city of cornelius,sheldon manufacturing and the wilco farm store continue to do well in cornelius....

CITY OF CORNELIUS,

OREGON

COMPREHENSIVE

ANNUAL

FINANCIAL

REPORT

For The Fiscal Year Ended June 30, 2016

Prepared by the Finance Department

of the City of Cornelius

CITY OF CORNELIUS, OREGON TABLE OF CONTENTS June 30, 2016

PAGE

INTRODUCTORY SECTION

Transmittal Letter ......................................................................................................................................... i Certificate of Achievement ....................................................................................................................... vii Officials of the City of Cornelius, Oregon ............................................................................................... viii Organization Chart ..................................................................................................................................... ix

FINANCIAL SECTION

Independent Auditor’s Report ..................................................................................................................... 1 Management’s Discussion and Analysis ..................................................................................................... 5

Basic Financial Statements ........................................................................................................................... 13

Government-Wide Financial Statements: Statement of Net Position ................................................................................................................. 14 Statement of Activities ...................................................................................................................... 15 Fund Financial Statements: ....................................................................................................................... 16 Governmental Funds: Balance Sheet ............................................................................................................................. 17 Statement of Revenues, Expenditures, and Changes in Fund Balances ..................................... 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances to the Statement of Activities ................................................... 19 Proprietary Funds: ............................................................................................................................. 20 Statement of Net Position ........................................................................................................... 21 Statement of Revenues, Expenses, and Changes in Net Position ............................................... 22 Statement of Cash Flows ............................................................................................................ 23

Notes to the Basic Financial Statements .................................................................................................... 24

Required Supplementary Information ........................................................................................................ 49

Budgetary Comparison Schedules: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual

General Fund – Budgetary Basis ..................................................................................................... 50 Street and Pathway Fund .................................................................................................................. 51

Schedule of the Proportionate Share of the Net Pension Liability ............................................................ 52

Schedule of Contributions ......................................................................................................................... 53

Notes to the Required Supplementary Information ................................................................................... 54

Other Supplementary Information ............................................................................................................. 55

Combining Schedules: ................................................................................................................................ 56 Nonmajor Special Revenue Funds Combining Balance Sheet ......................................................... 57 Nonmajor Special Revenue Funds Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances ............................................................................ 58

Budgetary Comparison Schedules: ............................................................................................................ 59 Governmental Funds: Schedule of Expenditures – Budget and Actual: General Fund – Budgetary Basis ......................... 60 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Bancroft Debt Service Fund ....................................................................................................... 61 Library Capital Project Fund ...................................................................................................... 62

CITY OF CORNELIUS, OREGON TABLE OF CONTENTS June 30, 2016

Non-major Governmental Funds: Building Inspection Fund ........................................................................................................... 63 Parks SDC Fund ......................................................................................................................... 64 Traffic Development Fund ......................................................................................................... 65

Enterprise Funds: ................................................................................................................................. 66 Water Operations Combined ...................................................................................................... 67 Water Fund ................................................................................................................................. 68 Water Capital Asset Fund ........................................................................................................... 69 Sewer Operations Combined ...................................................................................................... 70 Sewer Fund ................................................................................................................................. 71 Sewer Capital Asset Fund .......................................................................................................... 72 Storm Drain Operations Combined ............................................................................................ 73 Storm Drain Fund ....................................................................................................................... 74 Storm Drain Capital Asset Fund ................................................................................................ 75

Internal Service Funds: ........................................................................................................................ 76 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Internal Service Fund ................................................................................................................. 77 Schedule of Expenditures – Budget and Actual: Internal Service Fund ........................................... 78 STATISTICAL SECTION

Introduction ............................................................................................................................................... 79 Net Position by Component (Last Ten Fiscal Years) ................................................................................ 80 Changes in Net Position (Last Ten Fiscal Years) ...................................................................................... 81 Governmental Activities Tax Revenues by Source (Last Ten Fiscal Years) ............................................. 82 Fund Balance of Governmental Funds (Last Ten Fiscal Years) ................................................................ 83 Changes in Fund Balances of Governmental Funds (Last Ten Fiscal Years) ........................................... 84 Market and Assessed Value of Taxable Property (Last Ten Fiscal Years) ............................................... 85 Overlapping Debt Schedule ....................................................................................................................... 87 Property Tax Rates (Last Ten Fiscal Years) .............................................................................................. 88 Principal Property Taxpayers (Last Ten Fiscal Years) .............................................................................. 89 Property Tax Levies and Collections (Last Ten Fiscal Years) .................................................................. 90 Property Tax Levies and Collections To Date (Last Ten Fiscal Years) .................................................... 91 Ratios of Outstanding Debt by Type (Last Ten Fiscal Years) ................................................................... 92 Ratios of General Bonded Debt Outstanding (Last Ten Fiscal Years) ...................................................... 93 Revenue Backed Debt (Last Ten Fiscal Years) ......................................................................................... 94 Direct and Overlapping Governmental Activities Debt ............................................................................ 95 Legal Debt Margin Information (Last Ten Fiscal Years) .......................................................................... 96 Demographic and Economic Statistics (Last Ten Fiscal Years) ................................................................ 97 Principal Employers (Current Year and Nine Years Ago) ........................................................................ 98 Full-time Equivalent City Government Employers by Function (Last Ten Fiscal Years) ........................ 99 Operating Indicators by Function (Last Ten Calendar Years) ................................................................. 100 Capital Asset Statistics by Function (Last Ten Fiscal Years) .................................................................. 101 Miscellaneous Statistical Data ................................................................................................................. 102 Population Growth ................................................................................................................................... 103

REPORTS OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS

Independent Auditor’s Report Required by Oregon State Regulation .......................................104

INTRODUCTORY SECTION

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CITY OF CORNELIUS December 19, 2016 To the Honorable Mayor, City Council, City Manager and citizens of Cornelius: I am pleased to submit the Comprehensive Annual Financial Report (CAFR) of the City of Cornelius, Oregon for the fiscal year ended June 30, 2016. This report is published to provide the City Council, city staff, citizens, and other readers with detailed information concerning the financial position and activities of the City. Responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures, rests with the City’s management. To the best of my knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of operations of the City. All disclosures necessary to enable the reader to gain an understanding of the City’s financial activities have been included. The State of Oregon requires an annual audit of the fiscal affairs of the City by independent public accountants. The City’s financial statements have been audited by Merina & Company, LLP, a firm of certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements included in this report are free of material misstatement. 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, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Cornelius’ financial statements for the fiscal year ended June 30, 2016 are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP). The independent auditors’ report is presented as the first component of the financial section of this report. The Management’s Discussion and Analysis (MD&A) immediately follows the independent auditors’ report and provides a narrative introduction, overview, and analysis to accompany the basic financial statements. It complements this letter of transmittal and should be read in conjunction with it and the notes to the financial statements. City Profile The City of Cornelius has a population of 12,161 and is located 25 miles west of Portland, Oregon and 10 miles east of the Coast Range in the fertile Tualatin River Valley. Cornelius is surrounded by high-tech industries, vineyards and farmland in Washington County. Cornelius is a home-rule City Charter community and exercises all powers except those reserved by State statutes, including

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the power to issue debt, levy taxes on real property within its boundaries, and extend its corporate limits by annexation. The City provides a full range of services as authorized in its charter, ordinances and budget. These services include police and fire protection, street infrastructure construction and maintenance, parks, a library, water, sanitary sewer, and storm water services, land use planning and zoning, and economic development. The City is governed by a City Council comprised of a Mayor and four Councilors. The City Council exercises policy-making and legislative authority and is responsible for, among other things, passing ordinances, adopting the budget, appointing committees, appointing the city attorney and municipal court judge, and hiring the city manager. The City Manager is responsible for carrying out the day-to-day operations of the City and appointing the heads of various departments. All Council members are elected at large to serve a four year term. Terms are staggered so that two Councilors are elected at one general election and two at the next general election. The Mayor is a member of the Council elected by the voters for a two year term. Police services have been contracted with the Washington County Sheriff’s Office since July 1, 2014. Building inspection services are contracted with neighboring City of Forest Grove. The City Council continues to support opportunities for citizens to gather and attend City-sponsored events. The City hosted four free ‘Flicks In The Park’ events, two Concerts in the Park, all being held at beautiful Harleman Park. In August, the Annual National Night Out Against Crime event was extremely successful. The City also hosted the Fifth Annual Take Care of Cornelius Day citywide clean-up event in May and the Fourth Annual Holiday Tree Lighting in December 2015. The City also presented the Community Thanksgiving Dinner and Veterans Day Celebration in FY 2015-16. All events were well attended. Factors Affecting the City’s Financial Condition Local Economy The City of Cornelius continues to operate in an economic environment that was growing at the local, regional and State level. Washington County is recognized as the “economic engine” of the State of Oregon and recent development, employment levels and population have benefited the City’s financial condition. Unemployment levels continue to decrease, with the current rate at 5.2%, down from 7.7% in 2011. Development construction, both residential and commercial, has been mostly flat during the fiscal year. A new food chain, Panda Express, re-developed an existing property and opened a new restaurant. St Alexanders Catholic Church is undergoing a major redevelopment project with a 2017 completion date. The City received a $2.4M Lottery Bond grant from the State of Oregon for construction of a new Library Facility. The 2016 “short” legislative session granted the City an additional $500,000 toward funding of the library construction. City Staff is working to obtain grants and donation to achieve the match, for a total projected cost of $4.8M. Construction is set to begin in late Spring 2017.

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Sheldon Manufacturing and the Wilco farm store continue to do well in Cornelius. Summit Biofuels, which produces ethanol from food waste, joined the industrial sector a few years ago. This is another example of how Cornelius fills the role of supporting the rich agricultural industry in the Tualatin River Valley and contributes to the growth of the traded sector in Oregon. The strong business growth from Intel impacts Cornelius in positive ways and many Cornelius residents are employed by Intel in nearby Hillsboro. Residential development is still down dramatically, with only nine (9) new construction permits issued during the last six fiscal years (2011-2016), compared to 20 issued in 2010. The City has not previously had vacant land for additional residential development. Like other Portland area communities there are a number of homes in the various phases of foreclosure. In April 2014 the Oregon Legislature expanded the Urban Growth Boundary (UGB) by over 300 acres. The majority of the land is vacant farmland, which will provide great opportunity for the City to grow in residential housing in the next few years as the area annexes. Interest rates on the City’s investment in the Oregon Local Government Investment Pool has shown a slight increase, but not substantial enough to have a large financial impact. Additionally, the City has been careful to maintain its financial reserves. As a result, investment interest earnings have been low, but steady. Long-term Financial Planning Over the next few years, it will be critical for the City Council and staff to continue to address current and future operational needs, which will be an ongoing challenge and will require careful planning. The City has been close to build-out for some time, but the new land added within the Urban Growth Boundary by the 2014 Oregon legislature will provide significant growth opportunity in the next five years. New investment is necessary to resume growth in the assessed valuation. Cornelius remains committed to providing essential services and infrastructure to its residential and commercial population. With concern over the rising costs of public safety, operating materials like asphalt, ammunition and fuel, and employee healthcare and retirement benefits, City officials were careful with spending during the past few years. While revenue came in as expected, costs were kept to minimum operating standards. This seems to have been a good strategy to rebuild financial reserves for cash flow purposes and unforeseen expenses. During the next budget cycle city staff will develop a 5-year revenue/expense projection, along with a more detailed, 20-year, Capital Improvement Program (CIP), to assist with long-term financial planning and to ensure that capital needs can be met. Voters approved a 5-year Fire Operating Levy in May 2015, with the first year revenues being received in November 2015. The Levy provides for two additional full-time Firefighter/Paramedics and also allows the Fire Intern program to continue. The Fire Intern program was previously funded through a FEMA Grant that ended June 2015. The City will continue to increase funding so that both of these programs can extend beyond the 5-year Levy period. The City has the lowest rate of assessed valuation per capita in the metropolitan area reflecting a limited ability to pay. Therefore, the City has had to rely upon fees and charges for revenue to

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supplement a low tax base for general services. The City implemented a 2¢ per gallon fuel tax that began in mid-June 2010, which has generated a steady flow of income to the Street and Pathway fund. The effort to impose such fees fairly and equitably seems to have met with the approval of citizens so they will continue. But, as state and regional governmental agencies continue to look for more revenues for their programs, monies received from those sources by Cornelius could be at risk. The yield from most state-shared revenue has been flat. See the Management’s Discussion and Analysis, Economic Factors section for additional details. While the city has had little vacant residential land for growth there is a significant amount of industrial land that is not master planned or state certified. The city has embarked on a program to plan and eventually market the Holladay Street Industrial area. A portion of that area has been submitted for state certification as shovel-ready available industrial land. It is expected to receive site certification in late 2016. Financial Information Internal Controls Management of the City is responsible for establishing and maintaining an internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of financial statements in conformity with generally accepted accounting principles. Since the cost of internal controls should not outweigh the benefits, the City’s framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatements. Internal control training, monitoring and inspections continued to be commonplace among the staff of the city during this past year. Episodes elsewhere in prior years caused a heightened awareness of the need for good internal controls among even the smallest of local government units. Policies and procedures were updated in FY2015, and will continue to be reviewed and updated on a regular basis. The City uses financial software that has internal auditing capabilities to record and track changes made by staff. In addition to the basic software functions city staff also utilizes software modules for budgeting, capital assets, project/grant accounting, and licenses/permits which will help streamline workflow and reporting. Budget Process The annual budget is the basis for the City’s financial planning and control. The budget process begins with the appointment of the budget officer and Budget Committee. The Budget Committee consists of the five City Council members and an equal number of citizen representatives. Budget recommendations are developed through late winter. The Committee approves the budget in early spring after public hearings are held and citizen input is considered. The Council adopts the budget prior to June 30th. Once the budget is established, expenditures can only exceed the legal level of

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budgetary control, the department level, after approval from the City Council (within restrictions established in State statutes). Relevant Financial Policies The City maintains a general checking account to fund daily operations. Cash in excess of daily operating needs is typically pooled and invested in the Local Government Investment Pool (LGIP). However, with banking fees continuing to increase on the general checking account and interest at the LGIP continuing to stay low, city staff maintained a higher balance in the general checking account during the last few fiscal years to help offset bank fees. The City has risk management policies and a formal safety committee to address issues of employee safety, health and injury. The committee implements policies and procedures that include employee and employer accountability for safety and employee accident prevention training. The City participates in an insurance trust pool of Oregon cities and county governments for property, automobile, liability and worker’s compensation insurance coverage. The City also uses the services of WSC Insurance as its agent of record to provide additional risk management oversight. Further details on the City’s budget process, cash and cash equivalents, risk management, and retirement program can be found in the notes to the financial statements. Major Initiatives The City has continued to establish and work toward clearly defined goals and objectives. During the budget review process, goals and objectives are developed and prioritized by the City Council and staff. The process is a continuing cycle of setting goals and objectives, reviewing short and long term goals, evaluating results, and reassessing goals and their priorities. To prepare for the budget, the City Council defines and adopts new goals. The list of goals during the 2015-2016 fiscal year included these major policy areas: Achieve a more stable, long term financial basis for the City; Increase the ratio of commercial/industrial assessed valuation relative to residential valuation, Increase local employment and create a healthier business climate; Increase the involvement of people in local government and community activities; Continue to improve the quality of the City’s public services and infrastructure; and Collaborate with neighboring units of government, citizens, not-for profits and the business sector to promote the interests of Cornelius. The City Council will review the 2016-17 fiscal year goals prior to the spring 2017 budget process. Awards and Acknowledgements The City of Cornelius received the Certificate of Achievement for Excellence in Financial Reporting from the Government Finance Officers Association (GFOA) for FY 2015. This was the eighth year in a row that the City has received this award. In order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements.

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CITY OF CORNELIUS, OREGON

ELECTED OFFICIALS AND

PRINCIPAL APPOINTED OFFICERS OF THE CITY

JUNE 30, 2016 CITY COUNCIL TERM EXPIRES Jeffrey Dalin 322 N 31st Ave Mayor December 31, 2016 Cornelius, OR 97113 Steve Heinrich 2701 S Dogwood St Councilor December 31, 2016 Cornelius, OR 97113 David Schamp 390 S 28th Ave Councilor December 31, 2016 Cornelius, OR 97113 Harley Crowder 660 S 15th Ave Councilor December 31, 2018 Cornelius, OR 97113 Jose Orozco 44 S 18th Ct Councilor December 31, 2018 Cornelius, OR 97113

CITY ADMINISTRATION

Robert Drake City Manager Debra Roth City Recorder-Treasurer

CITY ADDRESS City of Cornelius 1355 N Barlow St

Cornelius, OR 97113

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City of Cornelius Organizational Chart

Citizens of Cornelius

City Council

City Manager

Community Development

Planning

Building (contracted)

Public Safety

Police

(contracted)

Fire

Municipal Court (contracted)

Community Services

Parks

Library

Support

Services

Administration

Human Resources

Finance

Facilities

Public Works

Water

Sanitary Sewer

Streets

Surface Water Management

Engineering

City AttorneyMunicipal Court

Judge

THIS PAGE INTENTIONALLY LEFT BLANK

FINANCIAL SECTION

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5499 AMY STREET • WEST LINN, OREGON 97068 • PHONE: (503) 723-0300 • FAX: (503) 723-9946 WWW.MERINACPAS.COM

INDEPENDENT AUDITOR’S REPORT

Honorable Mayor and City Council City of Cornelius, Oregon

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cornelius, Oregon, as of and for the year ended June 30, 2016, and the related notes to the financial statements, which collectively comprise the City of Cornelius, Oregon’s basic financial statements as listed in the table of contents.

Management’s Responsibility for the Financial Statements

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

Auditor’s Responsibility

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

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

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PARTNERS

KAMALA K. AUSTIN, CPA • TONYA M. MOFFITT, CPA

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of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

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

Opinions

In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Cornelius, Oregon, as of June 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that management’s discussion and analysis and required supplementary information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context.

We have applied certain limited procedures to management’s discussion and analysis, schedule of the proportionate share of the net pension liability, and schedule of contributions, as listed in the table of contents under required supplementary information, in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

The budgetary comparison schedules, as listed in the table of contents under required supplementary information, are the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other

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additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, this information is fairly stated, in all material respects, in relation to the basic financial statements as a whole.

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Cornelius, Oregon’s basic financial statements. The introductory section, other supplementary information, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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

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

Reports on Other Legal and Regulatory Requirements

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated December 19, 2016 on our consideration of the City of Cornelius, Oregon’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is issued separately and is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City of Cornelius, Oregon’s internal control over financial reporting and compliance.

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Other Reporting Required by Oregon Minimum Standards

In accordance with Minimum Standards for Audits of Oregon Municipal Corporations, we have also issued our report dated December 19, 2016, on our consideration of the City of Cornelius, Oregon’s compliance with certain provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance.

Merina & Company, LLP West Linn, Oregon December 19, 2016

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CITY OF CORNELIUS OREGON MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2016 The management of the City of Cornelius, Oregon offers readers of the Comprehensive Annual Financial Report, this narrative overview and analysis of the financial activities of the City of Cornelius for the fiscal year ended June 30, 2016. This analysis focuses on significant financial issues, major financial activities, and resulting changes in financial position, budget variances and specific issues related to funds and the economic factors affecting the City. Readers are encouraged to consider the information here in conjunction with additional information provided in the transmittal letter. Financial Highlights Assets totaled $59,863,283 at June 30, 2016 and consisted of $13,510,751 in cash and investments; $1,843,082 in accounts and interest receivable and other assets; $347,891 in Deferred outflows related to pensions; and $44,161,559 in capital assets. Net position (assets minus liabilities) was $52,550,506 at June 30, 2016 compared to $51,196,184 at June 30, 2015 year end. As of June 30, 2016 the City had $3,242,241 in outstanding bonds, notes payable and accrued compensated absences. The City’s net position increased by $1,354,322 from June 2015, primarily due to funds being held for future capital projects including the Aquifer Storage & Recovery Project as well as construction of a new City Library. Governmental net capital assets decreased by $58,311 in Fiscal Year 2016 mainly due to current year depreciations. Report Format This Management’s Discussion and Analysis (MD&A) section provides users of the basic financial statements a narrative introduction, overview, and analysis of the statements. The report also includes government-wide financial statements, fund financial statements, notes to the financial statements and required supplementary information. The first several statements are highly condensed and present a government-wide view of the City’s finances. Within this view all City operations are categorized and reported as either governmental or business type activities. Governmental activities include basic services such as public safety, transportation, culture and recreation, community development, and general governmental administration. Business-type activities are water, sewer and stormwater services. Taken together the sections provide a comprehensive financial look at the City. The individual components of the report include the following:

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Management Discussion and Analysis. This section of the report provides financial highlights, overview and economic factors affecting the City.

Basic Financial Statements. Includes the Statement of Net Position, Statement of

Activities, fund financial statements and the notes to the basic financial statements. Statements of Net Position and Activities focus on government-wide presentation using the accrual basis of accounting. They are designed to be more corporate-like in that all activities are consolidated into a total for the City.

o The Statement of Net Position focuses on resources available for future

operations. This statement presents a snap shot view of the assets the community owns, the liabilities it owes and the net difference. The net differences are further separated into amounts invested in capital assets, restricted for special purposes, and unrestricted amounts.

o The Statement of Activities focuses on gross and net costs of the City programs

and the extent to which such programs rely upon general tax and other revenues. This statement summarizes and simplifies the user’s analysis to determine the extent to which programs are self-supporting and/or subsidized by general revenue.

o Fund financial statements focus separately on major governmental funds and

proprietary funds. Governmental fund statements follow the more traditional presentation of governmental financial statements. The City’s major governmental funds are presented in their own column and the remaining funds are combined into a column titled “Other Governmental”. Budgetary comparison statements are presented for the General Fund as Required Supplementary Information. Statements for the City’s proprietary funds follow the governmental funds and include the Statement of Net Position, Statement of Revenues, Expenses and Changes in Fund Net Position and Statement of Cash Flow.

o The notes to the basic financial statements provide additional information to assist

the reader in understanding the City’s financial condition. Required Supplementary Information. Includes the Schedule of Revenues,

Expenditures and Changes in Fund Balance (Budget and Actual) for the General Fund, Bancroft Debt Service Fund, Street and Pathway Fund, and Traffic Development Fund. This section also includes the Schedule of the Proportionate Share of the Net Pension Liability and Schedule of Contributions, as they relate to GASB 68.

