
Ser
vice
s20
,449
,154
21,5
61,0
9220
,648
,157
22,3
50,9
0121
,357
,602
22,0
73,4
0521
,182
,005
24,1
58,2
2426
,262
,822
26,3
65,8
49F
ines
and
For
feit
ures
245,
150
184,
104
323,
063
57,1
9218
0,78
530
3,20
526
8,45
922
0,44
917
6,31
931
1,93
0L
ocal
Con
trib
utio
nsIn
terg
over
nmen
tal
47,3
80,7
9230
,321
,835
31,7
84,5
5632
,419
,475
45,5
87,3
8536
,462
,389
41,0
88,8
1833
,622
,666
35,1
25,0
7232
,365
,491
Exa
ctio
ns1,
754,
558
4,76
7,46
82,
823,
892
1,58
4,19
91,
282,
254
379,
575
601,
993
96,6
1312
9,60
353
2,41
0G
rant
Mat
ch2,
450,
210
2,02
5,39
62,
256,
329
2,17
8,32
91,
709,
521
2,73
4,43
32,
619,
353
Pro
pert
y S
ales
457,
849
523,
841
956,
340
785,
073
557,
071
803,
382
499,
119
2,68
1,46
345
3,54
046
2,57
0In
com
e on
Inv
estm
ents
451,
123
1,42
0,55
53,
366,
361
5,73
7,94
53,
582,
709
804,
510
300,
149
129,
839
589,
902
(509
,785
)O
ther
4,23
0,93
35,
544,
293
5,78
7,27
17,
260,
457
8,14
5,47
77,
928,
848
9,98
8,98
48,
998,
513
4,00
2,07
53,
436,
946
Tot
al R
even
ues
298,
917,
886
299,
324,
468
311,
489,
397
335,
926,
312
358,
732,
943
348,
633,
424
347,
278,
343
351,
272,
328
354,
826,
290
360,
218,
020
Exp
end
itu
res
Gen
eral
Gov
ernm
ent
21,3
30,6
249,
812,
520
8,63
5,24
96,
706,
895
13,6
51,4
646,
761,
982
6,96
2,87
37,
382,
550
5,05
9,17
75,
647,
407
Adm
inis
trat
ive
Ser
vice
s29
,924
,619
24,0
77,3
8425
,104
,922
25,4
31,7
381,
845,
175
3,21
3,26
21,
098,
505
1,20
9,50
419
,612
,467
10,3
70,9
72C
hief
Inf
orm
atio
n O
ffic
er9,
919,
332
13,5
66,1
8710
,287
,205
8,45
0,62
8C
hief
Dev
elop
men
t Off
icer
458,
932
613,
743
Fin
ance
6,48
8,79
86,
593,
458
7,14
5,88
19,
890,
462
11,5
61,1
0911
,488
,448
11,9
79,2
659,
271,
854
5,40
5,08
95,
115,
502
Pub
lic
Wor
ks36
,175
,381
41,2
47,3
8140
,430
,609
34,8
57,6
4023
,013
,365
24,7
08,8
3122
,514
,826
21,8
58,9
96E
nvir
onm
enta
l Qua
lity
& P
ubli
c W
orks
36,3
15,4
0337
,037
,311
Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent*
3,65
9,90
1P
ubli
c S
afet
y10
6,31
5,76
611
8,30
7,01
413
7,23
2,01
614
2,76
4,74
015
3,49
2,72
222
7,89
2,04
619
1,23
3,56
616
0,55
2,21
619
3,32
8,46
517
2,41
3,55
8S
ocia
l Ser
vice
s11
,162
,991
13,3
89,1
3512
,245
,264
13,3
47,0
7112
,006
,737
11,6
23,9
449,
615,
423
8,40
2,05
47,
804,
749
8,22
2,66
4E
nvir
onm
enta
l Qua
lity
19,4
41,3
4121
,076
,668
20,3
98,4
5722
,544
,214
Gen
eral
Ser
vice
s23
,757
,464
24,6
96,7
8030
,279
,293
28,0
40,5
0628
,280
,713
29,2
46,7
3026
,370
,443
25,7
63,1
1024
,095
,490
26,5
17,7
90L
aw a
nd R
isk
Man
agem
ent
1,63
0,46
61,
861,
769
1,57
5,63
72,
064,
825
23,5
51,5
9610
,851
,780
9,32
7,86
110
,237
,207
3,57
1,44
83,
994,
327
Out
side
Age
ncie
s27
,557
,006
18,8
76,4
5615
,846
,048
15,6
13,4
8020
,090
,648
19,2
36,2
0918
,123
,297
19,2
44,3
1520
,571
,727
20,2
60,0
96S
peci
al P
roje
cts
Deb
t Ser
vice
:P
rinc
ipal
10,4
04,3
2814
,156
,321
15,0
30,2
7318
,797
,661
16,7
40,0
0013
,760
,000
26,2
30,0
0020
,035
,000
18,4
65,0
0017
,855
,000
Inte
rest
and
Oth
er12
,150
,607
7,63
4,83
67,
384,
493
7,59
4,76
26,
907,
518
5,49
5,98
29,
409,
512
13,7
03,2
4312
,927
,929
13,1
08,7
40C
apit
al17
,883
,186
12,9
27,1
5921
,389
,866
36,8
61,8
8347
,475
,384
45,4
35,6
8970
,941
,523
49,0
10,0
3829
,785
,796
28,3
36,9
17T
otal
Exp
endi
ture
s30
4,78
1,23
629
3,58
0,21
332
2,29
9,55
134
1,97
1,66
338
7,97
7,10
444
4,35
7,75
843
4,49
2,75
637
7,66
4,92
937
7,40
1,67
235
3,15
3,92
8
Exc
ess
(Def
icie
ncy)
of
Rev
enue
sov
er (
unde
r) E
xpen
ditu
res
(5,8
63,3
50)
5,74
4,25
5(1
0,81
0,15
4)(6
,045
,351
)(2
9,24
4,16
1)(9
5,72
4,33
4)(8
7,21
4,41
3)(2
6,39
2,60
1)(2
2,57
5,38
2)7,
064,
092
Oth
er F
inan
cin
g S
ourc
es (
Use
s)T
rans
fers
In
1,82
0,46
15,
719,
846
6,80
7,38
73,
746,
037
1,37
5,48
34,
238,
345
6,72
3,50
43,
843,
657
18,1
02,6
757,
226,
272
Tra
nsfe
rs O
ut(2
,956
,814
)(7
,000
,929
)(6
,137
,133
)(7
,054
,091
)(2
,008
,473
)(3
,620
,469
)(4
,985
,650
)(3
,773
,123
)(1
8,49
3,13
1)(7
,822
,695
)P
rope
rty
Sal
esD
ebt P
roce
eds
(net
of
bond
ref
undi
ng)
6,59
0,00
022
,325
,000
24,7
00,0
004,
667,
606
116,
960,
000
119,
515,
000
19,7
20,0
0037
,275
,000
21,1
77,2
99B
ond
Ant
icip
atio
n N
ote
445,
187
304,
813
7,59
9P
rem
ium
(D
isco
unt)
on
Bon
ds I
ssue
d18
3,73
039
,218
210,
968
(7,1
30,1
68)
(4,5
80,2
55)
(6,0
14,9
21)
(4,5
49,0
25)
Tot
al O
ther
Fin
anci
ng S
ourc
es (
Use
s)6,
082,
564
21,3
87,9
4825
,588
,821
1,35
9,55
2(6
32,9
90)
117,
577,
876
114,
122,
686
15,2
10,2
7930
,869
,623
16,0
31,8
51
Net
Cha
nge
in F
und
Bal
ance
s$2
19,2
14$2
7,13
2,20
3$1
4,77
8,66
7($
4,68
5,79
9)($
29,8
77,1
51)
$21,
853,
542
$26,
908,
273
($11
,182
,322
)$8
,294
,241
$23,
095,
943
Deb
t Ser
vice
as
a pe
rcen
tage
of
nonc
apit
al e
xpen
ditu
res*
5.9%
7.8%
7.2%
8.3%
6.2%
4.5%
9.5%
10.2
%8.
7%9.
1%
*Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent w
as a
dded
in F
Y13
and
was
pre
viou
sly
incl
uded
wit
h A
dmin
istr
atio
n.
136
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
Fis
cal Y
ear
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CH
AN
GE
S I
N F
UN
D B
AL
AN
CE
S, G
OV
ER
NM
EN
TA
L F
UN
DS
LA
ST
TE
N F
ISC
AL
YE
AR
S(M
odif
ied
Acc
rual
Bas
is o
f A
ccou
ntin
g)
TA
BL
E 5
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Rev
enu
esL
icen
ses
and
Per
mit
s$1
77,6
23,0
46$1
88,6
32,4
70$1
97,8
05,4
30$2
14,6
65,6
74$2
23,6
22,5
31$2
21,6
12,0
09$2
18,3
33,0
96$2
27,4
86,7
34$2
33,8
98,0
45$2
42,3
04,6
33T
axes
15,7
29,4
5817
,731
,787
17,1
56,6
6618
,150
,819
19,5
09,2
1920
,737
,242
20,2
22,9
4520
,992
,845
20,8
80,3
5121
,368
,326
Cha
rges
for
Ser
vice
s20
,279
,414
21,2
60,9
5421
,003
,296
22,2
15,5
7421
,313
,927
21,9
65,6
1821
,002
,080
24,0
84,0
5923
,879
,484
24,2
02,1
74F
ines
and
For
feit
ures
245,
150
184,
104
323,
063
57,1
9213
7,65
927
0,59
826
2,04
021
5,49
317
0,00
130
9,44
2In
terg
over
nmen
tal
3,69
3,23
62,
418,
670
2,46
5,62
42,
133,
350
3,31
5,63
02,
405,
778
1,15
6,08
52,
441,
417
1,94
2,55
31,
978,
891
Pro
pert
y S
ales
438,
709
516,
536
349,
715
465,
537
392,
892
646,
007
473,
784
1,98
5,31
815
2,19
413
7,71
9In
com
e on
Inv
estm
ents
90,6
3953
3,60
71,
481,
463
2,97
1,94
21,
827,
694
288,
720
62,9
01(2
,381
)39
0,82
3(5
56,7
77)
Oth
er1,
138,
913
1,87
3,06
41,
743,
395
4,08
8,21
73,
206,
921
3,55
9,54
55,
640,
858
4,15
9,71
52,
213,
409
2,38
8,30
0T
otal
Rev
enue
s21
9,23
8,56
523
3,15
1,19
224
2,32
8,65
226
4,74
8,30
527
3,32
6,47
327
1,48
5,51
726
7,15
3,78
928
1,36
3,20
028
3,52
6,86
029
2,13
2,70
8
Exp
end
itu
res
and
Oth
er
F
inan
cin
g S
ourc
es (
Use
s)G
ener
al G
over
nmen
t 3,
680,
801
3,66
8,70
54,
458,
163
5,04
8,02
111
,450
,829
3,33
7,82
13,
206,
859
3,87
2,27
11,
700,
098
3,47
6,73
0A
dmin
istr
ativ
e S
ervi
ces
14,8
58,4
5013
,228
,125
15,5
82,3
6815
,276
,489
1,08
1,76
01,
052,
574
1,09
8,50
51,
209,
504
15,9
73,4
258,
112,
087
Chi
ef I
nfor
mat
ion
Off
icer
6,51
3,65
57,
610,
707
7,36
6,97
77,
820,
811
Chi
ef D
evel
opm
ent O
ffic
er15
8,93
216
3,74
3F
inan
ce6,
473,
910
6,77
3,33
27,
256,
067
7,74
5,98
27,
955,
937
9,05
7,36
18,
297,
391
7,93
6,58
95,
387,
968
5,10
1,15
8
Pub
lic
Wor
ks10
,706
,996
12,3
89,5
3412
,637
,417
11,7
71,6
5418
,553
,415
17,1
98,1
1818
,296
,963
16,6
28,4
45
Env
iron
men
tal Q
uali
ty &
Pub
lic
Wor
ks8,
380,
410
8,10
3,75
0
Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent*
2,73
8,01
1P
ubli
c S
afet
y99
,730
,690
111,
767,
425
131,
079,
150
138,
132,
390
146,
778,
076
219,
175,
755
183,
918,
587
154,
017,
726
187,
071,
884
167,
821,
104
Soc
ial S
ervi
ces
7,87
1,08
49,
143,
767
9,27
4,91
610
,617
,866
10,2
45,2
459,
604,
663
7,43
9,40
56,
801,
050
6,00
3,51
36,
566,
634
Env
iron
men
tal Q
uali
ty2,
025,
452
53,2
063,
217
6,40
7G
ener
al S
ervi
ces
21,6
44,8
4824
,917
,618
25,2
99,4
5628
,318
,762
28,0
32,8
5628
,401
,996
26,4
64,1
2125
,414
,155
24,1
65,0
3126
,774
,613
Law
1,61
3,72
41,
876,
412
1,92
3,92
81,
782,
008
20,0
32,9
349,
602,
925
8,60
1,96
79,
607,
308
3,49
4,86
33,
926,
008
Out
side
Age
ncie
s22
,818
,075
18,2
58,5
8414
,349
,512
15,4
64,8
0916
,843
,781
16,9
13,5
7016
,786
,200
16,9
35,3
7317
,206
,291
17,1
21,9
04D
ebt S
ervi
ce20
,447
,860
20,8
02,6
4121
,585
,420
25,6
62,8
6723
,163
,080
19,3
86,9
3627
,749
,206
33,7
01,2
6930
,937
,819
29,7
48,1
96O
ther
Fin
anci
ng (
Sou
rces
) U
ses
(479
,708
)4,
860,
964
140,
864
202,
328
(685
,501
)(7
8,65
2,38
4)(4
0,46
5,80
9)(3
,207
,654
)(3
7,03
1,12
8)2,
332,
547
Res
idua
l Equ
ity
Tra
nsfe
rsT
otal
Exp
endi
ture
s an
d O
ther
Fin
anci
ng S
ourc
es (
Use
s)20
9,36
6,73
022
7,68
7,10
724
3,58
7,26
126
0,02
3,17
629
1,99
1,51
926
2,74
3,24
826
8,76
3,58
928
0,74
3,25
426
3,44
9,10
628
1,98
6,48
5
Net
Cha
nge
in F
und
Bal
ance
$9,8
71,8
35$5
,464
,085
($1,
258,
609)
$4,7
25,1
29($
18,6
65,0
46)
$8,7
42,2
69($
1,60
9,80
0)$6
19,9
46$2
0,07
7,75
4$1
0,14
6,22
3
*Pla
nnin
g, P
rese
rvat
ion,
& D
evel
opm
ent w
as a
dded
in F
Y13
and
was
pre
viou
sly
incl
uded
wit
h A
dmin
istr
atio
n.
