2017

VILLAGE OF PLEASANT PRAIRIE Pleasant Prairie, Wisconsin FINANCIAL STATEMENTS Including Independent Auditors’ Report As of and for the Year Ended December 31, 2017 VILLAGE OF PLEASANT PRAIRIE TABLE OF CONTENTS As of and for the Year Ended December 31, 2017 Independent Auditors' Report i – ii Required Supplementary Information Management’s Discussion and Analysis iii – xi Basic Financial Statements Statement of Net Position 1 Statement of Activities 2 Balance Sheet – Governmental Funds 3 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 4 – 5 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 Statement of Net Position – Proprietary Funds 7 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 8 Statement of Cash Flows – Proprietary Funds 9 – 10 Statement of Net Position – Fiduciary Funds 11 Statement of Changes in Net Position – Fiduciary Fund 12 Notes to Financial Statements 13 – 61 Required Supplementary Information Detailed Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – General Fund 62 – 64 Other Postemployement Benefits Plan – Schedule of Employer Contributions and Schedule of Funding Progress 65 Schedule of Proportionate Share of t he Net Pension (Asset) / Liability – Wisconsin Retirement System 66 Schedule of Employer Contributions – Wisconsin Retirement System 66 Schedule of Changes in the Net OPEB Liability 67 Schedule of Investment Returns 68 Notes to Required Supplementary Information 69 VILLAGE OF PLEASANT PRAIRIE TABLE OF CONTENTS As of and for the Year Ended December 31, 2017 Supplementary Information Nonmajor Governmental Funds – Combining Balance Sheet 70 Nonmajor Governmental Funds – Combining Statement of Revenues, Expenditures and Changes in Fund Balances 71 Statement of Cash Flows – Component Unit 72 Combining Statement of Assets and Liabilities – Agency Funds 73 Combining Statement of Net Position – Internal Service Funds 74 Combining Statement of Revenues, Ex penses, and Changes in Net Position – Internal Service Funds 75 Combining Statement of Cash Flows – Internal Service Funds 76 INDEPENDENT AUDITORS' REPORT To the Village Board Village of Pleasant Prairie Pleasant Prairie, Wisconsin Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Village of Pleasant Prairie, Wisconsin, as of and for the year ended December 31, 2017, and the related notes to the financial statements, which collectively comprise the Village of Pleasant Prairie's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditors' Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village of Pleasant Prairie'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 Village of Pleasant Prairie's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Page i 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, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the Village of Pleasant Prairie, Wisconsin, as of December 31, 2017 and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Emphasis of Matters As discussed in Note I, the Village of Pleasant Prairie adopted the provisions of GASB Statement No. 74, Financial reporting for Postemployment Benefit Plans Other Than Pension Plans, effective January 1, 2017. Our opinions are not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the 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 the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village of Pleasant Prairie's basic financial statements. The accompanying supplementary information as listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 accompanying supplementary information is fairly stated in all material respects, in relation to the basic financial statements as a whole. Madison, Wisconsin September 5, 2018 Page ii Page iii MANAGEMENT’S DISCUSSION AND ANALYSIS (Unaudited) Our discussion and analysis of the Village of Pleasant Prairie’s (the Village) financial performance provides an overview of the Village’s financial activities as of and for the year ended December 31, 2017. Please read it in conjunction with the Village’s financial statements following this section. FINANCIAL HIGHLIGHTS The total net position of the Village increased by $16.9 million to $185.7 million. Events that had major impacts on the Village’s 2017 financials were:  The Village’s debt increased by $56.3 million ending the year with $142.9 million in general obligation bonds outstanding. The Village borrowed $63.9 million, see breakdown below, refinanced $18.2 million. The Village paid $25.8 million of principal in 2017. o $37.9 million – TID #2 - Purchase land to resell, now identified as Prairie Highlands Corporate Park o $25.9 million – TID #2 – put in escrow to be used to complete unfinished capital projects. o $267,000 – General Capital – short-term borrowing for roads maintenance  The Village had $25.9 million in land held for sale at the end for 2017, after selling property for $13 million to Haribo, the first of two land purchase installments.  The majority of the escrow balance, $25.4 million was not spent at the end of 2017. The escrow spending for development of Prairie Highland Corporate Park is planned for 2018 and 2019.  Capital grants and contributions decreased $2 million from $8.3 million in 2016 to $6.3 million in 2017. A decrease of $2.1 million in government activities, and increase of $.1 in business-type activities.  TID No. 2 was amended in 2017 to increase expenditures from $122.6 million to $176.7 million, $54.1 million increase. The increase was to purchase land that is now Prairie Highlands Corporate Pak, and make $25 million of improvements to this park. At the end of 2017, total TID #2 expenditure was $155.8 million, with 88.1% completed. To finish, the majority of the escrow balance of $25.5 million will be spent in 2018 and 2019. Land valued at $4.7 million was donated by the Village’s CDA to sell to Route 165 LLC. This donation wasn’t considered when amending TID #2, so the “Land Acquisitions” category is over the plan amendment by $4.7 million at the end of 2017. OVERVIEW OF THE FINANCIAL STATEMENTS This annual financial report consists of four parts:  Management’s discussion and analysis – required supplementary information  Basic financial statements Government-wide Financial Statements Fund Financial Statements Notes to the Financial Statements  Required supplementary information,  Supplementary information Page iv The basic financial statements include two kinds of statements that present different views of the Village. The first two statements are government-wide financial statements that provide both long-term and short-term information about the Village’s overall financial status. The remaining statements are fund financial statements that focus on individual parts of Village government and report the Village’s operations in more detail than the government-wide statements. The financial statements also include notes that explain some of the information in the financial statements and provide more data. The statements are followed by a section of required supplementary information that further explains and supports the information in the financial statements. In addition to these required elements, we have included a supplementary information section with combining statements that provide details about our non-major governmental funds. The non-major funds are added together and presented in single columns in the basic financial statements. Government-wide Statements Government-wide statements report information about the Village as a whole using accounting methods similar to those used by private-sector companies. The statement of net position includes all government assets, deferred outflows of resources, liabilities and deferred inflows of resources. All of the current year’s revenues and expenses are accounted for in the statement of activities regardless of when cash is received or paid. The two government-wide statements report the Village’s net position and how they have changed. Net position- the difference between the Village’s assets, deferred outflows of resources, liabilities and deferred inflows of resources – is one way to measure the Village’s financial health, or position.  Over time, increases or decreases in the Village’s net position are an indicator of whether its financial health is improving or deteriorating, respectively.  To assess the overall health of the Village you need to consider additional non-financial factors such as changes in the Village’s property tax base, economy and rate of growth. The government-wide financial statements of the Village are divided into two categories:  Governmental activities – The Village’s basic services are included here, such as police, fire, public works, parks, community development, assessing, finance and administration. Property taxes and state aid finance most of these activities.  Business-type activities – The Pleasant Prairie Utilities and the Lakeview RecPlex charge user fees to cover the costs of services they provide. This includes water, sewer, refuse, recycling, clean water and the recreational complex. Fund Financial Statements The fund financial statements provide detailed information about the Village’s significant funds. Funds are accounting devices that the Village uses to keep track of specific sources of funding and spending for particular purposes. The Village has three kinds of funds:  Governmental funds - Most of the Village’s basic services are included in governmental funds which focus on (1) how cash, and other financial assets that can readily be converted to cash, flow in and out, and (2) the balances left at year-end that are available for spending. Consequently, governmental fund statements tell how general government services like public safety and public works were financed in the short term as well as what future spending remains. Because this information does not encompass the additional long-term focus of government-wide statements, additional information is provided at the bottom of the governmental funds statement explaining the differences between them. Page v  Proprietary funds - Services for which the Village charges customers a fee are reported in proprietary funds. These include water, sewer and clean water utilities, waste collection, and our recreational complex. Proprietary fund statements offer short and long-term financial information about activities the Village operates like a business.  Fiduciary funds - The Village is the trustee, or fiduciary, for collection of all property taxes within the Village for all taxing districts, including the Kenosha Unified School District, Kenosha County and Gateway Technical College. The Village also has a retired employees’ healthcare plan trust, which reports resources for members and beneficiaries of the benefit plan. All of the Village’s fiduciary activities are reported in a separate statement of fiduciary net position. These activities are excluded from the Village’s government-wide financial statements because these assets cannot be used to finance operations. FINANCIAL ANALYSIS OF THE VILLAGE AS A WHOLE STATEMENT OF NET POSITION The Village’s combined net position increased by $16.9 million to $185.7 million. The majority of the net position, $143.2 million, belongs to business-type activities of the Village, primarily the sewer ($53.9 million) and water utilities ($53.6 million). Dollars % 2016 2017 2016 2017 2016 2017 Current and other assets 50.7 116.3 18.8 21.2 69.6 137.5 67.9 97.6% Capital assets 79.6 82.5 151.5 150.7 231.1 233.2 2.1 0.9% Total assets 130.3 198.8 170.3 171.9 300.7 370.7 70.1 23.3% Deferred outflow s of resources 6.3 4.6 2.2 1.5 8.5 6.1 (2.4) N/A Long-term debt outstanding 68.6 127.6 29.4 26.7 98.1 154.3 56.2 57.3% Other liabilities 13.4 7.3 2.9 2.9 16.3 10.2 (6.1) -37.4% Total liabilities 82.0 134.9 32.3 29.6 114.3 164.5 50.2 43.9% Deferred inflow s of resources 25.2 26.0 0.8 0.7 26.1 26.7 0.6 2.3% Net Position Net investment in capital assets 51.4 30.0 123.6 125.3 156.8 131.4 (25.4) -16.2% Restric ted 4.8 1.4 1.3 1.3 6.0 2.7 (3.4) -55.0% Unrestricted (deficit) (26.8) 11.1 14.5 16.6 5.8 51.7 45.9 791.4% Total net position - end of year 29.4 42.5 139.3 143.2 168.7 185.7 16.9 10.1% Figures may not total due to rounding. 2016-2017 Table A-1 Village of Pleasant Prairie's N et Position (in millions of dollars) Activities Bus ine s s -type Activities Total Governmental Total Change Governmental activities current and other assets increase of $65.6 million due to the following:  $13.0 million - sale of TID #2 land at end of year to Haribo  $25.9 million – Land purchased and being held for resale  $25.5 million - TID #2 bond proceeds put into an escrow account at U.S. Bank for future TID #2 expenditures. Page vi Additions of $7.6 million of capital assets expenditures outpaced minimal disposals and depreciation ($4.7 million) accounting for a $2.9 million increase in the Village’s governmental activities Capital Assets. Deferred outflow of resources is pension related with a decrease of $1.7 million. Village employees are covered under the State of Wisconsin pension plan. More information concerning the increase in capital assets and long- term debt is explained starting on page ix. Other Liabilities decreased by $6.1 million mainly because of a decrease in accounts payable in TID #2 capital project fund, paying off outstanding retainages, and land purchase obligations. Deferred inflows of resources is mainly property tax ($24 million) and pension ($1.9 million), with property tax increasing $1.3 million offset by a decrease in pension of .5 million. The net positon of the Village’s governmental activities increased $13.1 million to $42.5 million. The net position of the Village’s business-type activities increased by $3.9 million to $143.2 million. Accounting for the majority of the increase is the sewer utility ($1.9 million) and the RecPlex ($1.4 million). All business and government type activities are self-supporting entities. Net position of one entity is not permanently used by other entities. STATEMENT OF ACTIVITIES The Village’s 2017 revenues total $81.5 million and expenses total $70.8 million resulting in an increase in net position of $10.7 million prior to capital contributions and transfers. Table A-2 and the narrative that follow consider the operations of governmental and business-type activities separately. Dollar % 2016 2017 2016 2017 2016 2017 Revenues Program revenues Charges for services 4.2 4.5 25.7 26.4 29.9 30.9 0.9 3.3% Operating grants and contributions 0.9 1.0 0.1 0.1 1.1 1.1 0.1 0.0% General revenues Property taxes 20.3 22.8 0.0 0.0 20.3 22.8 2.4 12.3% Other taxes 0.2 0.4 0.0 0.0 0.2 0.4 0.2 100.0% Intergovernmental (not restricted) 2.4 2.5 0.0 0.0 2.4 2.5 0.1 4.2% Investment income 0.2 0.3 0.2 0.3 0.3 0.5 0.2 0.0% Others 0.2 22.8 0.0 0.6 0.2 23.4 23.2 11600.0% Total revenues 28.4 54.2 26.0 27.3 54.4 81.5 27.1 49.8% E xpenses General government 3.6 2.3 0.0 0.0 3.6 2.3 -1.3 -36.1% Public safety 9.7 9.7 0.0 0.0 9.7 9.7 0.0 0.0% Public w orks 10.5 7. 1 0.0 0.0 10.5 7. 1 -3.4 - 32.4% Parks 0.3 0.7 0.0 0.0 0.3 0.7 0.3 133.3% Community development 1.1 24.2 0.0 0.0 1.1 24.2 23.1 2100.0% Interest and fiscal charges 1.6 2.8 0.0 0.0 1.6 2.8 1.2 75.0% Water 0.0 0.0 4.3 4.7 4. 3 4.7 0.4 9.3% Sew er 0.0 0.0 4.7 5. 2 4.7 5. 2 0.5 10.6% Clean Water 0.0 0.0 1.4 1.7 1.4 1.7 0.3 21.4% LakeView RecPlex 0.0 0.0 10.8 10.8 10.8 10.8 0.0 0.0% Waste collection 0.0 0.0 1.7 1.7 1.7 1.7 0.0 0.0% Total expenses 26.8 46.8 22.9 24.1 49.7 70.8 21.2 42.5% I ncrease (deficiency) before contributions & transfers 1.6 7.4 3.1 3.2 4.7 10.7 6.0 127.7% Capital contributions 7. 6 5.4 0.7 0.9 8.3 6.3 -2.0 -24.1% Transfers -4.0 0.2 4.0 -0.2 0.0 0.0 0.0 0.0% CHANGE IN NET POSITION 5.2 13.1 7.8 3.9 13.0 16.9 ENDING NET POSITION 29.4 42.5 139.3 143.2 168.7 185.7 Figures may not total due to rounding. 