Other Supplementary Information. Readers desiring additional information on major

funds that are not a part of Required Supplementary Information and non-major funds can find it in the Combining Schedules of Non-Major Funds and the budgetary comparison sections of this report. Components within this section include;

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o Combining schedules. Major funds are included within the Basic Financial Statements, whereas non-major funds are presented here. These statements include combining balance sheets and combining schedule of revenues, expenditures and changes in fund balance.

o Budgetary Comparisons. Includes budgetary information for major governmental funds budgetary comparison schedules not included in the Required Supplemental Information for all non-major funds and business type activities.

o Other Financial Schedules complete the Financial Section of the report.

Compliance Section. Report and schedules required by Government Auditing Standards

and financially related comments and disclosures required by Oregon State Statutes. Financial Analysis of the Government’s Funds Governmental Funds. As of the end of the current fiscal year, the City of Cornelius’ governmental funds reported combined ending fund balances of $5,368,860, an increase of $1,124,183 in comparison with the prior year. The General Fund received a $2,400,000 Lottery Bond during FY2015 and transferred the funds to the new Library Capital Project Fund during FY2016, which resulted in the General Fund reflecting a decrease in fund balance, and the Library Capital Project Fund reflecting a large increase. The Bancroft fund shows a positive change in fund balance due to property owners paying their assessments in full. The Street and Pathway fund shows a positive change due to increases in fuel tax revenue and delay in capital projects. Proprietary Funds. As of the end of the current fiscal year, the City of Cornelius’ proprietary funds reported a total net position of $13,195,916, an increase of $1,436,562 in comparison with the prior year. Although utility fees were increased in all funds during the fiscal year only the Water and Storm Drain funds show an increase. This is largely due to capital construction that has been delayed until next fiscal year. The Water fund also shows a prior period adjustment in relation to Aquifer Storage and Recovery (ASR) expenses that should have been capitalized. The Sewer fund shows only a slight decrease. General Fund Budgetary Highlights The City Council approved several changes to the 2015-2016 adopted budget including four supplemental budgets. The General Fund’s budgeted appropriations between the original and final budget increased by $413,371. The majority of this increase is related to grants that were awarded and expended after budget adoption. There were also increases to allow for contracted Police overtime and Fire Conflagration support. The actual revenues and expenditures are fairly consistent with the final adopted budget. Capital Outlay expenditures are approximately $330,000 less than originally anticipated largely due to Parks projects that did not occur due to lack of grant funding.

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Statement of Net Position The following is a comparison between the June 30, 2015 and the 2016 Statement of Net Position:

Governmental Activities Business Type Activities 2015 2016 2015 2016 Cash and Investments 5,184,200 6,810,418 6,110,432 6,700,333Receivables 1,532,696 1,026,590 760,003 749,668Net Pension Asset 594,895 - 46,295 -Internal Balances 18,169 15,573 (18,169) (15,573)Inventories - - 67,097 66,824Capital Assets, Net 36,665,524 36,607,213 5,980,175 7,554,346Deferred outflows of resources 158,713 318,044 12,351 29,847 TOTAL ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

44,154,197 44,777,838 12,958,184

15,085,445

Accounts Payable and Accrued Expenses 1,332,662 1,450,270 307,769 379,301Deposits - - - 18,450Compensated absences 37,052 41,558 6,430 7,901Accrued interest payable 13,388 12,498 - - Long term obligations Due within one year 256,914 262,591 - - Due in more than one year 1,997,238 1,744,767 704,269 1,185,424Net Pension Liability - 1,518,786 - 185,810Deferred inflows of resources 1,169,465 489,120 91,010 16,301 TOTAL LIABILITIES AND DEFERRED INFLOWS OF RESOURCES 4,806,719 5,519,590 1,109,478 1,793,187 Net investment in capital assets 34,559,585 34,766,088 5,301,626 6,283,538Restricted for: Street & Roadside maint. 520,225 833,342 911 operations system - - Library Capital Projects 2,400,000 2,885,668 Capital Improvements* - - 2,097,139 2,042,263 Debt service payments 370,723 388,116 Unrestricted 1,496,945 385,034 4,449,941 4,966,457 TOTAL NET POSITION 39,347,478 39,258,248 11,848,706 13,292,258TOTAL LIABILITIES AND NET POSITION 44,154,197 44,777,838 12,958,184 15,085,445

*Business Type Activities were reclassified from prior year.

9

The government’s net position decreased slightly by $89,230 from 2015. Proprietary funds increased by $1,443,552 primarily for capital projects scheduled for completion in FY2017. Statement of Activities The following is a comparison between the June 30, 2015 and 2016 Statement of Activities:

Governmental Activities Business Type Activities 2015 2016 2015 2016 Revenues Program Revenues Charges for Services 1,242,260 1,105,339 5,511,073 6,795,178 Operating Grants and Contributions 600,934 268,672 - 74,895 Capital Grants and Contributions 2,870,808 716,391 - -General Revenues - - Property Taxes 2,316,868 2,694,055 - - Other Taxes 2,108,733 2,154,031 - - Other 148,412 200,668 34,323 51,142 Total Revenues 9,288,015 7,139,156 5,545,396 6,921,215

Expenses General Government 802,705 1,619,638 - - Public Safety 3,027,540 4,145,025 - - Highways and Streets 929,062 1,064,969 - - Culture and Recreation 755,104 855,833 - - Interest on Long Term Debt 67,031 62,141 - -Business Type Activities Water - - 2,067,833 1,423,348 Sewer - - 2,235,607 2,296,952 Storm Drain - - 604,990 733,401 Total Expenses 5,581,442 7,747,606 4,908,430 4,453,701

Change in Net Position before transfers 3,706,573 (608,450) 636,966 2,467,514Transfers 781,436 519,220 (781,436) (519,220)

Change in Net Position 4,488,009 89,230 (144,470) 842,955

Net Position Beginning* 34,859,469 39,347,478 11,993,176 11,848,706

Prior Period Adjustment - - - 600,597

Net Position Ending 39,347,478 39,258,248 11,848,706 13,292,258

*Net Position Beginning for FY2015 was restated due to implementation of GASB 68

Governmental activities decreased slightly by $89,230 from 2015. Business type activities increased by $1,443,552 from 2015 primarily due to revenue collections that will be used for capital construction in the next budget year.

10

Capital Assets At June 30, 2016 the City has $53,475,392 invested in a broad range of capital assets, including land, buildings and improvements, equipment, roads, and water, sewer and storm water lines. The following is a comparison of capital assets for 2015 and 2016.

Governmental Activities Business Type Activities 2015 2016 2015 2016

Land 1,645,467 1,645,467 20,000 20,000

Intangibles 16,088,232 16,088,232 - -

Construction in Progress - - - 1,070,984Buildings, Improvements, and Infrastructure 21,339,018 21,760,524 6,177,633 6,862,073

Equipment 2,508,588 2,406,737 1,396,087 1,311,536

Water, Sewer, and Storm Systems - - 2,291,839 2,291,839

41,581,305 41,900,960 9,885,559 11,556,432

For more detailed information regarding capital assets and accumulated depreciation please refer to Note 3 in the “Notes to the Basic Financial Statements”. Debt As of year-end, the City had $3,242,241 in bonds and notes payable compared to $3,001,903 in fiscal year end 2015. Governmental Activities showed decreases due to bond payments and Business Type Activities showed an increase to notes payable for the Aquifer Storage and Recovery Loan that is not yet due. $312,050 is due within one year.

Totals 2015 2016 Governmental: Notes payable* 312,939 286,125 Limited tax improvement bonds 1,793,000 1,555,000 Compensated absences 185,265 207,791 Total Governmental 2,291,204 2,048,916

Business Type: Notes payable** 678,549 1,153,818 Compensated absences 32,150 39,507 Total Business 710,699 1,193,325 TOTAL 3,001,903 3,242,241 Notes: *Cornelius Rural Fire Protection District loan. **Business Oregon – Aquifer Storage and Recovery Loan

11

For more detailed information regarding debt please refer to Note 5 in the “Notes to the Basic Financial Statements”. Economic Factors The governmental funds largest revenue sources are property taxes, franchise fees, fees for charges and services and state shared revenues. The State of Oregon does not have a sales tax; resulting in local government’s heavy reliance on property taxes and other self-generated revenues including franchise fees, business licenses, etc. In 1997 constituents in the State of Oregon passed a tax reform moving local governments from a tax base system to a tax rate system. The maximum allowed under Oregon statute is 3%. In 2016 the City’s assessed value increased 3.42%, while the market value increased 6.94%. The following graph depicts the change of both the real market value of property and the artificially restrained trend line of assessed valuation for taxation purposes.

Cornelius is known for its affordable housing stock. The market values of these homes started steadily decreasing in 2009, but we’ve seen a consistent rise since 2014. The historic decrease caused many foreclosures and bankruptcies of residents unable to sell their home or refinance. However, during the past couple years we’ve seen a change in cash flows for property taxes. Many property owners are choosing to pay their taxes in installments, rather than take advantage of the 3% discount by paying in full, which has caused revenue to be more evenly distributed during the fiscal year. However financial institutions foreclosing on property seem to take advantage of that discount. Personnel costs continue to rise due to increasing healthcare and retirement costs. Currently the City pays 90% of an employee’s healthcare plan, with the employee paying the other 10%. Some employees cover only themselves, with other employees covering an entire family. The high rate of “healthcare inflation” has affected all employers and employees and has been mitigated by the increased effectiveness of various wellness programs. The Public Employee Retirement System

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(PERS) is estimated to increase approximately 30% for the City of Cornelius for the biennium beginning July 1, 2017, with another increase planned for July 1, 2019. Staff is working diligently to try and absorb these costs, but may have to increase city fees. The City of Cornelius purchases its water from the City of Hillsboro as a wholesale customer, with rates increasing annually. Clean Water Services also adjusted the rates paid for sanitary sewer and system development charges on a pass-through basis. Financial Information Contact The City’s financial statements are designed to present users, including the taxpayers, citizens, customers, investors and creditors with a general overview of the City’s finances and overall accountability. If you have questions about the contents of this report or need additional financial information please contact Accounting Manager, Ellie Jones at 503-357-9112, 1355 N Barlow Street, Cornelius, Oregon 97113, email [email protected], or visit our website at www.ci.cornelius.or.us.

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BASIC FINANCIAL STATEMENTS

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Government-Wide Financial Statements

Fund Financial Statements

- Governmental Funds

- Proprietary Funds

BASIC FINANCIAL STATEMENTS

The basic financial statements include interrelated sets of financial statements as required by the GASB. The sets of statements include:

In addition, the notes to the basic financial statements are included to provide information that is essential to a user’s understanding of the basic financial statements.

13

CITY OF CORNELIUS, OREGONSTATEMENT OF NET POSITIONJune 30, 2016

Governmental Business-TypeActivities Activities Total

ASSETS:Current assets:

Cash and cash equivalents 6,810,418$ 6,700,333$ 13,510,751$ Property taxes receivable 117,226 - 117,226 Due from other governments 7,414 - 7,414 Accounts receivable, net 386,289 749,668 1,135,957 Inventories - 66,824 66,824

Total current assets 7,321,347 7,516,825 14,838,172

Noncurrent assets:Assessments receivable 515,661 - 515,661 Internal balances 15,573 (15,573) - Capital Assets:

Non-depreciable 17,733,699 20,000 17,753,699 Depreciable 18,873,514 7,534,346 26,407,860

Total noncurrent assets 37,138,447 7,538,773 44,677,220

DEFERRED OUTFLOWS OF RESOURCES:Deferred outflows related to pensions 318,044 29,847 347,891

Total assets and deferred outflows of resources 44,777,838$ 15,085,445$ 59,863,283$

LIABILITIES:Current liabilities:

Accounts payable and accrued expenses 1,450,270$ 379,301$ 1,829,571$ Deposits - 18,450 18,450 Current accrued compensated absences 41,558 7,901 49,459 Interest payable 12,498 - 12,498 Current portion of long-term debt 262,591 - 262,591

Total current liabilities 1,766,917 405,652 2,172,569

Noncurrent liabilities:Noncurrent portion of accrued compensated absences 166,233 31,606 197,839 Net Pension Liability 1,518,786 185,810 1,704,596 Noncurrent portion of long-term obligations 1,578,534 1,153,818 2,732,352

Total noncurrent liabilities 3,263,553 1,371,234 4,634,787

Total liabilities 5,030,470 1,776,886 6,807,356

DEFERRED INFLOWS OF RESOURCES:Deferred inflows related to pensions 489,120 16,301 505,421

NET POSITION:Net investment in capital assets 34,766,088 6,283,538 41,049,626 Restricted for:

System development capital projects - 2,042,263 2,042,263 Street and roadside maintenance 833,342 - 833,342 Debt service payments 388,116 - 388,116 Library capital projects 2,885,668 - 2,885,668

Unrestricted 385,034 4,966,457 5,351,491

Total net position 39,258,248 13,292,258 52,550,506

Total liabilities, deferred inflows of resources, and net position 44,777,838$ 15,085,445$ 59,863,283$

The accompanying notes are an integral part of the basic financial statements.14

CITY OF CORNELIUS, OREGONSTATEMENT OF ACTIVITIESFor the Fiscal Year Ended June 30, 2016

Operating Capital BusinessCharges for Grants and Grants and Governmental Type

Functions/Programs Expenses Services Contributions Contributions Activities Activities Total

Governmental activities:General government 1,619,638$ 781,537$ 94,076$ 48,126$ (695,899)$ -$ (695,899)$ Public safety 4,145,025 76,367 173,187 - (3,895,471) - (3,895,471) Highways and streets 1,064,969 211,149 - - (853,820) - (853,820) Culture and recreation 855,833 36,286 1,409 668,265 (149,873) - (149,873) Interest on long-term debt 62,141 - - - (62,141) - (62,141)

Total governmental activities 7,747,606 1,105,339 268,672 716,391 (5,657,204) - (5,657,204)

Business type activities:Water Operations 1,423,348 2,467,815 - - - 1,044,467 1,044,467 Sewer Operations 2,296,952 2,308,193 - - - 11,241 11,241 Storm Drain Operations 733,401 913,831 74,895 - - 255,325 255,325

Total business type activities 4,453,701 5,689,839 74,895 - - 1,311,033 1,311,033

Total government 12,201,307$ 6,795,178$ 343,567$ 716,391$ (5,657,204) 1,311,033 (4,346,171)

General revenues:Taxes:

Property taxes 2,694,055 - 2,694,055 Public Service taxes and state revenue sharing 1,411,647 - 1,411,647

Franchise taxes 742,384 - 742,384 Grants and contributions not restricted to specific program - - - Interest and investment earnings 39,938 36,439 76,377 Miscellaneous revenues 160,730 14,703 175,433

Transfers in (out) 519,220 (519,220) -

Total general revenues and transfers 5,567,974 (468,078) 5,099,896

Change in net position (89,230) 842,955 753,725

Net position - beginning 39,347,478 11,848,706 51,196,184

Prior period adjustmen - 600,597 600,597

Net position - ending 39,258,248$ 13,292,258$ 52,550,506$

Net (Expense) Revenue and Change in Net PositionProgram Revenues


General Fund

Bancroft Debt Service Fund

Street and Pathway Fund

Library Capital Project Fund

FUND FINANCIAL STATEMENTSMajor Governmental Funds

The General Fund accounts for all revenues and expenditures necessary to carry out basicgovernmental activities of the City that are not accounted for through other funds. For the City, theGeneral Fund includes such activities as general government, public safety, library operations, parksand recreations.

The Bancroft Debt Service Fund accounts for the resources accumulated and payments made forprincipal and interest of long-term debt of governmental funds.

The Street and Pathway Fund accounts for revenue derived from state, county and local fuel tax thatis used for repair, maintenance and construction of streets and pathways.

The purpose of this fund is to account for the major capital expenditures associated withbuilding a new city liabrary in the city of cornelius. This fund will manage all revenuesand expenses related to the new Cornelius place capital project.

16

CITY OF CORNELIUS, OREGONGOVERNMENTAL FUNDSBALANCE SHEETJune 30, 2016

General FundBancroft Debt Service Fund


Library CapitalProject Fund

Other Governmental

Total Governmental

Cash and cash equivalents 1,214,465$ 388,117$ 1,703,052$ 2,889,752$ 406,938$ 6,602,324$ Property taxes receivable 117,226 - - - - 117,226 Due from other governments 7,414 - - - - 7,414 Accounts receivable, net 300,971 - 84,292 - - 385,263 Assessments receivable - 515,661 - - - 515,661 Due from other funds - 219,294 - - - 219,294

Total assets 1,640,076$ 1,123,072$ 1,787,344$ 2,889,752$ 406,938$ 7,847,182$

LIABILITIES:Accounts payable and accrued expenses 312,951$ -$ 1,115,120$ 4,084$ 5$ 1,432,160$ Due to other funds 141,421 - 62,300 - - 203,721

Total liabilities 454,372 - 1,177,420 4,084 5 1,635,881

DEFERRED INFLOWS OF RESOURCES:Unavailable revenue - property taxes 107,485 - - - - 107,485 Unavailable revenue - special assessments - 734,956 - - - 734,956

Total deferred inflows of resources 107,485 734,956 - - - 842,441

FUND BALANCES:Restricted for:

Street and roadside maintenance - - 609,924 223,418 833,342 Debt service payments - 388,116 - - - 388,116 Library capital projects - - - 2,885,668 - 2,885,668

Assigned to:Building and engineering - - - - 1,137 1,137 Parks capital projects - - - - 182,378 182,378

Unassigned 1,078,219 - - - - 1,078,219

Total fund balances 1,078,219 388,116 609,924 2,885,668 406,933 5,368,860

Total liabilities, deferred inflows or resources and fund balances 1,640,076$ 1,123,072$ 1,787,344$ 2,889,752$ 406,938$

36,607,213

842,441

191,010

Long-term debt (1,841,125) Compensated absences (207,791) Interest payable (12,498)

Net position of governmental activities 39,258,248$

(1,689,862)

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES

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

ASSETS:

Amounts reported in the statement of net position are different because:

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

Internal service funds are used by management to charge the costs of the administrative services department to individualfunds. The assets and liabilities of the internal service fund are included in governmental activities in the statement of netposition.

Other long-term assets are not available to pay for current-period expenditures and, therefore, are deferred in the funds.

Pension related changes


CITY OF CORNELIUS, OREGONGOVERNMENTAL FUNDSSTATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCESFor the Fiscal Year Ended June 30, 2016

General FundBancroft Debt Service Fund


Library Capital Project Fund

Other Governmental

Total Governmental

REVENUES:Property taxes 2,678,714$ -$ -$ -$ -$ 2,678,714$ Franchise fees 742,384 - - - - 742,384 Licenses, permits and fees 709,466 - 211,149 - 77,462 998,077 Intergovernmental 654,556 - 748,685 - - 1,403,241 Assessments - 169,233 - - - 169,233 Grants 442,321 - - 500,000 - 942,321 Fines and forfeitures 76,367 - - - - 76,367 Interest revenue 11,236 2,061 8,630 15,444 1,970 39,341 Miscellaneous revenue 150,419 - 3,463 - - 153,882 Donations - - - 28,200 - 28,200

Total revenues 5,465,463 171,294 971,927 543,644 79,432 7,231,760

EXPENDITURES:Current:

General government 564,437 - - 57,976 - 622,413 Public safety 3,337,535 - - - - 3,337,535 Highways and streets - - 664,771 - - 664,771 Culture and recreation 567,292 - - - - 567,292

Capital outlay 164,034 - 274,599 - - 438,633 Debt service: Principal 26,814 238,000 - - - 264,814 Interest 14,230 45,901 2,900 - - 63,031

Total expenditures 4,674,342 283,901 942,270 57,976 - 5,958,489

Revenues over (under) expenditures 791,121 (112,607) 29,657 485,668 79,432 1,273,271

OTHER FINANCING SOURCES (USES):Transfers in 305,643 130,000 322,645 2,400,000 - 3,158,288 Transfers out (3,044,773) - (262,603) - - (3,307,376)

Total other financing sources (uses) (2,739,130) 130,000 60,042 2,400,000 - (149,088)

Net changes in fund balances (1,948,009) 17,393 89,699 2,885,668 79,432 1,124,183

FUND BALANCES, BEGINNING 3,026,228 370,723 520,225 - 327,501 4,244,677

FUND BALANCES, ENDING 1,078,219$ 388,116$ 609,924$ 2,885,668$ 406,933$ 5,368,860$


CITY OF CORNELIUS, OREGONGOVERNMENTAL FUNDS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES For the Fiscal Year Ended June 30, 2016

Amounts reported in the statement of activities are different because:

Net change in fund balances 1,124,183$

(1,274,005)

Current year depreciation (523,265) Capital asset additions 464,954 (58,311)

(129,965)

Debt service principal payments 264,814 Changes in compensated absences (22,526) Accrued interest expense 890 243,178

5,690

Change in net position of governmental activities (89,230)$

Governmental funds report pension contributions as expenditures. However, in thestatements of activities, the cost of pension benefits earned net of employeecontributions is reports as pension expense.

The issuance of long-term debt (e.g., bonds, leases) provides current financialresources to governmental funds, while the repayment of the principal of long-termdebt consumes the current financial resources of governmental funds. Neithertransaction, however, has any effect on net position. This is the amount by whichproceeds exceeded repayments.

Internal service funds are used by management to charge the costs of theadministrative services department to individual funds. The net revenue of certainactivities of internal service funds is reported with governmental activities.

The statement of revenues, expenditures, and changes in fund balances report capitaloutlays as expenditures. However, in the statement of activities the cost of those assetsis allocated over their estimated useful lives and reported as depreciation expense.This is the amount by which depreciation exceeded capital outlay in the currentperiod.

Some revenue reported in the statement of activities do not provide current financialresources in the governmental funds.


Water OperationsWater Fund

Water Capital Asset Fund

Sewer OperationsSewer Fund

Sewer Capital Asset Fund

Storm Drain OperationsStorm Drain Fund

Storm Drain Capital Asset Fund

Internal Service Fund

Proprietary Funds

The Sewer Fund accounts for sewer services for residents of the City. The principal revenue source isfrom user fees. The primary expenditure is for system operations.

FUND FINANCIAL STATEMENTS

Enterprise Funds

These funds are used to account for operations that are financed and operated in a manner similar toprivate business enterprises. The intent of the governing body is that the costs of providing the servicesto the general public on a continuing basis be financed primarily through user charges. These fundsrepresent three segments of operations – Water, Sewer, and Storm Drain. Included in these segmentsare:

The Water Fund accounts for water services for residents of the City. The principal revenues source isfrom user fees. The primary expenditure is for system operations.