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
137
Fis
cal Y
ear
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CH
AN
GE
S I
N F
UN
D B
AL
AN
CE
, GE
NE
RA
L F
UN
DL
AS
T T
EN
FIS
CA
L Y
EA
RS
(Bud
geta
ry B
asis
of
Acc
ount
ing)
TA
BL
E 6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Rev
enu
esS
ewer
Ser
vice
Cha
rges
$25,
457,
887
$24,
049,
216
$25,
602,
266
$24,
014,
195
$25,
884,
142
$35,
213,
276
$45,
578,
971
$45,
663,
797
$44,
334,
743
$45,
990,
027
Sew
er T
ap o
n F
ees
1,42
8,44
91,
584,
341
1,66
1,41
71,
629,
573
1,22
3,82
01,
048,
864
1,07
2,45
21,
523,
169
1,94
4,01
02,
325,
787
Exa
ctio
ns87
8,03
51,
974,
660
1,16
0,29
651
3,53
934
3,99
819
8,91
428
7,67
788
5,73
015
0,12
04,
002,
945
Oth
er I
ncom
e19
3,69
450
,204
47,9
6541
,731
80,4
6293
,293
448,
880
776,
339
615,
624
609,
021
Tot
al R
even
ues
27,9
58,0
6527
,658
,421
28,4
71,9
4426
,199
,038
27,5
32,4
2236
,554
,347
47,3
87,9
8048
,849
,035
47,0
44,4
9752
,927
,780
Op
erat
ing
Exp
ense
sT
reat
men
t Pla
nt6,
616,
161
6,08
8,07
67,
106,
877
7,25
9,70
88,
164,
345
8,44
7,04
88,
502,
531
8,41
1,09
37,
933,
477
8,21
7,47
1C
olle
ctio
n S
yste
m3,
179,
687
3,48
5,27
23,
760,
098
4,23
6,19
95,
411,
212
4,42
7,86
34,
297,
166
5,54
4,18
45,
064,
273
4,40
5,02
0A
dmin
istr
atio
n4,
656,
945
6,00
2,43
35,
959,
400
6,78
6,34
915
,083
,099
14,3
25,6
8518
,974
,390
18,2
43,1
8317
,142
,578
16,2
16,6
19D
epre
ciat
ion
6,29
1,98
26,
373,
506
6,22
5,29
96,
361,
511
6,41
7,65
66,
393,
816
7,11
3,94
47,
214,
960
7,29
9,44
27,
683,
896
Tot
al O
pera
ting
Exp
ense
s20
,744
,775
21,9
49,2
8723
,051
,674
24,6
43,7
6735
,076
,312
33,5
94,4
1238
,888
,031
39,4
13,4
2037
,439
,770
36,5
23,0
06
Ope
rati
ng I
ncom
e7,
213,
290
5,70
9,13
45,
420,
270
1,55
5,27
1(7
,543
,890
)2,
959,
935
8,49
9,94
99,
435,
615
9,60
4,72
716
,404
,774
Net
Non
oper
atin
g R
even
ues/
(Exp
ense
s)(1
,074
,183
)(5
04,1
03)
555,
560
(279
,228
)(4
06,8
82)
(1,2
55,1
46)
(2,9
09,3
69)
(2,4
86,1
97)
(1,6
97,8
41)
(2,6
49,7
15)
Cap
ital
Con
trib
utio
ns88
,944
Tra
nsfe
rs I
n10
,000
10,0
0010
,000
533,
401
81,3
3145
3,97
43,
010,
299
422,
187
1,20
8,93
5T
rans
fers
Out
(4,4
00)
(952
)(1
,149
,277
)(9
10,4
55)
(596
,775
)(8
88,7
79)
(394
,869
)(4
,283
,344
)(4
66,1
38)
(1,0
39,1
94)
Net
Inc
ome/
Cha
nge
in N
et P
osit
ion
$6,2
33,6
51$5
,214
,079
$4,8
36,5
53$8
98,9
89($
8,46
6,21
6)$1
,269
,984
$5,1
95,7
11$5
,676
,373
$7,8
62,9
35$1
3,92
4,80
0
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
SA
NIT
AR
Y S
EW
ER
SY
ST
EM
SU
MM
AR
Y O
F R
EV
EN
UE
S A
ND
EX
PE
NS
ES
Fis
cal Y
ear
138
TA
BL
E 7
Fis
cal
Yea
rR
esid
enti
alF
arm
sC
omm
erci
al
Oil
, M
iner
al &
T
imbe
r R
ight
sT
angi
ble
Inta
ngib
leT
otal
Les
s In
tang
ible
Tot
al T
axab
le
Ass
esse
d V
alue
Tot
al D
irec
t Tax
R
ate
(Per
$10
0 of
A
sses
sed
valu
e)
2004
$10,
486,
255
$545
,897
$4,6
95,5
4980
6$
$4
,397
,630
$3,1
83,4
38$2
3,30
9,57
5$3
,183
,438
$20,
126,
137
0.29
0420
0511
,287
,422
559,
829
4,89
7,57
877
04,
315,
023
3,52
7,42
324
,588
,045
3,52
7,42
321
,060
,621
0.27
0420
0612
,304
,135
596,
790
5,11
0,10
983
94,
615,
906
4,25
5,90
126
,883
,680
4,25
5,90
122
,627
,779
0.27
0420
0713
,207
,008
624,
912
5,44
4,97
21,
524
5,03
0,92
324
,309
,339
24,3
09,3
390.
2704
2008
14,1
16,4
7381
9,01
35,
890,
069
1,54
44,
931,
925
25,7
59,0
2425
,759
,025
0.26
9420
0914
,681
,278
836,
738
6,21
9,16
21,
516
5,72
3,81
727
,462
,511
27,4
62,5
110.
2535
2010
14,8
87,5
1086
6,95
86,
310,
733
1,53
05,
076,
606
27,1
43,3
3727
,143
,337
0.25
3520
1115
,043
,326
880,
219
6,37
7,41
82,
241
4,97
5,02
727
,278
,231
27,2
78,2
310.
2535
2012
15,1
64,2
4389
8,98
26,
421,
877
1,88
05,
014,
698
27,5
01,6
8027
,501
,680
0.25
3520
13$1
5,23
5,64
8$8
97,6
67$6
,523
,119
$1,4
99$5
,333
,542
$27,
991,
475
$27,
991,
475
0.25
35
Not
e:
139
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
Pro
pert
y is
ass
esse
d at
100
% f
air
mar
ket v
alue
. T
he in
tang
ible
pro
pert
y ta
x ra
te w
as r
epea
led
as o
f Ja
nuar
y 1,
200
6 pe
r K
entu
cky
Rev
ised
Sta
tute
132
.208
.
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
NE
T A
SS
ES
SE
D V
AL
UE
R
EA
L, T
AN
GIB
LE
, & I
NT
AN
GIB
LE
PR
OP
ER
TY
(In
Tho
usan
ds)
TA
BL
E 8
Fis
cal
Yea
rT
axes
Lev
ied
for
the
Fis
cal Y
ear
Am
ount
% o
f L
evy
Am
ount
% o
f L
evy
2004
$41,
930,
263
$40,
877,
962
97.5
%$1
,052
,301
*$4
1,93
0,26
310
0.0%
2005
41,9
15,4
3141
,211
,370
98.3
%70
4,06
1*
41,9
15,4
3110
0.0%
2006
44,5
26,7
6344
,342
,484
99.6
%18
4,27
9*
44,5
26,7
6310
0.0%
2007
47,2
82,3
0347
,245
,216
99.9
%37
,087
*47
,282
,303
100.
0%20
0851
,138
,980
51,0
77,0
5599
.9%
61,9
25*
51,1
38,9
8010
0.0%
2009
53,8
23,1
4253
,779
,117
99.9
%44
,025
*53
,823
,142
100.