2016-2017 Activities Total Table A-2 Change in Village of Pleasant Prairie's Net Position (in millions of dollars) Governmental Activities Business-type Total Change Page vii Governmental Activities Revenues for the Village’s governmental activities total $54.2 million, with both property taxes and other revenues accounting for $22.8 million each. Other revenues includes land sales of $20.6 million, $13 million 1st installment payment for land sold to Haribo and $7.5 million sale of land to Uline. Charges for services includes Engineering Fees ($930,000), building permits ($745,000), rescue billings ($538,000), municipal court fees ($340,000), and franchisee fees ($279,000). Governmental activities expenses total $46.8 million, $19.9 million more than 2016 expenses. Parks, community development and interest charges increased by $24.6 million due to development incentives of $6.4 million and land purchases related to parcels that were sold in 2017 of $15.2 million, offset by decreases in general government and public works of $1.3 million and $3.4 million, respectively. Capital contributions decreased from $7.6 million in 2016 to $5.4 million in 2017. The transfers between governmental and business type decrease by $4.2 million, details below: Transfers - Impact on Government Activities 2016 2017 Change Payment in lieu of taxes 833,000 921,000 88,000 Equipment Storage building 1,305,000 - (1,305,000) TID #2 transfer to enterprise funds (6,115,000) (678,000) 5,437,000 (3,977,000) 243,000 4,220,000 Table A-3 presents the total cost of each of the Village’s activities ($46.7 million) as well as each activity’s net cost ($35.9 million). Activity’s net cost is total cost minus fees generated by the activities and direct intergovernmental aid. The net cost shows the financial burden placed on Village taxpayers or indirect revenue sources by each of these activities. The net cost of services increased from 2016 to 2017. Community development net cost is up by $18.2 million due to a development incentives and land purchase detailed above. In 2016, a one-time $6 million land donation was given that offset 2016 general government’s net cost of service, which wasn’t repeated in 2017. Sources of general revenue to cover net cost of services are:  Village property taxes ($22.8 million)  State of Wisconsin shared revenue ($2.5 million) Dollar % Dollar % 2016 2017 2016 2017 General government 3.6 2.3 (1.3) -35.1% (3.9) 1.8 5.7 -145.3% Public safety 9.7 9.7 (0.0) -0.1% 8.3 8.0 (0.3) -4.2% Public w orks 10.5 7.1 (3.4) -32.3% 8.2 4.7 (3.5) -42.7% Par ks 0.3 0.7 0.3 107.7% 0.1 0.7 0.6 969.6% Community development 1.1 24.2 23.1 2004.5% (0.2) 18.0 18.2 -10458.7% Other 1.6 2.8 1.2 76.0% 1.6 2.8 1.2 76.0% Grand Total 26.8 46.8 19.9 74.4% 14.1 35.8 21.8 154.7% Figures may not total due to rounding. Table A-3 Net Cost of Village of Pleasant Prairie Governmental Activities (in millions of dollars) Total Cost Change 2016-2017 Change 2016-2017 of Services Ne t Cos t of Services Page viii Business-type Activities Revenue from the Village’s business-type activities total $26.7 million with user fees accounting for 97%. In 2017, the RecPlex’s user fee revenues increased $.4 million, despite membership household count being down 132 memberships or a 2.7% decrease, ending the year at 4,887 memberships. The RecPlex offers a family-oriented recreation destination with five main activity areas: an aquatics center, fitness center, athletic field house, two ice rinks and a 50-meter competitive indoor swimming pool. Business-type expenses total $23.6 million, up $.7 from 2016. The RecPlex is the largest business type fund, accounting for 43% of all business-type expense activity. The sewer utility is a distant second at 22% of the business-type expenses. No property tax revenue was used to support business-type activities. Dollar % 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 2016 2017 Revenues Program revenues Charge for services 5.6 5.8 6.0 6.1 1.4 1.4 11.1 11.5 1.6 1.7 25.7 26.4 0.7 2.7% Intergovernmental 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.0 NA General Revenues Investment Income 0.1 0.1 0.1 0.1 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.3 0.1 50.0% Total revenue 5.7 5.8 6.1 6.2 1.4 1.4 11.1 11.5 1.7 1.7 25.9 26.7 0.8 3.1% E xpenses 4.4 4.7 4.7 5.2 1.4 1.7 10.7 10.2 1.7 1.8 22.9 23.6 0.7 3.1% Excess (deficiency) before contributions & transfers 1.3 1.1 1.4 1.0 0.0 -0.3 0.4 1.3 0.0 0.0 3.0 3.1 0.1 3.3% Capital contribution 5.9 0.5 0.8 0.8 0.1 0.2 0.0 0.0 0.0 0.0 6.9 1.5 -5.3 -78.3% Transfers -1.2 -1.0 -0.4 0.0 -0.6 0.0 0.1 0.1 0.0 0.0 (2.1) (0.9) 1.2 -57.1% Internal service fund charge 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0% CHA NGE IN NET POSITION 6.0 0.5 1.8 1.9 (0.5) (0.1) 0.5 1.4 0.0 (0.0) 7.8 3.8 -4.0 -51.3% ENDING NET POSITION 53.0 53.6 52.1 54.0 25.8 25.7 7.1 8.5 0.7 0.7 138.8 142.5 3.7 2.7% Figures may not total due to rounding. Change 2016-2017 Clean Water Table A-4 Change in B usiness Type Activity N et Position (in millions of dollars) Water Utility Sew er Utility Collection RecPlex Total LakeView Waste All the Village’s business-type funds experienced an increase in net position during 2017 except for our clean water and waste collection fund, with a decrease in net position of $57,003 and $24,320 respectively. FINANCIAL ANALYSIS OF THE VILLAGE’S FUNDS As the Village completed the year, its governmental funds closed the year at a fund balance of $61.4 million, up from $14.7 million at the end of 2016. The increase is primarily in TID No. 2 escrow capital project fund ($25.4 million) and TID No. 2 debt service fund ($21.8 million) offset by a decrease of $1.3 million in the general capital project fund. The general fund balance increased by $1.2 million to $6.4 million, which represents 42% of the expenditures for year-end December 31, 2017. The 2018 general fund budget uses $187,800 fund balance reserves for one time expenditures in 2018. Unassigned general fund balance was $6 million or 94%. The non-spendable balance $192,517 is delinquent taxes and prepaid items. Page ix GENERAL FUND BUDGETARY HIGHLIGHTS Budgets are adopted at the department level of expenditures. Budget amendments were made through the year within each department between expenses or sometimes against the department’s revenues. The 2017 general government operating net budget came in under budget by $1,229,686. CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets The Village had investments of $233.2 million at the end of 2017 in capital assets, a net increase of $2.1 million. (See table A5). Additions of $11.6 million offset depreciation of $9.5 million, and disposals of $26,341 causing this increase in capital assets. Dollar Percent 2016 2017 2016 2017 2016 2017 Land 25.7 27.0 2.0 2.0 27.7 29.1 1.3 5% Buildings and improvements 17.9 17.6 48.5 48.1 66.4 65.7 (0.7) -1% Equipment / Intangible Assets 6.8 8.1 4.0 3.9 10.7 12.1 1.3 12% Infrastructure 28.7 28.9 95.8 95.2 124.5 124.0 (0.4) 0% Construction in progress 0.5 0.9 1.2 1.4 1.8 2.3 0.5 30% Total 79.6 82.5 151.5 150.7 231.1 233.2 2.1 1% Figures may not total due to rounding. Governmental Total Change 2016-2017 Table A-5 Village of Pleasant Prairie Capital Assets (net of depreciation, in millions of dollars) Activities Busine ss-type Activities Total In 2017 $7.6 million was spent for government-type capital expenditures with Ladder Truck ($1.25 million ), Paving Program ($1.8 million) and Right of Way ($1.07 million) being the largest expenditures. The business- type activities additions totaled $4 million, with the RecPlex ($1.1 million) topping the list. The sewer, water, and clean water each spending just under $1 million each. Listed below are major additions for 2017. Project Description Fund Type Source Millions Ladder Truck Governmental Borrowed $1.25 Right of Way Governmental Borrowed - TID #2 $1.07 Paving Program Governmental Levy $1.81 Aqua System Modifications Business Operating - RecPlex $0.98 Total $5.11 Long-term Debt At year-end the Village had $142.9 million in general obligation bonds, an increase of $56.3 million (See table A-6). Borrowed $63.9 million, refinanced $18.2 million and principal payments of $25.8 million. Page x Dollar % 2016 2017 2016 2017 2016 2017 General obligation bonds 59.6 119.6 27.0 23.3 86.6 142.9 56.3 65.1% (backed by the Village) Total 59.6 119.6 27.0 23.3 86.6 142.9 56.3 65.1% Figures may not total due to rounding. Total Change 2016 -2017 Table A-6 Village of Pleasant Outstanding Debt (in millions of dollars) Activities Busine ss-type Activities Total Governmental The Village has the power to incur indebtedness for Village purposes specified by statute in an aggregate amount, not to exceed 5 percent of the equalized value of taxable property in the Village. Our legal debt capacity is $164.2 million, so the Village is at 87% of capacity at 2017 year-end. We have additional borrowing capacity of $21.3 million. In 2018, our principal payments are $37.5 million, with plans to only borrow $10 million. The majority of the governmental activities’ outstanding debt, $109.1 million or 91%, is fully supported by TID No. 2. Based on a cash flow projection for TID No. 2, we expect all debt paid by tax incremental collections and district No. 2 land sales by 2023. The general government has $10.5 million of outstanding debt that will be paid by tax levy. The business-type activities’ debt is supported by user fees from the Village’s Sewer Utility ($3.1 million) and RecPlex ($20.1 million). General obligation bonds are issued for our business-type activities to obtain a lower interest rate. The Village has been rated since 2001 with the following rating changes. Standard & Poor’s jumped the Village two levels in 2008, from an A+ to AA. In 2010, all municipality ratings were re-evaluated by Moody’s Investor Services and our rating increased to AA2 in 2010. Our ratings have not changed since 2010. Year Standard & Poor’s Moody’s Investor Service 2001 A+ A3 2003 A+ A2 2005 A+ A1 2008 AA A1 2010 AA AA2 ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES The Village’s strategic location between Milwaukee and Chicago is home to one of the largest and most successful corporate parks in Wisconsin. The Village’s two largest employers are Uline and Pleasant Prairie Premium Outlets. Uline employs 1,277 corporate office and warehouse employees and Premium Outlets employs approximately 1,042 in all their various shops located in the center. The Village’s tax base, currently $3.2 billion, up $44.8 million from 2016. Our population has also grown at a steady rate to 20,936 (2017 Estimate) versus 12,604 in 1993. Page xi The 2018 general fund-operating budget was approved to use $187,800 of Village’s surpluses for one time expenditures per our fund balance policy because surplus level were above 25%. Revenues were budgeted at $16.8 million (4.5% increase) and expenditures of $17.0 million (5.3% increase). Total general government property tax contribution increased from $11.5 to $11.8 million. Our business-type funds, sewer, water and solid waste didn’t implement any rate changes in 2018. The Clean Water Utility implemented a $0.67 ERU fee increase from $4.33 to $5. The RecPlex implemented at membership rate increase of 2%. CONTACTING THE VILLAGE’S FINANCIAL MANGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Village’s finances and to demonstrate the Village’s accountability for the money it receives. If you have questions about this report or need additional information, please contact the Village of Pleasant Prairie, Finance Director, 9915 39th Avenue, Pleasant Prairie, WI 53158. Component Business- Unit - Community Governmental type Development Activities Activities Totals Authority ASSETS Cash and investments 38,596,35 9$ 15,783,190 $ 54,379,54 9$ - $ Receivables (net) Taxes 24,160,34 9 290,148 24,450,49 7 - Delinquent taxes 41,296 - 41,296 - Accounts 613,481 1,825,784 2,439,26 5 - Special assessments 296,228 1,084,322 1,380,550 - Delinquent special assessments 317,585 - 317,585 - Accrued interest 77,111 3,712 80,823 - Other - 39,581 39,581 - Internal balances (788,108) 788,108 - - Prepaid items 151,221 1,226 152,447 - Inventories - 130,904 130,904 - Land held for resale 25,936,632 - 25,936,632 255,016 Restricted assets Cash and investments 26,892,69 8 1,299,826 28,192,524 - Capital assets Land 12,968,934 1,788,006 14,756,940 - Right of way 14,075,02 8 - 14,075,02 8 - Construction in progress 911,503 1,377,873 2,289,376 - Intangible assets, net of amortization 281,086 246,121 527,207 - Other capital assets, net of depreciation 54,288,01 3 147,257,05 3 201,545,06 6 - Total Assets 198,819,41 6 171,915,85 4 370,735,27 0 255,016 DEFERRED OUTFLOWS OF RESOURCES Pension-related amounts 4,588,488 1,542,882 6,131,370 - LIABILITIES Accounts payable and accrued liabilities 3,172,080 2,874,681 6,046,761 - Deposits - 10,000 10,000 Unearned revenue 4,124,729 3,012 4,127,741 - Noncurrent liabilities Due within one yea r 36,086,506 2,070,000 38,156,50 6 - Due in more than one year 91,504,023 24,641,37 6 116,145,39 9 - Total Liabilities 134,887,33 8 29,599,06 9 164,486,40 7 - DEFERRED INFLOWS OF RESOURCES Unearned revenues 24,110,205 - 24,110,20 5 - Pension-related amounts 1,930,774 665,888 2,596,662 - Total Deferred Inflows of Resources 26,040,97 9 665,888 26,706,86 7 - NET POSITION Net investment in capital assets 29,976,231 125,303,96 0 131,351,87 7 - Restricted Impact fees 1,350,379 - 1,350,379 - Federally forfeited property recoveries 4,276 - 4,276 - Equipment replacemen t - 1,299,826 1,299,826 - Unrestricted 11,148,701 16,589,99 3 51,667,00 8 255,016 TOTAL NET POSITION 42,479,587$ 143,193,77 9$ 185,673,36 6$ 255,016 $ VILLAGE OF PLEASANT PRAIRIE STATEMENT OF NET POSITION As of December 31, 2017 Primary Government See accompanying notes to financial statements. Page 1 Program Revenues Changes in Net Position Component Operating Capital Unit - Community Charges for Grants and Grants and Governmental Business-type Development Functions/Programs Expenses Services Contributions Contributions Activities Activities Totals Authority Primary Government Governmental Activities General government 2,315,934 $ 552,530 $ 1,925 $ - $ (1,761,479)$ - $ (1,761,479)$ - $ Public safety 9,710,736 1,508,254 251,067 - (7,951,415) - (7,951,415) - Public works 7,095,004 1,146,943 750,989 535,683 (4,661,389) - (4,661,389) - Culture, education and recreation 657,767 - - - (657,767) - (657,767) - Community development 24,198,120 1,264,435 - 4,869,965 (18,063,720) - (18,063,720) - Interest and fiscal charges 2,775,135 - - - (2,775,135) - (2,775,135) - Total Governmental Activities 46,752,696 4,472,162 1,003,981 5,405,648 (35,870,905) - (35,870,905) - Business-type Activities Water Utility 4,719,995 5,760,037 - 182,263 - 1,222,305 1,222,305 - Sewer Utility 5,172,483 6,091,627 - 450,872 - 1,370,016 1,370,016 - Clean Water Utility 1,683,954 1,388,340 14,157 227,665 - (53,792) (53,792) - Lakeview Rec Plex 10,817,391 11,495,824 60,021 - - 738,454 738,454 - Waste Collection 1,698,319 1,657,964 58,101 - - 17,746 17,746 - Total Business-type Activities 24,092,142 26,393,792 132,279 860,800 - 3,294,729 3,294,729 - Total Primary Government 70,844,838 $ 30,865,954 $ 1,136,260 $ 6,266,448 $ (35,870,905) 3,294,729 (32,576,176) - Component Unit Community Development Authority 7,398,072$ - $ - $ - $ - - - (7,398,072) General Revenues Taxes Property taxes, levied for general purposes 9,963,875 - 9,963,875 - Property taxes, levied for debt service 1,520,952 - 1,520,952 - Property taxes, levied for TIF districts 11,275,025 - 11,275,025 - Other taxes 407,725 - 407,725 - Intergovernmental revenues not restricted to specific programs 2,455,740 - 2,455,740 - Investment income 255,345 254,301 509,646 - Miscellaneous 22,845,337 550,000 23,395,337 - Total General Revenues 48,723,999 804,301 49,528,300 - Transfers 243,196 (243,196) - - Change in Net Position 13,096,290 3,855,834 16,952,124 (7,398,072) NET POSITION - Beginning of Year 29,383,297 139,337,945 168,721,242 7,653,088 NET POSITION - END OF YEAR 42,479,587$ 143,193,779 $ 185,673,366 $ 255,016 $ Primary Government Net (Expenses) Revenues and VILLAGE OF PLEASANT PRAIRIE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 See accompanying notes to financial statements. Page 2 VILLAGE OF PLEASANT PRAIRIE BALANCE SHEET GOVERNMENTAL FUNDS As of December 31, 2017 TID No. 2 TID No. 2 TID No. 2 General Debt General Capital Escrow Nonmajor Debt Service Capital Projects Capital Projects Governmental General Service Fund Projects Fund Fund Funds Totals ASSETS Cash and investments - unrestricted 7,212,182 $ 2,273,801 $ 26,218,808 $ - $ 37,199$ - $ 6,898$ 35,748,888$ Receivables (net) Taxes 9,432,468 1,766,100 12,200,971 757,294 - - 3,516 24,160,349 Delinquent taxes 41,296 - - - - - - 41,296 Accounts 613,481 - - - - - - 613,481 Special assessments - 261,049 35,179 - - - - 296,228 Delinquent special assessments - 317,585 - - - - - 317,585 Accrued interest 77,111 - - - - - - 77,111 Due from other funds 1,008,280 - - - - - - 1,008,280 Land held for resale - - - 3,677,167 - - - 3,677,167 Prepaid items 151,221 - - - - - - 151,221 Cash and investments - restricted - - - 1,350,379 - 25,542,319 - 26,892,698 TOTAL ASSETS 18,536,039$ 4,618,535 $ 38,454,958 $ 5,784,840 $ 37,199 $ 25,542,319$ 10,414 $ 92,984,304$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable 330,744 $ 18,944 $ 12,600 $ 354,378 $ - $ 112,423$ 634 $ 829,723$ Accrued liabilities 572,352 - - - - - - 572,352 Unearned revenue 1,399,476 1,602,092 - 1,123,161 - - - 4,124,729 Due to other funds - - - 964,322 12,239 31,719 1,008,280 Other liabilities 180,618 - - 175,000 - - - 355,618 Total Liabilities 2,483,190 1,621,036 12,600 2,616,861 - 124,662 32,353 6,890,702 Deferred Inflows of Resources Unearned revenue 9,389,273 1,763,872 12,196,250 757,294 - - 3,516 24,110,205 Unavailable revenue 273,082 245,700 38,790 - - - - 557,572 Total Deferred Inflows of Resources 9,662,355 2,009,572 12,235,040 757,294 - - 3,516 24,667,777 Fund Balances (Deficit) Nonspendable 192,517 - - - - - - 192,517 Restricted - 987,927 26,207,318 1,350,379 37,199 25,417,657 4,276 54,004,756 Committed - - - - - - 2,622 2,622 Assigned 187,800 - - 1,060,306 - - - 1,248,106 Unassigned (deficit) 6,010,177 - - - - - (32,353) 5,977,824 Total Fund Balances 6,390,494 987,927 26,207,318 2,410,685 37,199 25,417,657 (25,455) 61,425,825 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 18,536,039$ 4,618,535 $ 38,454,958 $ 5,784,840 $ 37,199 $ 25,542,319$ 10,414 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental funds are not financial resources and therefore are not reported in the funds. See Note II.A. 79,073,265 Some receivables that are not currently available are reported as unavailable revenue in the fund financial statements but are recognized as revenue when earned in the government-wide statements. See Note IV.B. 557,572 Internal service fund is reported in the statement of net position in the governmental activities column. 