The Water Capital Asset Fund is used to implement the Water System Master Plan, provided sufficientrevenue is generated from the water rate.

The Storm Drain Capital Asset Fund is used to implement the Storm Sewer System Master Planprovided there are sufficient revenues from operating rates and system development charges.

The Storm Drain Fund accounts for storm drain services for residents of the City. The principal revenuesource is from user fees. The primary expenditure is for system operations.

The Sewer Capital Asset Fund accounts for expenditures on major construction projects or equipmentacquisition. The principal resources are system development charges and transfers from the SewerFund.

This fund accounts for services provided to other departments or agencies within the city on a costreimbursement basis.

This fund is used to account for the financingof goods or services provided by one department or agencyto other departments or agencies of the government and to other government units, on a costreimbursement basis.

For Generally Accepted Accounting Principles purposes, these aforementioned funds are consolidatedand included as three separate Enterprise funds.


20

CITY OF CORNELIUS, OREGONPROPRIETARY FUNDSSTATEMENT OF NET POSITIONJune 30, 2016

Governmental Activities

Water OperationsSewer

OperationsStorm Drain Operations Total


ASSETS:Current assets:

Cash and cash equivalents 3,706,217$ 2,025,552$ 863,605$ 6,595,374$ 313,053$ Accounts receivable, net 427,522 221,682 99,946 749,150 1,544 Inventories 62,670 3,092 1,062 66,824 -

Total current assets 4,196,409 2,250,326 964,613 7,411,348 314,597

Noncurrent assets:Capital assets, net 5,661,201 755,998 1,137,147 7,554,346 -

Total assets 9,857,610 3,006,324 2,101,760 14,965,694 314,597

DEFERRED OUTFLOWS OF RESOURCES:Deferred outflows related to pensions 7,308 9,226 13,313 29,847 -

Total deferred outflows of resources 7,308 9,226 13,313 29,847 -

Total asset & deferred outflows of resources 9,864,918$ 3,015,550$ 2,115,073$ 14,995,541$ 314,597$

Current liabilities:Accounts payable 223,584$ 132,576$ 14,006$ 370,166$ 27,245$ Due to other funds - - 15,573 15,573 -Deposits 18,450 - - 18,450 - Current accrued compensated absences 2,634 2,634 2,633 7,901 -

Total current liabilities 244,668 135,210 32,212 412,090 27,245

Noncurrent liabilities:Noncurrent accrued compensated absences 10,535 10,535 10,536 31,606 - Noncurrent portion of long-term debt 1,153,818 - 1,153,818 - Net Pension Liability 47,595 61,159 77,056 185,810 -

Total non current liabilities 1,211,948 71,694 87,592 1,371,234 -

Total liabilities 1,456,616 206,904 119,804 1,783,324 27,245

DEFERRED INFLOWS OF RESOURCES:Deferred inflows related to pensions 2,557 2,490 11,254 16,301 -

Total deferred inflows of resources 2,557 2,490 11,254 16,301 -

NET POSITION:Net investment in capital assets 4,390,393 755,998 1,137,147 6,283,538 - Restricted for: .

System development capital projects 811,347 1,194,452 36,464 2,042,263 - Unrestricted 3,204,005 855,706 810,404 4,870,115 287,352

Total net position 8,405,745 2,806,156 1,984,015 13,195,916 287,352

Total liabilities, deferred inflows, and net position 9,864,918$ 3,015,550$ 2,115,073$ 14,995,541 314,597$

Total net position 13,195,916

96,342

Net position of business-type activities 13,292,258$

Business-Type Activities - Enterprise Funds

Internal balances result from transactions between the governmental activities, business-type activities and internal service funds

LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND NET POSITION

LIABILITIES:


PROPRIETARY FUNDS


Water OperationsSewer

OperationsStorm Drain Operations Total


OPERATING REVENUES:Grants -$ -$ 74,895$ 74,895$ -$ Charges for services 2,409,008 2,226,595 893,840 5,529,443 - Licenses, permits and fees 44,807 63,986 6,443 115,236 15,525 Intergovernmental - - - - 18,732 Miscellaneous income 9,557 5,146 - 14,703 15,261

Total operating revenues 2,463,372 2,295,727 975,178 5,734,277 49,518

OPERATING EXPENSES:Materials and services 930,683 1,744,893 212,213 2,887,789 659,877 Personnel services 120,050 159,656 238,935 518,641 899,946 Depreciation 106,063 57,064 23,575 186,702 -

Total operating expenses 1,156,796 1,961,613 474,723 3,593,132 1,559,823

Operating income (loss) 1,306,576 334,114 500,455 2,141,145 (1,510,305)

NON-OPERATING REVENUES (EXPENSES):Interest income 20,419 10,997 4,289 35,705 1,331

Interest expense - - (725) (725) - Grants - - - - 32,406

Total non-operating revenues (expenses) 20,419 10,997 3,564 34,980 33,737

Net income (loss) before transfers 1,326,995 345,111 504,019 2,176,125 (1,476,568)

TRANSFERS:Transfers in 51,675 22,903 73,506 148,084 - Transfers out (675,750) (411,052) (401,442) (1,488,244) 1,489,248

Net income (loss) before contributions 702,920 (43,038) 176,083 835,965 12,680

Change in net position 702,920 (43,038) 176,083 835,965 12,680

NET POSITION, BEGINNING 7,102,228 2,849,194 1,807,932 11,759,354 274,672

PRIOR PERIOD ADJUSTMENT 600,597 - - 600,597 -

NET POSITION, ENDING 8,405,745$ 2,806,156$ 1,984,015$ 13,195,916$ 287,352$

Change in net position enterprise funds 835,965$

6,990

Total change in net position of business-type activities 842,955$


STATEMENT OF REVENUES, EXPENSES,

Some amounts reported for business-type activities in the statement of activities are different because:

A portion of the net revenue (expenses) of internal service funds is allocated to business-typeactivities


For the Fiscal Year Ended June 30, 2016AND CHANGES IN NET POSITION


PROPRIETARY FUNDS

Governmental

Activities

Water Operations

Sewer Operations

Storm Drain Operations Total


CASH FLOWS FROM OPERATING ACTIVITIES:Cash received from customers 2,496,310$ 2,290,505$ 973,436$ 5,760,251$ 52,004$ Cash paid to employees and others for salaries and benefits (82,355) (66,379) (117,155) (265,889) (899,946) Cash paid to suppliers and others (852,552) (1,791,176) (275,373) (2,919,101) (661,819)

Net cash provided by (used for) operating activities 1,561,403 432,950 580,908 2,575,261 (1,509,761)

CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES:

Transfers in 51,675 22,903 73,506 148,084 1,489,248 Grant revenue - - - - 32,406 Transfers out (675,750) (411,052) (401,442) (1,488,244) -

Net cash provided by (used for) non-capital financing activities (624,075) (388,149) (327,936) (1,340,160) 1,521,654

CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES:

Purchase of capital assets (893,021) (1,815) (265,440) (1,160,276) - Interest paid - - (725) (725) - Interfund principal payment - - (2,596) (2,596) - Loan proceeds 475,269 - - 475,269 -

Net cash provided by (used for) capital and related financing activities (417,752) (1,815) (268,761) (688,328) -

CASH FLOWS FROM INVESTING ACTIVITIES:Interest received 20,419 10,997 4,289 35,705 1,331

Net cash provided by investing activities 20,419 10,997 4,289 35,705 1,331

Net increase (decrease) in cash and cash equivalents 539,995 53,983 (11,500) 582,478 13,224

CASH AND CASH EQUIVALENTS, BEGINNING 3,166,222 1,971,569 875,105 6,012,896 299,829

CASH AND CASH EQUIVALENTS, ENDING 3,706,217$ 2,025,552$ 863,605$ 6,595,374$ 313,053$

RECONCILIATION OF OPERATING INCOME (LOSS) TONET CASH PROVIDED BY (USED FOR) OPERATING ACTIVITIES

Operating Income 1,306,576$ 334,114$ 500,455$ 2,141,145$ (1,510,305)$ Adjustments Depreciation and amortization 106,063 57,064 23,575 186,702 - Decrease (increase) in: Accounts receivable and due from other funds 16,506 (5,222) (1,742) 9,542 2,486 Inventories (2,018) 837 1,454 273 - Increase (decrease) in: Accounts payable and accrued expenses 78,131 (1,289) (4,950) 71,892 (1,942) Deposits 18,450 - - 18,450 -

Net pension liability 35,242 44,994 59,664 139,900 - Accrued compensated absences 2,453 2,452 2,452 7,357 -

Net cash provided by (used for) operating activities 1,561,403$ 432,950$ 580,908$ 2,575,261$ (1,509,761)$

For the Fiscal Year Ended June 30, 2016


STATEMENT OF CASH FLOWS



CITY OF CORNELIUS, OREGON NOTES TO THE BASIC FINANCIAL STATEMENTS June 30, 2016

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1. Summary of Significant Accounting Policies A. Description of Reporting Entity

The City is an Oregon municipal corporation founded in 1893. The City is governed by an elected mayor and four-member council. Administration functions are delegated to individuals who reports to and are responsible to the mayor and council. The chief administrative officer is the City Manager. As required by GAAP, these financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities are, in substance, part of the government’s operations and so data from these units are combined with data of the primary government. Discretely presented component units, on the other hand, are reported in a separate column in the combined financial statements to emphasize it is legally separate from the government. The City has no blended or discretely presented component units. B. Basic Financial Statements

Basic financial statements are presented at both the government-wide and fund financial level. Both levels of statements categorize primary activities as either governmental or business-type. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Government-wide statements

The statement of net position and the statement of activities display information about the City as a whole. These statements include all the financial activities of the City. Generally the effect of interfund activity has been eliminated to minimize the double-counting of internal activities. Exceptions to this include interfund services provided and/or used. Interfund services provided and/or used are accounted for as revenues and expenses since the elimination of such revenues and expenses would distort the direct costs and program revenues reported for the various functions.

The statement of activities presents a comparison between direct expenses and program revenues for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees, fines, and charges paid by the recipients of goods or services offered by the programs, and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Taxes and other items not properly included among program revenues are reported instead as general revenues.

Fund financial statements

These statements display information at the individual fund level. Each fund is considered to be a separate accounting entity. Funds are classified and summarized as governmental and proprietary. Major individual governmental funds are reported as separate columns in the fund financial statements. Non-major funds are consolidated into a single column in the financial section of the basic financial statements and are detailed in the supplemental information.


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C. Basis of Presentation

The financial transactions of the City are recorded in individual funds. Each fund is accounted for by providing a separate set of self-balancing accounts that comprises its assets, deferred outflows of resources, liabilities, deferred inflows of resources, reserves, fund balance, revenues and expenditures/expenses. The various funds are reported by generic classification within the financial statements.

The GASB 34 model sets forth minimum criteria (percentage of the assets, liabilities, revenues, or expenditures/expenses of either fund category or the governmental and proprietary combined) for the determination of major funds. Non-major funds are combined in a column in the fund financial statements and detailed in the combining section.

The City reports the following major governmental funds:

General Fund Bancroft Debt Service Fund Street and Pathway Fund Library Capital Project Fund

The City reports each of its three proprietary funds as major funds. These funds are used to account for operations that are financed and operated in a manner similar to private business enterprises. The intent of the governing body is that the costs of providing the services to the general public on a continuing basis be financed primarily through user charges. The City reports the following proprietary funds:

Water Operations Sewer Operations Storm Drain Operations

Additionally, the government reports the following fund types: Internal Service Funds account for administration services provided to other departments or agencies of the government, or to other governments, on a cost reimbursement basis. Administrative and occupancy costs for city hall and other facilities are paid through charges allocated to the Internal Services Fund for the following services based upon the cost to the department for using these services; administrative and financial services, risk management, utilities, computer and phone services, and building usage. The costs of these services are at full cost, including replacement cost of equipment, thereby providing more accurate costs of providing services. These appear as “allocated” costs in the respective funds. The basis for allocation is determined on a number of factors depending upon the individual charge to be allocated. Some of the factors used are amount of department budget, number of staff, and time spent. Activity for the administration, human resources, financial services and information technology are accounted for in this fund. Revenues are generated through user charges for the cost of providing the services. Expenditures are for personnel services, material and services, and transfers.


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The Internal Service Fund includes the following departments:

Administrative Information Technology Facilities Support Services – Public Works

D. Measurement Focus and Basis of Accounting

Measurement focus is a term used to describe which transactions are recorded with the various financial statements. Basis of accounting refers to when transactions are recorded regardless of the measurement focus.

The government-wide financial statements and the proprietary funds financial statements are reported using the economic resources measurement focus and the full accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, long-term compensated absences are recorded only when payment is due.

Property taxes, franchise taxes, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City.

Unavailable revenues arises in the Governmental Funds Balance Sheet when potential revenue does not meet both the measurable and available criteria for recognition in the current period. This unavailable revenue consists primarily of uncollected property taxes and assessments not deemed available to financial operation of the current period. In the government-wide Statement of Net Position, with a full accrual basis of accounting, revenue must be recognized as soon as it is earned regardless of its availability. Thus, the liability created on the Governmental Fund Balance Sheet for unavailable revenue is eliminated. Note that unavailable revenues also arise outside the scope of measurement focus and basis of accounting, such as when the City receives resources before it has a legal claim to them. For instance, when grant monies are received prior to the incurrence of qualifying expenditures.

Similar to the way its revenues are recorded, governmental funds only record those expenditures that affect current financial resources. Principal and interest on general long-term debt are recorded as fund liabilities only when due, or when amounts have been accumulated in the debt service fund for


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payments to be made early in the following year. Vested compensated absences are recorded as expenditures when they mature. In the government-wide financial statements, however, with a full accrual basis of accounting, all expenditures affecting the economic resource status of the government must be recognized, thus, the expense and related accrued liability for long term portions of debt and compensated absences must be included.

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 necessary to explain the adjustments needed to transform the fund based financial statements into the governmental column of the government-wide presentation. This reconciliation is part of the financial statements.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services, and producing and delivering goods in connection with a proprietary fund’s principle ongoing operations. The principle operating revenues of the City’s enterprise funds are charges to customers for sales and services. These funds also recognize fees intended to recover the cost of connecting new customers to the City’s utility systems as operating revenue. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses and overhead, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The proprietary financial statements have incorporated all applicable GASB pronouncements. E. Cash and Investments

For the purposes of the statement of cash flows the City considers all highly liquid investments with an original maturity of three months or less when purchased, to be cash equivalents. Investments included in cash and cash equivalents are reported at fair value. The City invests in the State of Oregon Local Government Investment Pool, which is authorized by Oregon Revised Statutes. Interest earned from pooled investments is allocated based on a fund’s portion of the total investment balance. The City maintains depository insurance under Federal depository insurance funds and state and financial institution collateral pools for its cash deposits and investments, except the Local Government Investment Pool, which is exempt from statutes requiring such insurance.

F. Receivables

Uncollected property taxes receivable collected within sixty days following year end are considered measurable and available and are recognized as revenues. All other uncollected property taxes receivable are offset by unavailable revenue and, accordingly, have not been recorded as revenue. Property taxes are assessed and become a lien against the property as of July 1 each year and are payable in three installments on November 15, February 15, and May 15 following the lien date. Taxes unpaid and outstanding on May 16 are considered delinquent.


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Assessments receivable are recognized at the time property owners are assessed for property improvements. Assessments receivable expected to be collected within sixty days following year end and are considered measurable and available and are recognized as revenue. All other assessments receivable are offset by unavailable revenue and, accordingly, have not been recorded as revenue. Receivables for grants and state shared revenues, included in accounts receivable are recorded as revenues in governmental fund types as earned. Receivables of the proprietary fund types are recorded as revenues as earned, including services earned but not billed. G. Interfund Loans Receivables/Payables

Interfund loans are classified as “Due to and due from other funds”. H. Inventories

Inventories in the proprietary funds consist of expendable supplies held for maintenance and improvements. Inventories are stated at cost using the consumption method. I. Capital Assets

Capital assets, which include property, plant, equipment, and infrastructure assets (e.g. roads, street lights, etc.), are reported in the applicable governmental or business-type activities column in the governmental-wide financial statements. Capital assets are charged to expenditures as purchased in the governmental fund statements, and capitalized in the proprietary fund statements. Capital assets are recorded at historical cost, or estimated historical cost if actual cost is not available. Donated capital assets are recorded at their estimated fair market value at the time received. Capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more, and having useful lives extending beyond a single reporting period. Additions or improvements and other capital outlays that significantly extend the useful life of an asset, or that significantly increase the capacity of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. No interest costs were capitalized during the year ended June 30, 2016.


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Depreciation on exhaustible assets is recorded as an allocated expense in the Statement of Activities with accumulated depreciation reflected in the Statement of Net Position and is provided on the straight-line basis over the following estimated useful lives:

Asset Years

Buildings and Improvements 20 to 50

Infrastructure 20 to 75

Equipment 5 to 15

Water and Sewer Lines 75 Monthly depreciation is taken in the year the assets are acquired or retired. Gains or losses from sales or retirements of capital assets are included in operations of the current period. GASB Statement No. 34 (GASB 34) required the City to prospectively report and depreciate all infrastructure assets of governmental activities (primarily transportation systems) effective July 1, 2003. GASB extended the implementation period for retroactive reporting of these capital assets to the beginning of the fiscal year ending June 30, 2008. The City reports newly acquired infrastructure in accordance with GASB 34.

J. Intangible Capital Assets

Intangible capital assets, which include easements, water rights, timber rights, patents, trademarks, and computer software, are reported in the applicable governmental or business-type activities column in the governmental-wide financial statements. Intangible capital assets are charged to expenditures as purchased in the governmental fund statements, and capitalized in the proprietary fund statements. Intangible capital assets are recorded at historical cost, or estimated historical cost if actual cost is not available. Donated intangible capital assets are recorded at their estimated fair market value at the time received. Intangible capital assets are defined by the City as assets with an initial, individual cost of $5,000 or more, and having useful lives extending beyond a single reporting period. Additions or improvements and other capital outlays that significantly extend the useful life of an asset, or that significantly increase the capacity of an asset are capitalized. Other costs incurred for repairs and maintenance are expensed as incurred. Amortization on exhaustible intangible assets is recorded as an allocated expense in the Statement of Activities with accumulated amortization reflected in the Statement of Net Position and is provided on the straight-line basis over the estimated useful life of the asset. Monthly amortization is taken in the year the assets are acquired or retired. Gains or losses from sales or retirements of intangible capital assets are included in operations of the current period.


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K. Compensated Absences

Accumulated vested vacation pay is accrued as it is earned. For governmental funds, accumulated vested vacation pay is maintained separately and represents a reconciling item between the fund-level and government-wide presentations. No liability is recorded for non-vesting accumulating rights to receive sick pay benefits. Accumulated vested vacation pay is reported in governmental funds only if they matured.

Funds used to liquidate accrued compensated absences included the general fund, street and pathway fund, water fund, sewer fund, storm drain fund, and the internal service fund. L. Deferred Outflows/ Inflows of Resources

In addition to assets, the Statement of Financial Position will sometimes report a separate section for deferred outflows of resources. Deferred outflows of resources represent a consumption of net position that applies to future periods and so will not be recognized as an outflow of resources (expenditure/expense) until then. The City has one item that qualifies for reporting in this category. It is the deferred amounts relating to pensions. This amount is deferred and recognized as an outflow of resources in the period when the City's recognizes pension expense/expenditures. Deferred outflows are included in the government-wide Statement of Net Position and the proprietary funds Statement of Net Position.

In addition to liabilities, the Statement of Financial Position will sometimes report a separate section for deferred inflows of resources. Deferred inflows of resources represent an acquisition of net position that applies to future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City has three items that qualify for reporting in this category. The governmental funds report unavailable revenues from two sources: property taxes and special assessments. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The government-wide Statement of Net Position and the proprietary funds Statement of Net Position also reports deferred amounts related to pensions. These amounts are deferred and recognized as an inflow of resources in the period when the City's recognizes pension income. M. Pension

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Oregon Public Employees Retirement System (OPERS) and additions to/deductions from OPERS's fiduciary net position have been determined on the same basis as they are reported by OPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. N. Net Position

In the government-wide financial statements and proprietary funds financial statements, net position is reported in three categories: net investment in capital assets; restricted net position; and unrestricted net position. Net investment in capital assets represents capital assets less accumulated depreciation less outstanding principal of related debt. Net investment in capital assets does not include the unspent proceeds of capital debt. Restricted net position represents net position restricted by parties outside of the City (such as creditors, grantors, contributors, laws, and


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regulations of other governments) and includes unspent proceeds of bonds issued to acquire or construct capital assets. The nonexpendable portion of permanent funds is reported as a component of restricted net position. The City’s other restricted net position is temporarily restricted (ultimately expendable) assets. All other net position is considered unrestricted.

O. Fund Balance

In the fund financial statements, governmental funds report fund balance in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components – non-spendable, restricted, committed, assigned and unassigned.

Non-Spendable – Includes amounts not immediately converted to cash, such as prepaid items and inventory.

Restricted – Includes amounts that are restricted by external creditors, grantors or contributors, or restricted by legal constitutional provisions.

Committed – Includes amounts that can be used only for the specific purposes determined by resolution by the City Council, the City’s highest level of decision-making authority. Committed amounts may not be used for any other purpose unless the City Council removes the constraint by similar council action. Commitments of fund balance must be made prior to the end of the fiscal year.

Assigned – Includes amounts assigned for specific purposes by council action who authorizes, by resolution, the Budget Officer or City Manager to assign fund balance. Assigned fund balance is also established by the Council through adoption or amendment of the budget as intended for specific purpose. Assignments of fund balance can be done at any time, including after the fiscal year end date.

Unassigned – This is the residual classification used for those balances not assigned to another category. Any balances that are budgeted as unappropriated will be considered to be unassigned. P. Use of Restricted Resources

When both restricted and unrestricted resources are available for use, it is the City’s policy to use restricted resources first, then unrestricted resources, as they are needed. When unrestricted resources (committed, assigned, and unassigned) are available for use it is the City’s policy to use committed resources first, then assigned, and then unassigned as they are needed.

Q. Accounting Estimates

The preparation of financial statements in conformity with accounting principles generally accepted requires that management make estimates and assumptions which affect the reporting amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from those estimated.