0%20
1051
,262
,112
50,0
85,8
8497
.7%
1,17
6,22
8*
51,2
62,1
1210
0.0%
2011
52,2
64,2
2051
,732
,977
99.0
%53
1,24
3*
52,2
64,2
2010
0.0%
2012
52,6
31,2
8352
,011
,046
98.8
%59
2,49
5*
52,6
03,5
4199
.9%
2013
$53,
136,
159
$52,
567,
908
98.9
%$0
$52,
567,
908
98.9
%
Not
e:D
ata
prov
ided
by
the
She
riff
's T
ax S
ettl
emen
t Rep
ort
*Cor
rect
ed to
ref
lect
col
lect
ions
to d
ate
by f
isca
l yea
r of
levi
es
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
Col
lect
ions
in
Sub
sequ
ent
Yea
rs
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
PR
OP
ER
TY
TA
X L
EV
IES
AN
D C
OL
LE
CT
ION
SL
AS
T T
EN
FIS
CA
L Y
EA
RS
140
Col
lect
ed w
ithi
n th
e F
isca
l Yea
r of
Lev
yT
otal
Col
lect
ions
to D
ate
TA
BL
E 9
Fay
ette
Com
mon
wea
lth
Soi
l &S
tree
tS
tree
tT
otal
Cou
nty
of
Ext
ensi
onW
ater
Hea
lth
Gen
eral
Ref
use
Lig
hts
Cle
anin
gD
irec
tS
choo
lK
entu
cky
Ser
vice
sC
onse
rvat
ion
Dep
artm
ent
Lex
tran
Tot
al
2004
0.08
000.
1750
0.02
600.
0094
0.29
040.
5330
0.13
300.
0032
0.00
040.
9600
2005
0.08
000.
1600
0.02
100.
0094
0.27
040.
5350
0.13
100.
0032
0.00
040.
0280
0.96
8020
060.
0800
0.16
000.
0210
0.00
940.
2704
0.53
800.
1310
0.00
310.
0004
0.02
800.
0600
1.03
0920
070.
0800
0.16
000.
0210
0.00
940.
2704
0.54
100.
1280
0.00
310.
0004
0.02
800.
0600
1.03
0920
080.
0800
0.15
900.
0210
0.00
940.
2694
0.59
400.
1240
0.00
310.
0004
0.02
800.
0600
1.07
8920
090.
0800
0.15
900.
0210
0.00
940.
2694
0.60
500.
1220
0.00
320.
0004
0.02
800.
0600
1.08
8020
100.
0800
0.14
310.
0210
0.00
940.
2535
0.62
800.
1220
0.00
320.
0004
0.02
800.
0600
1.09
5120
110.
0800
0.14
310.
0210
0.00
940.
2535
0.62
800.
1220
0.00
320.
0004
0.02
800.
0600
1.09
5120
120.
0800
0.14
310.
0210
0.00
940.
2535
0.62
800.
1220
0.00
320.
0004
0.02
800.
0600
1.09
5120
130.
0800
0.14
310.
0210
0.00
940.
2535
0.62
800.
1220
0.00
320.
0004
0.02
800.
0600
1.09
51
Not
e:be
red
uced
for
thos
e ta
xpay
ers
rece
ivin
g le
ss th
an f
ull u
rban
ser
vice
s.
Ove
rlap
ping
Rat
es
All
taxp
ayer
s in
Fay
ette
Cou
nty
are
subj
ect t
o th
e G
ener
al S
ervi
ce r
ate.
Tot
al D
irec
t rat
e is
for
taxp
ayer
s re
ceiv
ing
com
plet
e ur
ban
serv
ices
. R
ates
wou
ld
The
ann
ual i
ncre
ase
in r
eal p
rope
rty
tax
reve
nue,
exc
ludi
ng n
ew a
sses
smen
ts, m
ust b
e 4%
or
less
. A
ny a
mou
nt o
ver
4% is
sub
ject
to a
rec
all v
ote.
141
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
LF
UC
G D
irec
t Rat
esU
rban
Ser
vice
sF
isca
l Y
ear
DIR
EC
T A
ND
OV
ER
LA
PP
ING
PR
OP
ER
TY
TA
X R
AT
ES
LA
ST
TE
N F
ISC
AL
YE
AR
S(R
AT
E P
ER
$10
0)
TA
BL
E 1
0
Nam
eT
axab
le A
sses
sed
Val
ueR
ank
% o
f T
otal
Cit
y T
axab
le A
sses
sed
Val
ueT
axab
le A
sses
sed
Val
ueR
ank
% o
f T
otal
Cit
y T
axab
le A
sses
sed
Val
ue
Fay
ette
Mal
l SP
E L
LC
$117
,000
,000
10.
42%
Fou
rth
Qua
rter
Pro
pert
ies
101,
405,
300
20.
36%
$70,
956,
500
10.
35%
Lex
mar
k In
tern
atio
nal I
nc.
55,8
06,6
003
0.20
%56
,251
,100
30.
28%
Sir
For
ty 5
7 L
LC
52,5
00,0
004
0.19
%W
ar A
dmir
al P
lace
LL
C44
,970
,900
50.
16%
Wei
ngar
ten
Rea
lty
Inc.
40,4
17,9
006
0.14
%F
ayet
te P
laza
CM
BS
LL
C40
,000
,000
70.
14%
Bea
umon
t Lex
ingt
on37
,525
,300
80.
13%
Mid
Am
eric
an A
pts
LL
C37
,400
,000
90.
13%
New
tow
n C
ross
ing
II37
,000
,000
100.
13%
Bal
l Rea
lty
Inc.
59,3
90,4
002
0.30
%L
exin
gton
Joi
nt V
entu
re*
50,4
63,8
004
0.25
%M
eije
r S
tore
s L
td35
,879
,400
50.
18%
W T
You
ng I
nc.
34,2
69,0
006
0.17
%G
riff
in G
ate
Ass
ocia
tion
26,7
00,0
007
0.14
%M
CV
Ven
ture
26,5
00,0
008
0.13
%W
al M
art R
eal E
stat
e26
,175
,400
90.
13%
Blu
egra
ss B
uild
ing
Par
tner
s25
,100
,000
100.
12%
Tot
al$5
64,0
26,0
002.
01%
$411
,685
,600
2.05
%
*Lex
ingt
on J
oint
Ven
ture
- c
hang
ed n
ame
to F
ayet
te M
all S
PE
LL
C in
201
0
142
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
PR
INC
IPA
L P
RO
PE
RT
Y T
AX
PA
YE
RS
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
2004
2013
CU
RR
EN
T Y
EA
R A
ND
NIN
E Y
EA
RS
AG
O
TA
BL
E 1
1
Fis
cal
Yea
rL
FU
CG
Dir
ect
Rat
eF
ayet
te C
ount
y S
choo
lT
otal
2004
2.25
%0.
50%
2.75
%20
052.
25%
0.50
%2.
75%
2006
2.25
%0.
50%
2.75
%20
072.
25%
0.50
%2.
75%
2008
2.25
%0.
50%
2.75
%20
092.
25%
0.50
%2.
75%
2010
2.25
%0.
50%
2.75
%20
112.
25%
0.50
%2.
75%
2012
2.25
%0.
50%
2.75
%20
132.
25%
0.50
%2.
75%
143
LIC
EN
SE
FE
E R
AT
ES
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
DIR
EC
T A
ND
OV
ER
LA
PP
ING
LA
ST
TE
N F
ISC
AL
YE
AR
S
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
TA
BL
E 1
2
Nam
e20
13 R
ank
2004
Ran
k
Uni
vers
ity
of K
entu
cky
11
Fay
ette
Cou
nty
Boa
rd o
f E
duca
tion
23
Lex
mar
k In
tern
atio
nal
32
Lex
ingt
on-F
ayet
te U
rban
Cou
nty
Gov
ernm
ent
44
St.
Jose
ph H
ospi
tal
55
Bap
tist
Hea
lthc
are
66
Def
ense
Fin
ance
& A
cctg
Sys
tem
7
9A
shla
nd, I
nc.
810
Lex
ingt
on C
lini
c9
AC
S C
omm
erci
al S
olut
ions
/Xer
ox10
Com
mon
wea
lth
of K
entu
cky
8IB
M I
nfor
mat
ion
Pro
duct
s7
144
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
TE
N M
AJO
R O
CC
UP
AT
ION
AL
TA
X W
ITH
HO
LD
ER
SC
UR
RE
NT
YE
AR
AN
D N
INE
YE
AR
S A
GO
TA
BL
E 1
3
Fis
cal
Yea
r
Gen
eral
O
blig
atio
n B
onds
, Not
es,
Lea
ses
Mor
tgag
e R
even
ue B
onds
Lea
se R
even
ue
Not
es P
ayab
le
Bon
d A
ntic
ipat
ion
Not
esR
even
ue
Bon
ds
Mor
tgag
e R
even
ue
Bon
dsN
otes
Pay
able
Tot
al P
rim
ary
Gov
ernm
ent
% o
f P
erso
nal
Inco
me
Pri
mar
y G
over
nmen
t D
ebt P
er
Cap
ita
2004
$136
,560
,000
$0$4
34,2
55$0
$50,
040,
000
$73,
940,
000
$0$2
60,9
74,2
552.
8%$9
58*
2005
144,
905,
000
257,
934
742,
401
46,5
60,0
0071
,680
,000
264,
145,
335
2.7%
959
*20
0615
4,76
0,00
072
,661
750,
000
42,9
15,0
0069
,625
,000
268,
122,
661
2.5%
958
*20
0714
2,80
5,00
039
,400
,000
68,8
85,0
0025
1,09
0,00
02.
3%88
6*
2008
126,
065,
000
35,7
15,0
0068
,195
,000
229,
975,
000
2.0%
799
*20
0922
9,26
5,00
031
,860
,000
66,4
70,0
0032
7,59
5,00
03.
0%1,
120
*20
1030
8,35
5,00
08,
000,
000
64,5
65,0
0063
,890
,000
444,
810,
000
3.9%
*1,
499
*20
1130
3,86
5,00
060
,055
,000
61,9
90,0
0015
,105
,027
441,
015,
027
3.7%
1,46
220
1231
5,71
4,65
048
,121
,327
56,7
08,6
6414
,766
,530
435,
311,
171
na1,
425
2013
$314
,541
,343
$0$0
$0$4
5,40
0,39
8$5
4,83
0,75
2$1
4,40
3,72
7$4
29,1
76,2
20na
na
* U
pdat
ed in
201
3
Not
e:
Det
ails
reg
ardi
ng L
FU
CG
out
stan
ding
deb
t can
be
foun
d in
the
note
s to
the
fina
ncia
l sta
tem
ents
.S
ee ta
ble
18 f
or p
opul
atio
n da
ta.
Per
sona
l inc
ome
data
for
201
2 an
d 20
13 n
ot a
vail
able
at t
ime
of p
ubli
cati
on.
Pop
ulat
ion
data
for
201
3 no
t ava
ilab
le a
t tim
e of
pub
lica
tion
.
145
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
RA
TIO
S O
F O
UT
ST
AN
DIN
G D
EB
T B
Y T
YP
EL
AS
T T
EN
FIS
CA
L Y
EA
RS
Bus
ines
s-ty
pe A
ctiv
itie
sG
over
nmen
tal A
ctiv
itie
s
TA
BL
E 1
4
Fis
cal
Yea
rG
ener
al O
blig
atio
n B
onds
% o
f A
sses
sed
Val
ue o
f P
rope
rty
Per
Cap
ita
2004
$136
,560
,000
0.68
%$5
0620
0514
4,90
5,00
00.
69%
532
2006
154,
760,
000
0.68
%56
120
0714
2,80
5,00
00.
59%
512
2008
126,
065,
000
0.49
%44
720
0922
9,26
5,00
00.
83%
773
2010
308,
355,
000
1.14
%1,
042
2011
303,
865,
000
1.11
%1,
008
2012
315,
714,
650
1.15
%1,
033
2013
$314
,541
,343
1.12
%na
Not
es:
to th
e fi
nanc
ial s
tate
men
ts.
Pop
ulat
ion
data
for
201
3 no
t ava
ilab
le a
t tim
e of
pub
lica
tion
.
146
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
See
tabl
e 7
for
prop
erty
val
ue d
ate
and
tabl
e 18
for
pop
ulat
ion
data
.