5,416,276 Some liabilities, including long-term debt, are not due and payable in the current period and therefore are not reported in the funds. See Note II.A. (128,864,091) Land held for resale in TID governmental funds are not financial resources according to the TID project plans and, therefore, are not reported in the funds. 22,259,465 Deferred outflows of resources related to pensions do not relate to current financial resources and are not reported in the governmental funds. 4,509,464 Deferred inflows of resources related to pensions do not relate to current financial resources and are not reported in the governmental funds. (1,898,189) NET POSITION OF GOVERNMENTAL ACTIVITIES 42,479,587$ See accompanying notes to financial statements. Page 3 VILLAGE OF PLEASANT PRAIRIE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 General TID No. 2 General Debt Debt Service Capital General Service Fund Projects REVENUES Taxes 9,009,202 $ 1,520,952 $ 11,270,696 $ 1,363,579 $ Intergovernmental 2,296,386 - 332,485 785,996 Regulation and compliance 1,621,918 - - - Public charges for services 2,063,963 - - 394,586 Intergovernmental charges for services 176,061 - - - Special assessments - 4,271 9,891 - Investment income (loss) 99,450 48,487 91,061 5,835 Miscellaneous 2,304,612 - - 11,941 Total Revenues 17,571,592 1,573,710 11,704,133 2,561,937 EXPENDITURES Current General government 3,077,547 - - - Public safety 8,648,664 - - - Public works 2,099,781 - - - Culture, recreation, and education 534,702 - - - Community development 910,555 - - - Capital outlay - - - 4,130,339 Debt service Principal retirement - 1,500,000 12,855,000 - Interest and fiscal charges - 346,210 2,126,689 4,980 Total Expenditures 15,271,249 1,846,210 14,981,689 4,135,319 Excess (deficiency) of revenues over (under) expenditures 2,300,343 (272,500) (3,277,556) (1,573,382) OTHER FINANCING SOURCES AND (USES) Debt issued - 245,000 10,289,172 267,000 Premium on debt issued - 8,853 109,432 - Sale of property - - 13,088,498 26,342 Transfers in 921,297 - 1,568,581 - Transfers out (1,991,954) - - - Total Other Financing Sources and (Uses) (1,070,657) 253,853 25,055,683 293,342 Net Change in Fund Balance 1,229,686 (18,647) 21,778,127 (1,280,040) FUND BALANCES - Beginning of Year 5,160,808 1,006,574 4,429,191 3,690,725 FUND BALANCES - END OF YEAR (DEFICIT) 6,390,494$ 987,927 $ 26,207,318$ 2,410,685$ Page 4 TID No. 2 TID No. 2 Escrow Nonmajor Capital Projects Capital Projects Governmental Fund Fund Funds Totals -$ - $ 3,148$ 23,167,577$ - - - 3,414,867 - - - 1,621,918 - - - 2,458,549 - - - 176,061 - - - 14,162 18,627 (15,285) 120 248,295 4,736,628 - 32,913 7,086,094 4,755,255 (15,285) 36,181 38,187,523 1,734 - - 3,079,281 - - 54,517 8,703,181 - - - 2,099,781 - - - 534,702 44,945,759 - - 45,856,314 2,651,937 1,132,058 35,501 7,949,835 - - - - 14,355,000 735,799 - - 3,213,678 48,335,229 1,132,058 90,018 85,791,772 (43,579,974) (1,147,343) (53,837) (47,604,249) 63,600,828 - - 74,402,000 216,001 - - 334,286 7,572,500 - - 20,687,340 - 26,565,000 - 29,054,878 (28,133,581) - - (30,125,535) 43,255,748 26,565,000 - 94,352,969 (324,226) 25,417,657 (53,837) 46,748,720 361,425 - 28,382 14,677,105 37,199$ 25,417,657$ (25,455) $ 61,425,825$ See accompanying notes to financial statements. Page 5 VILLAGE OF PLEASANT PRAIRIE RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2017 Net change in fund balances - total governmental funds 46,748,720 $ Amounts reported for governmental activities in the statement of net position are different because: Governmental funds report capital outlays as expenditures. However, in the statement of net position the cost of these assets is capitalized and they are depreciated over their estimated useful lives and reported as depreciation expense in the statement of activities. Capital outlay is reported as an expenditure in the fund financial statements but is capitalized in the government-wide financial statements 7,949,835 Some items reported as capital outlay were not capitalized (1,166,520) Depreciation is reported in the government-wide statements (4,080,792) Improvements transferred as assets to utility funds (678,101) Contributed capital assets are reported as revenues in the government-wide statements. 671,916 Land held for resale is reported as an expenditure in the TID fund financial statements. 22,259,465 Receivables not currently available are reported as revenue when collected or currently available in the fund financial statements but are recognized as revenue when earned in the government-wide financial statements. 38,920 Debt issued provides current financial resources to governmental funds, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Debt issued (74,402,000) Principal repaid 14,355,000 Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in the governmental funds. Net pension liability 531,565 Deferred outflows of resources related to pensions (1,679,158) Deferred inflows of resources related to pensions 494,328 Compensated absences 214 Accrued interest on debt (611,414) Other post-employment benefits (154,270) Governmental funds report debt premiums and discounts, as other financing sources (uses) or expenditures. However, in the statement of net position, these are reported as other assets or deductions from long-term debt. These are allocated over the period the debt is outstanding in the statement of activities and are reported as interest expense. Debt premium 715,671 Internal service fund is used by management to charge the costs of the fleet internal services to individual funds. The increase in net position of the internal service fund is reported with governmental activities. 2,102,911 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 13,096,290$ See accompanying notes to financial statements. Page 6 Governmental Activities Nonmajor Waste Internal Water Sewer Clean Water Lakeview Collection Service Utility Utility Utility Rec Plex Fund Fund Totals Funds ASSETS Current Assets Cash and investments 4,777,624 $ 6,744,704 $ 2,415,554 $ 1,618,520 $ 226,788 $ 15,783,190$ 2,847,471 $ Receivables Taxes 66,807 119,903 48,467 - 54,971 290,148 - Accounts 465,529 664,613 169,494 362,202 163,946 1,825,784 - Accrued interest - 3,712 - - - 3,712 - Other 17,507 6,831 - 15,243 - 39,581 - Prepaid items - - - 1,226 - 1,226 - Current portion of special assessments 16,345 2,376 7,476 - - 26,197 - Inventories 49,480 7,576 - 73,848 - 130,904 - Total Current Assets 5,393,292 7,549,715 2,640,991 2,071,039 445,705 18,100,742 2,847,471 Noncurrent Assets Restricted assets Replacement account - 1,299,826 - - - 1,299,826 - Other assets - Special assessments receivable 586,926 451,303 19,896 - - 1,058,125 - Capital assets Land 546,218 1,241,788 - - - 1,788,006 - Intangibles 135,340 85,550 8,072 256,064 8,073 493,099 16,699 Plant in service 64,612,192 76,470,693 34,961,160 45,173,328 1,245,548 222,462,921 - Machinery and equipment - - - - - - 9,317,323 Accumulated depreciation (17,084,419) (29,281,837) (12,239,081) (15,713,276) (887,255) (75,205,868) (5,873,777) Accumulated amortization - - (8,072) (230,833) (8,073) (246,978) (8,946) Construction work in progress 12,574 112,126 470,963 782,210 - 1,377,873 - Total Noncurrent Assets 48,808,831 50,379,449 23,212,938 30,267,493 358,293 153,027,004 3,451,299 Total Assets 54,202,123 57,929,164 25,853,929 32,338,532 803,998 171,127,746 6,298,770 DEFERRED OUTFLOWS OF RESOURCES Pension-related amounts 116,540 139,844 61,570 1,055,318 169,610 1,542,882 79,024 LIABILITIES Current Liabilities Accounts payable 582,435 440,716 102,296 306,188 30,077 1,461,712 74,240 Accrued liabilities 24,513 35,155 15,942 289,920 30,662 396,192 12,596 Accrued interest 34,300 - 216,069 - 250,369 - Other current liabilities - - - 766,408 - 766,408 - Deposits - - - 10,000 - 10,000 - Unearned revenue 3,012 - - - - 3,012 - Current portion of long-term debt - 670,000 - 1,400,000 - 2,070,000 - Total Current Liabilities 609,960 1,180,171 118,238 2,988,585 60,739 4,957,693 86,836 Noncurrent Liabilities Long-term debt - 2,475,000 - 18,725,000 - 21,200,000 - Other post-employment benefits 48,947 94,567 47,350 540,375 113,368 844,607 42,893 Unamortized debt premium - 46,968 - 2,048,125 - 2,095,093 - Net pension liability 16,808 16,797 13,230 140,686 22,247 209,768 11,096 Customer advances for construction 17,143 274,765 - - - 291,908 - Total Noncurrent Liabilities 82,898 2,908,097 60,580 21,454,186 135,615 24,641,376 53,989 Total Liabilities 692,858 4,088,268 178,818 24,442,771 196,354 29,599,069 140,825 DEFERRED INFLOWS OF RESOURCES Pension-related amounts 50,231 59,910 26,360 455,982 73,405 665,888 32,585 NET POSITION Net investment in capital assets 48,221,905 45,436,352 23,193,042 8,094,368 358,293 125,303,960 3,451,299 Restricted for equipment replacement - 1,299,826 - - - 1,299,826 - Unrestricted 5,353,669 7,184,652 2,517,279 400,729 345,556 15,801,885 2,753,085 TOTAL NET POSITION 53,575,574$ 53,920,830 $ 25,710,321 $ 8,495,097 $ 703,849 $ 142,405,671 6,204,384 $ Amounts reported for business-type activities in the statement of net position are different because: Internal services fund net position allocated to the business-type activities 788,108 NET POSITION OF BUSINESS-TYPE ACTIVITIES 143,193,779$ Major VILLAGE OF PLEASANT PRAIRIE STATEMENT OF NET POSITION PROPRIETARY FUNDS As of December 31, 2017 Business-type Activities See accompanying notes to financial statements. Page 7 Governmental Activities Nonmajor Waste Internal Water Sewer Clean Water Lakeview Collection Service Utility Utility Utility Rec Plex Fund Fund Totals Funds OPERATING REVENUES 5,760,037$ 6,091,627 $ 1,388,340 $ 11,495,824 $ 1,657,964 $ 26,393,792 $ 1,765,721 $ OPERATING EXPENSES Operation and maintenance 3,582,517 3,576,783 862,279 8,871,824 1,688,547 18,581,950 959,911 Depreciation/amortization 1,149,945 1,478,941 859,233 1,258,857 68,741 4,815,717 574,797 Total Operating Expenses 4,732,462 5,055,724 1,721,512 10,130,681 1,757,288 23,397,667 1,534,708 Operating Income (Loss) 1,027,575 1,035,903 (333,172) 1,365,143 (99,324) 2,996,125 231,013 NONOPERATING REVENUES (EXPENSES) Investment income 67,348 116,918 34,347 18,785 16,903 254,301 7,050 Intergovernmental grant - - 14,157 - 58,101 72,258 - Interest expense - (158,679) - (872,839) - (1,031,518) - Gain on disposal of assets 300 300 - 14 - 614 13,041 Interest subsidy - - - 60,021 - 60,021 - Issuance cost - - - (128,295) - (128,295) - Amortization of premium - 21,730 - 302,847 - 324,577 - Miscellaneous - - - 550,000 - 550,000 - Total Nonoperating Revenues (Expenses) 67,648 (19,731) 48,504 (69,467) 75,004 101,958 20,091 Income (Loss) Before Contributions and Transfers 1,095,223 1,016,172 (284,668) 1,295,676 (24,320) 3,098,083 251,104 CONTRIBUTIONS AND TRANSFERS Capital contributions 182,263 450,872 227,665 - - 860,800 - Capital contributions - governmental activities 292,720 385,381 - - - 678,101 - Transfers in - - - 119,370 - 119,370 1,991,954 Transfers - tax equivalent (921,297) - - - - (921,297) - Transfers out (119,370) - - - - (119,370) - Total Contributions and Transfers (565,684) 836,253 227,665 119,370 - 617,604 1,991,954 CHANGE IN NET POSITION 529,539 1,852,425 (57,003) 1,415,046 (24,320) 3,715,687 2,243,058 NET POSITION – Beginning of Year 53,046,035 52,068,405 25,767,324 7,080,051 728,169 3,961,326 NET POSITION – END OF YEAR 53,575,574$ 53,920,830 $ 25,710,321 $ 8,495,097 $ 703,849 $ 6,204,384 $ Internal service fund change in net position allocated to the business-type activities 140,147 CHANGE IN NET POSITION BUSINESS-TYPE ACTIVITIES 3,855,834$ Major Business-type Activities VILLAGE OF PLEASANT PRAIRIE STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended December 31, 2017 See accompanying notes to financial statements. Page 8 Governmental Activities Nonmajor Waste Internal Water Sewer Clean Water Lakeview Collection Service Utility Utility Utility Rec Plex Fund Fund Totals Funds CASH FLOWS FROM OPERATING ACTIVITIES Received from customers 5,819,067 $ 6,103,996 $ 1,407,510 $ 11,350,504 $ 1,715,582 $ 26,396,659 $ 1,765,721 $ Paid to suppliers for goods and services (2,749,492) (2,569,047) (504,488) (4,069,401) (1,057,813) (10,950,241 ) (653,903) Paid to employees for services (642,219) (750,927) (359,867) (4,576,783) (621,191) (6,950,987) (249,874) Net Cash Flows From Operating Activities 2,427,356 2,784,022 543,155 2,704,320 36,578 8,495,431 861,944 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Paid to municipality for tax equivalent (921,297) - - - - (921,297) - Transfers from (to) other funds (119,370) - - 119,370 - - 1,991,954 Net Cash Flows From Noncapital Financing Activities (1,040,667) - - 119,370 - (921,297) 1,991,954 CASH FLOWS FROM INVESTING ACTIVITIES Marketable securities purchased - (323,000) - - - (323,000) - Marketable securities sold - 270,872 - - - 270,872 - Investment income 67,859 115,433 34,347 19,734 16,903 254,276 7,050 Net Cash Flows From Investing Activities 67,859 63,305 34,347 19,734 16,903 202,148 7,050 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Debt retired - (700,000) - (10,715,000 ) - (11,415,000 ) - Interest paid - (165,200) - (903,034) - (1,068,234) - Debt issuance costs - - - (128,295) - (128,295) - Proceeds from debt issued - - - 7,700,000 - 7,700,000 - Debt premium - - - 1,489,907 - 1,489,907 - Capital contributions received - 206,185 - 560,000 - 766,185 - Acquisition and construction of capital assets (514,566) (463,433) (808,913) (1,377,023) (20,207) (3,184,142) (793,331) Special assessments received 55,021 199,987 8,579 - - 263,587 - Interest subsidy - - - 60,021 - 60,021 - Net Cash Flows From Capital and Related Financing Activities (459,545) (922,461) (800,334) (3,313,424) (20,207) (5,515,971) (793,331) Net Change in Cash and Cash Equivalents 995,003 1,924,866 (222,832) (470,000) 33,274 2,260,311 2,067,617 CASH AND CASH EQUIVALENTS - Beginning of Year 3,782,621 4,822,186 2,638,386 2,088,520 193,514 13,525,227 779,854 CASH AND CASH EQUIVALENTS - END OF YEAR 4,777,624$ 6,747,052 $ 2,415,554 $ 1,618,520 $ 226,788 $ 15,785,538$ 2,847,471 $ VILLAGE OF PLEASANT PRAIRIE STATEMENT OF CASH FLOWS PROPRIETARY FUNDS For the Year Ended December 31, 2017 Major Business-type Activities Page 9 Governmental Activities Nonmajor Waste Internal Water Sewer Clean Water Lakeview Collection Service Utility Utility Utility Rec Plex Fund Fund Totals Funds RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH FROM OPERATING ACTIVITIES Operating income (loss ) 1,027,575$ 1,035,903 $ (333,172) $ 1,365,143 $ (99,324) $ 2,996,125$ 231,013 $ Miscellaneous non-operating revenue - - 14,157 - 58,101 72,258 - Noncash items included in income (loss) Depreciation/amortization 1,149,945 1,478,941 859,233 1,258,857 68,741 4,815,717 574,797 Depreciation charged to other funds 46,806 (46,806) - - - - - Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources Accounts receivable 5,564 52,365 6,410 (145,320) (2,667) (83,648) - Other accounts receivable (589) 3,223 - - - 2,634 - Prepaid items - - - 15,586 - 15,586 - Inventories 1,691 (60) - 11,151 - 12,782 - Accounts payable 165,534 237,368 (29,922) (30,102) (19,235) 323,643 40,694 Due from other funds 7,249 3,587 (1,397) - 2,184 11,623 - Other current and accrued liabilities (1,606) (2,096) (4,206) 11,487 (11,489) (7,910) (4,960) Pension-related amounts 22,120 18,530 21,732 183,399 29,947 275,728 3,508 Other post employment benefits 3,067 3,067 10,320 34,119 10,320 60,893 16,892 NET CASH FLOWS FROM OPERATING ACTIVITIES 2,427,356$ 2,784,022 $ 543,155 $ 2,704,320$ 36,578 $ 8,495,431$ 861,944 $ RECONCILIATION OF CASH AND CASH EQUIVALENTS TO THE STATEMENT OF NET POSITION Cash and investments 4,777,624 $ 6,744,704 $ 2,415,554 $ 1,618,520 $ 226,788 $ 15,783,190$ 2,847,471 $ Restricted cash and investments - 1,299,826 - - - 