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2. Cash and Cash Equivalents

At June 30, 2016 investments included in cash and cash equivalents consist of the following:

Weighted Average Fair Maturity (Years) Value Investments in the State Treasurer’s Local Government Investment Pool

0.00

$ 12,595,557

A. Interest rate risk

The City of Cornelius does not have a formal investment policy that limits investments maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. B. Credit risk

State statutes authorize the City of Cornelius to invest in general obligations of the U.S. Government and its agencies, certain bonded obligations of Oregon municipalities, bank repurchase agreements, bankers’ acceptances, and the State Treasurer’s Oregon Local Government Investment Pool, among others. The City has no investment policy that would further limit its investment choices. The State Treasurer’s Investment Pool operates in accordance with appropriate state laws and regulations, but is not regulated by other laws, organizations or regulations. The reported value of the Pool is the same as the fair value of Pool shares. Investments are regulated by the Oregon Short-Term Fund Board and approved by the Oregon Investment Council (ORS 294.805 to 294.895). The State Treasurer’s Oregon Local Government Investment Pool is not registered with the SEC as an investment company and is unrated. The City’s investment in the Local Government Investment Pool is considered unclassified as to credit risk because it is not evidenced by securities that exist in physical or book entry form. C. Concentration of credit risk

All investments of the City shall be made in accordance with Oregon Revised Statutes: ORS 294.035 (Investment of surplus funds of political subdivisions; approved investments), ORS 294.040 (Restriction on investments under ORS 294.035), ORS 294.135 (Investment maturity dates), ORS 294.145 (Prohibited conduct for custodial officer), ORS 294.805 to 294.895 (Local Government Investment Pool). Any revisions or extensions of these sections of the ORS shall be assumed to be part of this investment policy immediately upon being enacted. D. Custodial credit risk – deposits

Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned. The City does not have a deposit policy for custodial credit risk. The Federal Depository Insurance Corporation (FDIC) provides insurance for the City’s deposits up to $250,000 for the combined total of all deposit accounts at each financial institution. The remaining deposits are covered by the Public Funds Collateralization program (PFCP) of the State of Oregon in accordance with ORS 295. Depositories qualified under this program are required to pledge collateral against any public funds deposits in excess of deposit insurance amounts. This provides additional protection for public funds in the event of a bank failure or loss. ORS 295 sets the specific value of


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the collateral, as well as the types of collateral that are acceptable. ORS 295 creates a shared liability structure for participating depositories, better protecting public funds though still not guaranteeing that all funds are 100% protected. As of June 30, 2016, the book value of the City’s deposits was $914,481 and the bank balance was $1,072,027. $822,027 of the City’s bank balances were exposed to custodial credit risk as they were collateralized under PFCP.


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3. Capital Assets

Capital asset activity for the year ended June 30, 2016 was as follows:

Primary GovernmentBeginning Balance Additions Deletions Ending Balance

Capital Assets, non-depreciable:Land 1,645,467$ -$ -$ 1,645,467$ Intangibles 16,088,232 - - 16,088,232

Total capital assets, non-depreciable 17,733,699 - - 17,733,699

Capital assets, depreciable:Buildings 3,599,077 - - 3,599,077 Improvements 3,632,615 148,724 - 3,781,339 Equipment 985,390 43,447 (110,298) 918,539 Vehicles 1,523,198 - (35,000) 1,488,198 Infrastructure 14,107,326 272,782 - 14,380,108 Total capital assets, depreciable 23,847,606 464,953 (145,298) 24,167,261

Less accumulated depreciation for:Buildings (1,508,629) (86,031) - (1,594,660) Improvements (1,025,163) (100,002) - (1,125,165) Equipment (851,258) (15,557) 110,298 (756,517) Vehicles (572,864) (72,057) 35,000 (609,921) Infrastructure (957,867) (249,617) - (1,207,484) Total accumulated depreciation (4,915,781) (523,264) 145,298 (5,293,747)

Net depreciable capital assets 18,931,825 (58,311) - 18,873,514

Net capital assets 36,665,524$ (58,311)$ -$ 36,607,213$

Governmental activities: DepreciationGeneral government 30,396$ Highways & streets 307,577Public safety 128,277Parks 57,015

Total depreciation expense - governmental activities $ 523,265

Total Primary Government


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Busness-type activities totals Beginning BalancePrior Period Adjustment Additions Deletions Ending Balance

Capital Assets, non-depreciable:Land 20,000$ -$ -$ -$ 20,000$ Construction in Progress - 600,597 470,387 - 1,070,984

Total capital assets, non-depreciable 20,000 600,597 470,387 - 1,090,984

Capital assets, depreciable:Buildings 2,049,551 - - - 2,049,551 Improvements 242,288 - - - 242,288 Equipment 707,750 - 5,449 (20,000) 693,199 Vehicles 688,337 - - (70,000) 618,337 Infrastructure 6,177,633 - 684,440 - 6,862,073 Total capital assets, depreciable 9,865,559 - 689,889 (90,000) 10,465,448

Less accumulated depreciation for:Buildings (638,009) - (40,595) - (678,604) Improvements (110,275) - (3,520) - (113,795) Equipment (613,844) - (15,671) 20,000 (609,515) Vehicles (474,952) - (31,594) 70,000 (436,546) Infrastructure (2,068,304) - (95,322) - (2,163,626) Total accumulated depreciation (3,905,384) - (186,702) 90,000 (4,002,086)

Net depreciable capital assets 5,960,175 - 503,187 - 6,463,362

Net capital assets 5,980,175$ 600,597$ 973,574$ -$ 7,554,346$

Business-type activities: DepreciationWater 106,063$ Sewer 57,064 Storm Drain 23,575

Total depreciation expense - business-type activities 186,702$

Total Business Activities


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4. Interfund Transfers

Interfund transfers are used to pay administrative services, provide funds for debt service, contribute toward the cost of capital projects, and provide operational resources.

5. Long Term Debt

During the year ended June 30, 2016, long-term liability activity was as follows:

Transfers In Transfers OutGovernmental Funds:

General Fund 305,643$ 3,044,773$ Street and Pathway Fund 322,645 262,603 Bancroft Debt Service Fund 130,000 - Library Capital Projects 2,400,000 -

Total Governmental Funds 3,158,288 3,307,376

Proprietary FundsWater Operations 51,675 675,750 Sewer Operations 22,903 411,052 Storm Drain Fund 73,506 401,442 Internal Service Fund 1,489,248 -

Total Proprietary Funds 1,637,332 1,488,244

Total All Funds 4,795,620$ 4,795,620$

Beginning Ending Amounts

due within Balance Additions Reductions Balance one year

Governmental Activities:Notes Payable 312,939$ -$ 26,814$ 286,125$ 19,591$ Limited Tax Improvement Bonds 1,793,000 - 238,000 1,555,000 243,000 Compensated Absences 185,265 207,791 185,265 207,791 41,558

Total governmental activities 2,291,204$ 207,791$ 450,079$ 2,048,916$ 304,149$

Business Type Activities:Notes Payable 678,549$ 475,269$ -$ 1,153,818$ -$ Compensated Absences 32,150 39,507 32,150 39,507 7,901

Total business type activities 710,699$ 514,776$ 32,150$ 1,193,325$ 7,901$


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A. Notes Payable


Cornelius Rural Fire Protection District Loan: In March 2014 the City entered into an agreement with the Cornelius Rural Fire Protection District to fund the City’s portion ($331,387) of the jointly owned Fire Engine. The City will repay this amount in quarterly payments over 15 years with 2.5% interest.

$ 286,125

Annual debt service requirements to maturity for notes payable are as follows:

Business-Type Activities

Business Oregon Aquifer Storage and Recovery Loan: In November 2013 the City entered into an agreement with the Business Oregon Infrastructure Finance Authority to award the City a total award of $2,934,000 of which $750,000 is expected to be forgivable. The City will repay this amount in annual payments over 19 years starting at the end of the project with 3.0% interest. The forgivable loan will be drawn down first. At year end the City had drawn down:

$ 1,153,818

B. Bonds Payable

1. Limited tax improvement bonds outstanding at June 30, 2016 are as follows:


Series 2013 (2002 rebonding): In March 2013 the City issued bonds in the amount of $2,249,000 at 2.56% for street, water, storm sewer, and sewer improvements in the East Baseline district. Bond interest is payable semiannually, while principal is due annually through March 2022. $ 1,555,000

Principal Interest Total2017 19,591$ 6,970$ 26,561$ 2018 20,085 6,476 26,561 2019 20,592 5,969 26,561 2020 21,112 5,450 26,562 2021 21,645 4,917 26,562

2022-2026 116,697 16,110 132,807 2027-2031 66,403 2,385 68,788

286,125$ 48,277$ 334,402$

Fiscal Year

Cornelius Rural Fire Protection District Loan


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Annual debt service requirements to maturity for bonds payable are as follows:

6. Interfund Receivable & Payable; Special Assessment Debt

Interfund activity from the Bancroft Debt Service Fund to the General Fund, the Street and Pathway Fund, and the Storm Drain Operations Fund are for street, water, storm sewer, and sewer improvements. Interfund balances at June 30, 2016 are as follows: Due to/from other funds: Receivable Fund Payable Fund Amount Bancroft Debt Service Fund General Fund $ 141,421Bancroft Debt Service Fund Street and Pathway Fund 62,300Bancroft Debt Service Fund Storm Drain Operations Fund 15,573

Total $ 219,294

7. Net Position

The government-wide statement of net position reports $6,149,389 of restricted net position, of which $833,342 is restricted by enabling legislation.

8. Pension Plan

A. Plan Description

Employees of the City are provided with pensions through the Oregon Public Employees Retirement System (OPERS) a cost-sharing multiple-employer defined benefit pension plan, the Oregon Legislature has delegated authority to the Public Employees Retirement Board to administer and manage the system. All benefits of the System are established by the legislature pursuant to ORS Chapters 238 and 238A. Tier One/Tier Two Retirement Benefit plan, established by ORS Chapter 238, is closed to new members hired on or after August 29, 2003. The Pension Program, established by ORS Chapter 238A, provides benefits to members hired on or after August 29, 2003. OPERS

Principal Interest Total2017 243,000$ 19,904$ 262,904$ 2018 250,000 33,587 283,587 2019 256,000 27,187 283,187 2020 262,000 20,634 282,634 2021 269,000 13,926 282,926

2022-2026 275,000 7,040 282,040

Total 1,555,000$ 122,278$ 1,677,278$

Fiscal Year

Limited Tax Improvement Bonds


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issues a publicly available Comprehensive Annual Financial Report and Actuarial Valuation that can be obtained at http://www.oregon.gov/pers/Pages/section/financial_reports/financials.aspx.

B. Benefits provided

A. Tier One/Tier Two Retirement Benefit ORS Chapter 238

Pension Benefits

The PERS retirement allowance is payable monthly for life. It may be selected from 13 retirement benefit options. These options include survivorship benefits and lump-sum refunds. The basic benefit is based on years of service and final average salary. A percentage (2.0 percent for police and fire employees, 1.67 percent for general service employees) is multiplied by the number of years of service and the final average salary. Benefits may also be calculated under either a formula plus annuity (for members who were contributing before August 21, 1981) or a money match computation if a greater benefit results.

A member is considered vested and will be eligible at minimum retirement age for a service retirement allowance if he or she has had a contribution in each of five calendar years or has reached at least 50 years of age before ceasing employment with a participating employer (age 45 for fire). General service employees may retire after reaching age 55. Fire members are eligible after reaching age 50. Tier One general service employee benefits are reduced if retirement occurs prior to age 58 with fewer than 30 years of service. Fire member benefits are reduced if retirement occurs prior to age 55 with fewer than 25 years of service. Tier Two members are eligible for full benefits at age 60. The ORS Chapter 238 Defined Benefit Pension Plan is closed to new members hired on or after August 29, 2003.

Death Benefits

Upon the death of a non-retired member, the beneficiary receives a lump-sum refund of the member’s account balance (accumulated contributions and interest). In addition, the beneficiary will receive a lump-sum payment from employer funds equal to the account balance, provided one or more of the following conditions are met:

the member was employed by a PERS employer at the time of death, the member died within 120 days after termination of PERS-covered employment, the member died as a result of injury sustained while employed in a PERS covered

job, or the member was on an official leave of absence from a PERS-covered job at the time

of death.

Disability Benefits

A member with 10 or more years of creditable service who becomes disabled from other than duty-connected causes may receive a non-duty disability benefit. A disability resulting from a job-incurred injury or illness qualifies a member (including PERS judge members) for disability benefits regardless of the length of PERS-covered service. Upon qualifying for either a non-duty or duty disability, service time is computed to age 58 (55 for fire members)


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when determining the monthly benefit.

Benefit Changes

After Retirement Members may choose to continue participation in a variable equities investment account after retiring and may experience annual benefit fluctuations due to changes in the market value of equity investments. Under ORS 238.360 monthly benefits are adjusted annually through cost-of-living changes. Under current law, the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25 percent on the first $60,000 of annual benefit and 0.15 percent on annual benefits above $60,000.

B. OPSRP Pension Program (OPSRP DB)

Pension Benefits

The Pension Program (ORS Chapter 238A) provides benefits to members hired on or after August 29, 2003. This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated with the following formula for members who attain normal retirement age:

Fire: 1.8 percent is multiplied by the number of years of service and the final average salary. Normal retirement age for fire members is age 60 or age 53 with 25 years of retirement credit. To be classified as a fire member, the individual must have been employed continuously as a fire member for at least five years immediately preceding retirement.

General service: 1.5 percent is multiplied by the number of years of service and the final average salary. Normal retirement age for general service members is age 65, or age 58 with 30 years of retirement credit.

A member of the OPSRP Pension Program becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, and, if the pension program is terminated, the date on which termination becomes effective.

Death Benefits

Upon the death of a non-retired member, the spouse or other person who is constitutionally required to be treated in the same manner as the spouse, receives for life 50 percent of the pension that would otherwise have been paid to the deceased member.

Disability Benefits

A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related injury shall receive a disability benefit of 45 percent of the member’s salary determined as of the last full month of employment before the disability occurred.


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Benefit Changes After Retirement

Under ORS 238A.210 monthly benefits are adjusted annually through cost-of-living changes. Under current law, the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25 percent on the first $60,000 of annual benefit and 0.15 percent on annual benefits above $60,000.

C. OPSRP Individual Account Program (OPSRP IAP)

Pension Benefits

An IAP member becomes vested on the date the employee account is established or on the date the rollover account was established. If the employer makes optional employer contributions for a member, the member becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, the date the IAP is terminated, the date the active member becomes disabled, or the date the active member dies.

Upon retirement, a member of the OPSRP Individual Account Program (IAP) may receive the amounts in his or her employee account, rollover account, and vested employer account as a lump-sum payment or in equal installments over a 5-, 10-, 15-, 20-year period or an anticipated life span option. Each distribution option has a $200 minimum distribution limit.

Death Benefits

Upon the death of a non-retired member, the beneficiary receives in a lump sum the member’s account balance, rollover account balance, and vested employer optional contribution account balance. If a retired member dies before the installment payments are completed, the beneficiary may receive the remaining installment payments or choose a lump-sum payment.

Recordkeeping

OPERS contracts with VOYA Financial to maintain IAP participant records.

C. Contributions

PERS funding policy provides for monthly employer contributions at actuarially determined rates. These contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets to pay benefits when due. This funding policy applies to the PERS Defined Benefit Plan and the Other Postemployment Benefit Plans. Employer contribution rates during the period were based on the December 31, 2013 actuarial valuation as subsequently modified by 2013 legislated changes in benefit provisions. The rates based on a percentage of payroll, first became effective July 1, 2015. Employer contributions for the year ended June 30, 2016 were $231,899, excluding amounts to fund employer specific liabilities. The rates in effect for the fiscal year ended June 30, 2016 were 12.26 percent for Tier One/Tier Two General Service Member, 12.26 percent for Tier One/Tier Two Fire, 6.97 percent for OPSRP Pension Program General Service Members, 11.08 percent for OPSRP Pension Program Fire Members, and 6 percent for OPSRP Individual Account


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Program. D. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred

Inflows of Resources Related to Pensions

At June 30, 2016, the City reported a liability of $1,704,596 for its proportionate share of the net pension asset. The net pension asset was measured as of June 30, 2015, and the total pension asset used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2013 rolled forward to June 30, 2015. The City's proportion of the net pension asset was based on a projection of the City's long-term share of contributions to the pension plan relative to the projected contributions of all participating entities, actuarially determined. At June 30, 2015, the City's proportion was 0.02968924 percent, which increased from its proportion measured as of June 30, 2014.

For the year ended June 30, 2016, the City's recognized pension expense (income) of ($1,413,905). At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred Outflows of Resources

Deferred Inflows of Resources

Differences between expected and actual experience 91,920$ -$ Changes of assumptions - - Net difference between projected and actual earnings on investments - 357,322 Changes in proportion 24,072 - Differences between employer contributions and proportionate share of contributions - 148,099 Total (prior to post-MD contributions) 115,992 505,421 Contributions subsequent to the MD 231,899 -

Total 347,891$ 505,421$


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Deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in pension expense as follows:

E. Actuarial assumptions

The employer contribution rates effective July 1, 2013, through June 30, 2015, and effective July 1, 2015, through June 30, 2017, were set using the projected unit credit actuarial cost method. For the Tier One/Tier Two component of the PERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (1) an amount for normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), (2) an amount for the amortization of unfunded actuarial accrued liabilities, which are being amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 20 years.

For the OPSRP Pension Program component of the PERS Defined Benefit Plan, this method produced an employer contribution rate consisting of (a) an amount for normal cost (the estimated amount necessary to finance benefits earned by the employees during the current service year), (b) an amount for the amortization of unfunded actuarial accrued liabilities, which are being amortized over a fixed period with new unfunded actuarial accrued liabilities being amortized over 16 years.

Amortization Period Amortization PeriodFY2017 258,261$ FY2017 205,067$ FY2018 26,362 FY2018 205,067 FY2019 26,362 FY2019 205,067 FY2020 26,362 FY2020 (121,590) FY2021 10,544 FY2021 11,810

Total 347,891$ Total 505,421$

Deferred InflowsDeferred Outflows


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The total pension liability in the December 31, 2013 actuarial valuation was determined using the following actuarial assumptions:

Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31 of even numbered years. The methods and assumptions shown above are based on the 2014 Experience Study which reviewed experience for the four-year period ending on December 31, 2014. F. Long-term expected rate of return

To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2013 the PERS Board reviewed long-term assumptions developed by both Milliman’s capital market assumptions team and the Oregon Investment Council’s (OIC) investment advisors. The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at that time based on the OIC long-term target asset allocation. The OIC’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption is based on a consistent set of underlying assumptions, and includes adjustment for the inflation assumption. These assumptions are not based on historical returns, but instead are based on a forward-looking capital market economic model.

Valuation DateMeasurement DateExperience Study ReportActuarial Cost MethodActuarial Assumptions:

Inflation RateLong-Term Expected Rate of Return 7.75 percentDiscount RateProjected Salary IncreasesCost of Living Adjustments (COLA)Mortality

2.75 percent

December 31, 2013

2014, published September 2015Entry Age Normal

June 30, 2015

7.75 percent3.75 percent overall payroll growth

Health retirees and beneficiaries: RP-2000Sex-distinct, generational per Scale AA, withcollar adjustments and set-backs as describedin the valuation.

Active Members: Mortality rates are apercentage of healthy retiree rates that varyby group, as described in the valuation.

Disabled retirees: Mortality rates are apercentage (65% for males, 90% for females)of the RP-2000 statistic combined disabledmortality sex-distinct table.

Blend of 2.00% COLA and grade COLA


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G. Depletion Date Projection

GASB 68 generally requires that a blended discount rate be used to measure the Total Pension Liability (the Actuarial Accrued Liability calculated using the Individual Entry Age Normal Cost Method). The long-term expected return on plan investments may be used to discount liabilities to the extent that the plan’s Fiduciary Net Position is projected to cover benefit payments and administrative expenses. A 20-year high quality (AA/Aa or higher) municipal bond rate must be used for periods where the Fiduciary Net Position is not projected to cover benefit payments and administrative expenses. Determining the discount rate under GASB 68 will often require that the

Asset Class/Strategy Low Range High Range TargetCash 0.0% 3.0% 0.0%Debt Securities 15.0% 25.0% 20.0%Public Equity 32.5% 42.5% 37.5%Private Equity 16.0% 24.0% 20.0%Real Estate 9.5% 15.5% 12.5%Alternative Equity 0.0% 10.0% 10.0%Opportunity Portfolio 0.0% 3.0% 0.0%Total 100.0%

Assumed Asset Allocation

Asset Class Target AllocationCompounded Annual Return (Geometric)

Core Fixed Income 7.20% 4.50%Short-Term Bonds 8.00% 3.70%Intermediate -Term Bonds 3.00% 4.10%High Yield Bonds 1.80% 6.66%Large Cap US Equities 11.65% 7.20%Mid Cap US Equities 3.88% 7.30%Small Cap US Equities 2.27% 7.45%Developed Foreign Equities 14.21% 6.90%Emerging Foreign Equities 5.49% 7.40%Private Equities 20.00% 8.26%Opportunity Funds/Absolute Return 5.00% 6.01%Real Estate (Property) 13.75% 6.51%Real Estate (REITS) 2.50% 6.76%Commodities 1.25% 6.07%

Total 100.00%

Assumed Inflation - Mean 2.75%


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actuary perform complex projections of future benefit payments and pension plan investments. GASB 68 (paragraph 67) does allow for alternative evaluations of projected solvency, if such evaluation can reliably be made. GASB does not contemplate a specific method for making an alternative evaluation of sufficiency; it is left to professional judgment.

The following circumstances justify an alternative evaluation of sufficiency for PERS: PERS has a formal written policy to calculate an Actuarially Determined Contribution

(ADC), which is articulated in the actuarial valuation report. The ADC is based on a closed, layered amortization period, which means that payment of the

full ADC each year will bring the plan to a 100% funded position by the end of the amortization period if future experience follows assumption.

GASB 68 specifies that the projections regarding future solvency assume that plan assets earn the assumed rate return and there are no future changes in the plan provisions or actuarial methods and assumptions, which means that the projections would not reflect any adverse future experience which might impact the plan’s funded position.