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
RA
TIO
S O
F G
EN
ER
AL
BO
ND
ED
DE
BT
OU
TS
TA
ND
ING
LA
ST
TE
N F
ISC
AL
YE
AR
S
Det
ails
reg
ardi
ng L
FU
CG
out
stan
ding
deb
t can
be
foun
d in
the
note
s
TABLE 15
Debt Outstanding (1)
Estimated Percentage Applicable
(2)
Estimated Share of
Overlapping Debt
$20,370,000 3.71% $756,453
31,880,000 4.24% 1,352,3295,400,000 4.24% 229,0656,770,000 4.24% 287,179
11,230,000 4.24% 476,369297,289,528 100.00% 297,289,528
Lexington-Fayette Urban County Department of Health $515,000 100.00% 515,000300,905,923314,541,343
$615,447,266
Notes
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTSCHEDULE OF DIRECT AND OVERLAPPING INDEBTEDNESS
AS OF JUNE 30, 2013
(1) Industrial Revenue Bonds, Industrial Development Bonds, Multi-Family and Single Family Housing Bonds are not included in this schedule of overlapping debt as they are not secured by the full faith and credit of Lexington-Fayette Urban County Government.
Mortgage Revenue Bonds, Series 2008ALexington Center Corporation
Source: Department of Finance, Lexington-Fayette Urban County Government
(2) Determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in LFUCG or by ratio of total revenue of overlapping unit to total revenue of LFUCG.
Fayette County School & Kentucky School Commission Bonds
Subtotal, Overlapping Debt
Lexington-Fayette Urban County Government Airport Corporation
Variable Rate General Airport,Revenue and Refunding Bond 2009B (AMT)
LFUCG, Direct DebtTotal Direct and Overlapping Indebtedness
Fixed Rate General Airport,Revenue and Refunding Bond 2012A (AMT)
Fixed Rate General Airport, Revenue and Refunding Bond 2009A (non-AMT)
Fixed Rate General Airport,Revenue and Refunding Bond 2012B (non-AMT)
147
TA
BL
E 1
6
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
Ass
esse
d V
alue
$23,
309,
575
$24,
588,
044
$26,
883,
680
$24,
309,
339
$25,
759,
025
$27,
462,
511
$27,
143,
337
$27,
278,
231
$27,
501,
680
$27,
991,
475
Deb
t lim
it (
10%
of
Ass
esse
d V
alue
)2,
330,
958
2,45
8,80
42,
688,
368
2,43
0,93
42,
575,
902
2,74
6,25
12,
714,
334
2,72
7,82
32,
750,
168
2,79
9,14
8
Tot
al n
et d
ebt
appl
icab
le to
lim
it18
7,35
018
1,67
517
6,11
017
1,27
016
6,45
519
5,77
517
1,51
010
8,71
020
3,81
719
4,41
4
Leg
al d
ebt m
argi
n$2
,143
,608
$2,2
77,1
29$2
,512
,258
$2,2
59,6
64$2
,409
,447
$2,5
50,4
76$2
,542
,824
$2,6
19,1
13$2
,546
,351
$2,6
04,7
34
Tot
al n
et d
ebt
appl
icab
le to
the
lim
it
as a
per
cent
age
of
debt
lim
it8.
04%
7.39
%6.
55%
7.05
%6.
46%
7.13
%6.
32%
3.99
%7.
41%
6.95
%
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
148
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
LE
GA
L D
EB
T M
AR
GIN
IN
FO
RM
AT
ION
LA
ST
TE
N F
ISC
AL
YE
AR
S(I
n T
hous
ands
) Fis
cal Y
ear
TA
BL
E 1
7
Les
s:N
etL
ess:
Net
Fis
cal
Gro
ssO
pera
ting
Ava
ilab
leG
ross
Ope
rati
ngA
vail
able
Yea
rR
even
ueE
xpen
ses
Rev
enue
Pri
ncip
alIn
tere
stC
over
age
Rev
enue
Exp
ense
sR
even
ueP
rinc
ipal
Inte
rest
Cov
erag
e
2004
$28,
428
$14,
453
$13,
975
$3,3
35$2
,570
2.37
$11,
504
$2,4
74$9
,030
$4,7
60$4
,530
0.97
2005
28,7
0115
,576
13,1
253,
480
2,41
42.
236,
943
2,47
94,
464
1,36
53,
473
0.92
2006
28,4
7216
,826
11,6
463,
515
2,07
62.
087,
251
2,60
04,
651
1,48
53,
348
0.96
2007
26,1
9918
,282
7,91
73,
685
1,90
61.
425,
439
2,09
53,
344
3,49
50.
9620
0828
,994
28,6
5933
53,
855
1,72
60.
066,
238
2,85
33,
385
1,00
53,
721
0.72
2009
37,0
4927
,201
9,84
83,
855
1,70
61.
776,
841
2,68
14,
160
1,00
52,
716
1.12
2010
47,4
4631
,774
15,6
724,
040
1,84
92.
666,
431
2,67
03,
761
2,64
32,
661
0.71
2011
49,3
8332
,198
17,1
854,
510
2,60
82.
417,
159
2,78
94,
370
1,90
02,
570
0.98
2012
48,0
2330
,140
17,8
8311
,117
3,18
11.
257,
157
2,69
74,
460
1,97
02,
495
1.00
2013
$52,
769
$28,
839
$23,
930
$3,4
13$2
,400
4.12
$5,8
30$2
,305
$3,5
25$2
,050
$2,4
160.
79
Les
s:N
etS
peci
alF
isca
lG
ross
Ope
rati
ngA
vail
able
Ass
essm
ent
Yea
rR
even
ueE
xpen
ses
Rev
enue
Pri
ncip
alIn
tere
stC
over
age
Col
lect
ions
Pri
ncip
alIn
tere
stC
over
age
2004
$1,5
63$3
06$1
,257
$860
$229
1.15
$46
$45
$14
0.78
2005
1,45
134
31,
108
895
190
1.02
3445
120.
6020
061,
304
387
917
655
129
1.17
2950
90.
4920
0759
414
944
569
010
00.
5626
507
0.46
2008
1,19
30
1,19
372
070
1.51
3555
40.
5920
091,
383
580
803
720
701.
0250
10.
0020
101,
203
539
664
750
360.
8420
1186
160
026
120
1297
854
043
820
13$5
$4$1
Not
e:de
prec
iati
on, o
r am
orti
zati
on e
xpen
ses.
149
Deb
t Ser
vice
San
itar
y S
ewer
Sys
tem
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
RE
VE
NU
E B
ON
D C
OV
ER
AG
EL
AS
T T
EN
FIS
CA
L Y
EA
RS
(In
Tho
usan
ds)
Pub
lic
Fac
ilit
ies
Cor
pora
tion
Deb
t Ser
vice
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
Spe
cial
Ass
essm
ent B
onds
Deb
t Ser
vice
Det
ails
reg
ardi
ng L
FU
CG
out
stan
ding
deb
t can
be
foun
d in
the
note
s to
the
fina
ncia
l sta
tem
ents
. O
pera
ting
exp
ense
s do
not
incl
ude
inte
rest
,
Pub
lic
Par
king
Cor
pora
tion
Deb
t Ser
vice
TA
BL
E 1
8
Fis
cal Y
ear
Pop
ulat
ion
Per
sona
l Inc
ome
(Tho
usan
ds)
Per
Cap
ita
Per
sona
l In
com
eE
mpl
oyed
Une
mpl
oyed
Une
mpl
oym
ent
Rat
e20
0427
2,37
7*
$9,3
33,7
54$3
4,26
813
7,81
66,
033
4.2%
2005
275,
540
*9,
713,
901
35,2
5413
9,18
26,
679
4.6%
2006
279,
971
*10
,542
,071
37,6
5414
2,07
76,
582
4.4%
2007
283,
291
*11
,004
,358
38,8
4514
4,39
36,
056
4.0%
2008
287,
683
*11
,388
,063
39,5
8514
4,06
87,
311
4.8%
2009
292,
514
*11
,000
,332
*37
,606
*14
1,04
913
,087
8.5%
2010
296,
792
*11
,343
,547
*38
,221
*14
2,19
612
,029
7.8%
2011
301,
569
12,0
47,5
6539
,950
147,
052
12,1
467.
6%20
1230
5,48
9na
na14
6,77
510
,192
6.5%
2013
nana
na15
2,86
611
,657
7.1%
* U
pdat
ed in
201
3
Not
e:
Per
sona
l Inc
ome
and
Per
Cap
ita
Per
sona
l Inc
ome
data
for
201
2 an
d 20
13 n
ot a
vail
able
at t
ime
of p
ubli
cati
on.
Pop
ulat
ion
data
for
201
3 no
t ava
ilab
le a
t tim
e of
pub
lica
tion
.
Sou
rce:
The
Bur
eau
of E
cono
mic
Ana
lysi
sS
ourc
e: U
.S. C
ensu
s B
urea
u
150
Sou
rce:
The
Bur
eau
of L
abor
Sta
tist
ics
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
DE
MO
GR
AP
HIC
AN
D E
CO
NO
MIC
ST
AT
IST
ICS
LA
ST
TE
N F
ISC
AL
YE
AR
S
Civ
ilia
n L
abor
For
ce
TA
BL
E 1
9
Nam
eE
mpl
oyee
sR
ank
Per
cent
age
of
Tot
al C
ity
Em
ploy
men
tE
mpl
oyee
sR
ank
Per
cent
age
of
Tot
al C
ity
Em
ploy
men
t
Uni
vers
ity
of K
entu
cky
14,0
001
9.16
%n/
an/
an/
aF
ayet
te C
ount
y P
ubli
c S
choo
ls5,
374
23.
52%
n/a
n/a
n/a
Ken
tuck
yOne
Hea
lth
3,00
03
1.96
%n/
an/
an/
aL
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t2,
699
41.
77%
n/a
n/a
n/a
Lex
mar
k In
tern
atio
nal
2,65
65
1.74
%n/
an/
an/
aX
erox
2,53
06
1.66
%n/
an/
an/
aB
apti
st H
ealt
hcar
e2,
496
71.
63%
n/a
n/a
n/a
Wal
-Mar
t2,
027
81.
33%
n/a
n/a
n/a
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
PR
INC
IPA
L E
MP
LO
YE
RS
, FA
YE
TT
E C
OU
NT
YC
UR
RE
NT
YE
AR
AN
D N
INE
YE
AR
S A
GO
2013
2004
,L
ockh
eed
Mar
tin
1,86
79
1.22
%n/
an/
an/
aK
roge
r1,
665
101.
09%
n/a
n/a
n/a
38,3
1425
.06%
Not
e:F
irst
yea
r of
pre
sent
atio
n fo
r E
mpl
oyee
s an
d P
erce
ntag
e of
Tot
al C
ity
Em
ploy
men
t was
FY
2010
. T
his
data
is n
ot a
vail
able
for
FY
2004
.