1,299,826 - Less: Noncash equivalents - (1,297,478) - - - (1,297,478) - CASH AND CASH EQUIVALENTS - END OF YEAR 4,777,624$ 6,747,052 $ 2,415,554 $ 1,618,520 $ 226,788 $ 15,785,538$ 2,847,471 $ NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Capital additions contributed to the utility by the municipality, customers, and TID district s 474,983$ 438,558 $ 227,665 $ - $ - $ 1,141,206$ - $ Deferred special assessments -$ 198,306$ - $ - $ - $ 198,306$ - $ Special assessments adjustments (12,192)$ - $ - $ - $ - $ (12,192)$ - $ Right of recovery agreements 43,047$ - $ - $ - $ - $ 43,047$ - $ Interest subsidy receivable -$ - $ - $ 5,243$ - $ 5,243$ - $ Capital accounts payable 39,197$ - $ - $ 106,813$ - $ 146,010$ - $ Major Business-type Activities See accompanying notes to financial statements. Page 10 STATEMENT OF NET POSITION FIDUCIARY FUNDS As of December 31, 2017 Retired Employees Healthcare Agency Plan Trust Funds ASSETS Cash and investments 947,285 $ 16,563,694$ Receivables Taxes - 27,471,018 Accounts - 15,547 Total Assets 947,285 44,050,259 LIABILITIES Accounts payable - 36,154 Due to other taxing units - 44,014,105 Total Liabilities - 44,050,259 NET POSITION Net position restricted for OPEB 947,285 - TOTAL NET POSITION 947,285$ - $ VILLAGE OF PLEASANT PRAIRIE See accompanying notes to financial statements. Page 11 STATEMENT OF CHANGES IN NET POSITION - FIDUCIARY FUND For the Year Ended December 31, 2017 Retired Employees Healthcare Plan Trust ADDITIONS Employer contributions 197,000 $ Net investment income 16,273 Total Additions 213,273 DEDUCTIONS Service benefits 197,000 Net Increase in Net Position 16,273 NET POSITION - Beginning 931,012 NET POSITION - ENDING 947,285$ VILLAGE OF PLEASANT PRAIRIE See accompanying notes to financial statements. Page 12 Page 13 VILLAGE OF PLEASANT PRAIRIE INDEX TO NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 NOTE Page I. Summary of Significant Accounting Policies 14 A. Reporting Entity 14 B. Government-Wide and Fund Financial Statements 15 C. Measurement Focus, Basis of Accoun ting, and Financial Statement Presentation 18 D. Assets, Deferred Outflow s of Resources, Liabilities, Deferred Inflows of Resources, and Net Position or Equity 19 1. Deposits and Investments 19 2. Receivables 21 3. Inventories and Prepaid Items 22 4. Restricted Assets 22 5. Capital Assets 22 6. Deferred Outflows of Resources 23 7. Compensated Absences 23 8. Long-Term Obligations/Conduit Debt 24 9. Deferred Inflows of Resources 24 10. Equity Classifications 24 11. Basis for Existing Rates 26 12. Pension 26 II. Reconciliation of Government-Wide and Fund Financial Statements 27 A. Explanation of Certain Differences Between the Governmental Fund Balance Sheet and the Statement of Net Position 27 III. Stewardship, Complian ce, and Accountability 28 A. Excess Expenditures Over Appropriations 28 B. Deficit Balances 28 C. Limitations on the Village’s Tax Levy 28 IV. Detailed Notes on All Funds 29 A. Deposits and Investments 29 B. Receivables 32 C. Restricted Assets 32 D. Capital Assets 33 E. Interfund Receivables/Payables and Transfers 40 F. Long-Term Obligations 42 G. Net Position/Fund Balances 45 H. Component Unit 46 V. Other Information 47 A. Employees’ Retirement System 47 B. Risk Management 52 C. Commitments and Contingencies 52 D. Other Postemployment Benefits 54 E. Significant Customers 61 F. Subsequent Events 61 G. Effect of New Accounting Standards on Current-Period Financial Statements 61 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 14 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the Village of Pleasant Prairie, Wisconsin (the Village) conform to accounting principles generally accepted in the United States of America as applicable to governmental units. The accepted standard-setting body for establishing governmental accounting and financial reporting principles is the Governmental Accounting Standards Board (GASB). A. R EPORTING ENTITY This report includes all of the funds of the village. The reporting entity for the village consists of the primary government and its component units. Component units are legally separate organizations for which the primary government is financially accountable or other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the reporting entity’s financial statements to be misleading. The primary government is financially accountable if (1) it appoints a voting majority of the organization’s governing body and is able to impose its will on that organization; (2) it appoints a voting majority of the organization’s governing body and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government; (3) the organization is fiscally dependent on and there is a potential for the organization to provide specific financial benefits to, or impose specific financial burdens on, the primary government. Certain legally separate, tax exempt organizations should also be reported as a component unit if all of the following criteria are met: (1) the economic resources received or held by the separate organization are entirely or almost entirely for the direct benefit of the primary government, its component units, or its constituents; (2) the primary government, or its component units, is entitled to, or has the ability to access, a majority of the economic resources received or held by the separate organization; and (3) the economic resources received or held by an individual organization that the primary government, or its component units, is entitled to, or had the ability to otherwise access, are significant to the primary government. Component units are reported using one of two methods, discrete presentation or blending. Generally, component units should be discretely presented in a separate column in the financial statements. A component unit should be reported as part of the primary government using the blending method if it meets any one of the following criteria: (1) the primary government and its component unit have substantively the same governing body and a financial benefit or burden relationship exists; (2) the primary government and the component unit have substantially the same governing body and management of the primary government has operational responsibility for the component unit; (3) the component unit serves or benefits, exclusively or almost exclusively, the primary government rather than its citizens; or (4) the total debt of the component unit will be paid entirely or almost entirely from resources of the primary government. Discretely Presented Component Unit Community Development Authority The government-wide financial statements include the Community Development Authority (“CDA”) as a component unit. The CDA is a legally separate organization. The board of the CDA is appointed by the village board. Wisconsin Statutes provide for circumstances whereby the village can impose its will on the CDA, and also create a potential financial benefit to or burden on the village. See Note IV. H. As a component unit, the CDA’s financial statements have been presented as a discrete column in the financial statements. The information presented is for the year ended December 31, 2017. Separately issued financial statements for the CDA are not prepared. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 15 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. G OVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS In June 2015, the GASB issued Statement No. 74 – Financial Reporting for Post-employment Benefit Plans Other Than Pensions. This statement establishes requirements for financial reporting and disclosures for governments that have defined benefit and defined contribution other post-employment benefit plans administered through a trust. This standard was implemented January 1, 2017. Government-Wide Financial Statements The statement of net position and statement of activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Likewise the primary government is reported separately from the legally separate component unit for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. The village does not allocate indirect expenses to functions in the statement of activities. Program revenues include 1) charges to customers or applicants who purchase, use or directly benefit from goods, services, or privileges provided by a given function or segment, and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not included among program revenues are reported as general revenues. Internally dedicated resources are reported as general revenues rather than as program revenues. Fund Financial Statements Financial statements of the village are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts, which constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, net position/fund balance, revenues, and expenditure/expenses. Funds are organized as major funds or nonmajor funds within the governmental and proprietary statements. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the village or meets the following criteria: a. Total assets/deferred outflows of resources, liabilities/deferred inflows of resources, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10% of the corresponding total for all funds of that category or type, and b. The same element of the individual governmental or enterprise fund that met the 10% test is at least 5% of the corresponding total for all governmental and enterprise funds combined. c. In addition, any other governmental or enterpri se fund that the village believes is particularly important to financial statement users may be reported as a major fund. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 16 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. G OVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The village reports the following major governmental funds: General Fund – accounts for the village’s prim ary operating activities. It is used to account for all financial resources except those accounted for and reported in another fund. General Debt Service – used to account fo r resources that are restricted, committed, or assigned to expenditures for the payment of general long-term debt principal, interest, and related costs, other than TID or enterprise debt. Tax Incremental District (TID) No. 2 Debt Service Fund – used to account for and report financial resources that are restricted, committed, or assigned to expenditures for the payment of general long-term debt principal, interest, and related costs. General Capital Projects – used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of equipment and/or major capital facilities. Tax Incremental District (TID) No. 2 Capital Projects Fund – used to account for and report financial resources that are restricted, committed or assigned to expenditures outlined in the TID project plan. Tax Incremental District (TID) No. 2 Escr ow Capital Projects Fund – used to account for and report financial resources that are restricted to expenditures outlined in the TID project plan and 2017 Taxable G.O. Notes Construction Fund Uses. The village reports the following major enterprise funds: Water Utility – accounts fo r operations of the water system Sewer Utility – accounts for operations of the sewer system Clean Water Utility – accounts for operations of the storm sewer system Lakeview Rec Plex Fund – accounts fo r operations of the recreational complex The village reports the following nonmajor governmental and enterprise funds: Special Revenue Funds – used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes (other than debt service or capital projects). Police Canine Unit Federally Forfeited Property Fund VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 17 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) B. G OVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS (cont.) Fund Financial Statements (cont.) The village reports the following nonmajor governmental and enterprise funds: (cont.) Capital Projects Fund – used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of equipment and/or major capital facilities. Tax Incremental District (TID) No. 4 Tax Incremental District (TID) No. 5 Enterprise Funds – used to report any activity for which a fee is charged to external uses for goods or services. Waste Collection Fund In addition, the village reports the following fund types: Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the village, or to other governmental units, on a cost reimbursement basis. Fleet I n s u r a n c e Other employee benefit trust funds are used to report resources that are required to be held in trust for the members and beneficiaries of other postemployment benefit plans. Retired Employees Healthcare Plan Trust Agency funds are used to account for assets held by the village in a trustee capacity or as an agent for individuals, private organizations, and/or other governmental units. Tax Collection Fund Mobile Home Fees VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 18 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C. M EASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION Government-Wide Financial Statements The government-wide statement of net position and statement of activities are reported using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues, expenses, gains, losses, assets, and liabilities resulting from exchange and exchange-like transactions are recognized when the exchange takes place. Property taxes are recognized as revenues in the year for which they are levied. Taxes receivable for the following year are recorded as receivables and deferred inflows. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. Special assessments are recorded as revenue when earned. Unbilled receivables are recorded as revenues when services are provided. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the village’s water and sewer utility and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Fund Financial Statements Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recorded when they are both measurable and available. Available means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. For this purpose, the village considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Certain revenues are to be considered available, such as intergovernmental grants, when collected within 180 days of the end of the current fiscal period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on long-term debt, claims, judgments, compensated absences, and pension expenditures, which are recorded as a fund liability when expected to be paid with expendable available financial resources. Property taxes are recorded in the year levied as receivables and deferred inflows. They are recognized as revenues in the succeeding year when services financed by the levy are being provided. Intergovernmental aids and grants are recognized as revenues in the period the village is entitled the resources and the amounts are available. Amounts owed to the village which are not available are recorded as receivables and unavailable revenues. Amounts received before eligibility requirements (excluding time requirements) are met are recorded as liabilities. Amounts received in advance of meeting time requirements are recorded as deferred inflows. Special assessments are recorded as revenues when they become measurable and available as current assets. Annual installments due in future years are reflected as receivables and unavailable revenues. Delinquent special assessments being held for collection by the county are reported as receivables and nonspendable fund balance in the general debt service fund. At December 31, 2017, there were $4,346,356 of unrecorded deferred assessments which are not recorded as receivables because collection is subject to certain events occurring in the future. No formal repayment schedule has been established. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 19 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) C. M EASUREMENT FOCUS, BASIS OF ACCOUNTING, AND FINANCIAL STATEMENT PRESENTATION (cont.) Fund Financial Statements (cont.) Revenues susceptible to accrual include property taxes, miscellaneous taxes, public charges for services, special assessments and interest. Other general revenues such as fines and forfeitures, inspection fees, recreation fees, and miscellaneous revenues are recognized when received in cash or when measurable and available under the criteria described above. Proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as described previously in this note. Agency funds follow the accrual basis of accounting, and do not have a measurement focus. The proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the water, sewer and clean water utilities, as well as the rec plex and waste collection funds are charges to customers for sales and services. Special assessments are recorded as receivables and contribution revenue when levied. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation/amortization on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. All Financial Statements The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures/expenses during the reporting period. Actual results could differ from those estimates. D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY 1. Deposits and Investments For purposes of the statement of cash flows, the village considers all highly liquid investments with an initial maturity of three months or less when acquired to be cash equivalents. Investment of village funds is restricted by state statutes. Available investments are limited to: a. Time deposits in any credit union, bank, savi ngs bank or trust company maturing in three years or less. b. Bonds or securities of any county, city, dr ainage district, technical college district, village, town, or school district of the state. Also, bonds issued by a local exposition district, a local professional baseball park district, a local professional football stadium district, a local cultural arts district, the University of Wisconsin Hospitals and Clinics Authority, or the Wisconsin Aerospace Authority. c. Bonds or securities issued or gua ranteed by the federal government. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 20 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 1. Deposits and Investments (cont.) d. The local government investment pool. e. Any security maturing in seven years or less and having the highest or second highest rating category of a nationally recognized rating agency. f. Securities of an open-end management invest ment company or investment trust, subject to various conditions and investment options. g. Repurchase agreements with public depositories, with certain conditions. Additional restrictions may arise from local charters, ordinances, resolutions and grant resolutions. The village has adopted an investment policy. That policy follows the state statute for allowable investments. Deposits and investments held by the village have the following risks: custodial credit risk, credit risk, concentration of credit risk, and interest rate risk. No policy exists for the following risk: Concentration of credit risk Custodial Credit Risk The village’s investment policy states that collateralization will be required on two types of investments: certificates of deposit and repurchase agreements. The collateralization level will be 110% of market value of principal and accrued interest. Credit Risk The policy also states that credit risk will be mitigated by limiting investments to the safest types of securities and diversifying the investment portfolio so that potential losses on individual securities will be minimized. Interest Rate Risk The policy also states that interest rate risk may be mitigated by structuring the investment portfolio so that securities mature to meet cash requirements for ongoing operations, thereby avoiding the need to sell securities on the open market prior to maturity and by investing operating funds primarily in shorter- term securities. Investments are stated at fair value, which is the amount at which an investment could be exchanged in a current transaction between willing parties. Fair values are based on methods and inputs outlined in Note IV.A. No investments are reported at amortized cost. Adjustments necessary to record investments at fair value are recorded in the operating statement as increases or decreases in investment income. Investment income on commingled investments of municipal accounting funds is allocated based on average balances. The difference between the bank statement balance and the carrying value is due to outstanding checks and/or deposits in transit. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 21 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 1. Deposits and Investments (cont.) Interest Rate Risk (cont.) The Wisconsin Local Government Investment Pool (LGIP) is part of the State Investment Fund (SIF), and is managed by the State of Wisconsin Investment Board. The SIF is not registered with the Securities and Exchange Commission, but operates under the statutory authority of Wisconsin Chapter 25. The SIF reports the fair value of its underlying assets annually. Participants in the LGIP have the right to withdraw their funds in total on one day’s notice. At December 31, 2017, the fair value of the village’s share of the LGIP’s assets was substantially equal to the amount as reported in these statements. See Note IV.A. for further information. 2. Receivables Property taxes are levied in December on the assessed value as of the prior January 1. In addition to property taxes for the village, taxes are collected for and remitted to the state and county governments as well as the local school district and technical college district. Taxes for all state and local governmental units billed in the current year for the succeeding year are reflected as receivables and due to other taxing units on the accompanying statement of net position – fiduciary funds. Property tax calendar – 2017 tax roll: Lien date and levy date December 2017 Tax bills mailed December 2017 Payment in full, or January 31, 2018 First installment due January 31, 2018 Second installment due April 30, 2018 Third installment due July 31, 2018 Personal property taxes in full January 31, 2018 Tax sale – 2017 delinquent real estate taxes October 2020 Accounts receivable have been shown net of an allowance for uncollectible accounts. Delinquent real estate taxes as of July 31 are paid in full by the county, which assumes the collection thereof. No provision for uncollectible accounts receivable has been made for the water, sewer, and clean water utilities because they have the right by law to place substantially all delinquent bills on the tax roll, and other delinquent bills are generally not significant. During the course of operations transactions occur between individual funds that may result in amounts owed between funds. Short-term interfund loans are reported as “due to and from other funds.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Position. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances” and/or “advances.” VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 22 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 3. Inventories and Prepaid Items Governmental fund inventory items except for land held for resale in non-TID funds are charged to expenditure accounts when purchased. Land held for resale is a type of inventory that is valued at the lower of cost or market. Land held for resale reported in the governmental activities also includes any land held for resale in the TID funds. Proprietary fund inventories are generally used for construction and/or for operation and maintenance work. Of the proprietary funds, the Rec Plex inventory is for resale. Inventories are valued at lower of cost or market, and charged to construction, and/or operation and maintenance expense when used. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 4. Restricted Assets Mandatory segregations of assets are presented as restricted assets. Such segregations are required by bond agreements and other external parties. Current liabilities payable from these restricted assets are so classified. The excess of restricted assets over current liabilities payable from restricted assets will be used first for retirement of related long-term debt. The remainder, if generated from earnings, is shown as restricted net position. 5. Capital Assets Government-Wide Statements Capital assets, which include property, plant and equipment, are reported in the government-wide financial statements. Capital assets are generally defined by the government as assets with an initial cost of more than $5,000 for general capital assets and $5,000 for infrastructure assets, and an estimated useful life in excess of one year. All capital assets are valued at historical cost, or estimated historical cost if actual amounts are unavailable. Donated capital assets are recorded at their estimated acquisition value at the date of donation. Additions to and replacements of capital assets of business-type activities are recorded at original cost, which includes material, labor, overhead, and an allowance for the cost of funds used during construction when significant. For tax-exempt debt, the amount of interest capitalized equals the interest expense incurred during construction netted against any interest revenue from temporary investment of borrowed fund proceeds. No interest was capitalized during the current year. The cost of renewals and betterments relating to retirement units is added to plant accounts. The cost of property replaced, retired or otherwise disposed of, is deducted from plant accounts and, generally, together with removal costs less salvage, is charged to accumulated depreciation/amortization. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 23 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 5. Capital Assets (cont.) Government-Wide Statements (cont.) Depreciation and amortization of all exhaustible capital assets is recorded as an allocated expense in the Statement of Activities, with accumulated depreciation and amortization reflected in the statement of net position. Depreciation and amortization is provided over the assets’ estimated useful lives using the straight-line method. The range of estimated useful lives by type of asset is as follows: Land Improvements 30 Years Buildings 30 Years Intangible Assets 2-50 Years Machinery and Equipment 2-15 Years Infrastructure 20-30 Years Utility Systems 3-100 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government-wide statements. 6. Deferred Outflows of Resources A deferred outflow of resources represents a consumpt ion of net position/fund balance that applies to a future period and will not be recognized as an outflow of resources (expense/expenditure) until that future time. 7. Compensated Absences Under terms of employment, employees are granted sick leave and vacations in varying amounts. Only benefits considered to be vested are disclosed in these statements. All vested vacation and sick leave pay is accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations and retirements, or are payable with expendable available resources. Payments for vacation and sick leave will be made at rates in effect when the benefits are used. Accumulated vacation and sick leave liabilities at December 31, 2017 are determined on the basis of current salary rates and include salary related payments. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 24 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 8. Long-Term Obligations/Conduit Debt All long-term obligations to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term obligations consist primarily of notes and bonds payable, and accrued compensated absences. Long-term obligations for governmental funds are not reported as liabilities in the fund financial statements. The face value of debts (plus any premiums) are reported as other financing sources and payments of principal and interest are reported as expenditures. The accounting in proprietary funds is the same as it is in the government-wide statements. For the government-wide statements and proprietary fund statements, bond premiums and discounts are amortized over the life of the issue using the effective interest method. The balance at year end is shown as an increase or decrease in the liability section of the statement of net position. The village has approved the issuance of industrial revenue bonds (IRB) for the benefit of private business enterprises. IRB's are secured by mortgages or revenue agreements on the associated projects, and do not constitute indebtedness of the village. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. The total amount of IRB’s outstanding at the end of the year is approximately $131,040,238, made up of three issues. 9. Deferred Inflows of Resources A deferred inflow of resources represents an acquisition of net position/fund balance that applies to a future period and therefore will not be recognized as an inflow of resources (revenue) until that future time. 10. Equity Classifications Government-Wide Statements Equity is classified as net position and displayed in three components: a. Net investment in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation/amortization and reduced by the outstanding balances (excluding unspent debt proceeds) of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net positi on with constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or, 2) law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net position that does not meet the definition of “restricted” or “net investment in capital assets.” VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 25 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 10. Equity Classifications (cont.) Government-Wide Statements (cont.) The net position section includes an adjustment for capital assets owned by the business-type activities column, but financed by the debt of the governmental activities column. The amount is a reduction of “net investment in capital assets”, and an increase in “unrestricted” net position, shown only in the total column. A reconciliation of this adjustment is as follows: Governmental Activities Business-type Activities Adjustment Total Net investment in capital assets $ 29,976,231 $ 125,303,960 $ (23,928,314 ) $ 136,111,779 Unrestricted 11,148,701 16, 589,993 23,928,314 51,667,008 When both restricted and unrestricted resources are available for use, it is the village’s policy to use restricted resources first, then unrestricted resources as they are needed. Fund Statements Governmental fund balances are displayed as follows: a. Nonspendable – Includes fund balance amounts that cannot be spent either because they are not in spendable form or because legal or contractual requirements require them to be maintained intact. b. Restricted – Consists of fund balances wi th constraints placed on their use either by 1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments or 2) law through constitutional provisions or enabling legislation. c. Committed – Includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority. Fund balance amounts are committed through a formal action (resolution) of the village. This formal action must occur prior to the end of the reporting period, but the amount of the commitment, which will be subject to the constraints, may be determined in the subsequent period. Any changes to the constraints imposed require the same formal action of the village that originally created the commitment. d. Assigned – Includes spendable fund bal ance amounts that are intended to be used for specific purposes that do not meet the criteria to be classified as restricted or committed. The village board may take official action to assign amounts. Assignments may take place after the end of the reporting period. e. Unassigned – Includes residual positive fund balance within the general fund which has not been classified within the other above mentioned categories. Unassigned fund balance may also include negative balances for any governmental fund if expenditures exceed amounts restricted, committed, or assigned for those purposes. Proprietary fund equity is classified the same as in the government-wide statements. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 26 NOTE I – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont.) D. A SSETS, DEFERRED OUTFLOWS OF RESOURCES, LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND NET POSITION OR EQUITY (cont.) 10. Equity Classifications (cont.) The village considers restricted amounts to be spent first when both restricted and unrestricted fund balance is available unless there are legal documents / contracts that prohibit doing this, such as in grant agreements requiring dollar for dollar spending. Additionally, the village would first use committed, then assigned and lastly unassigned amounts of unrestricted fund balance when expenditures are made. The village has a minimum fund balance policy. That policy is to maintain an unassigned fund balance in the general fund between 25-30% of budgeted general fund expenditures. The unassigned fund balance in the general fund at year-end was $6,010,177 or 37% of budgeted general fund expenditures. See Note IV.G. for further information. 