Based on these circumstances, it is our independent actuary’s opinion that the detailed depletion date projections outlined in GASB 68 would clearly indicate that the Fiduciary Net Position is always projected to be sufficient to cover benefit payments and administrative expenses H. Discount rate

The discount rate used to measure the total pension liability was 7.75 percent for the Defined Benefit Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those of the contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability. I. Sensitivity of the City's proportionate share of the net pension liability to changes in the

discount rate

The following presents the City's proportionate share of the net pension liability calculated using the discount rate of 7.75 percent, as well as what the City's proportionate share of the net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.75 percent) or 1-percentage-point higher (8.75 percent) than the current rate:

1% Decrease (6.75%) Discount Rate (7.75%) 1% Increase (8.75%)

4,113,980$ 1,704,596$ (325,881)$ City's proportionate share of the net pension liability (asset)


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J. Pension plan fiduciary net position

Detailed information about the pension plan's fiduciary net position is available in the separately issued OPERS financial report. K. Payables to the pension plan

The City reports payables in the amount of $15,833 payable to the pension plan. L. Changes in Plan Provisions Subsequent to Measurement Period

The Oregon Supreme Court on April 30, 2015, ruled that the provisions of Senate Bill 861, signed into law in October 2013, that limited the post-retirement COLA on benefits accrued prior to the signing of the law was unconstitutional. Benefits could be modified prospectively, but not retrospectively. As a result, those who retired before the bills were passed will continue to receive a COLA tied to the Consumer Price Index that normally results in a 2% increase annually. OPERS will make restoration payments to those benefit recipients.

OPERS members who have accrued benefits before and after the effective dates of the 2013 legislation will have a blended COLA rate when they retire. This change in benefit terms were reflected in the current valuation Changes in Plan Provisions Subsequent to Measurement Date There were no changes subsequent to the June 30, 2015 measurement date. M. Retirement Health Insurance Account (RHIA)

As a member of Oregon Public Employees Retirement System (OPERS), the City contributes to the Retirement Health Insurance Account (RHIA) for each of its eligible employees. RHIA is a cost-sharing multiple-employer defined benefit other post-employment benefit plan administered by OPERS. RHIA pays a monthly contribution toward the cost of Medicare companion health insurance premiums of eligible retirees. Oregon Revised Statute (ORS) 238.420 established this trust fund. Authority to establish and amend the benefit provision of RHIA resides with the Oregon Legislature. OPERS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained by writing to Oregon Public Employees Retirement System, PO Box 23700, Tigard, OR 97281-3700. Because RHIA was created by enabling legislation (ORS 238.420), contribution requirements of the plan members and the participating employers were established and may be amended only by the Oregon Legislature. ORS require that an amount equal to $60 or the total monthly cost of Medicare companion health insurance premiums coverage, whichever, is less shall be paid by the eligible retired member in the manner provided in ORS 238.410. Participating employers are contractually required to contribute to RHIA at a rate assessed each year by OPERS, currently 0.49% for Tier1/Tier 2 and 0.53% for OPSRP of annual covered payroll. The OPERS Board of Trustees sets the employer contribution rate based on the annual required contribution of the employers (ARC), an amount actuarially determined in accordance with the


48

parameters of GASB Statement No. 45. The ARC represent a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortized any unfunded actuarial liabilities (or funding excess) of the plan over a period not to exceed thirty years. The City’s contributions to RHIA for the years ended June 30, 2016, 2015, and 2014 were $11,001, $10,262, and $14,848 respectively which equal the required contributions for that year. 9. Property Tax Calendar

Real and personal property taxes are levied in July of each fiscal year. Property taxes attach as an enforceable lien on property as of July 1, and are payable in three installments on November 15, February 15, and May 15. All property taxes are billed and collected by Washington County and remitted to the City. Uncollected taxes, including delinquent amounts, are considered substantially collectible or recoverable through liens, and accordingly no allowance for uncollected taxes has been established. 10. Risk Management

The City is exposed to various risks of loss related to errors and omissions; automobile; damage to or destruction of assets; bodily injury; and worker’s compensation for which the City carries commercial insurance. There has been no significant reduction in insurance coverage from the prior year and settled claims have not reached the level of commercial coverage in any of the past three fiscal years. The City Council adopted Risk Management Policies (Resolution No. 1712) outlining its approach to minimizing or transferring the risks of municipal operations. The City Manager is permitted to designate a Risk Manager. 11. Prior Period Adjustment Capital Assets – In fiscal year 2014-15 the City expensed engineering costs of $600,597 for the construction of a new water tower. After reevaluating the project in fiscal year 2015-16 the engineering costs where capitalized resulting in a prior period adjustment that increased construction in process by $600,597. The adjustment resulted in an increase to beginning net position at the fund level and raising the ending net position as follows:

This will carry over to the government wide statements in the business type activity section by increasing the ending net position by the adjustment amount.

NET POSITION, BEGINNING 7,102,228$ 2,849,194$ 1,807,932$ 11,759,354$

PRIOR PERIOD ADJUSTMENT 600,597 - - 600,597

NET POSITION, ENDING 8,405,745$ 2,806,156$ 1,984,015$ 13,195,916$

REQUIRED SUPPLEMENTARY INFORMATION

Budgetary Comparison Schedule

- General Fund

- Street and Pathway Fund

Schedule of the Proportionate Share of the Net Pension Liability

Schedule of Contributions

Required supplementary information includes financial information and disclosures that are required bythe GASB but are not considered a part of the basic financial statements.

REQUIRED SUPPLEMENTARY INFORMATION

49

CITY OF CORNELIUS, OREGONGENERAL FUND - BUDGETARY BASISSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

Variance withOriginal Final Actual Final Budget

REVENUES: Property taxes 2,517,069$ 2,517,069$ 2,678,714$ 161,645$ Franchise fees 705,750 705,750 742,384 36,634 Licenses, permits and fees 719,850 719,850 709,466 (10,384) Intergovernmental 645,116 666,242 654,556 (11,686) Grants 614,594 814,886 442,321 (372,565) Fines and forfeitures 91,160 91,160 76,367 (14,793) Interest revenue 2,000 2,000 11,236 9,236 Miscellaneous revenue 38,700 103,200 150,419 47,219

Total revenues 5,334,239 5,620,157 5,465,463 (154,694)

EXPENDITURES:General government 623,496 702,496 564,437 138,059 Public safety 3,257,460 3,483,027 3,337,535 145,492 Culture and recreation 581,207 604,333 567,292 37,041 Capital outlay 431,750 494,175 164,034 330,141 Debt service: Principal 43,000 50,900 50,384 516 Interest 14,300 14,300 14,230 70 Contingency 707,662 723,015 - 723,015

Total expenditures 5,658,875 6,072,246 4,697,912 1,374,334

Revenues over (under) expenditures (324,636) (452,089) 767,551 1,219,640

OTHER FINANCING SOURCES (USES):Transfers in 305,643 305,643 305,643 - Transfers out (3,044,773) (3,044,773) (3,044,773) -

Total other financing sources (uses) (2,739,130) (2,739,130) (2,739,130) -

Net change in fund balance (3,063,766) (3,191,219) (1,971,579) 1,219,640

FUND BALANCES, BEGINNING BUDGETARY BASIS 3,063,766 3,191,219 3,191,219 -

FUND BALANCES, ENDING BUDGETARY BASIS -$ -$ 1,219,640 1,219,640$

Interfund payable (141,421)

FUND BALANCES, ENDING 1,078,219$

Budget

50

CITY OF CORNELIUS, OREGONSTREET AND PATHWAY FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Licenses, permits and fees 193,560$ 193,560$ 211,149$ 17,589$ Intergovernmental 740,400 740,400 748,685 8,285 Grants 1,500,000 1,500,000 - (1,500,000) Interest revenue 5,000 5,000 8,630 3,630 Miscellaneous revenue - - 3,463 3,463

Total revenues 2,438,960 2,438,960 971,927 (1,467,033)

EXPENDITURES:Personnel service 498,603 502,003 503,083 (1,080) Materials and service 217,340 213,940 161,688 52,252 Capital outlay 3,092,799 2,582,556 274,599 2,307,957 Debt service: Principal 10,400 10,400 10,383 17 Interest 3,750 3,750 2,900 850 Contingency 643,884 643,884 - 643,884

Total expenditures 4,466,776 3,956,533 952,653 3,003,880

Revenues over (under) expenditures (2,027,816) (1,517,573) 19,274 1,536,847

OTHER FINANCING SOURCES (USES):Transfers in 1,187,740 1,187,740 322,645 (865,095) Transfers out (263,075) (263,075) (262,603) 472

Total other financing sources (uses) 924,665 924,665 60,042 (864,623)

Net change in fund balance (1,103,151) (592,908) 79,316 672,224

FUND BALANCES, BEGINNING BUDGETARY BASIS 1,103,151 592,908 592,908 -

FUND BALANCES, ENDING BUDGETARY BASIS -$ -$ 672,224 672,224$

Interfund payable (62,300)

FUND BALANCES, ENDING 609,924$

Budget

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CITY OF CORNELIUS, OREGONSCHEDULE OF THE PROPORTIONATE SHARE OF THE NET PENSION LIABILITYFor the Last Three Fiscal Years

(b/c)City's

(a) (b) Plan fiduciaryCity's City's (c) net position as

Measurement proportion of proportionate share City's a percentage of Date the net pension of the net pension covered the total pension

June 30, liability (asset) liability (asset) payroll liability

2015 0.02968924% 1,704,596$ 2,091,115$ 81.52% 91.90%2014 0.02828721% (641,190) 3,109,461 -20.62% 103.60%2013 0.02828721% 673,613 2,993,858 22.50% 91.97%

proportionate share of the net pension

liability (asset) as a percentage of its covered payroll

The amounts presented for each fiscal year were actuarial determined at December 31 and rolled forward to the measurement date.

This schedule is presented to illustrate the requirements to show information for 10 years. However, until a full 10-year trend has been compiled, information is presented only for the years for which the required supplementary information is available.

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CITY OF CORNELIUS, OREGONSCHEDULE OF CONTRIBUTIONSFor the Last Three Fiscal Years

(b) (b/c)(a) Contributions in (a-b) (c) Contributions

Year Statutorily relation to the Contribution City's as a percentEnded required statutorily required deficiency covered of covered

June 30, contribution contribution (excess) payroll payroll

2016 231,899$ 231,899$ -$ 2,214,870 10.47%2015 733,439 733,439 - 2,091,115 35.07%2014 764,158 764,158 - 3,109,461 24.58%

The amounts presented for each fiscal year were actuarial determined at December 31 and rolled forward to themeasurement date.

This schedule is presented to illustrate the requirements to show information for 10 years. However, until a full 10-yeartrend has been compiled, information is presented only for the years for which the required supplementary information isavailable.

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CITY OF CORNELIUS, OREGON NOTES TO THE REQUIRED SUPPLEMENTARY INFORMATION June 30, 2016

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Stewardship, Compliance, and Accountability A. Budgetary Information

On or before June 30 of each year, the City enacts a resolution approving the budget, appropriating the expenditures, and levying the property taxes. The City’s budget is presented on the modified accrual basis of accounting which is the same basis as GAAP. Prior to enacting this resolution, the proposed budget is presented to a budget committee consisting of members of the City Council and a like number of interested citizens. The budget committee presents the budget to the City Council for budget hearings prior to enactment of the resolution. The City budgets all funds as required by Oregon Local Budget Law. The resolution authorizing appropriations for each fund sets the legal level of control by which expenditures cannot legally exceed appropriations. Total expenditures by department as established by the resolution are the legal level of control for the General Fund. Expenditure categories of personal services, materials and services, capital outlay, debt service, transfers, and contingency are the legal level of control for all other funds. The detail budget document, however, is required to contain more specific information for the above mentioned expenditure categories. Unexpected additional resources may be added to the budget through the use of a supplemental budget. A supplemental budget requires hearings before the public, publications in newspapers, and adoption by the City Council. Management may modify original and supplemental budgets by the use of appropriation transfers between the legal levels of control within a fund. Such transfers require approval by the City Council. Management may not amend the budget without seeking the approval of the Council. The City had four supplemental budgets during the year-ended June 30, 2016. Appropriations lapse as of year-end.

B. Changes in Plan Provisions

A summary of key changes in plan provisions are described in the Oregon Public Employees Retirement System’s GASB 68 Disclosure Information which can be found at: http://www.oregon.gov/pers/EMP/docs/er_general_information/opers_gasb_68_disclosure_information_revised.pdf

C. Changes of assumptions

A summary of key changes implemented since the December 31, 2011 valuation are described in the Oregon Public Employees Retirement System’s GASB 68 Disclosure Information which can be found at: http://www.oregon.gov/pers/EMP/docs/er_general_information/opers_gasb_68_disclosure_information_revised.pdf Additional details and a comprehensive list of changes in methods and assumptions can be found in the 2012 Experience Study for the System, which was published on September 18, 2013, and can be found at:

http://www.oregon.gov/pers/docs/2012%20Exp%20Study%20Updated.pdf

Other supplementary information includes financial schedules not required by the GASB, nor a part of the basicfinancial statements, but are presented for purposes of additional analysis.

OTHER SUPPLEMENTARY INFORMATION

Such schedules include:

Combining Statement – Nonmajor Governmental Funds

Budgetary Comparison Schedules

Budgetary Comparison Schedules – Enterprise Funds

Budgetary Comparison Schedules – Internal Service Fund

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Special Revenue Funds

Building Inspection Fund

Parks SDC Fund

Traffic Development FundThe Traffic Development Fund tracks revenues of the Transportation Development Tax (TDT) and the TrafficImpact Fee (TIF) programs. These programs were initiated throughout all of Washington County to charge newgrowth and development for the impact to arterial and collector designated streets. These funds can only bespent on arterial and collector streets that must be designated by the Washington County CoordinatingCommittee and adopted by the Washington County Commission. These funds are transferred to, and expendedby, the Street and Pathway Fund for capital projects.

COMBINING SCHEDULES

The Building Inspection Fund accounts for revenues and expenditures relating to building inspection contractedthrough the City of Forest Grove, Oregon.

The Parks SDC Fund is used to account for revenues from the Parks Systems Development Charges. Thesefunds are to be used to provide new and upgraded play equipment, picnic tables, lighting, irrigation, and landpurchases for new parks to accommodate growth.

Nonmajor Governmental Funds

These funds account for revenue derived from specific taxes or other earmarked revenue sources, which arelegally restricted to expenditures for specified purposes. Funds included in this category are:

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CITY OF CORNELIUS, OREGONNONMAJOR SPECIAL REVENUE FUNDSCOMBINING BALANCE SHEETJune 30, 2016

Building Inspection

FundParks SDC

Fund

Traffic Development

Fund Total

Cash and cash equivalents 1,137$ 182,378$ 223,423$ 406,938$

Total assets 1,137$ 182,378$ 223,423$ 406,938$

FUND BALANCES:Restricted for:

Street and roadside maintenance -$ -$ 223,418$ 223,418$ Assigned to:

Building and engineering 1,137 - - 1,137

Parks capital projects - 182,378 - 182,378

Total fund balances 1,137$ 182,378$ 223,418$ 406,933$

ASSETS:

ASSETS AND DEFERRED OUTFLOWS OF RESOURCES

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CITY OF CORNELIUS, OREGONNONMAJOR SPECIAL REVENUE FUNDSCOMBINING SCHEDULE OF REVENUES, EXPENDITURES,AND CHANGES IN FUND BALANCESFor the Fiscal Year Ended June 30, 2016

Building Inspection

FundParks SDC

Fund

Traffic Development

Fund TotalREVENUES:

Licenses, permits and fees -$ 36,286$ 41,176$ 77,462$ Interest revenue 6 876 1,088 1,970

Total revenues 6 37,162 42,264 79,432

Revenues over (under) expenditures 6 37,162 42,264 79,432

Net change in fund balance 6 37,162 42,264 79,432

FUND BALANCES, BEGINNING 1,131 145,216 181,154 327,501

FUND BALANCES, ENDING 1,137$ 182,378$ 223,418$ 406,933$

58

General Fund Schedule of Expenditures - Budgetary Basis Bancroft Debt Service Fund Library Capital Project Fund

Nonmajor Governmental Budgetary Comparison schedules included the following:

Special Revenue Funds

- Building Inspection Fund- Parks SDC Fund- Traffic Development Fund

Pursuant to the provisions of Oregon Revised Statute, an individualschedule of revenues, expenditures,and changes in fund balances - budget and actual be displayed for each fund where legally adoptedbudgets are required.

BUDGETARY COMPARISON SCHEDULES

Major Governmental Budgetary Comparison schedules not included in required supplemental information include the following:

59

SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL


Police operations: Personnel services 44,468$ 50,568$ 48,012$ 2,556$ Materials and services 2,030,708 2,110,708 2,100,791 9,917

Subtotal 2,075,176 2,161,276 2,148,803 12,473

Municipal court: Materials and services 6,000 6,000 3,538 2,462

Subtotal 6,000 6,000 3,538 2,462

Fire services: Personnel services 535,324 572,924 539,759 33,165 Materials and services 322,865 406,732 352,892 53,840 Capital outlay 9,500 16,925 15,310 1,615

Debt Service:Principal 19,000 26,900 26,814 86 Interest 7,700 7,700 7,647 53

Subtotal 894,389 1,031,181 942,422 88,759

Parks: Personnel services 79,402 82,802 78,825 3,977 Materials and services 75,970 74,570 74,371 199 Capital outlay 422,250 477,250 148,724 328,526

Subtotal 577,622 634,622 301,920 332,702

Other - planning and development: Personnel services 226,790 202,790 177,466 25,324 Materials and services 52,205 152,205 63,746 88,459

Subtotal 278,995 354,995 241,212 113,783

Engineering: Personnel services 299,443 299,443 293,971 5,472 Materials and services 17,145 17,145 5,230 11,915

Subtotal 316,588 316,588 299,201 17,387

Library: Personnel services 373,085 391,004 358,387 32,617 Materials and services 52,750 55,957 53,775 2,182

Grants - - 1,934 (1,934)

Subtotal 425,835 446,961 414,096 32,865

Other - Council: Personnel services 6,663 6,663 3,230 3,433 Materials and services 8,300 8,300 6,648 1,652

Subtotal 14,963 14,963 9,878 5,085

Fire Local option levy Personnel services 318,095 336,095 292,543 43,552

Subtotal 318,095 336,095 292,543 43,552

Non-departmental: Materials and services 12,950 15,950 14,146 1,804

Debt Service:Principal 24,000 24,000 23,570 430 Interest 6,600 6,600 6,583 17

Subtotal 43,550 46,550 44,299 2,251

Total expenditures 4,951,213$ 5,349,231$ 4,697,912$ 651,319$

Budget

CITY OF CORNELIUS, OREGONGENERAL FUND - BUDGETARY BASIS


60

CITY OF CORNELIUS, OREGONBANCROFT DEBT SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Assessments 191,000$ 191,000$ 169,233$ (21,767)$ Interest revenue 400 400 2,061 1,661

Total revenues 191,400 191,400 171,294 (20,106)

EXPENDITURES:Debt service: Principal 238,000 238,000 238,000 - Interest 45,920 45,920 45,901 19

Total expenditures 283,920 283,920 283,901 19

Revenues over (under) expenditures (92,520) (92,520) (112,607) (20,087)

OTHER FINANCING SOURCES (USES):Transfers in 130,000 130,000 130,000 -

Total other financing sources (uses) 130,000 130,000 130,000 -

Net change in fund balance 37,480 37,480 17,393 (20,087)

FUND BALANCES, BEGINNING 322,404 370,723 370,723 -

FUND BALANCES, ENDING 359,884$ 408,203$ 388,116$ (20,087)$

Budget

61

CITY OF CORNELIUS, OREGONLIBRARY CAPITAL PROJECT FUND SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Grants 1,100,000$ 1,100,000$ 500,000$ (600,000) Interest revenue 4,000 13,000 15,444 2,444 Donations 1,450,000 1,450,000 28,200 (1,421,800)

Total revenues 2,554,000 2,563,000 543,644 (2,019,356)

EXPENDITURES:Materials and service 32,000 56,000 57,976 (1,976) Contingency 4,922,000 4,907,000 - 4,907,000

Total expenditures 4,954,000 4,963,000 57,976 4,905,024


OTHER FINANCING SOURCES (USES):Transfers in 2,400,000 2,400,000 2,400,000 -

Total other financing sources (uses) 2,400,000 2,400,000 2,400,000 -

Net change in fund balance - - 2,885,668 2,885,668

FUND BALANCES, BEGINNING BUDGETARY BASIS - - - -

FUND BALANCES, ENDING BUDGETARY BASIS -$ -$ 2,885,668 2,885,668$

Budget

62

CITY OF CORNELIUS, OREGONBUILDING INSPECTION FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Interest revenue -$ -$ 6$ 6

Total revenues - - 6 6

EXPENDITURES:Materials and service 1,000 1,131 - 1,131

Total expenditures 1,000 1,131 - 1,131

Revenues over (under) expenditures (1,000) (1,131) 6 1,137

Net change in fund balance (1,000) (1,131) 6 1,137


FUND BALANCES, ENDING -$ -$ 1,137$ 1,137$

Budget

63

CITY OF CORNELIUS, OREGONPARKS SDC FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Licenses, permits and fees 45,450$ 45,450$ 36,286$ (9,164)$ Interest revenue 600 600 876 276

Total revenues 46,050 46,050 37,162 (8,888)

EXPENDITURES:Contingency 182,097 191,266 - 191,266


Revenues over (under) expenditures (136,047) (145,216) 37,162 182,378

Net change in fund balance (136,047) (145,216) 37,162 182,378



Budget

64

CITY OF CORNELIUS, OREGONTRAFFIC DEVELOPMENT FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Licenses, permits and fees 168,035$ 168,035$ 41,176$ (126,859)$ Interest revenue 4,000 4,000 1,088 (2,912)

Total revenues 172,035 172,035 42,264 (129,771)



Revenues over (under) expenditures 28,475 (62,679) 42,264 104,943

OTHER FINANCING SOURCES (USES):Transfers out (118,475) (118,475) - 118,475

Total other financing sources (uses) (118,475) (118,475) - 118,475

Net changes in fund balances (90,000) (181,154) 42,264 223,418



Budget

65

Enterprise Budgetary Comparison schedules include the following:

Water Operations

- Water Fund- Water Capital Asset Fund

Sewer Operations

- Sewer Fund- Sewer Capital Asset Fund

Storm Drain Operations

- Storm Drain Fund- Storm Drain Capital Asset Fund

BUDGETARY COMPARISON SCHEDULES

Pursuant to the provisions of Oregon Revised Statute, an individualschedule of revenues, expenditures,and changes in fund balances - budget and actual be displayed for each fund where legally adoptedbudgets are required.