Sou
rce:
Lex
ingt
on C
ham
ber
of C
omm
erce
151
TA
BL
E 2
0
Yea
rF
arm
Agr
icul
tura
l S
ervi
ceM
inin
gC
onst
ruct
ion
Man
ufac
turi
ngT
rans
port
atio
n &
P
ubli
c U
tili
ties
Who
lesa
le
Tra
deR
etai
l T
rade
Fin
ance
, In
sura
nce
and
Rea
l Est
ate
Ser
vice
s
Gov
ernm
ent
and
Gov
ernm
ent
Ent
erpr
ises
Tot
al
Em
ploy
men
t by
Pla
ce o
f W
ork
1997
1,98
43,
759
396
11,5
4718
,894
8,83
99,
184
36,2
8112
,404
62,3
2332
,240
197,
851
1998
1,79
33,
949
392
11,9
0019
,301
9,21
19,
331
36,6
5012
,455
63,4
4032
,605
201,
027
1999
1,83
14,
327
312
12,6
8719
,417
9,23
59,
215
37,5
3412
,481
65,5
3533
,326
205,
900
2000
1,80
54,
506
308
13,0
7619
,142
9,22
59,
177
38,2
3812
,768
66,7
7535
,434
210,
454
Yea
rF
arm
For
estr
y,
Fis
hing
and
R
elat
ed
Act
ivit
ies
Min
ing
Con
stru
ctio
nM
anuf
actu
ring
Who
lesa
le T
rade
, T
rans
port
atio
n an
d U
tili
ties
Info
rmat
ion
Ret
ail
Tra
de
Fin
ance
, In
sura
nce
and
Rea
l Est
ate
Ser
vice
s
Gov
ernm
ent
and
Gov
ernm
ent
Ent
erpr
ises
Tot
al
Em
ploy
men
t by
Pla
ce o
f W
ork
2001
1,85
23,
107
335
12,7
2716
,252
13,3
145,
315
24,2
2213
,180
79,8
5235
,156
205,
312
2002
1,82
12,
924
339
11,4
7814
,993
12,8
605,
075
23,8
7813
,259
81,3
2034
,208
202,
155
2003
2,06
72,
644
438
11,4
3214
,347
13,0
244,
883
23,8
9713
,330
82,1
5435
,099
203,
315
2004
2,00
02,
484
452
11,5
2414
,174
12,6
214,
367
23,8
3113
,978
85,6
8834
,607
205,
726
2005
1,71
72,
499
494
11,8
7514
,864
13,2
254,
456
24,0
2214
,277
87,8
0234
,910
210,
141
2006
1,70
82,
882
589
11,9
8015
,034
13,0
834,
445
24,0
9115
,129
89,7
9536
,138
214,
874
2007
1,66
73,
060
646
11,7
1615
,601
13,5
654,
323
24,2
0715
,340
89,8
1238
,641
218,
578
Sou
rce:
The
Bur
eau
of E
cono
mic
Ana
lysi
s
Yea
rC
onst
ruct
ion
Edu
cati
on
and
Hea
lth
Ser
vice
sF
inan
cial
A
ctiv
itie
sIn
form
atio
nL
eisu
re a
nd
Hos
pita
lity
Man
ufac
turi
ng
Nat
ural
R
esou
rces
an
d M
inin
gO
ther
S
ervi
ces
Pro
fess
iona
l and
B
usin
ess
Ser
vice
s
Tra
de,
Tra
nspo
rtat
ion,
an
d U
tili
ties
Oth
ers
Tot
al
Em
ploy
men
t by
Pla
ce o
f W
ork
2008
7,72
321
,035
8,58
35,
086
19,4
2714
,929
2,26
04,
941
23,7
0034
,320
110,
466
252,
470
2009
7,10
921
,603
7,92
14,
403
19,4
5513
,194
2,04
35,
138
23,7
4532
,697
104,
602
241,
910
2010
6,93
721
,477
8,04
64,
628
20,1
7612
,882
2,17
05,
383
22,1
8630
,782
104,
273
238,
940
2011
7,07
823
,186
8,16
75,
144
20,1
2312
,241
2,24
55,
514
22,6
4631
,404
101,
592
239,
340
2012
6,73
324
,230
7,99
45,
393
20,3
1312
,325
2,05
95,
348
27,4
9135
,039
147,
031
293,
956
Sou
rce:
Bur
eau
of L
abor
Sta
tist
ics
Ref
lect
s C
urre
nt I
ndus
try
Sta
ndar
ds
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
EM
PL
OY
ME
NT
BY
IN
DU
ST
RY
, FA
YE
TT
E C
OU
NT
Y
Bas
ed o
n 20
02 N
orth
Am
eric
an I
ndus
try
Sta
ndar
d
152
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
EM
PL
OY
ME
NT
BY
IN
DU
ST
RY
, FA
YE
TT
E C
OU
NT
Y
EM
PL
OY
ME
NT
BY
IN
DU
ST
RY
, FA
YE
TT
E C
OU
NT
YB
ased
on
1987
Sta
ndar
d In
dust
rial
Cla
ssif
icat
ion
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
TABLE 21
Value % Value % Value %Population and Number of Households
Population Under 18 years 50,416 22.4% 55,533 21.3% 62,633 21.2% 18 - 64 years 152,638 67.7% 178,805 68.6% 202,032 68.3% 65 years and over 22,312 9.9% 26,174 10.0% 31,138 10.5% Total 225,366 100.0% 260,512 100.0% 295,803 100.0%
Number of Households 89,529 108,288 123,043
Economic and Education Family Income Less than $10,000 5,979 10.5% 3,587 5.6% 4,407 6.3% $10,000 - $24,999 12,365 21.7% 8,947 14.1% 8,791 12.7% $25,000 - $49,999 20,889 36.7% 17,124 26.9% 15,164 21.8% $50,000 - $74,999 10,790 19.0% 14,759 23.2% 12,913 18.6% $75,000 or more 6,850 12.0% 19,231 30.2% 28,149 40.5% Total Families 56,873 100.0% 63,648 100.0% 69,424 100.0%
Median Family Income $35,936 $53,264 $63,086
Mean Family Income $44,467 $52,261 $76,373
Per Capita Income $20,355 $23,109 $25,561
School Enrollment Elementary/Secondary 32,858 36,938 43,918 College 28,339 31,508 41,238
Education for Individuals 25+ years of age Less than 9th grade 11,760 8.3% 8,539 5.1% 8,813 4.6% High School, No Diploma 16,365 11.5% 15,213 9.1% 13,986 7.3% High School Graduate 33,238 23.4% 37,448 22.4% 43,875 22.9% College 1 - 3 years 37,299 26.2% 46,420 27.8% 54,796 28.6% College 4 or more years 43,454 30.6% 59,615 35.6% 70,124 36.6% Total 142,116 100.0% 167,235 100.0% 191,595 100.0%
Unemployment Rate 3.7% 1.8% 7.0%
Source: U.S. Census Bureau
LEXINGTON-FAYETTE URBAN COUNTY GOVERNMENTU.S. CENSUS BUREAU STATISTICS
1990 Census 2000 Census 2010 Census
153
TA
BL
E 2
2
Fun
ctio
n/P
rogr
am20
0420
0520
0620
0720
08*
2009
2010
2011
2012
**20
13**
*
Adm
inis
trat
ive
Ser
vice
s14
0
139
14
3
145
77
89
91
8612
9
94
G
ener
al G
over
nmen
t67
64
70
74
77
48
73
7066
66
F
inan
ce &
Adm
inis
trat
ion
94
90
98
94
104
10
8
103
9468
65
G
ener
al S
ervi
ces
Par
ks a
nd R
ecre
atio
n17
2
180
18
7
183
18
0
145
13
813
214
0
139
O
ther
157
12
4
129
13
2
123
13
2
134
130
97
93
Pla
nnin
g, P
rese
rvat
ion
& D
evel
opm
ent
39
L
aw19
18
19
21
34
31
26
26
37
40
P
ubli
c S
afet
yF
ire
and
Em
erge
ncy
Ser
vice
sF
iref
ight
ers
and
Off
icer
s46
4
498
50
4
530
51
2
504
52
252
0
500
52
0
Civ
ilia
ns38
39
37
23
20
18
15
18
17
16
P
olic
eO
ffic
ers
471
47
2
527
53
4
538
55
7
542
511
50
4
524
C
ivil
ians
192
18
4
177
15
1
117
77
102
93
12
7
126
C
omm
unit
y C
orre
ctio
ns37
1
383
35
7
376
35
9
341
29
428
4
321
31
2
Oth
er72
73
78
78
99
101
75
79
81
80
P
ubli
c W
orks
& D
evel
opm
ent
221
21
8
244
Sol
id W
aste
236
21
7
221
21
1
San
itar
y S
ewer
s12
9
125
13
0
135
O
ther
168
15
4
162
16
2
240
Env
iron
men
tal Q
uali
ty &
Pub
lic
Wor
ks50
8
484
W
aste
Man
agem
ent
208
19
9
206
196
W
ater
& A
ir Q
uali
ty13
5
145
14
915
1
Oth
er18
10
15
16
S
ocia
l Ser
vice
s16
3
160
17
4
169
13
7
128
11
399
94
96
2,95
3
2,
920
3,01
3
3,
018
2,95
9
2,
851
2,84
2
2,
745
2,68
9
2,
694
H
uman
Res
ourc
es a
nd C
omm
unit
y D
evel
opm
ent m
oved
fro
m A
dmin
istr
ativ
e S
ervi
ces
to F
inan
ce &
Adm
inis
trat
ion
R
isk
Man
agem
ent m
oved
fro
m A
dmin
istr
ativ
e S
ervi
ces
to L
aw
His
tori
c P
rese
rvat
ion,
Pla
nnin
g an
d P
urch
ase
of D
evel
opm
ent R
ight
s m
oved
fro
m A
dmin
istr
ativ
e S
ervi
ces
to P
ubli
c W
orks
& D
evel
opm
ent
C
ompu
ter
Ser
vice
s m
oved
fro
m F
inan
ce &
Adm
inis
trat
ion
to A
dmin
istr
ativ
e S
ervi
ces
B
uild
ing
Insp
ecti
on m
oved
fro
m P
ubli
c S
afet
y to
Pub
lic
Wor
ks &
Dev
elop
men
t
Sol
id W
aste
(W
aste
Man
agem
ent)
and
San
itar
y S
ewer
s (W
ater
& A
ir Q
uali
ty)
mov
ed f
rom
Pub
lic
Wor
ks a
nd D
evel
opm
ent t
o E
nvir
onm
enta
l Qua
lity
**T
he f
ollo
win
g D
epar
tmen
tal r
eorg
aniz
atio
n to
ok p
lace
in F
Y20
12:
Com
mun
icat
ions
, Ent
erpr
ise
Sol
utio
ns, I
nfor
mat
ion
Tec
hnol
ogy
and
Peo
pleS
oft m
oved
fro
m C
hief
Inf
orm
atio
n O
ffic
er to
Adm
inis
trat
ive
Ser
vice
sH
isto
ric
Pre
serv
atio
n, P
lann
ing
and
Pur
chas
e of
Dev
elop
men
t Rig
hts
mov
ed f
rom
Pub
lic
Wor
ks to
Adm
inis
trat
ive
Ser
vice
sR
isk
Man
agem
ent m
oved
fro
m L
aw to
Adm
inis
trat
ive
Ser
vice
sB
udge
ting
mov
ed f
rom
Adm
inis
trat
ive
Ser
vice
s to
Fin
ance
Chi
ef D
evel
opm
ent A
dmin
istr
atio
n w
as c
reat
ed u
nder
Chi
ef D
evel
opm
ent O
ffic
erO
ffic
e of
Eco
nom
ic D
evel
opm
ent m
oved
fro
m G
ener
al G
over
nmen
t to
Chi
ef D
evel
opm
ent O
ffic
erC
omm
unit
y D
evel
opm
ent c
hang
ed to
Gra
nts
and
Spe
cial
Pro
ject
s an
d m
oved
fro
m F
inan
ce to
Adm
inis
trat
ive
Ser
vice
sH
uman
Res
ourc
es m
oved
fro
m F
inan
ce to
Law
Env
iron
men
tal Q
uali
ty a
nd P
ubli
c W
orks
wer
e m
erge
d to
for
m E
nvir
onm
enta
l Qua
lity
& P
ubli
c W
orks
Pol
ice
and
Fir
e P
ensi
on m
oved
fro
m P
ubli
c S
afet
y to
Fin
ance
Bui
ldin
g In
spec
tion
mov
ed f
rom
Pub
lic
Wor
ks to
Pub
lic
Saf
ety
Com
mun
ity
Cor
rect
ions
, Pol
ice
and
Fir
e an
d E
mer
genc
y S
ervi
ces
mov
ed to
Pub
lic
Saf
ety
***P
lann
ing,
Pre
serv
atio
n, &
Dev
elop
men
t was
add
ed in
FY
13 a
nd w
as p
revi
ousl
y in
clud
ed w
ith
Adm
inis
trat
ion.