11. Basis for Existing Rates Water Utility The water utility was authorized current rates by the Public Service Commission (PSC) effective June 1, 2015 and they are designed to provide a 2.00% return on rate base. Sewer Utility Current sewer rates were approved by the village board on April 20, 2015 to be effective June 1, 2015 for the Pleasant Prairie and Lake Michigan Sewer Districts. Clean Water Utility Current clean water rates were approved by the village board on December 7, 2015, effective January 1, 2016. Lakeview Rec Plex Fund Membership rates effective during the year 2017 were approved by Ordinance No. 14-34 on December 15, 2014. 12. Pension For purposes of measuring the net pension liability (asset), deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Wisconsin Retirement System (WRS) and additions to/deductions from WRS’ fiduciary net position have been determined on the same basis as they are reported by WRS. 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. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 27 NOTE II – RECONCILIATION OF GOVERNMENT-WIDE AND FUND FINANCIAL STATEMENTS A. E XPLANATION OF CERTAIN DIFFERENCES BETWEEN THE GOVERNMENTAL FUND BALANCE SHEET AND THE STATEMENT OF NET POSITION The governmental fund balance sheet includes a reconciliation between fund balance – total governmental funds and net position – governmental activities as reported in the government-wide statement of net position. One element of the reconciliation explains that “Capital assets used in governmental funds are not financial resources and, therefore, are not reported in the funds.” The details of this reconciliation include the following items. Capital assets per statement of net position Land $ 12,968,934 Right of way 14,075,028 Construction in progress 911,503 Intangible assets, net of amortization 281,086 Other capital assets, net of depreciation 54,288,013 Sub-total 82,524,564 Less: Internal service capital assets, net of depreciation (3,451,299) Net Adjustment for Capital Assets $ 79,073,265 Long-term liabilities applicable to the village’s governmental activities are not due and payable in the current period, and accordingly, are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities - both current and long-term are reported in the statement of net position. Bonds and notes payable $ 119,627,000 Compensated absences 614,506 Accrued interest 1,327,551 Unamortized debt premium 3,434,279 Other post-employment benefits 3,289,580 Net pension liability 571,175 Combined Adjustment for Long-Term Liabilities $ 128,864,091 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 28 NOTE III – STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY A. B UDGETARY INFORMATION Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I.C. A budget has been adopted for all funds ex cept for the TID. No. 5 and TID No . 2 Escrow capital project funds. Wisconsin Statute 65.90 requires that an annual budget be adopted for all funds. B. E XCESS EXPENDITURES OVER APPROPRIATIONS E x c e s s Fund Budgeted Expenditures Actual Expenditures Expenditures Over Budget General Debt Service $ 1,592,263 $ 1,846,210 $ 253,947 TID No. 2 Debt Service 10,658,800 14,981,689 4,322,889 General Capital Projects 2,630,937 4,135,319 1,504,382 TID No. 2 Capital Projects 228,061 76,468,810 76,240,749 Federally Forfeited Property 9,810 21,626 11,816 Police Canine Unit 2,000 32,891 30,891 The village controls expenditures at the department level. Some individual funds experienced expenditures which exceeded appropriations. The detail of those items can be found in the village’s year- end budget to actual report. B. D EFICIT BALANCES Generally accepted accounting principles require disclosure of individual funds that have deficit balances at year-end. As of December 31, 2017, the TID No. 5 Capital Projects Fund held a deficit balance of $32,353. The TID No. 5 capital project fund deficit is anticipat ed to be funded with future incremental taxes levied over the life of the district which is 27 years for districts created befo re October 1, 1995, and 23 years for districts created thereafter through September 30, 2004. Beginning October 1, 2004, the life of new districts varies by type of district (10-27 years) and may be extended in some case. C. L IMITATIONS ON THE VILLAGE’S TAX LEVY Wisconsin law limits the village’s future tax levies. Generally, the village is limited to its prior tax levy dollar amount (excluding TIF districts), increased by the greater of the percentage change in the village’s equalized value due to new construction, or zero percent. Changes in debt service from one year to the next are generally exempt from this limit with certain exceptions. The village is required to reduce its allowable levy by the estimated amount of fee revenue it collects for certain services, if those services were funded in 2013 by the property tax levy. Levies can be increased above the allowable limits if the amount is approved by referendum. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 29 NOTE IV – DETAILED NOTES ON ALL FUNDS A. D EPOSITS AND INVESTMENTS The village maintains a cash and investment pool that is available for use by all funds. Each fund type’s portion of this pool is displayed on the statement of net position and balance sheet as cash and investments. In addition, investments are separately held by several of the village’s funds. The village’s cash and investments at year end were comprised of the following: Carrying Statement Associated Value Balance Risks Deposits $ 65,198,286 $ 65,094,061 Custodial credit U.S. agencies (implicitly guaranteed) 21,783,59 4 21,783,594 Custodial credit, concentration of credit, interest rate Certificate of deposit (negotiable) 6, 052,923 6,052,923 Credit, custodial credit, concentration of credit, interest rate Corporate bonds 3,986,366 3,986, 366 Credit, custodial credit, concentration of credit, interest rate Mutual funds – bonds 748,287 748,287 Credit, interest rate U.S. Treasuries 2,296,133 2,296,133 Custodial credit, interest rate LGIP 5,037 5,037 Credit Petty cash 12,426 - N/A Total Cash and Investments $ 100,083,052 $ 99,966,401 Reconciliation to financial statements: Per statement of net position Unrestricted cash and investments $ 54,379,549 Restricted cash and investments 28,192,524 Per statement of net position – Fiduciary Funds Retired employees heathcare plan trust 947,285 Agency 16,563,694 Total Deposits and Investments $ 100,083,052 Deposits in each local and area bank are insured by the FDIC in the amount of $250,000 for time and savings accounts (including NOW accounts) and $250,000 for demand deposit amounts (interest-bearing and noninterest bearing). In addition, if deposits are held in an institution outside of the state in which the government is located, insured amounts are further limited to a total of $250,000 for the combined amount of all deposits. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 30 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) A. D EPOSITS AND INVESTMENTS (cont.) Bank accounts are also insured by the State Deposit Guarantee Fund in the amount of $400,000. However, due to the nature of this fund, recovery of material principal losses may not be significant to individual municipalities. This coverage has been considered in computing custodial credit risk. The village maintains collateral agreements with its banks. At December 31, 2017, the banks had pledged various government securities in the amount of $87,829,301 to secure the village’s deposits. The village categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The valuation methods for recurring fair value measurements are as follows: > Quoted market prices for identical assets > Quoted market prices for sim ilar assets in active markets December 31, 2017 Investment Type Level 1 Level 2 Level 3 Total Certificates of deposit (negotiable) $ - $ 6,052,923 $ - $ 6,052,923 Corporate bonds - 3,986,366 - 3,986,366 Mutual funds – bond funds 748,287 - - 748,287 U.S. agencies – implicitly guaranteed - 21,783,594 - 21,783,594 U.S. treasuries 2,296,133 - - 2,296,133 Totals $ 3,044,420 $ 31,822,883 $ - $ 34,867,303 Custodial Credit Risk Deposits – Custodial credit risk is the risk that in the event of a financial institution failure, the village’s deposits may not be returned to the village. The village does not have any deposits exposed to custodial credit risk. Investments – For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the village will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The village has $3,265,845 of investments exposed to custodial credit risk as follows: Uninsured/uncollateralized $ 3,265,845 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 31 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) A. D EPOSITS AND INVESTMENTS (cont.) Credit Risk Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. As of December 31, 2017, the village’s investments were rated as follows: Investment Type Standard & Poor’s Moody’s Investor Service U.S. agencies - implicitly guaranteed AA+ AAA Mutual funds – bonds AA+, A+ AAA, Aaa, A1 Corporate bonds AA+ Aaa The village also had investments in the following external pool which is not rated: Local Government Investment Pool (LGIP) Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. At December 31, 2017, the village held investments in U.S. agencies that exceeded 5% of the village’s investment portfolio as follows: FFCB (11.0%), FHLMC (11.4%), FNMA (11.7%), and FHLB (7.9%). Interest Rate Risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. As of December 31, 2017, the village’s investments were as follows: Maturity (In Years) Investment Type Fair Value Less than 1 2 – 5 6 – 10 Certificates of deposits (negotiable) $ 6,052,923 $ 3,111,894 $ 2,941,029 $ - Corporate bonds 3,986,366 1,616,997 2,364,369 - Mutual funds - bonds 748,287 - 511,914 236,373 U.S. agencies – implicitly guaranteed 21,783,594 12,116,668 5,751,081 3,915,845 U.S. treasuries 2,296,133 2,296,133 - - Totals $ 34,867,303 $ 19,141,692 $ 11,568,393 $ 4,152,218 See Note I.D.1. for further information on deposit and investment policies. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 32 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) B. R ECEIVABLES All receivable balances are expected to be collected within one year with the exception of $41,296 in delinquent taxes, $296,228 in special assessments, and $317,585 in delinquent special assessments. Receivables of the General fund and Lakeview Rec Plex are reported net of allowances in the amounts of $86,464 and $63,754, respectively. Governmental funds report unavailable or unearned revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. Property taxes levied for the subsequent year are not earned and cannot be used to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received, but not yet earned. At the end of the current fiscal year, the various components of unavailable revenue and unearned revenue reported in the governmental funds were as follows: Unavailable Unearned Property taxes receivable for subsequent year $ - $ 24,083,018 Rescue accounts receivable 185,317 - Assessing contracts receivable - 316,525 Developer fees - 1,036,446 Special assessments not yet due 284,490 1,602,092 Street light replacement - 37,293 Transportation improvement fees receivable - 876,355 Miscellaneous 87,765 283,205 Total Unavailable/Unearned Revenue for Governmental Funds $ 557,572 $ 28,234,934 Unearned revenue included in liabilities $ 4,124,729 Unearned revenue included in deferred inflows 24,110,205 Total Unearned Revenue for Governmental Activities $ 28,234,934 C. R ESTRICTED ASSETS Equipment Replacement Account As a condition of receiving state and federal funds for sewer utility treatment facility construction, the sewer utility has established an account for replacement of mechanical equipment during the life of the facility. TID Escrow Account TID No. 2 has reached the end of the TID expenditure period, but has uncompleted projects. The unspent debt proceeds have been placed in an escrow account and will be used to complete the unfinished capital projects. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 33 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) C. R ESTRICTED ASSETS (cont.) Impact Fee Account The village has received impact fees which must be spent in accordance with the local ordinance and state statutes. Any unspent funds must be refunded to the current property owner. Following is a list of restricted assets at December 31, 2017: Restricted Assets Sewer equipment replacement account $ 1,299,826 TID No. 2 escrow account 25,542,319 Impact fee account 1,350,379 Total Restricted Assets $ 28,192,524 D. C APITAL ASSETS Capital asset activity for the year ended December 31, 2017 was as follows: Governmental Activities Beginning Ending Balance Additions Deletions Balance Capital assets not being depreciated/ amortized Land $ 12,692,451 $ 276,483 $ - $ 12,968,934 Right of way 13,005,568 1,069,460 - 14,075,028 Construction in progress – general 192,430 513,545 29,385 676,590 Construction in progress – TID water and sewer 340,877 121,345 227,309 234,913 Total Capital Assets Not Being Depreciated/Amortized 26,231,326 1,980,833 256,694 27,955,465 Capital assets being depreciated/ amortized Land improvements 6,702,974 262,328 - 6,965,302 Buildings 17,690,768 244,463 - 17,935,231 Intangible assets – computer software 958,836 27,997 - 986,833 Intangible assets – fleet internal services 16,699 - - 16,699 Machinery and equipment 8,704,500 1,904,506 169,498 10,439,508 Machinery and equipment – fleet internal services 8,699,935 827,410 210,022 9,317,323 Roads 64,347,617 2,364,254 - 66,711,871 Street lighting 3,090,368 249,443 - 3,339,811 Traffic signals 290,544 - - 290,544 Railroad spur 1,295,421 - - 1,295,421 Total Capital Assets Being Depreciated/Amortized 111, 797,662 5,880,401 379,520 117,298,543 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 34 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Governmental Activities (cont.) Beginning Ending Balance Additions Deletions Balance Less: Accumulated depreciation/ amortization Land improvements $ (1,508,083) $ (217,345) $ - $ (1,725,428) Buildings (4,996,642) (588,005) - (5,584,647) Intangible assets – computer software (626,940) (86,560) - (713,500) Intangible assets – fleet internal services (6,561) (2,385) - (8,946) Machinery and equipment (5,495,462) (711,762) 169,498 (6,037,726) Machinery and equipment – fleet internal services (5 ,490,349) (572,412) 188,984 (5,873,777) Roads (38,603,515) (2,260,943) - (40,864,458) Street lighting (746,799) (153,626) - (900,425) Traffic signals (147,236) (19,370) - (166,606) Railroad spur (810,750) (43,181) - (853,931) Total Accumulated Depreciation/Amortization (58,432,337 ) (4,655,589) 358,482 (62,729,444 ) Net Capital Assets $ 79,596,651 $ 82,524,564 Depreciation/amortization expense was charged to functions as follows: Governmental Activities General government $ 379,658 Public safety 692,681 Public works, which includes the depreciation of roads, street lighting, traffic si gnals, and railroad spurs 2,873,233 Culture, education and recreation 134,208 Community development 1,012 Sub-total 4,080,792 Capital assets held by internal service fund charged to the various functions based on their usage of the assets 574,797 Total Governmental Activities D epreciation/Amortization Expense $ 4,655,589 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 35 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities Beginning Ending Balance Additions Deletions Balance Water Capital assets not being depreciated/ amortized Land and land rights $ 546,218 $ - $ - $ 546,218 Intangible assets 135,340 - - 135,340 Construction in progress 9,350 3,224 - 12,574 Total Capital Assets Not Being Depreciated/Amortized 690,908 3,224 - 694,132 Capital assets being depreciated/ amortized Source of supply 195,690 - - 195,690 Pumping 3,844,617 - - 3,844,617 Transmission and distribution 58,497,477 918,190 25,490 59,390,177 General assets 1,136,759 44,949 - 1,181,708 Total Capital Assets Being Depreciated/Amortized 63,674,543 963,139 25,490 64,612,192 Total Capital Assets 64,365,451 - - 65,306,324 Less: Accumulated depreciation/amortization (15,913,158) (1,196,751) 25,490 (17,084,419) Net Water Plant $ 48,452,293 $ 48,221,905 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 36 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities (cont.) Beginning Ending Balance Additions Deletions Balance Sewer Capital assets not being depreciated/ amortized Land and land rights $ 1,241,788 $ - $ - $ 1,241,788 Intangible assets 85,550 - - 85,550 Construction in progress 102,114 10,012 - 112,126 Total Capital Assets Not Being Depreciated/Amortized 1,429,452 10,012 - 1,439,464 Capital assets being depreciated/ amortized Collection systems 67,854,307 599,856 - 68,454,163 Collection system pumping 5,619,170 149,309 - 5,768,479 Treatment and disposal 292,599 - - 292,599 General assets 1,887,015 68,437 - 1,955,452 Total Capital Assets Being Depreciated/Amortized 75,653,091 817,602 - 76,470,693 