Enterprise Funds

66

CITY OF CORNELIUS, OREGONWATER OPERATIONS COMBINEDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEFor the Fiscal Year Ended June 30, 2016

Water FundWater Capital

Asset FundTotal Water Operations

REVENUES:Licenses, permits and fees 29,271$ 15,536$ 44,807$ Charges for services 2,409,008 - 2,409,008 Interest revenue 15,563 4,856 20,419 Miscellaneous revenue 9,557 - 9,557

Total revenues 2,463,399 20,392 2,483,791

EXPENDITURES:Personnel service 86,826 - 86,826 Materials and service 926,815 - 926,815 Capital outlay 896,889 - 896,889

Total expenditures 1,910,530 - 1,910,530

Revenues over (under) expenditures 552,869 20,392 573,261

OTHER FINANCING SOURCES (USES):Loan proceeds 475,269 - 475,269 Transfers in 51,675 - 51,675 Transfers out (587,871) (87,879) (675,750)

Total other financing sources (uses) (60,927) (87,879) (148,806)

Net change in fund balance 491,942 (67,487) 424,455

FUND BALANCE, BEGINNING BUDGETARY BASIS 2,575,849 878,837 3,454,686

PRIOR PERIOD ADJUSTMENT (605) - (605)

FUND BALANCE, ENDING BUDGETARY BASIS 3,067,186$ 811,350$ 3,878,536$

RECONCILIATION TO NET POSITION - GAAP BASISInventories 62,670Capital assets, net 5,661,201Deferred outflows related to pensions 7,308 Noncurrent portion of long-term debt (1,153,818) Deferred inflows related to pensions (2,557) Net Pension Liability (47,595)

NET POSITION 8,405,745$

67

CITY OF CORNELIUS, OREGONWATER FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive

Original Final Actual (Negative)REVENUES:

Licenses, permits and fees 33,494$ 33,494$ 29,271$ (4,223)$ Charges for services 2,329,300 2,329,300 2,409,008 79,708 Interest revenue 7,500 7,500 15,563 8,063 Miscellaneous revenue - - 9,557 9,557

Total revenues 2,370,294 2,370,294 2,463,399 93,105

EXPENDITURES:Personnel service 87,629 87,629 86,826 803 Materials and service 1,432,204 1,432,204 926,815 505,389 Capital outlay 2,784,786 2,784,786 896,889 1,887,897 Contingency 2,078,255 2,170,599 - 2,170,599

Total expenditures 6,382,874 6,475,218 1,910,530 4,564,688


OTHER FINANCING SOURCES (USES):Loan proceeds 2,295,586 2,295,586 475,269 (1,820,317) Transfers in 80,000 80,000 51,675 (28,325) Transfers out (838,343) (846,511) (587,871) 258,640

Total other financing sources (uses) 1,537,243 1,529,075 (60,927) (1,590,002)

Net change in fund balance (2,475,337) (2,575,849) 491,942 3,067,791

FUND BALANCE, BEGINNING BUDGETARY BASIS 2,475,337 2,575,849 2,575,849 -

PRIOR PERIOD ADJUSTMENT - - (605) (605)

FUND BALANCE, ENDING BUDGETARY BASIS -$ -$ 3,067,186$ 3,067,186$

Budget

68

CITY OF CORNELIUS, OREGONWATER CAPITAL ASSET FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive


Licenses, permits and fees 42,722$ 42,722$ 15,536$ (27,186)$ Interest revenue 3,000 3,000 4,856 1,856

Total revenues 45,722 45,722 20,392 (25,330)




OTHER FINANCING SOURCES (USES):Transfers out (512,824) (512,824) (87,879) 424,945

Total other financing sources (uses) (512,824) (512,824) (87,879) 424,945

Net change in fund balance (855,756) (878,837) (67,487) 811,350

FUND BALANCE, BEGINNING BUDGETARY BASIS 855,756 878,837 878,837 -

FUND BALANCE, ENDING BUDGETARY BASIS -$ -$ 811,350$ 811,350$

Budget

69

CITY OF CORNELIUS, OREGONSEWER OPERATIONS COMBINEDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEFor the Fiscal Year Ended June 30, 2016

Sewer FundSewer Capital

Asset FundTotal Sewer Operations

REVENUES:Licenses, permits and fees 61,200$ 2,786$ 63,986$ Charges for services 2,226,595 - 2,226,595 Interest revenue 4,470 6,527 10,997 Miscellaneous revenue 5,146 - 5,146

Total revenues 2,297,411 9,313 2,306,724

EXPENDITURES:Personnel service 113,825 - 113,825 Materials and service 1,741,481 - 1,741,481 Capital outlay 5,228 - 5,228

Total expenditures 1,860,534 - 1,860,534


OTHER FINANCING SOURCES (USES):Transfers in 22,903 - 22,903 Transfers out (411,052) - (411,052)

Total other financing sources (uses) (388,149) - (388,149)

Net change in fund balance 48,728 9,313 58,041

FUND BALANCE, BEGINNING BUDGETARY BASIS 858,910 1,185,141 2,044,051


FUND BALANCE, ENDING BUDGETARY BASIS 907,035$ 1,194,454$ 2,101,489$

RECONCILIATION TO NET POSITION - GAAP BASISCapital assets, net 755,998Deferred outflows related to pensions 9,226 Inventories 3,092 Deferred inflows related to pensions (2,490) Net Pension Liability (61,159)


70

CITY OF CORNELIUS, OREGONSEWER FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive

Original Final Actual (Negative)

REVENUES:Licenses, permits and fees 66,100$ 66,100$ 61,200$ (4,900)$ Charges for services 2,350,000 2,350,000 2,226,595 (123,405) Interest revenue 3,000 3,000 4,470 1,470 Miscellaneous revenue - - 5,146 5,146

Total revenues 2,419,100 2,419,100 2,297,411 (121,689)

EXPENDITURES:Personnel service 114,049 114,049 113,825 224 Materials and service 1,967,009 1,967,009 1,741,481 225,528 Capital outlay 34,200 34,200 5,228 28,972 Contingency 616,035 674,131 - 674,131

Total expenditures 2,731,293 2,789,389 1,860,534 928,855


OTHER FINANCING SOURCES (USES):Transfers in 22,903 22,903 22,903 - Transfers out (511,524) (511,524) (411,052) 100,472

Total other financing sources (uses) (488,621) (488,621) (388,149) 100,472





Budget

71

CITY OF CORNELIUS, OREGONSEWER CAPITAL ASSET FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive

Original Final Actual (Negative)

REVENUES:Licenses, permits and fees 3,016$ 3,016$ 2,786$ (230)$ Interest revenue 4,000 4,000 6,527 2,527

Total revenues 7,016 7,016 9,313 2,297

EXPENDITURES:Contingency 1,187,810 1,192,157 - 1,192,157

Total expenditures 1,187,810 1,192,157 - 1,192,157

Net change in fund balance (1,180,794) (1,185,141) 9,313 1,194,454

FUND BALANCE, BEGINNING BUDGETARY BASIS 1,180,794 1,185,141 1,185,141 -

FUND BALANCE, ENDING BUDGETARY BASIS -$ -$ 1,194,454$ 1,194,454$

Budget

72

CITY OF CORNELIUS, OREGONSTORM DRAIN OPERATIONS COMBINEDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCEFor the Fiscal Year Ended June 30, 2016

Storm Drain Fund

Storm Drain Capital Asset

Fund

Total Storm Drain

Operations

REVENUES:Licenses, permits and fees -$ 6,443$ 6,443$ Grants 74,895 - 74,895Charges for services 893,840 - 893,840 Interest revenue 4,102 187 4,289

Total revenues 972,837 6,630 979,467

EXPENDITURES:Personnel service 179,271 - 179,271 Materials and service 207,349 - 207,349 Capital outlay 268,850 - 268,850 Debt service: Principal - 2,596 2,596 Interest - 725 725

Total expenditures 655,470 3,321 658,791


OTHER FINANCING SOURCES (USES):Transfers in 73,506 - 73,506 Transfers out (401,442) - (401,442)

Total other financing sources (uses) (327,936) - (327,936)

Net change in fund balance (10,569) 3,309 (7,260)

FUND BALANCE, BEGINNING BUDGETARY BASIS 911,443 33,161 944,604


FUND BALANCE, ENDING BUDGETARY BASIS 899,906$ 36,470$ 936,376$

RECONCILIATION TO NET POSITION - GAAP BASISCapital assets, net 1,137,147Deferred outflows related to pensions 13,313 Inventories 1,062 Debt Service Payment (15,573) Deferred inflows related to pensions (11,254) Net Pension Liability (77,056)


73

CITY OF CORNELIUS, OREGONSTORM DRAIN FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive


Grants 37,448$ 74,894$ 74,895$ 1$ Charges for services 895,000 895,000 893,840 (1,160) Interest revenue 1,500 1,500 4,102 2,602 Miscellaneous revenue - - - -

Total revenues 933,948 971,394 972,837 1,443

EXPENDITURES:Personnel service 175,083 175,083 179,271 (4,188) Materials and service 245,350 257,850 207,349 50,501 Capital outlay 117,700 280,700 268,850 11,850 Contingency 968,044 840,796 - 840,796

Total expenditures 1,506,177 1,554,429 655,470 898,959


OTHER FINANCING SOURCES (USES):Transfers in 73,506 73,506 73,506 - Transfers out (401,914) (401,914) (401,442) 472

Total other financing sources (uses) (328,408) (328,408) (327,936) 472

Net change in fund balance (900,637) (911,443) (10,569) 900,874

FUND BALANCE, BEGINNING BUDGETARY BASIS 900,637 911,443 911,443 - .



Budget

74

CITY OF CORNELIUS, OREGONSTORM DRAIN CAPITAL ASSET FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016

VariancePositive


Licenses, permits and fees 17,112$ 17,112$ 6,443$ (10,669)$ Interest revenue - - 187 187

Total revenues 17,112 17,112 6,630 (10,482)

EXPENDITURES:Debt service: Principal 2,600 2,600 2,596 4 Interest 950 950 725 225 Contingency 15,132 46,723 - 46,723

Total expenditures 18,682 50,273 3,321 46,952




Budget

75


- Internal Service Fund

BUDGETARY COMPARISON SCHEDULESInternal Service Funds

Pursuant to the provisions of Oregon Revised Statute, an individual schedule of revenues,expenditures, and changes in fund balances - budget and actual be displayed for each fund wherelegally adopted budgets are required.

76

CITY OF CORNELIUS, OREGONINTERNAL SERVICE FUNDSCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUALFor the Fiscal Year Ended June 30, 2016


REVENUES:Licenses, permits and fees 10,000$ 10,000$ 15,525$ 5,525$ Intergovernmental 18,009 18,009 18,732 723 Grants 21,000 61,000 32,406 (28,594) Interest revenue 1,200 1,200 1,331 131 Miscellaneous revenue 14,500 14,500 15,261 761

Total revenues 64,709 104,709 83,255 (21,454)

EXPENDITURES:Personnel services 975,954 983,954 899,946 84,008 Material services 695,385 721,330 627,046 94,284 Capital outlay 34,000 34,000 32,831 1,169 Contingency 42,139 139,401 - 139,401

Total expenditures 1,747,478 1,878,685 1,559,823 318,862

Revenues over (under) expenditures (1,682,769) (1,773,976) (1,476,568) 297,408

OTHER FINANCING SOURCES (USES):Transfers in 1,491,136 1,499,304 1,489,248 (10,056)

Total other financing sources (uses) 1,491,136 1,499,304 1,489,248 (10,056)




Revenues ExpendituresTotal revenue and expenditures above 83,255$ 1,559,823$ Transfers in/out 1,489,248 -

Total revenues and expenses-generally accepted accounting principles 1,572,503$ 1,559,823

Change in net position 12,680$

Budget

77

SCHEDULE OF EXPENDITURES - BUDGET AND ACTUAL


Support Services:Administrative 1,005,294$ 1,015,294$ 960,240$ 55,054$ Support Services-PW 222,525 222,525 216,491 6,034 Facilities 402,820 426,765 323,609 103,156 IT 72,000 72,000 59,150 12,850

Support Services Total 1,702,639 1,736,584 1,559,490 177,094

Non-Departmental 2,700 2,700 333 2,367

Total expenditures 1,705,339$ 1,739,284$ 1,559,823$ 179,461$

CITY OF CORNELIUS, OREGONINTERNAL SERVICE FUND


Budget

78

STATISTICAL SECTION

Contents Page

Financial Trends 80

Revenue Capacity 85

Debt Capacity 92

Demographic and Economic Information 97

Operating Information 100

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year.

STATISTICAL SECTION

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

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

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

This part of the City of Cornelius' comprehensive annual financial report presents detailed information as a context for understanding the information in the financial statements, note disclosures, required supplementary information, and other supplementary information says about the City's overall financial health.

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

These schedules contain information to help the reader assess the city's most significant local revenue source, the property tax.

79

FINANCIAL TRENDS

CITY OF CORNELIUS , OREGONNET POSITION BY COMPONENTLast Ten Fiscal Years(accrual basis of accounting)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Governmental activities

Net investment in capital assets 13,093,001$ 23,417,844$ 26,991,058$ 27,452,709$ 27,970,024$ 27,836,634$ 29,024,906$ 32,475,589$ 34,559,585$ 34,766,088$

Restricted 164,332 101,812 - 2,609,627 2,691,592 2,731,403 1,757,252 3,472,102 4,107,126

Unrestricted 15,815,264 6,101,290 4,690,656 4,605,603 2,136,533 2,162,276 1,650,725 1,749,887 1,315,791 385,034

Total governmental activities net position 29,072,597$ 29,620,946$ 31,681,714$ 32,058,312$ 32,716,184$ 32,690,502$ 33,407,034$ 35,982,728$ 39,347,478$ 39,258,248$

Business-type activities


Restricted* - 2,097,139 2,042,263

Unrestricted* 3,205,702 3,038,526 3,733,202 4,554,334 5,134,146 5,995,997 5,999,698 6,484,232 4,449,941 4,966,457

Total business-type activities net position 7,695,681$ 7,774,853$ 8,384,869$ 9,297,268$ 9,931,616$ 10,700,808$ 11,642,070$ 12,080,589$ 11,848,706$ 13,292,258$

Primary government


Restricted 164,332 101,812 - 2,609,627 2,691,592 2,731,403 1,757,252 5,569,241 6,149,389

Unrestricted 19,020,966 9,139,816 8,423,858 9,159,937 7,270,679 8,158,273 7,650,423 8,234,119 5,765,732 5,351,491

Total primary government net position 36,768,278$ 37,395,799$ 40,066,583$ 41,355,580$ 42,647,800$ 43,391,310$ 45,049,104$ 48,063,317$ 51,196,184$ 52,550,506$

Note: *Business Type Activites was reclassified from prior years

Fiscal Year

80

CITY OF CORNELIUS , OREGONCHANGES IN NET POSITIONLast Ten Fiscal Years(accrual basis of accounting)

Expenses 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016Governmental activities:

General government 1,068,955$ 1,351,423$ 1,380,139$ 1,486,245$ 1,698,129$ 1,253,580$ 1,085,808$ 1,294,587$ 802,705$ 1,619,638$ Public safety 3,966,138 2,996,133 3,107,644 3,227,903 3,149,388 3,190,923 3,330,799 3,072,017 3,027,540 4,145,025 Highways and streets 713,834 990,970 724,432 755,969 833,645 793,239 838,550 804,279 929,062 1,064,969

Culture and recreation 368,707 399,751 520,314 575,709 556,916 538,471 582,711 568,848 755,104 855,833

Interest on long-term debt 276,664 267,629 227,008 215,714 224,584 213,820 146,709 68,987 67,031 62,141

Total governmental activities expenses 6,394,298 6,005,906 5,959,537 6,261,540 6,462,662 5,990,033 5,984,577 5,808,718 5,581,442 7,747,606

Business-type activities:Water 1,187,954$ 1,217,608$ 1,605,823$ 1,635,493$ 1,475,401$ 1,489,088$ 1,660,700$ 1,545,986$ 2,067,833$ 1,423,348$ Sewer 1,501,135 1,568,812 1,387,587 1,586,161 1,525,503 1,787,339 1,834,057 2,131,554 2,235,607 2,296,952 Storm Drain 367,905 281,257 184,998 197,189 339,250 417,978 496,244 443,081 604,990 733,401

Total business-type activities expenses 3,056,994 3,067,677 3,178,408 3,418,843 3,340,154 3,694,405 3,991,001 4,120,621 4,908,430 4,453,701

Total primary government expenses 9,451,292$ 9,073,583$ 9,137,945$ 9,680,383$ 9,802,816$ 9,684,438$ 9,975,578$ 9,929,339$ 10,489,872$ 12,201,307$

Program RevenuesGovernmental activities:Charges for services:

General government 1,135,767$ 982,360$ 745,122$ 1,005,926$ 608,701$ 985,945$ 602,358$ 319,308$ 929,300$ 781,537$ Culture and recreation 83,577 54,556 10,715 67,536 4,471 17,032 19,895 21,477 17,884 36,286 Public Safety 365,339 139,671 16,950 - 1,043,270 353,123 358,088 317,646 94,510 76,367

Highways and Streets 78,982 - 64,359 - 53,952 323,104 190,412 200,566 211,149 Interest in Long Term Debt 317,368 488,727 701,573 392,641 324,008 227,923 - - - -

Operating grants and contributions 1,617,844 59,334 195,162 187,818 151,836 381,040 607,911 473,660 600,934 268,672 Capital grants and contributions 1,000,000 404,485 2,501,730 536,236 10,250 409,892 2,245,014 2,870,808 716,391

Total governmental activities program revenues 4,598,877 2,129,133 4,171,252 1,718,280 2,668,522 2,029,265 2,321,248 3,567,517 4,714,002 2,090,402

Business-type activities:Charges for services:

Water 1,499,160 1,566,926 1,761,472 2,140,353 1,745,223 1,839,279 1,829,847 2,031,432 2,319,854 2,467,815 Sewer 1,779,553 1,851,479 1,836,487 2,045,692 1,932,505 2,045,571 2,056,322 2,139,016 2,286,762 2,308,193 Storm Drain 357,419 411,684 507,909 590,566 677,397 743,836 788,361 821,226 904,457 913,831 Operating grants and contributions - - - - 74,895 Capital grants and contributions - - - -

Total business-type activities program revenues 3,636,132 3,830,089 4,105,868 4,776,611 4,355,125 4,628,686 4,674,530 4,991,674 5,511,073 5,764,734

Total primary government program revenues 8,235,009$ 5,959,222$ 8,277,120$ 6,494,891$ 7,023,647$ 6,657,951$ 6,995,778$ 8,559,191$ 10,225,075$ 7,855,136$

Net (expense)/revenueGovernmental activities (1,795,421) (3,876,773) (1,788,285) (4,543,260) (3,794,140) (3,960,768) (3,663,329) (2,241,201) (867,440) (5,657,204) Business-type activities 579,138 762,412 927,460 1,357,768 1,014,971 934,281 683,529 871,053 602,643 1,311,033

Total primary government net expense (1,216,283)$ (3,114,361)$ (860,825)$ (3,185,492)$ (2,779,169)$ (3,026,487)$ (2,979,800)$ (1,370,148)$ (264,797)$ (4,346,171)$

General Revenues and Other Changes in Net PositionGovernmental activities:

TaxesProperty taxes 1,810,915 1,852,678 1,900,932 1,921,755 2,105,470 2,159,525 2,178,949 2,247,586 2,316,868 2,694,055 Public Services taxes - 1,060,658 1,002,160 1,164,982 1,418,322 1,037,579 1,355,211 1,394,095 1,324,126 1,411,647 Franchise taxes 370,963 384,248 448,741 424,655 401,479 448,913 454,643 620,716 784,607 742,384 Motor fuel taxes - - - - - - - - - - Alcoholic beverage taxes - - - - - - - - - -

Unrestricted grants and contributions - - - - - - - - - - Investment earnings 237,147 161,555 66,067 22,483 17,623 19,115 19,481 17,680 18,003 39,938 Miscellaneous 224,839 123,705 52,241 912,073 123,384 74,636 66,761 73,589 130,409 160,730 Gain (loss) on disposal of capital assets - - - - - - - - - - Transfers 233,240 842,278 378,912 473,910 405,991 195,318 (171,542) 463,229 781,436 519,220

Total governmental activities 2,877,104$ 4,425,122$ 3,849,053$ 4,919,858$ 4,472,269$ 3,935,086$ 3,903,503$ 4,816,895$ 5,355,449$ 5,567,974$

Business-type activities: Franchise Taxes - - - - - - - - - -

Investment earnings 135,578 133,123 61,159 26,340 21,989 27,544 30,388 29,089 32,013 36,439 Miscellaneous 40,942 25,915 309 2,201 3,379 2,685 55,803 1,606 1,987 14,703 Gain (loss) on disposal of capital assets 323 - Transfers (233,240) (842,278) (378,912) (473,910) (405,991) (195,318) 171,542 (463,229) (781,436) (519,220)

Total business-type activities (56,720) (683,240) (317,444) (445,369) (380,623) (165,089) 257,733 (432,534) (747,113) (468,078)

Total primary government 2,820,384$ 3,741,882$ 3,531,609$ 4,474,489$ 4,091,646$ 3,769,997$ 4,161,236$ 4,384,361$ 4,608,336$ 5,099,896$

Change in Net PositionGovernmental activities 1,081,683 548,349 2,060,768 376,598 678,129 (25,682) 240,174 2,575,694 4,488,009 (89,230) Business-type activities 522,418 79,172 610,016 912,399 634,348 769,192 941,262 438,519 (144,470) 842,955

Total primary government 1,604,101$ 627,521$ 2,670,784$ 1,288,997$ 1,312,477$ 743,510$ 1,181,436$ 3,014,213$ 4,343,539$ 753,725$

Fiscal Year

81

CITY OF CORNELIUS , OREGONGOVERNMENTAL ACTIVITIES TAX REVENUES BY SOURCELast Ten Fiscal Years(accrual basis of accounting)

Fiscal Year Property Tax Motor Fuel Tax Franchise TaxAlcoholic Beverage

Tax Total2007 1,805,441$ 543,473 370,963 122,292 2,842,169$ 2008 1,841,319$ 516,525 384,248 123,628 2,865,720$ 2009 1,892,927$ 463,596 448,741 131,791 2,937,055$ 2010 1,978,770$ 507,265 424,655 123,809 3,034,499$ 2011 1,986,215$ 791,202 401,479 130,070 3,308,967$ 2012 2,134,465$ 875,733 448,913 151,953 3,611,064$ 2013 2,175,620$ 889,860 454,643 158,753 3,678,876$ 2014 2,241,425$ 913,884 620,716 166,884 3,942,909$ 2015 2,322,062$ 930,989 784,607 171,593 4,209,251$