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
*The
fol
low
ing
Dep
artm
enta
l reo
rgan
izat
ion
took
pla
ce in
FY
2008
:
154
LF
UC
G E
MP
LO
YE
ES
BY
FU
NC
TIO
N/P
RO
GR
AM
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
LA
ST
TE
N F
ISC
AL
YE
AR
S(E
xclu
ding
Tem
pora
ry, S
easo
nal,
and
Par
t-T
ime
Em
ploy
ees)
TA
BL
E 2
3
Fun
ctio
n/P
rogr
am20
0420
0520
0620
0720
0820
0920
1020
1120
1220
13F
ire
and
Em
erge
ncy
Ser
vice
sE
mer
genc
y M
edic
al C
alls
27,7
5028
,698
28,7
7230
,087
31,3
3631
,490
32,1
9934
,197
37,0
0036
,619
Fal
se C
alls
2,72
12,
606
2,56
02,
667
2,80
42,
715
2,65
32,
870
2,67
32,
585
Fir
e In
cide
nts
1,35
61,
194
1,31
51,
402
1,32
21,
301
1,12
91,
337
1,56
41,
293
Goo
d In
tent
Cal
lsna
nana
1112
1,09
01,
245
1,26
51,
271
1,15
31,
107
Haz
ardo
us M
ater
ials
Cal
ls1,
115
1,15
51,
090
1,08
71,
252
1,29
51,
192
1,11
81,
248
1,45
1O
ther
nana
na12
910
913
462
7960
44R
escu
esna
nana
517
387
366
451
460
421
449
Rup
ture
- G
as, W
ater
, etc
.na
nana
5232
5145
4736
34S
ervi
ce C
alls
985
1,02
21,
128
1,16
11,
313
1,33
01,
227
1,52
91,
707
1,59
8P
olic
eP
hysi
cal A
rres
ts
22,4
2222
,295
23,4
1124
,677
1946
018
,155
17,1
2615
,248
20,2
1414
,592
Par
king
Vio
lati
ons
16,3
2520
,874
21,6
6817
,665
8945
49,4
7146
,949
42,6
7541
,849
47,2
01T
raff
ic V
iola
tion
s67
,115
66,9
5467
,487
75,0
1476
529
73,9
4564
,954
63,5
4652
,086
40,4
78P
arks
and
Rec
reat
ion
Rou
nds
of G
olf
159,
505
154,
124
152,
659
139,
353
141,
776
122,
153
107,
565
89,2
9195
,382
96,6
07P
ool V
isit
s18
0,41
718
0,61
919
9,49
619
8,18
120
2,09
321
7,91
718
8,38
918
5,42
120
5,35
316
9,82
0B
uild
ing
Insp
ecti
onP
erm
its
Issu
ed *
19,8
7520
,514
20,7
1916
,620
14,1
7313
,660
13,6
4613
,090
13,6
2313
,860
Insp
ecti
ons
36,9
3738
,669
39,7
7329
,991
27,6
5029
,404
28,9
1524
,563
23,9
5724
,518
San
itar
y S
ewer
sT
ap-o
n In
spec
tion
s 2,
212
2,13
12,
108
1,68
110
5787
994
662
564
486
1A
vera
ge d
aily
sew
age
trea
tmen
t (m
gd48
5138
4238
4036
4139
39S
olid
Was
teA
nnua
l ton
s of
ref
use
coll
ecte
d15
7,61
815
6,34
715
2,96
915
4,63
716
5,08
715
5,64
514
1,83
113
8,33
113
4,78
813
5,59
5A
nnua
l ton
s of
rec
ycla
bles
col
lect
ed10
,412
11,6
6815
,188
18,7
4018
,355
20,1
9018
,831
20,4
0221
,834
22,4
46A
nnua
l ton
s of
yar
d w
aste
col
lect
ed18
,199
18,0
4921
,801
20,4
92O
ther
Pub
lic
Wor
ksS
tree
t Res
urfa
cing
(m
iles
)21
2316
4038
3530
1528
22
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
OP
ER
AT
ING
IN
DIC
AT
OR
S B
Y F
UN
CT
ION
/PR
OG
RA
ML
AS
T T
EN
FIS
CA
L Y
EA
RS
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
155
TA
BL
E 2
4
Fun
ctio
n/P
rogr
am20
0420
0520
0620
0720
0820
0920
1020
1120
1220
13F
ire
and
Em
erge
ncy
Ser
vice
sN
umbe
r of
Fir
e S
tati
ons
2121
2223
2323
2323
2323
Num
ber
of E
ngin
es21
2122
2424
2423
2322
22N
umbe
r of
Aer
ials
68
88
88
77
77
Num
ber
of E
C U
nits
79
99
910
1010
1010
Num
ber
of H
az-M
at U
nits
33
33
33
22
22
Pol
ice
Sta
tion
s3
33
33
33
33
3P
atro
l Uni
ts46
046
346
746
748
143
844
444
042
942
4P
arks
and
Rec
reat
ion
Acr
es o
f P
arks
4,26
34,
261
4,26
14,
261
4,56
54,
565
4,91
74,
917
4,28
24,
282
Num
ber
of G
olf
Cou
rses
66
66
66
66
55
Num
ber
of S
wim
min
g P
ools
810
1010
99
99
77
San
itar
y S
ewer
sT
reat
men
t Cap
acit
y (m
gd)
6464
6464
6464
6464
6464
Sol
id W
aste
Col
lect
ion
Tru
cks
117
117
118
126
116
115
119
113
119
119
Oth
er P
ubli
c W
orks
Str
eets
(m
iles
)15
161,
544
1,56
31,
542
1,58
91,
599
1,62
81,
634
1,63
61,
638
Acr
es in
Cou
nty
182,
762
182,
762
182,
762
182,
762
182,
762
182,
762
182,
762
182,
762
182,
762
182,
762
Acr
es in
Urb
an S
ervi
ces
Are
a54
,618
54,6
1854
,618
54,6
1854
,618
54,6
1854
,618
54,6
1854
,618
54,6
18T
raff
ic S
igna
ls34
034
935
335
736
336
737
638
038
237
6
LE
XIN
GT
ON
-FA
YE
TT
E U
RB
AN
CO
UN
TY
GO
VE
RN
ME
NT
CA
PIT
AL
AS
SE
T S
TA
TIS
TIC
S B
Y F
UN
CT
ION
/PR
OG
RA
ML
AS
T T
EN
FIS
CA
L Y
EA
RS
Sou
rce:
Dep
artm
ent o
f F
inan
ce, L
exin
gton
-Fay
ette
Urb
an C
ount
y G
over
nmen
t
156
E-1-1
APPENDIX E-1FORM OF LEGAL APPROVING OPINION OF BOND COUNSEL
(SERIES 2014A BONDS)
The form of the legal approving opinion of Peck, Shaffer & William, a division ofDinsmore & Shohl LLP, Bond Counsel, is set forth as follows. The actual opinion will bedelivered on the date of delivery of the Series 2014A Bonds referred to therein and may varyfrom the form set forth to reflect circumstances both factual and legal at the time of suchdelivery. Recirculation of the Final Official Statement shall create no implication that Peck,Shaffer & Williams, a division of Dinsmore & Shohl LLP has reviewed any of the matters setforth in such opinion subsequent to the date of such opinion.
October 23, 2014
Lexington-Fayette Urban County GovernmentLexington, Kentucky
Ladies and Gentlemen:
We have examined the transcript of proceedings relative to the issuance by theLexington-Fayette Urban County Government (the “Issuer”) of its $24,190,000 Sewer SystemRevenue Refunding Bonds, Series 2014A (the "Series 2014A Bonds"), dated October 23, 2014.The Series 2014A Bonds are issued in definitive form as registered bonds in the denomination of$5,000 or any integral multiple thereof, numbered from 1 upward.
The Series 2014A Bonds are authorized pursuant to (i) Sections 58.010 through 58.140,inclusive, 67A.060 and 82.082 of the Kentucky Revised Statutes (collectively, the “Act”); (ii)Ordinance No. 118-2014 adopted by the Lexington-Fayette Urban County Council (the“Legislative Authority”) on September 25, 2014, authorizing the Master Trust Agreement (the“General Bond Ordinance”); and (iii) Ordinance No. 119-2014 adopted by the LegislativeAuthority on September 25, 2014 authorizing the issuance of the Series 2014A Bonds (togetheritems (ii), and (iii) are referred to herein as the “Series 2014 Bond Legislation”). Pursuant to theBond Legislation, the Legislative Authority has authorized a Master Trust Agreement, dated asof September 1, 2014 (the “Master Trust Agreement”), as amended and supplemented by a FirstSupplemental Trust Agreement, dated as of the date of issuance of the Series 2014 Bonds (the“First Supplement” and together, with the Master Trust Agreement, the “Trust Agreement”), byand between the Issuer and The Bank of New York Mellon Trust Company, N.A., Louisville,Kentucky, as trustee (the “Trustee”). Capitalized terms utilized herein and not defined have themeanings ascribed to such terms in the Series 2014 Bond Legislation and the Trust Agreement.
We have examined the Series 2014 Bond Legislation, the executed Master TrustAgreement, securing the Series 2014A Bonds, the First Supplement thereto, and the provisionsof the laws of the Commonwealth of Kentucky, particularly the Act, under authority of which theSeries 2014A Bonds are issued. We have also examined records and the transcript ofproceedings relating to the authorization and issuance of the Series 2014A Bonds, including aspecimen Series 2014A Bond, and other relevant matters. We have also made such investigation
E-1-2
as we have deemed necessary for the purposes of such opinions, and relied upon certificates ofofficials of the Issuer as to certain factual matters.
Based upon the foregoing, it is our opinion that, as of the date hereof:
1. The Issuer is a political subdivision of the Commonwealth of Kentucky,validly existing under the provisions of the Constitution and laws of the Commonwealthof Kentucky, including the Act, with right and power under the Act to adopt the Series2014 Bond Legislation and execute and deliver the Trust Agreement as authorizedthereby.
2. The Trust Agreement and the Series 2014A Bonds have been dulyauthorized, executed, issued and delivered by the Issuer and constitute valid and bindingspecial and limited revenue obligations of the Issuer, in accordance with the terms andprovisions thereof; the Series 2014A Bonds are and will continue to be payable only fromthe Pledged Revenues of the Sewer System secured by the Trust Agreement.
3. Neither the faith and credit nor the taxing power of the Issuer, theCommonwealth, or any political subdivision thereof, is pledged to the payment of theprincipal of or interest on the Series 2014A Bonds, or to the payment of premium, if any.
4. The interest on the Series 2014A Bonds is not subject to taxation by theCommonwealth of Kentucky, and the Series 2014A Bonds are not subject to ad valoremtaxation by the Commonwealth of Kentucky or by any political subdivision thereof.