2016 2,678,714$ 958,274 742,384 170,980 4,550,352$

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

TAX REVENUE BY SOURCE

Property Tax

Motor Fuel Tax

Franchise Tax

Alcoholic Beverage Tax

82

CITY OF CORNELIUS , OREGONFUND BALANCE OF GOVERNMENTAL FUNDSLast Ten Fiscal Years(modified accrual basis of accounting)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016General fund

Committed -$ -$ -$ 175,342$ 175,342$ -$ -$ 2,400,000$ -$ Unassigned 353,387 473,578 570,004 509,248 64,837 160,734 100,962 410,250 626,228 1,078,219

Total general fund 353,387$ 473,578$ 570,004$ 509,248$ 240,179$ 336,076$ 100,962$ 410,250$ 3,026,228$ 1,078,219$

All other governmental fundsRestricted 164,332$ 1,507,727$ 560,798$ 207,657$ Street & roadside maint. 2,461,262$ 2,590,942$ 2,569,858$ 1,466,496$ 701,379$ 833,342$ 911 operations system 404$ 406$ 408$ 410$ -$ -$ Library Capital Projects -$ 2,885,668$ Debt Service payments 147,961$ 100,244$ 161,137$ 290,346$ 370,723$ 388,116$ Assigned Building and Engineering 189,774$ 74,763$ 5,599$ 1,536$ 1,131$ 1,137$ Parks Capital Projects 190,530$ 194,647$ 190,313$ 126,703$ 145,216$ 182,378$ Unassigned, reported in:

Special revenue funds 2,698,127 1,209,636 1,259,458 2,282,165 - - - - - - Debt Service Funds 256,564 463,956 105,256 Capital project funds 310,481 662,025 179,820 10,298 - 10,383 - - - -

Total all other governmental funds 3,172,940$ 3,635,952$ 2,464,032$ 2,605,376$ 2,989,931$ 2,971,385$ 2,927,315$ 1,885,491$ 1,218,449$ 4,290,641$

Total all funds 3,526,327$ 4,109,530$ 3,034,036$ 3,114,624$ 3,230,110$ 3,307,461$ 3,028,277$ 2,295,741$ 4,244,677$ 5,368,860$

Fiscal Year

$-

$500,000

$1,000,000

$1,500,000

$2,000,000

$2,500,000

$3,000,000

$3,500,000

$4,000,000

$4,500,000

$5,000,000

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Governmental Fund Balance

83

CITY OF CORNELIUS , OREGONCHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDSLast Ten Fiscal Years(modified accrual basis of accounting)

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016RevenuesTaxes 1,805,441$ 1,841,319$ 1,892,927$ 1,978,770$ 2,044,249$ 2,134,465$ 2,175,620$ 2,241,425$ 2,322,061$ 2,678,714$ Licenses and permits, fees 1,557,762 1,191,345 895,052 1,256,659 1,723,693 1,012,186 987,465 779,848 1,110,616 998,077 Intergovernmental 1,101,692 1,064,733 1,012,081 1,156,373 1,409,366 1,370,604 1,347,767 1,387,611 1,317,993 1,403,241 Franchise Fees 370,963 384,248 448,741 424,655 401,479 448,913 454,643 620,716 784,607 742,384 Fines 266,018 268,667 216,253 137,448 135,731 188,977 189,020 147,253 94,510 76,367 Investment earnings 236,986 155,927 64,357 22,162 17,492 18,456 18,459 16,997 17,546 39,341 Special assessments 317,368 488,727 701,573 392,641 324,008 227,923 450,649 218,245 242,778 169,233 Grants 1,488,858 449,728 801,013 172,877 670,529 376,754 1,017,803 2,708,056 3,471,742 942,321 Donations - - - - - - - - 28,200 Charges for services - - - - - - - - - Miscellaneous 218,380 104,434 31,088 909,068 110,789 63,755 51,253 65,394 123,721 153,882 Reimbursement - other funds -

Total revenues 7,363,468 5,949,128 6,063,085 6,450,653 6,837,336 5,842,033 6,692,679 8,185,545 9,485,574 7,231,760

ExpendituresGeneral government 247,030$ 783,720$ 730,640$ 828,010$ 664,775$ 725,961$ 529,246$ 569,752$ 612,886$ 622,413$ Public safety 2,518,974 2,520,623 2,676,796 2,790,325 2,707,289 2,801,609 2,983,161 2,844,501 3,068,602 3,337,535 Highways and streets 598,824 819,596 558,975 565,907 599,415 566,697 639,927 656,789 651,172 664,771 Culture and recreation 274,553 314,399 420,242 482,664 459,667 443,203 497,780 502,721 717,491 567,292 Capital outlay 4,085,095 564,067 1,771,460 708,045 1,538,674 208,587 943,306 4,272,603 2,349,494 438,633 Debt service

Bond Issuance Costs 66,250 - - - Principle 427,311 417,516 447,247 625,397 158,953 158,953 2,420,000 224,000 250,449 264,814 Interest 282,631 259,999 235,879 215,554 181,480 173,571 173,655 69,094 70,791 63,031

Total expenditures 8,434,418 5,679,920 6,841,239 6,215,902 6,310,253 5,078,581 8,253,325 9,139,460 7,720,885 5,958,489

Excess of revenues over (under) expenditures (1,070,950) 269,208 (778,154) 234,751 527,083 763,452 (1,560,646) (953,915) 1,764,689 1,273,271

Other financing sources (uses)Loan Proceeds 101,723 - 41,613 - - 2,249,000 331,388 - -

Transfers in 369,615 1,681,996 620,940 868,540 567,054 497,156 328,897 2,089,056 1,061,936 3,158,288

Transfers out (1,417,095) (1,469,724) (918,280) (1,064,316) (958,394) (1,183,257) (1,188,930) (2,199,065) (877,689) (3,307,376)

Bonds issued - - - - - - - - - -

Capital leases - - - - - - - - - -

Sale of capital assets - - - - - - - - - -

Total other financing sources (uses) (1,047,480) 313,995 (297,340) (154,163) (391,340) (686,101) 1,388,967 221,379 184,247 (149,088)

Net change in fund balances (2,118,430)$ 583,203$ (1,075,494)$ 80,588$ 135,743$ 77,351$ (171,679)$ (732,536)$ 1,948,936$ 1,124,183$

Capital Asset additions (from reconciliation of governmental funds) 2,947,547 536,221 3,505,326 516,452 684,112 196,823 1,435,138 3,965,938 2,370,507 464,954

Debt service as a percentage of non-capital expenditures ((Debt/Other Exp)-Capital Additions) 12.9% 13.2% 20.5% 14.8% 6.1% 6.8% 38.0% 5.7% 6.0% 6.0%

84

REVENUE CAPACITY

CITY OF CORNELIUS , OREGONMARKET AND ASSESSED VALUEOF TAXABLE PROPERTYLast Ten Fiscal Years continued on next page

Fiscal Year Ended June 30 Market Value Measure 5 Assessed Value Market Value Measure 5 Assessed Value Market Value Measure 5 Assessed Value

2007 571,169,400 566,822,330 376,104,970 12,436,519 12,436,519 12,436,519 6,843,880 6,843,880 6,618,360 2008 720,822,528 715,053,988 407,789,600 13,799,205 13,799,205 13,799,205 7,056,680 7,056,680 6,674,740 2009 806,606,550 800,742,880 429,296,810 14,086,748 14,086,748 14,086,748 7,114,190 7,114,190 6,562,550 2010 825,297,620 819,390,050 450,452,890 16,199,277 16,199,277 16,199,277 7,223,070 7,223,070 6,584,810 2011 771,210,340 765,244,060 469,601,850 15,206,983 15,206,983 15,206,983 7,322,030 7,322,030 6,597,530 2012 726,679,060 720,742,850 485,388,370 15,229,392 15,229,392 15,229,392 6,839,440 6,839,440 4,857,000 2013 698,786,770 692,871,420 509,570,960 16,164,185 16,164,185 16,164,185 6,826,780 6,826,780 4,763,350 2014 657,521,360 652,602,600 537,590,430 18,117,098 18,117,098 18,117,098 6,718,560 6,718,560 4,608,730 2015 734,768,920 729,846,720 556,014,570 18,082,282 18,082,282 18,082,282 7,251,510 7,251,510 4,902,860 2016 784,717,850 779,800,310 574,512,280 17,692,884 17,692,884 17,692,884 9,395,410 9,395,410 6,022,040

Source: Washington County Assessment and Taxation

Note: In May, 1997 Oregon voters approved Measure 50 that revised the property tax system state-wide effective July 1, 1997. For property tax purposes, the measure changed a property's assessed valuation from real market value to a value for tax purposes. For FY 97-98, a property's assessed value for tax purposes will equal the property's market value as of July 1, 1995 less 10%. In addition, the maximum assessed value of a property was limited to a maximum of 3% growth per year.

Definition: Measure 5 value is the value used to calculate the Measure 5 limits. This value differs from Real Market Value for property that is assessed under a Special Assessment program (such as Farm and Forest property). For non-specially assessed property, Measure 5 Value is equal to Real Market Value (RMV). For specially assessed property, Measure 5 Value is the sum of the Real Market Value of the market portion of the account plus the Specially Assessed Value (SAV) of the specially assessed portion of the account.

Real Property Manufactured HomesPersonal Property

85

CITY OF CORNELIUS , OREGONMARKET AND ASSESSED VALUEOF TAXABLE PROPERTYLast Ten Fiscal Years continued

Market Value Measure 5 Assessed Value Market Value Measure 5 Assessed Value

Total Assessed Value to Total Market Value

Total Direct Tax Rate

Assessed Value Change

16,721,217 16,721,217 15,720,630 606,171,016 601,823,946 410,880,479 67.8% 4.25 1.08115,473,546 15,473,546 15,312,400 757,151,959 751,383,419 443,575,945 58.6% 4.17 1.08014,477,482 14,477,482 14,254,340 842,284,970 836,421,300 464,200,448 55.1% 4.07 1.04716,208,464 16,208,464 15,902,970 864,928,431 859,020,861 489,139,947 56.6% 4.00 1.05420,338,658 20,338,658 20,314,890 814,078,011 808,111,731 511,721,253 62.9% 3.98 1.04620,824,097 20,824,097 20,654,600 769,571,989 763,635,779 526,129,362 68.4% 3.98 1.02821,350,346 21,350,346 20,629,580 743,128,081 737,212,731 551,128,075 74.2% 3.98 1.04819,552,328 19,552,328 17,766,690 701,909,346 696,990,586 578,082,948 82.4% 3.98 1.02719,724,516 19,724,516 18,358,100 779,827,228 774,905,028 597,357,812 76.6% 3.98 1.03322,178,690 22,178,690 19,534,900 833,984,834 829,067,294 617,762,104 74.1% 3.98 1.034

Public Utilities Total

86

CITY OF CORNELIUS , OREGONOVERLAPPING DEBT SCHEDULEJune 30, 2016

Gross Property-tax Net Property-taxOverlapping Issuer Name Real Market Valuation Percent Overlapping Backed Debt Backed Debt

BANKS FIRE DISTRICT 13 659,371,918 0.06% 186 186 METRO 238,253,176,805 0.33% 749,417 654,925 NORTHWEST REGIONAL ESD 97,770,080,401 0.85% 36,842 - PORT OF PORTLAND 259,090,246,916 0.32% 204,226 - PORTLAND COMMUNITY COLLEGE 190,092,396,391 0.44% 1,863,649 1,463,025 TRI-MET

WASHINGTON COUNTY 78,127,512,918 1.06% 854,297 570,238 WASHINGTON COUNTY SD 13 (BANKS) 770,448,572 0.05% 7,233 7,233 WASHINGTON CTY SD 15 (FOREST GROVE) 3,109,669,482 18.11% 18,416,940 18,416,940 WASHINGTON CTY SD 1J (HILLSBORO 7 Bd) 18,077,867,408 1.47% 67,404 67,404 WASHINGTON CTY SD 1J (HILLSBORO) 16,096,441,281 1.57% 3,963,757 3,963,757

Totals: Overlapping Issuer Count: 9 26,163,951 25,143,708

Net Property-tax Backed Debt Ratio of Net Property-tax Backedof Subject Issuer is: 2,033,640 Debt to Real Market Value is: 0.25%

Per Capita Net Property-tax BackedDebt is: 171$

Net Property-tax Backed Debtof Overlapping Issuers is: 25,143,708 Ratio of Total Net Property-tax

Backed Debt to Real Market Value is: 3.27%Total Net Property-tax Backed Debtof Subject Issuer and Overlapping Issuers is: 27,177,348 Per Capita Total Net Property-tax

Backed Debt is: 2,284$ Cornelius Population 11,900 As of : 07/01/15Real Market Value of Subject Issuer is: 829,928,424 As of : 01/01/15

Source: State of Oregon, Debt Management Division

Definition: "Gross Property-tax Backed Debt" includes all General Obligation (GO) bonds and Full Faith & Credit bonds.

Definition: "Net Property-tax Backed Debt" is Gross Property-tax Backed Debt less Self-supporting Unlimited-tax GO and less Self-supporting Full Faith & Credit debt.

Appropriation Credits, Conduit Revenue Bonds, Dedicated Niche Obligations, Other, Revenue Bonds, and any other obligations issued for less than 13 months (E.g. Bond Anticipation Notes, Tax Anticipation Notes), lease purchase agreements and loans are NOT included in Property-tax backed calculations.

Overlapping

87

CITY OF CORNELIUS , OREGONPROPERTY TAX RATESLast Ten Fiscal Years

Fiscal Year

Operating Millage

Debt Service Millage

Total City Millage

Operating Millage


Total City Millage

Operating Millage


Total City Millage

Operating Millage


Total City Millage

SpecialDistricts

Total Direct& Overlapping

Rates2007 3.9836 0.2762 4.260 2.61 0.2178 2.8278 4.9142 3.2306 8.1448 4.9749 1.6086 6.584 21.8162008 3.9836 0.1862 4.170 2.2484 0.2010 2.4494 4.9142 3.3943 8.3085 4.9749 1.5491 6.524 21.4522009 3.9836 0.0887 4.072 2.2484 0.1947 2.4431 4.9142 3.3624 8.2766 4.9749 1.2245 6.199 20.9912010 3.9836 0.0169 4.001 2.2484 0.1456 2.3940 4.9142 3.4528 8.3670 4.9749 1.3187 6.294 21.0552011 3.9836 0 3.984 2.2484 0.1456 2.3940 4.9142 3.3823 8.2965 4.9749 1.3573 6.332 21.0062012 3.9836 0 3.984 2.2484 0.1414 2.3898 4.9142 3.5253 8.4395 4.9749 1.4252 6.400 21.2132013 3.9836 0 3.984 2.2484 0.1360 2.3844 4.9142 3.3413 8.2555 4.9749 1.3184 6.293 20.9172014 3.9836 0 3.984 2.2484 0.1291 2.3775 4.9142 3.0345 7.9487 4.9749 1.3029 6.278 20.5882015 3.9836 0 3.984 2.2484 0.5900 2.8384 4.9142 2.8601 7.7743 4.9749 0.9640 5.939 20.5352016 3.9836 0 3.984 2.2484 0.5900 2.8384 4.9142 2.8601 7.7743 4.9749 0.9640 5.939 20.535

Source: Washington County Assessment and Taxation Department

Overlapping Rates

City of Cornelius County School District Forest Grove School District Hillsboro

88

CITY OF CORNELIUS , OREGONPRINCIPAL PROPERTY TAXPAYERSLast Ten Fiscal Years

Taxpayer Taxable

Assessed Value Rank

Percentage of Total Taxable Assessed

Value Taxable

Assessed Value Rank

Percentage of Total Taxable

Assessed Value Taxable

Assessed Value Rank



Assessed Value Rank



Assessed Value Rank



Assessed Value Rank



Assessed Value Rank



Assessed Value Rank



Assessed Value Rank



Assessed Value Rank


Assessed Value

WAL-MART STORES INC 2,687,490 10 0.71% 2,768,050 9 0.60% 3,746,300 7 0.77% 4,696,200 4 0.92% 4,696,200 4 0.89% 20,575,816 1 3.73% 20,575,816 1 3.73% 20,704,477 1 3.58% 20,930,826 1 3.62% 20,930,826 1 3.62%

TOM MOYER THEATERS 15,848,610 1 4.17% 16,273,660 1 3.51% 17,264,680 1 3.53% 17,782,600 1 3.48% 17,782,600 1 3.38% 16,995,670 2 3.08% 16,995,670 2 3.08% 17,369,310 2 3.00% 17,860,390 2 3.09% 17,860,390 2 3.09%

JSTT INC 7,287,950 2 1.92% 7,506,530 2 1.62% 7,963,600 2 1.63% 8,289,240 2 1.62% 8,289,240 2 1.58% 8,210,030 3 1.49% 8,210,030 3 1.49% 8,598,140 3 1.49% 8,538,240 3 1.48% 8,538,240 3 1.48%

PORTLAND GENERAL ELECTRIC 5,583,000 3 1.47% 5,950,000 3 1.28% 6,883,000 3 1.41% 7,440,000 3 1.45% 7,440,000 3 1.41% 8,055,000 4 1.46% 8,055,000 4 1.46% 6,925,000 4 1.20% 6,708,000 4 1.16% 6,708,000 4 1.16%

SHELDON MANUFACTURING INC 4,136,220 5 1.09% 4,260,460 4 0.92% 5,359,130 4 1.10% 4,985,820 5 0.97% 4,985,820 5 0.95% 4,919,890 5 0.89% 4,919,890 5 0.89% 4,578,670 5 0.79% 4,583,020 5 0.79% 4,583,020 5 0.79%

FOREST HILLS-MCGILL LLC 3,156,930 7 0.73% 3,251,490 7 0.70% 3,449,260 9 0.71% 3,552,620 8 0.69% 3,552,620 8 0.68% 3,768,730 6 0.68% 3,768,730 6 0.68% 3,881,820 6 0.67% 3,998,260 6 0.69% 3,998,260 6 0.69%

COMCAST CORPORATION 2,956,000 10 0.60% 2,976,100 11 0.58% 2,976,100 11 0.57% 3,170,500 10 0.58% 3,170,500 10 0.58% 3,435,400 7 0.59% 3,864,600 7 0.67% 3,864,600 7 0.67%

HAZELNUT GROWERS OF OREGON 2,865,590 8 0.75% 2,984,770 8 0.64% 3,866,930 8 0.79% 3,669,620 9 0.72% 3,669,620 9 0.70% 3,586,980 7 0.65% 3,586,980 7 0.65% 3,395,640 10 0.59% 3,881,550 8 0.67% 3,881,550 8 0.67%

NORTHWEST NATURAL GAS CO 4,615,400 4 1.21% 3,405,500 6 0.73% 5,119,400 5 1.05% 4,805,600 6 0.94% 4,805,600 6 0.91% 3,315,900 9 0.60% 3,315,900 9 0.60% 3,339,000 9 0.58% 3,599,600 9 0.62% 3,599,600 9 0.62%

COASTAL FARM REAL ESTATE INC 2,730,450 11 0.56% 3,171,415 10 0.62% 3,171,415 10 0.60% 3,350,392 8 0.61% 3,350,392 8 0.61% 3,414,870 8 0.59% 3,489,870 10 0.60% 3,489,870 10 0.60%

ALL CROP INC 1,763,310 19 0.36% 1,895,403 18 0.37% 1,895,403 18 0.36% 1,920,657 19 0.35% 1,920,657 19 0.35% 1,953,713 20 0.34% 3,354,430 11 0.58% 3,354,430 11 0.58%

HANK'S PROPERTIES LLC 2,448,920 12 0.64% 2,522,380 10 0.54% 2,675,990 12 0.55% 2,750,760 12 0.54% 2,750,760 12 0.52% 2,922,470 12 0.53% 2,922,470 12 0.53% 2,926,060 12 0.51% 2,984,580 12 0.52% 2,984,580 12 0.52%

SMOKETREE MHC LLC 2,120,420 14 0.56% 2,184,020 13 0.47% 2,317,000 15 0.47% 2,427,430 15 0.47% 2,427,430 15 0.46% 2,559,330 13 0.46% 2,559,330 13 0.46% 2,633,790 13 0.46% 2,697,280 13 0.47% 2,697,280 13 0.47%

FRED MEYER STORES INC 2,689,969 9 0.71% 2,507,808 11 0.54% 2,658,629 13 0.54% 2,654,179 14 0.52% 2,654,179 14 0.50% 3,170,500 11 0.58% 3,170,500 11 0.58% 3,435,400 11 0.59% 2,582,476 14 0.45% 2,582,476 14 0.45%

MOREY, ROBERT S & 2,271,860 13 0.60% 2,197,110 12 0.47% 2,180,650 16 0.45% 2,234,050 16 0.44% 2,234,050 16 0.42% 2,287,180 15 0.41% 2,287,180 15 0.42% 2,355,780 15 0.41% 2,504,110 15 0.43% 2,504,110 15 0.43%

FRONTIER COMMUNICATIONS 3,902,000 6 1.03% 3,937,000 5 0.85% 4,143,900 6 0.85% 3,840,100 7 0.75% 3,840,100 7 0.73% 2,558,000 14 0.46% 2,558,000 14 0.46% 2,552,000 14 0.44% 2,479,000 16 0.43% 2,479,000 16 0.43%

DAVIS STREET APTS LLC 1,654,990 17 0.44% 1,928,670 15 0.42% 2,046,080 17 0.42% 2,107,440 17 0.41% 2,107,440 17 0.40% 2,235,740 16 0.41% 2,235,740 16 0.41% 2,302,800 16 0.40% 2,371,870 17 0.41% 2,371,870 17 0.41%

CORNELIUS ADAIR LLC 2,008,560 15 0.53% 2,168,870 14 0.47% 2,496,620 14 0.51% 2,697,080 13 0.53% 2,697,080 13 0.51% 2,260,970 17 0.41% 2,260,970 17 0.41% 2,297,080 17 0.40% 2,343,020 18 0.41% 2,343,020 18 0.41%

CAPLACO TWELVE INC 1,685,770 18 0.36% 1,788,430 18 0.37% 1,842,080 20 0.36% 1,842,080 20 0.35% 1,954,260 18 0.35% 1,954,260 18 0.35% 2,012,880 19 0.35% 2,073,260 19 0.36% 2,073,260 19 0.36%

HANEY INDUSTRIAL PROPERTIES INC 1,602,070 19 0.42% 1,650,120 19 0.36% 0.00% 2,029,370 20 0.35% 2,029,370 20 0.35%

STERLING SAVINGS BANK 504,750 18 0.09%

CASTRO, RICHARD TR 1,529,930 20 0.40% 1,575,820 20 0.34% 1,671,760 20 0.34% 1,826,740 20 0.33% 1,826,740 20 0.33%

EATA LLC 1,846,583 19 0.36% 1,846,583 19 0.35%

RIVERSIDE HOMES INC 2,605,140 11 0.69% 1,855,240 16 0.40% 0.00%

WESTERN FARM SERVICE INC 1,621,039 18 0.43% 1,708,532 17 0.37% 0.00%

STILL, MICHAEL TRUSTEEEMMERT, TERRY WK & D EQUIPMENT CO, INC

Totals 70,636,088 18.50% 72,321,800 15.59% 83,081,119 16.99% 85,664,320 16.74% 85,664,320 16.28% 99,644,755 18.08% 99,644,755 18.08% 98,616,580 17.06% 102,873,752 17.80% 102,873,752 17.80%


*Note: 2014-2015 data (2015-2016 data not available from the County at time of printing CAFR)

2015-2016*2006-2007 2007-2008 2008-2009 2009-2010 2010-2011 2011-2012 2012-2013 2013-2014 2014-2015

89

CITY OF CORNELIUS , OREGONPROPERTY TAX LEVIES AND COLLECTIONSLast Ten Fiscal Years

Beginning July 12007 2008 2009 2010 2011 2012 2013 2014 2015 2016

BALANCE Current - - - - - - - - - - Prior 49,362 54,658 65,360 84,674 90,089 85,264 107,268 101,317 105,868 101,481

49,362 54,658 65,360 84,674 90,089 85,264 107,268 101,317 105,868 101,481

LEVY Current 1,866,438 1,902,243 1,961,461 2,039,156 2,098,134 2,199,047 2,243,360 2,311,677 2,382,960 2,764,901 Prior (43) (15) - - - (28)

1,866,438 1,902,243 1,961,461 2,039,156 2,098,091 2,199,032 2,243,360 2,311,677 2,382,960 2,764,873

ADJUSTMENTS

Current (3,615) (2,199) (3,734) (6,443) (9,547) 3,333 3,141 (6,314) (2,324) (2,691) Prior (3,351) (2,816) (4,721) (6,002) (2,943) (4,253) (25,736) (1,170) (6,687) (1,075)

(6,966) (5,015) (8,455) (12,445) (12,490) (921) (22,595) (7,484) (9,011) (3,766)

NET INTEREST (Discounts) Current (46,944) (47,701) (48,327) (50,539) (52,693) (55,615) (57,608) (60,288) (62,447) (74,234) Prior 3,420 3,511 4,035 5,316 6,599 7,836 6,795 5,514 5,177 5,265

(43,525) (44,189) (44,292) (45,223) (46,094) (47,778) (50,813) (54,775) (57,270) (68,969)

COLLECTIONS Current 1,777,256 1,806,126 1,849,457 1,925,328 1,986,301 2,092,086 2,142,013 2,199,225 2,278,007 2,642,372 Prior 33,339 36,211 39,928 50,745 58,031 36,243 33,890 45,642 43,060 34,019

1,810,595 1,842,337 1,889,386 1,976,073 2,044,333 2,128,329 2,175,903 2,244,867 2,321,067 2,676,391

BALANCES end of FY Current 38,622 46,217 59,944 56,846 49,592 54,678 46,880 45,850 40,182 45,604 Prior 16,092 19,143 24,746 33,243 35,671 52,590 54,437 60,019 61,299 71,624

54,714 65,360 84,689 90,089 85,264 107,268 101,317 105,868 101,481 117,228

Notes: Fiscal Year runs from July 1st to June 30th


90

CITY OF CORNELIUS , OREGONPROPERTY TAX LEVIES AND COLLECTIONS TO DATELast Ten Fiscal Years

Tax Year Ended

December 31Total Tax Levy for Fiscal Year Amount Percentage of Levy

Collections in subsequent years Amount

Percentage of Levy

2007 1,866,438 1,777,256 95.2% 39,723 1,816,979 97.4%2008 1,902,243 1,806,126 94.9% 53,495 1,859,621 97.8%2009 1,961,461 1,849,457 94.3% 62,732 1,912,189 97.5%2010 2,039,156 1,925,328 94.4% 54,540 1,979,868 97.1%2011 2,098,134 1,986,301 94.7% 37,540 2,023,841 96.5%2012 2,199,047 2,092,086 95.1% 33,207 2,125,294 96.6%2013 2,243,360 2,142,013 95.5% 37,484 2,179,497 97.2%2014 2,311,677 2,199,225 95.1% 31,258 2,230,482 96.5%2015 2,382,960 2,278,007 95.6% 19,237 2,297,244 96.4%2016 2,764,901 2,642,372 95.6% - 2,642,372 95.6%


Collected within the Fiscal Year of the Levy Total Collections to Date

91

DEBT CAPACITY

CITY OF CORNELIUS , OREGONRATIOS OF OUTSTANDING DEBT BY TYPELast Ten Fiscal Years

Fiscal Year

General Obligation

Bonds

Special Assessment

BondsCapital Leases

Other Notes

Revenue Bonds Series

2000

Special Assessment

BondsCapital Leases

Other Notes*

Total Primary Government

Percentage of Personal Income Per Capita Population

2007 205,000 3,620,000 12,987 232,545 1,200,000 - - - 5,270,532 N/A 489 10,785

2008 105,000 3,405,000 106,864 135,943 1,135,000 - 4,887,807 N/A 446 10,955

2009 - 3,235,000 56,702 - 1,065,000 - - - 4,356,702 N/A 397 10,985

2010 - 2,670,000 40,315 - 995,000 - - - 3,705,315 N/A 336 11,020

2011 - 2,545,000 42,195 - 920,000 - - - 3,507,195 N/A 295 11,869

2012 - 2,420,000 42,250 - 840,000 - - - 3,302,250 N/A 278 11,869

2013 - 2,249,000 14,230 - - - - - 2,263,230 N/A 190 11,915

2014 - 2,025,000 - - - - - 34,613 2,059,613 N/A 169 12,161

2015 - 1,793,000 312,939 - - - - 678,549 2,784,488 N/A 229 12,161

2016 - 1,555,000 286,125 - - - - 1,153,818 2,994,943 N/A 246 12,161

Note:Details regarding the Cities outstanding debt can be found in the Notes to the Basic Financial Statements*Business Type Activities Notes - Business Oregon Aquifer Storage and Recovery LoanN/A - Not Available

Governmental Activities Business - Type Activities

92

CITY OF CORNELIUS , OREGONRATIOS OF GENERAL BONDED DEBT OUTSTANDINGLast Ten Fiscal Years

Fiscal Year

General Obligation

Bonds

Less: Amounts Available in Debt

Service Fund Total

Percentage of Actual Taxable Value of

Property Per Capita Population (1) Assessed Value (2)2007 205,000 164,332 40,668 0.01% 4 10,785 410,880,479 2008 105,000 101,812 3,188 0.001% 0 10,955 443,575,945 2009 - - - 0.00% 0 10,985 464,200,448 2010 - - - 0.00% 0 11,020 489,139,947 2011 - - - 0.00% 0 11,869 511,721,253 2012 - - - 0.00% 0 11,869 526,129,362 2013 - - - 0.00% 0 11,915 551,128,075 2014 - - - 0.00% 0 12,161 578,082,948 2015 - - - 0.00% 0 12,161 597,357,812 2016 - - - 0.00% 0 12,161 617,762,104

Sources:

(1) United States Census

(2) Washington County Assessment and Taxation

N/A - Not Available

Note: In 2006 the Amount Available in in Debt Service Fund increased significantly due to a prior period adjustment.

93

CITY OF CORNELIUS , OREGONREVENUE BACKED DEBTLast Ten Fiscal Years

Fiscal YearUtility

Charges

Less: OperatingExpenses

Net AvailableRevenue Principal Interest Coverage

2007 5,635,051 4,000,122 1,634,929 60,000 75,915 12.03 2008 6,895,620 5,141,110 1,754,510 65,000 72,615 12.75 2009 6,954,260 4,720,610 2,233,650 70,000 69,008 16.07 2010 11,681,423 7,779,392 3,902,031 70,000 65,088 28.89 2011 9,745,593 5,357,516 4,388,077 75,000 61,133 32.23 2012 10,493,821 5,356,504 5,137,317 80,000 56,815 37.55 2013 12,198,185 7,300,348 4,897,837 840,000 45,077 5.53 2014 14,594,253 9,047,773 5,546,480 - - - 2015 12,220,246 6,521,394 5,698,852 - - - 2016 17,613,440 4,972,921 12,640,519 1,153,818 - 10.96

Note:Details regarding the Cities outstanding debt can be found in the Notes to the Basic Financial Statements

Utility charges include all revenue from the Water, Sewer, Storm, and Street funds.

Operating expenses do not include depreciation.

FY2010 - Capital projects were moved to the street fund resulting in higher revenues/expenses

FY2013 - The Debt Service was paid in full

Public works facility revenue bond Debt Service

94

CITY OF CORNELIUS , OREGONDIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBTJune 30, 2016

Governmental Unit Debt OutstandingEstimated Percentage Applicable

Estimated Share of Direct and

Overlapping DebtDebt repaid with property taxesBanks Fire District 13 330,000$ 0.06% 186$ Metro 228,690,000 0.33% 654,925 Portland Community College 426,855,000 0.44% 1,463,025 Washington County 80,419,570 1.06% 570,238 Washington County SD 13 (Banks) 14,975,457 0.05% 7,233 Washington County SD 15 (Forest Grove) 101,687,004 18.11% 18,416,940 Washington County SD 1J (Hillsboro) 269,460,000 1.47% 3,963,757 Washington County SD 1J (Hillsboro 7 Bd) 4,583,144 1.47% 67,404

Other debtMetro -$ - -$ Northwest Regional ESD 4,340,000 0.85% - Port of Portland 63,760,760 0.32% - Portland Community College - - - Washington County - - -

Subtotal, overlapping debt 1,195,100,935$ 25,143,708

City direct debt 1,841,125

Total direct and overlapping debt 26,984,833$

Source: State of Oregon, Debt Management Division

Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City. The State of Oregon provided overlapping debt data on real market valuation of properties for each jurisdiction.

95

CITY OF CORNELIUS , OREGONLEGAL DEBT MARGIN INFORMATIONLast Ten Fiscal Years

True Cash Value (1) 833,984,834$

x 3%General Obligation Debt Limit (2) 25,019,545

Gross bonded debt subject to limitation -

Legal debt margin available for future indebtedness 25,019,545$

0.00%

Fiscal Year True Cash Value Debt Limit

Total debt applicable to

limit Legal Debt Margin2007 606,171,016 18,185,130 300,000 17,885,130$ 1.65%2008 757,151,959 22,714,559 205,000 22,509,559$ 0.90%2009 842,284,970 25,268,549 105,000 25,163,549$ 0.42%2010 864,928,431 25,947,853 - 25,947,853$ 0.00%2011 814,078,011 24,422,340 - 24,422,340$ 0.00%2012 769,571,989 23,087,160 - 23,087,160$ 0.00%2013 743,128,081 22,293,842 - 22,293,842$ 0.00%2014 701,909,346 21,057,280 - 21,057,280$ 0.00%2015 779,827,228 23,394,817 - 23,394,817$ 0.00%2016 833,984,834 25,019,545 - 25,019,545$ 0.00%

Sources:(1) From Washington County Assessment and Taxation

Total net debt applicable to the limit as a percentage of debt limit

Total net debt applicable to the limit as a percentage of the

debt limit

(2) ORS 257.004 provides a debt limit of 3% of the true cash value of all taxable property within the City boundaries

96

DEMOGRAPHIC AND ECONOMIC INFORMATION

CITY OF CORNELIUS , OREGONDEMOGRAPHIC AND ECONOMIC STATISTICSLast Ten Fiscal Years

Fiscal Year Population (1)

MedianHouseholdIncome (1)

Personsbelow poverty

level (1)

UnemploymentRate Washington

County (1)2007 10,785 N/A N/A 4.4%2008 10,955 N/A N/A 4.9%2009 10,985 N/A N/A 10.4%2010 11,020 N/A N/A 9.0%2011 11,869 N/A N/A 8.1%2012 11,869 48,778$ 17.5% 7.3%2013 11,915 50,085$ 17.5% 6.2%2014 12,161 51,392$ 19.4% 5.7%2015 12,161 55,203$ 13.1% 5.3%2016 12,161 56,870$ 12.6% 5.2%

Notes:N/A - Not Available

Sources:(1) Oregon State Employment Division

97

CITY OF CORNELIUS , OREGONPRINCIPAL EMPLOYERSCurrent Year and Nine Years Ago

Employer Employees Rank

Percentage of Total City

Employment Employees Rank

Percentage of Total City

EmploymentWalmart Superstore 294 1 15.20%Fred Meyer 186 1 13.76% 268 2 13.86%Sheldon Manufacturing 140 2 10.36% 120 3 6.20%Forest Grove School District 85 3 6.29% 94 4 4.86%Virginia Garcia 64 5 3.31%Hazelnut Growers of Oregon 42 7 3.11% 45 6 2.33%Summit Foods 45 7 2.33%City of Cornelius 45 5 3.33% 38 8 1.96%Burger King 34 9 35 9 1.81%Squires Electronics 34 8 2.51% 33 10 1.71%Grande Foods 58 4 4.29%Truss Components of Oregon, Inc. 45 6 3.33%HPS Pipe & Supply 27 10 2.00%ISC, Inc. dba Pallet Doctor 27 11 2.00%

Totals 723 50.96% 1036 53.57%

Total FT Employees 2007 1213 Total FT Employees 2015 1295Total Part Time Employees 139 Total Part Time Employees 639Total Employees 1352 Total Employees 1934

Source: City Business licenses

2007 2016

98

CITY OF CORNELIUS , OREGONFULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTIONLast Ten Fiscal Years

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Function

General Government 18 17 17 17 17 13 13 11 12 12Public Safety

Police

Officers* 13 14 14 14 14 15 15 15 - - Fire

Firefighters and officers 4 4 4 5 5 5 5 5 5 7Highways and streets

Engineering 3 3 3 3 3 3 3 3 3 3Maintenance 5 5 5 5 5 5 5 5 5 5

Sanitation - - - - - - - - - - Culture and recreation 4 6 6 6 6 6 6 6 6 7Water 1 1 1 1 1 1 1 1 1 1Sewer 2 1 1 1 1 1 1 1 1 1Surfacewater 2 1 1 1 1 2 2 2 2 2Electric - - - - - - - - - -

Total 52 52 52 53 53 51 51 49 35 38

Source: City Administration Department

Note:*Police Services are contracted beginning FY2015

Full-time Equivalent Employees as of December 31

99

OPERATING INFORMATION

CITY OF CORNELIUS , OREGONOPERATING INDICATORS BY FUNCTIONLast Ten Calendar Years

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

Function

Police*

Physical arrests 540 520 580 551 428 570 470 661 490 473 Parking violations 242 390 13 14 11 19 9 39 20 59 Traffic violations 1,379 1,432 1,515 466 604 1,082 1,358 2,448 1,134 1,001

Fire

Number of calls answered 1,073 1,073 1,158 1,133 935 1,190 1,275 1,183 1,383 1,916 Inspections 95 99 49 80 25 35 45 54 63 91

Highways and streets

Street resurfacing (square yards) 32,991 5,307 7,348 19,027 3,240 8,088 2,562 14,535 11,161 12,680

Sewer

Sewer mains cleaned (lineal feet) 42,561 49,961 33,460 88,291 99,320 167,609 131,258 120,419 117,409 189,993 Storm

Storm catch basins cleaned 1,165 1,165 1,023 864 944 971 917 917 917 1,075 Sanitation**

Refuse collected (tons/day) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/ARecyclables collected (tons/day) N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Culture and recreation

Parks use permits 31 28 63 94 84 114 124 147 162 206 Athletic field permits issued 13 7 6 2 9 10 10 6 7 5 Library circulation 39,833 58,829 68,029 92,253 103,055 111,074 118,067 109,926 92,253 87,600 Library visitors 31,531 39,729 46,860 60,563 65,430 72,355 77,339 71,738 62,720 60,248 Library programs 114 134 213 322 157 139 208 257 153 144

Water

New connections 53 27 4 20 4 - - 1 6 7 Water main breaks repaired 45 40 44 44 52 22 33 48 29 26

City Code Violations

Overgrown Vegetation 57 56 63 67 63 49 Abandoned Vehicles 147 195 210 158 171 189 Other 42 54 82 61 82 87

N/A - Not Available

Notes:

*Police Services are contracted beginning FY2015

**Private collection company

Source: City Administration, Court, Police, and Development and Operations Departments

Fiscal Year

100

CITY OF CORNELIUS , OREGONCAPITAL ASSET STATISTICS BY FUNCTIONLast Ten Fiscal Years

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016FunctionPublic Safety

Police:Stations 1 1 1 1 1 1 1 1 1 1

Patrol units* 7 7 8 8 8 8 9 9 9 0

Fire stations 1 1 1 1 1 1 1 1 1 1

SanitationCollection trucks 0 0 0 0 0 0 0 0 0 0

Highways and streetsStreets (miles) 33 33 33 36 36 36 36 36 36 36Streetlights 505 505 505 662 662 662 669 670 857 857

Traffic signals N/A N/A N/A N/A N/A N/A N/A N/A N/A N/A

Culture and recreationParks acreage 23.12 23.12 23.12 22.62 22.62 22.62 25.45 25.45 25.7 25.7

Parks 11 11 11 13 13 13 13 13 14 14

Swimming pools 0 0 0 0 0 0 0 0 0 0

Tennis courts 1 1 1 1 1 1 1 1 1 1

Community centers 0 0 0 0 0 0 0 0 0 0

WaterWater mains (miles) 32 32 32 32 32 32 32 32 32 32

Fire hydrants 340 340 340 402 402 402 402 402 402 402

Maximum daily capacity (thousands of gallons)

SewerSanitary sewers (miles) 24 24 24 24 24 24 24 24 24 24

Storm sewers (miles) 19 19 19 19 19 19 19 19 19 19

Maximum daily treatment capacity (millions of gallons)

*Note: Patrol units are now owned by Washington County Sheriffs Office

Source: City Administration, Court, Police, and Development and Operations DepartmentsThis report would usually conatin 10 years worth of information

Fiscal Year

101

CITY OF CORNELIUS , OREGONMISCELLANEOUS STATISTICAL DATAJune 30, 2016

Date of Incorporation 1893Form of Government City Council/City ManagerArea in Miles 2.03

Fire Protection Number of Stations 1 Number of Firefighters, Officers and Other Personnel 6 (exclusive of volunteer firefighters)

Police Protection Number of Stations 1 Number of Sworn officers budgeted** 0

Recreation and Culture Number of Parks and Open Spaces 14

Total number of Park and Open Space Acreage 25.7 Tennis Courts 1 Pools 0 Number of Libraries 1 Total Library Circulation 87,600 Total Library Cardholders 3,777 Total Library Volumes 115,098 (Includes non-book material)

Transportation Designated Bike Routes 8 Bus Stops 25 Freight lines 2 Airports 0 Miles of Streets 36 Number of Street Lights* 857

Full Time Employees Union Employees 28 Non Union Employees 10

Notes: N/A =not available* Some lights are owned and maintained by Portland General Electric**Police Services are contracted beginning FY2015

Sources: City: Administration Department Police Department Engineering Department Fire Department Library Department Development and Operations Department

102

CITY OF CORNELIUS, OREGONPOPULATION GROWTH2007-2016

Year Population Percent change2007 10,785 1.89%2008 10,955 1.58%2009 10,985 0.27%2010 10,985 0.00%2011 11,869 8.05%2012 11,869 0.00%2013 11,915 0.39%2014 12,161 2.46%2015 12,161 0.00%2016 12,161 0.00%

14.64%Cumulative population growth

Note:

Figures are presented based on Fiscal Year. Portland State University presents estimated figures July 1st each year

10,000

10,500

11,000

11,500

12,000

12,500

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

103

INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATION

104

5499 AMY STREET • WEST LINN, OREGON 97068 • PHONE: (503) 723-0300 • FAX: (503) 723-9946 WWW.MERINACPAS.COM

INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATION

We have audited the basic financial statements of the City of Cornelius, Oregon, as of and for the year ended June 30, 2016 and have issued our report thereon dated December 19, 2016. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States.

Compliance

As part of obtaining reasonable assurance about whether the City of Cornelius, Oregon’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in the Oregon Administrative Rules 162-10-000 through 162-10-330 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion.

We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following:

Deposits of public funds with financial institutions (ORS Chapter 295).

Indebtedness limitations, restrictions, and repayments.

Budgets legally required (ORS Chapter 294).

Insurance and fidelity bonds in force or required by law.

Programs funded from outside sources.

Highway revenues used for public highways, roads, and streets.

Authorized investment of surplus funds. (ORS Chapter 294).

Public contracts and purchasing (ORS Chapters 279A, 279B, and 279C).

Accountability for collecting or receiving money by elected officials. The City does not have any elected officials collecting or receiving money.

In connection with our testing, nothing came to our attention that caused us to believe the City of Cornelius, Oregon was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in the

CCEERRTTIIFFIIEEDDPPUUBBLLIICCAACCCCOOUUNNTTAANNTTSSAANNDDCCOONNSSUULLTTAANNTTSS

PARTNERS

KAMALA K. AUSTIN, CPA • TONYA M. MOFFITT, CPA

105

Oregon Administrative Rules 162-10-000 through 162-10-330 of the Minimum Standards for Audits of Oregon Municipal Corporations.

OAR 162-10-0230 Internal Control

In planning and performing our audit, we considered the City of Cornelius, Oregon’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Cornelius, Oregon’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City of Cornelius, Oregon’s internal control.

A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct misstatements on a timely basis. A material weakness is a deficiency, or combination of deficiencies, in internal control such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified.

This report is intended solely for the information and use of the Honorable Mayor, City Council, Oregon Secretary of State Audits Division, and management, and is not intended to be and should not be used by anyone other than these specified parties.

Merina & Company, LLP West Linn, Oregon December 19, 2016

city of cornelius,sheldon manufacturing and the wilco farm store continue to do well in cornelius....

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