5. Under the laws, regulations, rulings and judicial decisions in effect as ofthe date hereof, and assuming continuing compliance with the Certificate RegardingIssuance, Use of Proceeds, and Arbitrage Compliance and Certificate Under Sections103(b)(2) and 148 of the Internal Revenue Code of 1986, as amended (the “Code”),executed by the Issuer, dated the date hereof, interest on the Series 2014A Bonds isexcludible from gross income for Federal income tax purposes, pursuant to the Code.Furthermore, interest on the Series 2014A Bonds will not be treated as a specific item oftax preference, under Section 57(a)(5) of the Code, in computing the alternativeminimum tax for individuals and corporations, nor be includable in adjusted currentearnings, under Section 56(c) of the Code, in computing the alternative minimum tax forcorporations. We express no other opinion as to the federal or state tax consequences ofpurchasing, holding or disposing of the Series 2014A Bonds.
6. The Issuer has not designated the Series 2014A Bonds as "qualified tax-exempt obligations" with respect to investments by certain financial institutions underSection 265 of the Code.
In rendering this opinion, we have relied upon covenants and certifications of facts,estimates and expectations made by officials of the Issuer and others contained in the transcriptwhich we have not independently verified. It is to be understood that the enforceability of theSeries 2014 Bond Legislation, the Trust Agreement, the Series 2014A Bonds and agreementsrelating thereto may be limited by bankruptcy, insolvency, reorganization, moratorium,
E-1-3
insolvency, or other similar laws relating to or affecting the enforcement of creditors' rights or bygeneral equitable principles.
Without having undertaken to determine independently or to verify the accuracy orcompleteness of the statements contained in the Official Statement issued with respect to theSeries 2014A Bonds, and expressing no opinion as to the financial statements or any otherfinancial or statistical data contained therein, nothing has come to our attention in the course ofour professional engagement as Bond Counsel which would lead us to believe that the OfficialStatement contains any untrue statement of a material fact or omit to state a material factnecessary in order to make the statements contained therein, in the light of the circumstancesunder which they were made, not misleading.
Very truly yours,
E-2-1
APPENDIX E-2FORM OF LEGAL APPROVING OPINION OF BOND COUNSEL
(SERIES 2014B BONDS)
The form of the legal approving opinion of Peck, Shaffer & William, a division ofDinsmore & Shohl LLP, Bond Counsel, is set forth as follows. The actual opinion will bedelivered on the date of delivery of the Series 2014B Bonds referred to therein and may varyfrom the form set forth to reflect circumstances both factual and legal at the time of suchdelivery. Recirculation of the Final Official Statement shall create no implication that Peck,Shaffer & Williams, a division of Dinsmore & Shohl LLP has reviewed any of the matters setforth in such opinion subsequent to the date of such opinion.
October 23, 2014
Lexington-Fayette Urban County GovernmentLexington, Kentucky
Ladies and Gentlemen:
We have examined the transcript of proceedings relative to the issuance by theLexington-Fayette Urban County Government (the “Issuer”) of its $10,410,000 Taxable SewerSystem Revenue Refunding Bonds, Series 2014B (the "Series 2014B Bonds"), dated October 23,2014. The Series 2014B Bonds are issued in definitive form as registered bonds in thedenomination of $5,000 or any integral multiple thereof, numbered from 1 upward.
The Series 2014B Bonds are authorized pursuant to (i) Sections 58.010 through 58.140,inclusive, 67A.060 and 82.082 of the Kentucky Revised Statutes (collectively, the “Act”); (ii)Ordinance No. 118-2014 adopted by the Lexington-Fayette Urban County Council (the“Legislative Authority”) on September 25, 2014, authorizing the Master Trust Agreement (the“General Bond Ordinance”); and (iii) Ordinance No. 119-2014 adopted by the LegislativeAuthority on September 25, 2014 authorizing the issuance of the Series 2014B Bonds (togetheritems (ii), and (iii) are referred to herein as the “Series 2014 Bond Legislation”). Pursuant to theBond Legislation, the Legislative Authority has authorized a Master Trust Agreement, dated asof September 1, 2014 (the “Master Trust Agreement”), as amended and supplemented by a FirstSupplemental Trust Agreement, dated as of the date of issuance of the Series 2014 Bonds (the“First Supplement” and together, with the Master Trust Agreement, the “Trust Agreement”), byand between the Issuer and The Bank of New York Mellon Trust Company, N.A., Louisville,Kentucky, as trustee (the “Trustee”). Capitalized terms utilized herein and not defined have themeanings ascribed to such terms in the Series 2014 Bond Legislation and the Trust Agreement.
We have examined the Series 2014 Bond Legislation, the executed Master TrustAgreement, securing the Series 2014B Bonds, the First Supplement thereto, and the provisions ofthe laws of the Commonwealth of Kentucky, particularly the Act, under authority of which theSeries 2014B Bonds are issued. We have also examined records and the transcript ofproceedings relating to the authorization and issuance of the Series 2014B Bonds, including aspecimen Series 2014B Bond, and other relevant matters. We have also made such investigation
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as we have deemed necessary for the purposes of such opinions, and relied upon certificates ofofficials of the Issuer as to certain factual matters.
Based upon the foregoing, it is our opinion that, as of the date hereof:
1. The Issuer is a political subdivision of the Commonwealth of Kentucky,validly existing under the provisions of the Constitution and laws of the Commonwealthof Kentucky, including the Act, with right and power under the Act to adopt the Series2014B Bond Legislation and execute and deliver the Trust Agreement as authorizedthereby.
2. The Trust Agreement and the Series 2014B Bonds have been dulyauthorized, executed, issued and delivered by the Issuer and constitute valid and bindingspecial and limited revenue obligations of the Issuer, in accordance with the terms andprovisions thereof; the Series 2014B Bonds are and will continue to be payable only fromthe Pledged Revenues of the Sewer System secured by the Trust Agreement.
3. Neither the faith and credit nor the taxing power of the Issuer, theCommonwealth, or any political subdivision thereof, is pledged to the payment of theprincipal of or interest on the Series 2014B Bonds, or to the payment of premium, if any.
4. Under the laws, regulations, rulings and judicial decisions in effect as ofthe date hereof, interest on the Series 2014B Bonds is not excludible from gross incomefor federal income tax purposes, pursuant to the Internal Revenue Code of 1986, asamended.
5. The interest on the Series 2014B Bonds is not subject to taxation by theCommonwealth of Kentucky, and the Series 2014B Bonds are not subject to ad valoremtaxation by the Commonwealth of Kentucky or by any political subdivision thereof.
In rendering this opinion, we have relied upon covenants and certifications of facts,estimates and expectations made by officials of the Issuer and others contained in the transcriptwhich we have not independently verified. It is to be understood that the enforceability of theSeries 2014 Bond Legislation, the Trust Agreement, the Series 2014B Bonds and agreementsrelating thereto may be limited by bankruptcy, insolvency, reorganization, moratorium,insolvency, or other similar laws relating to or affecting the enforcement of creditors' rights or bygeneral equitable principles.
Without having undertaken to determine independently or to verify the accuracy orcompleteness of the statements contained in the Official Statement issued with respect to theSeries 2014B Bonds, and expressing no opinion as to the financial statements or any otherfinancial or statistical data contained therein, nothing has come to our attention in the course ofour professional engagement as Bond Counsel which would lead us to believe that the OfficialStatement contains any untrue statement of a material fact or omit to state a material factnecessary in order to make the statements contained therein, in the light of the circumstancesunder which they were made, not misleading.
Very truly yours,
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CONTINUING DISCLOSURE CERTIFICATE
THIS CONTINUING DISCLOSURE CERTIFICATE (the "Certificate") is executed
and delivered the 23rd
day of October, 2014 by the Lexington-Fayette Urban County Government
(the "Issuer") in connection with the issuance of its (a) $24,190,000 Tax-Exempt Sewer System
Revenue Refunding Bonds, Series 2014A (the "Series 2014A Bonds"); and (b) $10,410,000
Taxable Sewer System Revenue Refunding Bonds, Series 2014B (the "Series 2014B Bonds" and
together with the Series 2014A Bonds, the "Bonds"). The Bonds are being issued pursuant to (i)
Sections 58.010 through 58.140, inclusive, 67A.060 and 82.082 of the Kentucky Revised
Statutes (collectively, the “Act”); (ii) Ordinance No. 118- 2014 adopted by the Lexington-
Fayette Urban County Council on September 25, 2014, authorizing the Trust Agreement (the
“General Bond Ordinance”); (iii) Ordinance No.119-2014 adopted by the Lexington-Fayette
Urban County Council on September 25, 2014 authorizing the issuance of the Bonds (together,
the "Authorizing Legislation") and (iv) the Trust Agreement. The Issuer certifies, covenants and
agrees as follows:
SECTION 1. Purpose of the Certificate.
This Certificate is being executed and delivered by the Issuer to provide for the disclosure
of certain information concerning the Bonds on an on-going basis as set forth herein for the
benefit of Bondholders (as hereinafter defined) in accordance with the provisions of Securities
and Exchange Commission Rule 15c2-12, as amended from time to time (the "Rule");
SECTION 2. Definitions; Scope of this Certificate.
All terms capitalized but not otherwise defined herein shall have the meanings assigned
to those terms in the Authorizing Legislation and the Bonds. Notwithstanding the foregoing, the
term "Disclosure Agent" shall mean the Issuer, or any disclosure agent appointed or engaged by
the Issuer; any successor disclosure agent shall automatically succeed to the rights and duties of
the Disclosure Agent hereunder, without any amendment hereto. The following capitalized
terms shall have the following meanings:
"Annual Financial Information" shall mean a copy of the annual audited financial
information prepared for the Issuer which shall include, if prepared, a balance sheet, a
statement of revenue and expenditure and a statement of changes in fund balances. All
such financial information shall be prepared using Governmental Accounting Standards
Board (GASB), provided, however, that the Issuer may change the accounting principles
used for preparation of such financial information so long as the Issuer includes as
information provided to the public a statement to the effect that different accounting
principles are being used, stating the reason for such change and how to compare the
financial information provided by the differing financial accounting principles. Any or
all of the items listed above may be set forth in other documents, including Offering
Documents of debt issues of the Issuer or related public entities, which have been
transmitted to the MSRB, or may be included by specific reference to documents
available to the public on the MSRB's Internet Website or filed with the SEC.
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"Beneficial Owner" shall mean any person which has the power, directly or
indirectly, to vote or consent with respect to, or to dispose of ownership of, any Bonds
(including personal holding Bonds through nominees, depositories or other
intermediaries).
"Bondholders" shall mean any holder of the Bonds and any Beneficial Owner
thereof.
"Event" shall mean any of the following events with respect to the Bonds:
(i) Principal and interest payment delinquencies;
(ii) Non-payment related defaults, if material;
(iii) Unscheduled draws on debt service reserves reflecting financial
difficulties;
(iv) Unscheduled draws on credit enhancements reflecting financial
difficulties;
(v) Substitution of credit or liquidity providers, or their failure to perform;
(vi) Adverse tax opinions, the issuance by the Internal Revenue Service of
proposed or final determinations of taxability, Notices of Proposed Issue
(IRS Form 5701-TEB) or other material notices or determinations with
respect to the tax status of the security, or other material events affecting
the tax-exempt status of the security;
(vii) Modifications to rights of security holders, if material;
(viii) Bond calls, if material, and tender offers (except for mandatory scheduled
redemptions not otherwise contingent upon the occurrence of an event);
(ix) Defeasances;
(x) Release, substitution or sale of property securing repayment of the
securities, if material;
(xi) Rating changes;
(xii) Bankruptcy, insolvency, receivership or similar event of the obligated
person (Note: For the purposes of this event, the event is considered to
occur when any of the following occur: The appointment of a receiver,
fiscal agent or similar officer for an obligated person in a proceeding
under the U.S. Bankruptcy Code or in any other proceeding under state or
federal law in which a court or governmental authority has assumed
jurisdiction over substantially all of the assets or business of the obligated
person, or if such jurisdiction has been assumed by leaving the existing
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governing body and officials or officers in possession but subject to the
supervision and orders of a court or governmental authority, or the entry
of an order confirming a plan of reorganization, arrangement or
liquidation by a court or governmental authority having supervision or
jurisdiction over substantially all of the assets or business of the obligated
person);
(xiii) The consummation of a merger, consolidation, or acquisition involving an
obligated person or the sale of all or substantially all of the assets of the
obligated person, other than in the ordinary course of business, the entry
into a definitive agreement to undertake such an action or the termination
of a definitive agreement relating to any such actions, other than pursuant
to its terms, if material; and
(xiv) Appointment of a successor or additional trustee or the change of name of
a trustee, if material.
The SEC requires the listing of (i) through (xiv) although some of such events
may not be applicable to the Bonds.
For purposes of this transaction with respect to Events as set forth in the Rule:
(a) there are no debt service reserve funds applicable to the Series
2014 Bonds;
(b) there are no credit enhancements applicable to the Series 2014
Bonds;
(c) there are no liquidity providers applicable to the Series 2014
Bonds; and
(d) there is no property securing the repayment of the Series 2014
Bonds.
"MSRB" shall mean the Municipal Securities Rulemaking Board.
"Offering Document" shall mean the Official Statement dated October 8, 2014.
"Operating Data" shall mean an update of the operating data contained in
Appendix C to the Offering Document under the headings “OPERATING
INFORMATION - Customer History”, “OPERATING INFORMATION – Rates and
Charges” ‘OPERATING INFORMATION - Historical Debt Service Coverage.”
"Participating Underwriter" shall mean any of the original underwriters of the
Bonds required to comply with the Rule in connection with the offering of the Bonds.
"SEC" shall mean the Securities and Exchange Commission.
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"State" shall mean the Commonwealth of Kentucky.
SECTION 3. Disclosure of Information.
(A) Information Provided to the Public. Except to the extent this Certificate is
modified or otherwise altered in accordance with Section 4 hereof, the Issuer shall make, or shall
cause the Disclosure Agent to make, public the information set forth in subsections (1), (2) and
(3) below:
(1) Annual Financial Information and Operating Data. Annual Financial
Information and Operating Data at least annually not later than nine months following the
end of the Issuer’s fiscal year beginning with the fiscal year ending June 30, 2013 and
continuing with each fiscal year thereafter. If the Disclosure Agent is an entity or person
other than the Issuer, then the Issuer shall provide the Annual Financial Information to
the Disclosure Agent not later than fifteen (15) Business Days prior to the disclosure date
referenced above. The Annual Financial Information may be submitted as a single
document or as separate documents comprising a package, and may cross-reference other
information; provided that the audited financial statements of the Issuer may be submitted
separately from the balance of the Annual Financial Information and later than the date
required above for the filing of the Annual Financial Information if they are not available
by that date.
(2) Events Notices. Notice of the occurrence of an Event, in a timely manner,
not in excess of ten (10) business days after the occurrence of the Event.
(3) Failure to Provide Annual Financial Information or Operating Data.
Notice of the failure of Issuer to provide the Annual Financial Information or Operating
Data by the date required herein.
(4) Other. Notice of any material change in the accounting principles applied
in the preparation of its annual financial statements, any change in its fiscal year, or any
failure to appropriate funds necessary to perform this Continuing Disclosure Certificate.
(B) Information Provided to Public. Annual Financial Information and, subject to the
timing requirement set forth in subsection (A)(2) of this Section 3, notice of all Event
occurrences shall be made public on the same day as notice thereof is given to the Bondholders
of outstanding Bonds, if required pursuant to the Authorizing Legislation or the Bonds, and shall
not be made public before the date of such notice.
(C) Means of Making Information Public.
(1) Information shall be deemed to be made public by the Issuer or the
Disclosure Agent under this Certificate if it is transmitted as provided in subsection
(C)(2) of this Section 3 by the following means:
(a) to the Bondholders of outstanding Bonds, by first class mail,
postage prepaid;
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(b) to the MSRB, in an electronic format as prescribed by the MSRB,
accompanied by identifying information as prescribed by the MSRB (a
description of such format and information as presently prescribed by the MSRB
is included in Exhibit A hereto); and/or
(c) to the SEC, by (i) electronic facsimile transmissions confirmed by
first class mail, postage prepaid, or (ii) first class mail, postage prepaid; provided
that the Issuer or the Disclosure Agent is authorized to transmit information to the
SEC by whatever means are mutually acceptable to the Disclosure Agent or the
Issuer, as applicable, and the SEC.
(2) Information shall be transmitted to the following:
(a) all information to be provided to the public in accordance with
subsection (A) of this Section 3 shall be transmitted to the MSRB;
(b) all information described in clause (a) shall be made available to
any Bondholder upon request, but need not be transmitted to the Bondholders
who do not so request.
(c) to the extent the Issuer is obligated to file any Annual Financial
Information or Operating Data with the MSRB pursuant to this Agreement, such
Annual Financial Information or Operating Data may be set forth in the document
or set of documents transmitted to the MSRB, or may be included by specific
reference to documents available to the public on the MSRB’s Internet Website or
filed with the SEC.
With respect to requests for periodic or occurrence information from
Bondholders, the Issuer or Disclosure Agent may require payment by requesting holders
of a reasonable charge for duplication and transmission of the information and for the
Issuer's or Disclosure Agent's administrative expenses incurred in providing the
information.
SECTION 4. Amendment or Modification.
Notwithstanding any other provision of this Certificate, the Issuer may amend this
Certificate and any provision of this Certificate may be waived, if such amendment or waiver is
supported by an opinion of nationally recognized bond counsel expert in federal securities laws
to the effect that such amendment or waiver would not, in and of itself, cause the undertakings
herein to violate the Rule if such amendment or waiver had been effective on the date hereof but
taking into account any subsequent change in or official interpretation of the Rule as well as any
change in circumstance.
SECTION 5. Miscellaneous.
(A) Termination. The Issuer's obligations under this Certificate shall terminate when
all of the Bonds are or are deemed to be no longer outstanding by reason of redemption or legal
defeasance or at maturity.
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(B) Additional Information. Nothing in this Certificate shall be deemed to prevent the
Issuer from disseminating any other information, using the means of dissemination set forth in
this Certificate or any other means of communication, or including any other information in any
Annual Financial Statement or notice of occurrence of an Event, in addition to that which is
required by this Certificate. If the Issuer chooses to include any information in any Annual
Financial Statement or notice of occurrence of an Event in addition to that which is specifically
required by this Certificate, the Issuer shall have no obligation under this Certificate to update
such information or include it in any future Annual Financial Statement or notice of occurrence
of an Event.
(C) Defaults: Remedies. In the event of a failure of the Issuer or the Disclosure Agent
to comply with any provision of this Certificate any Bondholder may take such action as may be
necessary and appropriate, including seeking an action in mandamus or specific performance to
cause the Issuer or the Disclosure Agent to comply with its obligations under this Certificate. A
default under this Certificate shall not constitute a default on the Bonds and the sole remedy
available in any proceeding to enforce this Certificate shall be an action to compel specific
performance.
(D) Beneficiaries. This Certificate shall inure solely to the benefit of the Issuer, the
Disclosure Agent, the Participating Underwriter and Bondholders, or beneficial owners thereof,
and shall create no rights in any other person or entity.
SECTION 6. Additional Disclosure Obligations.
The Issuer acknowledges and understands that other state and federal laws, including but
not limited to the Securities Act of 1933, the Securities Exchange Act of 1934 and Rule 10b-5
promulgated thereunder, may apply to the Issuer, and that under some circumstances compliance
with this Agreement, without additional disclosures or other action, may not fully discharge all
duties and obligations of the Issuer under such laws.
SECTION 7. Notices.
Any notices or communications to the Issuer may be given as follows:
To the Issuer: Lexington-Fayette Urban County Government
200 East Main Street
Lexington, KY 40507
Attention: Commissioner of Finance
Phone: (859) 258-3300
Fax: (859) 258-3385
[Remainder of page intentionally left blank]
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[Signature page to the Continuing Disclosure Certificate]
IN WITNESS WHEREOF, the Issuer has caused its duly authorized officer to execute
this Certificate as of the day and year first above written.
LEXINGTON-FAYETTE URBAN COUNTY
GOVERNMENT, Issuer
By:
William O'Mara
Commissioner of Finance
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EXHIBIT A
MSRB PROCEDURES FOR SUBMISSION OF CONTINUING DISCLOSURE
DOCUMENTS AND RELATED INFORMATION
Securities and Exchange Commission Release No. 34-59061 (the “Release”) approves an
MSRB rule change establishing a continuing disclosure service of the MSRB’s Electronic
Municipal Market Access system (“EMMA”). The rule change establishes, as a component of
EMMA, the continuing disclosure service for the receipt of, and for making available to the
public, continuing disclosure documents and related information to be submitted by issuers,
obligated persons and their agents pursuant to continuing disclosure undertakings entered into
consistent with Rule 15c2-12 (“Rule 15c2-12”) under the Securities Exchange Act of 1934. The
following discussion summarizes procedures for filing continuing disclosure documents and
related information with the MSRB as described in the Release.
All continuing disclosure documents and related information is to be submitted to the
MSRB, free of charge, through an Internet-based electronic submitter interface or electronic
computer-to-computer data connection, at the election of the submitter. The submitter is to
provide, at the time of submission, information necessary to accurately identify: (i) the category
of information being provided; (ii) the period covered by any annual financial information,
financial statements or other financial information or operating data; (iii) the issues or specific
securities to which such document is related or otherwise material (including CUSIP number,
issuer name, state, issue description/securities name, dated date, maturity date, and/or coupon
rate); (iv) the name of any obligated person other than the issuer; (v) the name and date of the
document; and (vi) contact information for the submitter.
Submissions to the MSRB are to be made as portable document format (PDF) files
configured to permit documents to be saved, viewed, printed and retransmitted by electronic
means. If the submitted file is a reproduction of the original document, the submitted file must
maintain the graphical and textual integrity of the original document. In addition, such PDF files
must be word-searchable (that is, allowing the user to search for specific terms used within the
document through a search or find function), provided that diagrams, images and other non-
textual elements will not be required to be word-searchable.
All submissions to the MSRB’s continuing disclosure service are to be made through
password protected accounts on EMMA by (i) issuers, which may submit any documents with
respect to their municipal securities; (ii) obligated persons, which may submit any documents
with respect to any municipal securities for which they are obligated; and (iii) agents, designated
by issuers and obligated persons to submit documents and information on their behalf. Such
designated agents are required to register to obtain password-protected accounts on EMMA in
order to make submissions on behalf of the designating issuers or obligating persons. Any party
identified in a continuing disclosure undertaking as a dissemination agent or other party
responsible for disseminating continuing disclosure documents on behalf of an issuer or
obligated person will be permitted to act as a designated agent for such issuer or obligated
person, without a designation being made by the issuer or obligated person as described above, if
such party certifies through the EMMA on-line account management utility that it is authorized
to disseminate continuing disclosure documents on behalf of the issuer or obligated person under
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the continuing disclosure undertaking. The issuer or obligated person, through the EMMA on-
line account management utility, is able to revoke the authority of such party to act as a
designated agent.
The MSRB’s Internet-based electronic submitter interface (EMMA Dataport) is at
www.emma.msrb.org.