Total Capital Assets 77,082,543 827,614 - 77,910,157 Less: Accumulated depreciation/amortization (27,849,702) (1,432,135) - (29,281,837) Net Sewer Plant $ 49,232,841 $ 48,628,320 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 37 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities (cont.) Beginning Ending Balance Additions Deletions Balance Clean Water Capital assets not being depreciated/amortized Construction in progress $ 323,958 $ 151,911 $ 4,906 $ 470,963 Capital assets being depreciated/amortized Equipment 19,552 - - 19,552 Intangible assets 8,072 - - 8,072 Land improvements 319,721 268,165 - 587,886 Storm sewers 33,732,314 621,408 - 34,353,722 Total Capital Assets Being Depreciated/Amortized 34,079,659 889,573 - 34,969,232 Total Capital Assets 34,403,617 1,041,484 4,906 35,440,195 Less: Accumulated depreciation/amortization (11,387,920) (859,233) - (12,247,153) Net Clean Water Capital Assets $ 23,015,697 $ 23,193,042 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 38 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities (cont.) Beginning Ending Lakeview Rec Plex Balance Additions Deletions Balance Capital assets not being depreciated/amortized Construction in progress $ 786,303 $ 765,686 $ 769,779 $ 782,210 Capital assets being depreciated/ amortized Building 39,455,357 1,014,508 - 40,469,865 Equipment 2,407,174 131,778 110,068 2,428,884 Infrastructure 198,788 - - 198,788 Intangible assets 256,064 - - 256,064 Land improvements 2,075,791 - - 2,075,791 Total Capital Assets Being Depreciated/Amortize d 44,393,174 1,146,286 110,068 45,429,392 Total Capital Assets 45,179,477 1,911,972 879,847 46,211,602 Less: Accumulated depreciation/amortization Building (11,250,060) (1,052,954) - (12,303,014) Equipment (2,119,462) (83,928) 104,765 (2,098,625) Infrastructure (107,676) (6,626) - (114,302) Intangible assets (216,338) (14,495) - (230,833) Land improvements (1,096,481) (100,854) - (1,197,335) Total Accumulated Depreciation/Amortization (14,790,017) (1,258,857) 104,765 (15,944,109) Net Lakeview Rec Plex Capital Assets $ 30,389,460 $ 30,267,493 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 39 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities (cont.) Beginning Ending Balance Additions Deletions Balance Waste Collection Capital assets being depreciated/ amortized Land improvements $ 150,055 $ - $ - $ 150,055 Buildings 303,117 20,207 - 323,324 Equipment 772,169 - - 772,169 Intangible assets 8,073 - - 8,073 Total Capital Assets Being Depreciated/Amortized 1,233,414 20,207 - 1,253,621 Total Capital Assets 1,233,414 20,207 - 1,253,621 Less: Accumulated depreciation/amortization Land improvements (8,099 ) (5,559 ) - (13,658) Buildings (124,339 ) (15,493 ) - (139,832) Equipment (686,076 ) (47,689 ) - (733,765) Intangible assets (8,073 ) - - (8,073) Total Accumulated Depreciation/Amortization (826,587 ) (68,741 ) - (895,328) N e t W a s t e C o l l e c t i o n Capital Assets $ 406,827 $ 358,293 Business-type Capital Assets, Net of Accumulated Depreciation/Amortization $ 151,497,118 $ 150,677,125 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 40 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) D. C APITAL ASSETS (cont.) Business-type Activities (cont.) Depreciation/amortization expense was charged to functions as follows: Business-type Activities Water $ 1,149,945 Sewer 1,478,941 Clean Water 859,233 Lakeview Rec Plex 1,258,857 Waste Collection 68,741 Total Business-type Activities Depreciation/Amortization Expense $ 4,815,717 Depreciation/amortization expense may be different from business-type activity accumulated depreciation additions because of joint metering, salvage, cost of removal, internal allocations, and costs associated with the disposal of assets. E. I NTERFUND RECEIVABLES/PAYABLES AND TRANSFERS Interfund Receivables/Payables The following is a schedule of interfund receivables and payables: Receivable Fund Payable Fund Amount Amount Not Due Within One Year General Fund General Capital Projects $ 964,322 $ - General Fund TID No. 2 Escrow 12,239 - General Fund TID No. 5 31,719 - Subtotal – Fund Financial Statements 1,008,280 Less: Fund eliminations (1,008,280) Less: Interfund receivable created with internal service fund elimination (788,108) Total – Government-Wide Statement of Net Position $ (788,108) Receivable Fund Payable Fund Amount Business-type Activities – internal service allocations Governmental Activities – internal service allocations $ 788,108 Total Internal Balances - Government-wide Statement of Net Position $ 788,108 All amounts are due within one year. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 41 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) E. I NTERFUND RECEIVABLES/PAYABLES AND TRANSFERS (cont.) Transfers The following is a schedule of interfund transfers: Fund Transferred To Fund Transferred From Amount Principal Purpose General Fund Water Utility $ 921,297 Payment in lieu of taxes Lakeview Rec Plex Water Utility 119,370 Tower lease payments TID No. 2 Debt Service TID No. 2 Capital Projects 1,568,581 Route 165 net sales TID No. 2 Escrow TID No. 2 Capital Projects 26,565,000 Establish fund Insurance – internal service General Fund 1,991,954 Establish fund Total – Fund Financial Statements 31,166,202 Less: Fund eliminations (28,252,951) Less: Government-wide eliminations (1,991,954 ) Less: Transfer to business-type activities for capital assets funded by the governmental activities (678,101) Total Transfers – Government-Wide Statement of Activities $ 243,196 Fund Transferred To Fund Transferred From Amount Governmental Activities Business-type Activities $ 921,297 Business-type Activities Gove rnmental Activities (678,101 )) Total Government-wide Statement of Activities $ 243,196 Generally, transfers are used to (1) move revenues from the fund that collects them to the fund that the budget requires to expend them, (2) move receipts restricted to debt service from the funds collecting the receipts to the debt service fund, and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 42 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) F. LONG-TERM OBLIGATIONS Long-term obligations activity for the year ended December 31, 2017 was as follows: Amounts Beginning Ending Due Within Balance Increases Decreas es Balance One Year GOVERNMENTAL ACTIVITIES Bonds and Notes Payable General obligation debt $ 59,580,000 $ 74,402,000 $ 14,355,000 $ 119,627,000 $ 35,472,000 Premium 4,149,950 334,286 1,049,957 3,434,279 - Sub-totals 63,729,950 74,736,286 15,404,957 123,061,279 35,472,000 Other Liabilities Vested compensated absences 614,720 614,506 614,720 614,506 614,506 Other post-employment benefits General 3,135,310 278,690 124,420 3,289,580 - Internal service 39,385 3,508 - 42,893 - Net pension liability General 1,102,740 - 531,565 571,175 - Internal service 19,387 - 8,291 11,096 - Total Other Liabilities 4,911,542 896,704 1,278,996 4,529,250 614,506 Total Governmental Activities Long-Term Liabilities $ 68,641,492 $ 75,632,990 $ 16,683,953 $ 127,590,529 $ 36,086,506 BUSINESS-TYPE ACTIVITIES Bonds and Notes Payable General obligation debt $ 26,985,000 $ 7,700,000 $ 11,415,000 $ 23,270,000 $ 2,070,000 Premium 929,763 1,489,907 324,577 2,095,093 - Sub-totals 27,914,763 9,189,907 11,739,577 25,365,093 2,070,000 Other Liabilities Customer advances 330,955 4,000 43,047 291,908 - Other post-employment benefits 783,714 61,775 882 844,607 - Net pension liability 391,054 - 181,286 209,768 - Total Other Liabilities 1,505,723 65,775 225,215 1,346,283 - Total Business-type Activities Long-Term Liabilities $ 29,420,486 $ 9,255,682 $ 11,964,792 $ 26,711,376 $ 2,070,000 In accordance with Wisconsin Statutes, total general obligation indebtedness of the village may not exceed 5% of the equalized value of taxable property within the village's jurisdiction. The debt limit as of December 31, 2017 was $164,161,140. Total general obligation debt outstanding at year-end was $142,897,000. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 43 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) F. LONG-TERM OBLIGATIONS (cont.) General Obligation Debt All general obligation notes and bonds payable are backed by the full faith and credit of the village. Notes and bonds in the governmental funds will be retired by future property tax levies or tax increments accumulated by the debt service fund. Business-type activities general obligation debt is payable by revenues from user fees of those funds or, if the revenues are not sufficient, by future tax levies. Original Date of Final Interest Indebted- Balance Governmental Activities Issue Maturity Rates ness 12-31-17 General Obligation Debt Promissory notes 02/19/08 02/ 01/18 3.00 – 4.00% $ 2,235,000 $ 235,00 0 Promissory notes 04/27/10 04/ 01/20 3.00 – 4.50% 2,025,000 750,000 Refunding bonds 10/25/12 06/01/ 19 2.00 – 3.00% 2,635,000 835,000 Promissory notes 11/03/14 05/ 01/24 2.00 – 4.00% 6,865,000 5,865,000 Promissory notes 08/20/14 09/ 01/23 4.50 – 5.00% 20,970,000 20,970,000 Promissory notes 06/04/15 09/ 01/20 2.00 – 3.00% 13,450,000 13,450,000 Promissory notes 11/01/16 11/ 01/26 2.00 – 3.00% 3,245,000 3,120,000 Note anticipation notes 05/11/17 01/01/18 1.47% 21,570,000 21,570,000 Promissory notes 05/11/17 09/ 01/20 1.54 – 2.00% 16,375,000 16,375,000 Promissory notes 07/13/17 09/ 01/23 1.90 – 2.00% 21,335,000 21,335,000 Promissory notes 07/13/17 09/01/21 2.00% 4,325,000 4,325,000 Refunding bonds 08/24/17 08/01/18 4.00% 4,105,000 4,350,000 Promissory notes 12/12/17 02/01/18 1.25% 267,000 267,000 Refunding notes 12/12/17 12/01/20 2.25% 6,180,000 6,180,000 Total Governmental Activities – General Obligation Debt $ 119,627,000 Business-type Activities General Obligation Debt Refunding notes 06-16-08 12/01/19 4.00 – 4.25% $ 950,000 $ 400,00 0 Promissory notes 12/04/08 09/01/18 4.00 – 4.75% 1,270,000 445,000 Promissory notes 04/27/10 04/01/20 3.00 – 4.50% 2,375,000 2,300,000 Promissory notes 09/21/10 04/01/27 4.55 – 4.85%* 1,890,000 1,890,000 Refunding notes 06/07/11 09/01/21 3.00 – 4.00% 7,095,000 3,150,000 Refunding notes 02/01/12 12/01/23 2.00 – 3.00% 2,605,000 1,505,000 Refunding notes 02/21/13 05/01/24 3.00 – 3.25% 7,305,000 5,880,000 Refunding bonds 08/24/17 08/01/28 3.00 – 5.00% 7,700,000 7,700,000 Total Business-type Activities General Obligation Debt $ 23,270,000 * The interest on this debt is being subsidized by the federal government. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 44 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) F. LONG-TERM OBLIGATIONS (cont.) General Obligation Debt (cont.) Debt service requirements to maturity are as follows: Governmental Activities Business-type Activities General Obligation Debt General Obligation Debt Years Principal Interest Principal Interest 2018 $ 35,472,000 $ 3,106,262 $ 2,070,000 $ 882,643 2019 12,135,000 2,419,139 2,100,000 820,121 2020 24,630,000 2,120,404 4,025,000 705,184 2021 12,425,000 1,395,000 1,925,000 599,996 2022 12,650,000 981,600 1,700,000 540,090 2023 – 2027 22,315,000 704,025 9,350,000 1,769,593 2028 - - 2,100,000 105,000 Totals $ 119,627,000 $ 10, 726,430 $ 23,270,000 $ 5,422,627 Current Refunding On August 24, 2017, the village issued $12,050,000 in general obligation bonds with an average coupon rate of 2.19% to refund $13,465,000 of outstanding bonds with an average coupon rate of 4.21%. The net proceeds along with existing funds of the village were used to prepay the outstanding debt. The cash flow requirements on the refunded debt prior to the current refunding was $14,108,225 in 2018. The cash flow requirements on the refunding bonds are $15,435,081 from 2018 through 2028. The current refunding resulted in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $299,478. On December 27, 2017, the village issued $6,180,000 in general obligation notes with an average coupon rate of 2.25% to refund $6,070,000 of outstanding note anticipation notes with an average coupon rate of 1.437%. The net proceeds will be used to prepay the outstanding debt in 2018. The cash flow requirements on the debt that will be refunded in 2018, prior to the current refunding is $6,128,124 for 2018. The cash flow requirements on the refunding bonds are $6,587,108 from 2018 through 2020. The current refunding resulted in an economic gain (difference between the present values of the debt service payments on the old and new debt) of $52,089. Other Debt Information Estimated payments of compensated absences and other post-employment benefits are not included in the debt service requirement schedules. The compensated absences and other post-employment benefit liabilities attributable to governmental activities will be liquidated primarily by the general fund. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 45 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) G. N ET POSITION/FUND BALANCES Governmental activities net position reported on the government wide statement of net position at December 31, 2017 includes the following: Governmental Activities Net investment in capital assets Land $ 12,968,934 - Right of way 14,075,028 Construction in progress 911,503 Intangible assets, net of amortization 281,086 Other capital assets, net of accumulated depreciation 54,288,013 Less: unamortized debt premium (3,434,279) Less: related capital long-term debt outstanding (net of unspent proceeds of debt) (49,114,054) Total Net Investment in Capital Assets $ 29,976,231 Governmental Funds Governmental fund balances reported on the fund financial statements at December 31, 2017 include the following: TID No. 2 TID No. 2 Nonmajor General Debt General Capital TID #2 Govern- General Debt Service Capital Projects Escrow mental Fund Service Fund Projects Fund Fund Funds Totals Fund Balances Nonspendable: Delinquent taxes/ specials $ 41,296 $ - $ - $ - $ - $ - $ - $ 41,296 Prepaid items 151,221 - - - - - - 151,221 Sub-total 192,517 - - - - - - 192,517 Restricted for: Debt service - 987,927 26,207,318 - - - - 27,195,245 TID purposes - - - - 37,199 25,417,657 - 25,454,856 Impact fees - - - 1,350,379 - - - 1,350,379 Federally forfeited property - - - - - - 4,276 4,276 Sub-total - 987,927 26,207,318 1,350,379 37,199 25,417,657 4,276 54,004,756 Committed to: Police canine unit - - - - - - 2,622 2,622 Assigned to: Capital projects - - - 1,060,306 - - - 1,060,306 2018 budget 187,800 - - - - - - 187,800 Sub-total 187,800 - - 1,060,306 - - - 1,248,106 Unassigned (deficit) 6,010,177 - - - - - (32,353) 5,977,824 Total Fund Balances (Deficit) $ 6,390,494 $ 987,927 $ 26,207,318 $ 2,410,685 $ 37,199 $ 25,417,657 $ (25,455) $ 61,425,825 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 46 NOTE IV – DETAILED NOTES ON ALL FUNDS (cont.) G. N ET POSITION/FUND BALANCES (cont.) Business-type Activities Net Investment in Capital Assets Land $ 1,788,006 Construction in progress 1,377,873 Intangible assets, net of amortization 246,121 Other capital assets, net of accumulated depreciation 147,257,053 Less: Long-term capital d ebt outstanding (23,270,000) Less: Unamortized debt premium (2,095,093) Total Net Investment in Capital Assets $ 125,303,960 H. C OMPONENT UNIT This report contains the Community Development Authority (CDA), which is included as a component unit. Financial information is presented as a discrete column in the statement of net position and statement of activities. In addition to the basic financial statements and the preceding notes to financial statements which apply, the following additional disclosures are considered necessary for a fair presentation. a. Basis of Accounting/Measurement Focus The CDA follows the full accrual basis of accounting and the flow of economic resources measurement focus. b. Deposits and Investments At December 31, 2017, the CDA held no cash or investments. c. Land Held for Resale The CDA had a balance of $255,016 in land held for resale as of December 31, 2017. This balance is reported at the lower of cost or market. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 47 NOTE V – OTHER INFORMATION A. EMPLOYEES’ RETIREMENT SYSTEM General Information About the Pension Plan Plan description. The WRS is a cost-sharing multiple-employer defined benefit pension plan. WRS benefits and other plan provisions are established by Chapter 40 of the Wisconsin Statutes. Benefit terms may only be modified by the legislature. The retirement system is administered by the Wisconsin Department of Employee Trust Funds (ETF). The system provides coverage to all eligible State of Wisconsin, local government and other public employees. All employees, initially employed by a participating WRS employer on or after July 1, 2011, and expected to work at least 1,200 hours a year and expected to be employed for at least one year from employee’s date of hire are eligible to participate in the WRS. ETF issues a standalone Comprehensive Annual Financial Report (CAFR), which can be found at http://etf.wi.gov/publications/cafr.htm. Vesting. For employees beginning participation on or after January 1, 1990, and no longer actively employed on or after April 24, 1998, creditable service in each of five years is required for eligibility for a retirement annuity. Participants employed prior to 1990 and on or after April 24, 1998, and prior to July 1, 2011, are immediately vested. Participants who initially became WRS eligible on or after July 1, 2011, must have five years of creditable service to be vested. Benefits provided. Employees who retire at or after age 65 (54 for protective occupation employees, 62 for elected officials and State executive participants) are entitled to receive an unreduced retirement benefit. The factors influencing the benefit are: (1) final average earnings, (2) years of creditable service, and (3) a formula factor. Final average earnings is the average of the participant's three highest years' earnings. Creditable service is the creditable current and prior service expressed in years or decimal equivalents of partial years for which a participant receives earnings and makes contributions as required. The formula factor is a standard percentage based on employment category. Employees may retire at age 55 (50 for protective occupation employees) and receive reduced benefits. Employees terminating covered employment before becoming eligible for a retirement benefit may withdraw their contributions and forfeit all rights to any subsequent benefits. The WRS also provides death and disability benefits for employees. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 48 NOTE V – OTHER INFORMATION (cont.) A. EMPLOYEES’ RETIREMENT SYSTEM (cont.) Post-retirement adjustments. The Employee Trust Funds Board may periodically adjust annuity payments from the retirement system based on annual investment performance in accordance with s. 40.27, Wis. Stat. An increase (or decrease) in annuity payments may result when investment gains (losses), together with other actuarial experience factors, create a surplus (shortfall) in the reserves, as determined by the system’s consulting actuary. Annuity increases are not based on cost of living or other similar factors. For Core annuities, decreases may be applied only to previously granted increases. By law, Core annuities cannot be reduced to an amount below the original, guaranteed amount (the “floor”) set at retirement. The Core and Variable annuity adjustments granted during recent years are as follows: Year Core Fund Adjustment Variable Fund Adjustment 2007 3.0% 10% 2008 6.6 0 2009 (2.1) (42) 2010 (1.3) 22 2011 (1.2) 11 2012 (7.0) (7) 2013 (9.6) 9 2014 4.7 25 2015 2.9 2 2016 0.5 (5) Contributions. Required contributions are determined by an annual actuarial valuation in accordance with Chapter 40 of the Wisconsin Statutes. The employee required contribution is one-half of the actuarially determined contribution rate for General category employees and Executives and Elected Officials. Starting January 1, 2016, the Executives and Elected Officials category merged into the General Employee category. Required contributions for protective employees are the same rate as general employees. Employers are required to contribute the remainder of the actuarially determined contribution rate. The employer may not pay the employee required contribution unless provided for by an existing collective bargaining agreement. During the reporting period, the WRS recognized $962,497 in contributions from the village. Contribution rates as of December 31, 2017 are: Employee Category Employee Employer General (Executives & Elected Officials) 6.8% 6.8% Protective with Social Security 6.8% 10.6% Protective without Social Security 6.8% 14.9% VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 49 NOTE V – OTHER INFORMATION (cont.) A. EMPLOYEES’ RETIREMENT SYSTEM (cont.) Pension Liability, Pension Expense, Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At December 31, 2017, the village reported a liability of $792,039 for its proportionate share of the net pension liability. The net pension liability was measured as of December 31, 2016, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of December 31, 2015 rolled forward to December 31, 2016. No material changes in assumptions or benefit terms occurred between the actuarial valuation date and the measurement date. The village’s proportion of the net pension liability was based on the village’s share of contributions to the pension plan relative to the contributions of all participating employers. At December 31, 2016, the village’s proportion was .09609345%, which was an increase of .00297350% from its proportion measured as of December 31, 2016. For the year ended December 31, 2017, the village recognized pension expense of $2,004,623. At December 31, 2017, the village 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 $ 302,004 $ 2,490,896 Changes of actuarial assumptions 828,108 - Net differences between projected and actual earnings on pension plan investments 3,942,520 - Changes in proportion and differences between employer contributions and proportionate share of contributions - 105,766 Employer contributions subsequent to the measurement date 1,058,738 - Totals $ 6,131,370 $ 2,596,662 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 50 NOTE V – OTHER INFORMATION (cont.) A. EMPLOYEES’ RETIREMENT SYSTEM (cont.) $1,058,738 reported as deferred outflows related to pension resulting from the WRS Employer’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2018. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended December 31: Deferred Outflows of Resources Deferred Inflows of Resources 2018 $ 1,845,558 $ 830,006 2019 1,845,557 830,006 2020 1,511,799 820,868 2021 (131,660) 115,360 2022 1,378 422 Actuarial assumptions. The total pension liability in the December 31, 2016 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Actuarial Valuation Date: December 31, 2015 Measurement Date of Net Pension Liability (Asset) December 31, 2016 Actuarial Cost Method: Entry Age Asset Valuation Method: Fair Market Value Long-Term Expected Rate of Return: 7.2% Discount Rate: 7.2% Salary Increases: Inflation Seniority/Merit 3.2% 0.2% - 5.6% Mortality: Wisconsin 2012 Mortality Table Post-retirement Adjustments*: 2.1% * No post-retirement adjustment is guaranteed. Actual adjustments are based on recognized investment return, actuarial experience and other factors. 2.1% is the assumed annual adjustment based on the investment return assumption and the post-retirement discount rate. Actuarial assumptions are based upon an experience study conducted in 2015 using experience from 2012 – 2014. The total pension liability for December 31, 2016 is based upon a roll-forward of the liability calculated from the December 31, 2015 actuarial valuation. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 51 NOTE V – OTHER INFORMATION (cont.) A. EMPLOYEES’ RETIREMENT SYSTEM (cont.) Long-term expected return on plan assets. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class are summarized in the following table: Core Fund Asset Class Current Asset Allocation % Destination Target Asset Allocation % Long-Term Expected Nominal Rate of Return % Long-Term Expected Real Rate of Return % Global Equities 50% 45% 8.3% 5.4% Fixed Income 24.5 37 4.2 1.4 Inflation Sensitive Assets 15.5 20 4.3 1.5 Real Estate 8 7 6.5 3.6 Private Equity/Debt 8 7 9.4 6.5 Multi-Asset 4 4 6.6 3.7 Total Core Fund 110 120 7.4 4.5 Variable Fund Asset Class U.S. Equities 70 70 7.6 4.7 International Equities 30 30 8.5 5.6 Total Variable Fund 100 100 7.9 5.0 New England Pension Consultants Long-Term US CPI (Inflation) Forecast: 2.75% Asset Allocations are managed within established ranges, target percentages may differ from actual monthly allocations VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 52 NOTE V – OTHER INFORMATION (cont.) A. EMPLOYEES’ RETIREMENT SYSTEM (cont.) Single discount rate. A single discount rate of 7.20% was used to measure the total pension liability. This single discount rate was based on the expected rate of return on pension plan investments of 7.20% and a long term bond rate of 3.78%. Because of the unique structure of WRS, the 7.20% expected rate of return implies that a dividend of approximately 2.1% will always be paid. For purposes of the single discount rate, it was assumed that the dividend would always be paid. The projection of cash flows used to determine this single discount rate assumed that plan member contributions will be made at the current contribution rate and that employer contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on these assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments (including expected dividends) of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the village’s proportionate share of the net pension liability (asset) to changes in the discount rate. The following presents the village’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.20 percent, as well as what the village’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.20 percent) or 1-percentage-point higher (8.20 percent) than the current rate: 1% Decrease to Discount Rate (6.20%) Current Discount Rate (7.20%) 1% Increase to Discount Rate (8.20%) Village’s proportionate share of the net pension liability (asset) $ 10,419,787 $ 792,039 $ (6,621,762) Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is available in separately issued financial statements available at http://etf.wi.gov/publications/cafr.htm. At December 31, 2017, the village reported a payable to the pension plan which represents contractually required contributions outstanding as of the end of the year. B. R ISK MANAGEMENT The village is exposed to various risks of loss related to torts; theft of, damage to, or destruction of assets; errors and omissions; workers compensation; and health care of its employees. All of these risks are covered through the purchase of commercial insurance, with minimal deductibles. Settled claims have not exceeded the commercial coverage in any of the past three years. There were no significant reductions in coverage compared to the prior year. C. C OMMITMENTS AND CONTINGENCIES Claims and judgments are recorded as liabilities if all the conditions of Governmental Accounting Standards Board pronouncements are met. The liability and expenditure for claims and judgments is only reported in governmental fund types if it has matured. Claims and judgments are recorded in the government-wide statements and proprietary funds as expenses when the related liabilities are incurred. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 53 NOTE V – OTHER INFORMATION (cont.) C. C OMMITMENTS AND CONTINGENCIES (cont.) From time to time, the village is party to various pending claims and legal proceedings. Although the outcome of such matters cannot be forecasted with certainty, it is the opinion of management and the village's legal counsel that the likelihood is remote that any such claims or proceedings will have a material adverse effect on the village's financial position or results of operations. The village has received federal and state grants for specific purposes that are subject to review and audit by the grantor agencies. Such audits could lead to requests for reimbursements to the grantor agency for expenditures disallowed under terms of the grants. Management believes such disallowances, if any, would be immaterial. The village has active construction projects as of December 31, 2017. Work that has been completed on these projects but not yet paid for (including contract retainages) is reflected as accounts payable and expenditures. In 2009, the village issued a municipal revenue obligation as part of a development agreement, which was authorized through the TID project plan. The original amount of the obligation was $452,062 and is payable to the developer solely from tax increments collected from a specific portion of the development in TID No. 4. Payments are scheduled through the year 2027, and carry an interest rate not to exceed 9.75%. The obligation does not constitute a charge upon any funds of the village. In the event that future tax increments are not sufficient to pay off the obligation, the obligation terminates with no further liability to the village. Since the amount of future payments is contingent on the collection of future TIF increments, the obligation is not reported as a liability in the accompanying financial statements. The balance of the commitment and accrued interest outstanding at year end was $770,230. Water Supply and Wastewater Treatment The utilities have a long-term agreement with Kenosha Water Utility for all water supply and all wastewater treatment. Water Purchase Agreement On March 15, 2004, the water utility entered into an agreement to provide water to WE Energies. The agreement states the utility may provide up to 3.5 million gallons per day with WE Energies purchasing a minimum of 100 million gallons per year for the calendar years 2012 through 2016. After 2016, the minimum water purchase can’t be less than 50 million gallons per year. For 2017, WE Energies purchased 171 million gallons. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 54 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS The village administers a single-employer defined benefit healthcare plan (“the Retiree Health Plan”). The plan provides health insurance contributions for eligible retirees and their spouses through the village’s group health insurance plan, which covers both active and retired members. Benefit provisions are established through collective bargaining agreements and past practice and state that eligible retirees and their spouses receive lifetime healthcare insurance at established contribution rates. The Retiree Health Plan does not issue a publicly available financial report. Summary of Significant Accounting Policies Basis of Accounting. The plan’s financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions to the plan are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Method Used to Value Investments. Investments are reported at fair value, which is determined by the mean of the most recent bid and asked provides as obtained from dealers that make markets in such securities. Securities for which market quotations are not readily available are valued at their fair value as determined by the custodian under the direction of the plan board of trustees, with the assistance of a valuation service. Plan Contribution Information Members of the plan consisted of the following at January 1, 2016, the date of the latest actuarial valuation: Retirees 17 Active plan members 180 Number of participating employers 1 Contribution requirements are established through collective bargaining agreements and past practice and may be amended only through negotiations between the village and the union. The village makes the same monthly health insurance contribution on behalf of the retiree as it makes on behalf of all other active employees during that year. The village contributes 95% of the current year premiums for a family or single plan, for eligible retired plan members and their spouses, upon attaining the age 60 for nonrepresented, 55 for police and 53 for fire until they reach Medicare eligible age. For 2017, the village contributed $125,302 to the plan. There were no member contributions for 2017. The village does not pay any portion of the premiums for fire and rescue employees hired after August 17, 2009, nonrepresented employees hired after July 1, 2010, and police employees hired after January 1, 2011. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 55 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Plan Contribution Information (cont.) The village’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution of the employer (ARC), an amount actuarially determined in accordance with parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. The following table shows the components of the village’s annual OPEB cost for the year, the amount actually contributed to the plan, and changes in the village’s net OPEB obligation to the Retiree Health Plan: Annual required contribution $ 405,747 Interest on net OPEB obligation 158,336 Adjustment to annual required contribution (220,110) Annual OPEB cost 343,973 Contributions made (125,302) Increase in net O PEB obligation 218,671 Net OPEB Obligation – Beginning of Year 3,958,409 Net OPEB Obligation – End of Year $ 4,177,080 The village’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2017 and the two preceding years were as follows: Percentage of Annual OPEB Annual OPEB Cost Net OPEB Fiscal Year Ended Cost Contributed Obligation 12/31/17 $ 343,973 36.4% $ 4,177,080 12/31/16 593,042 14.2% 3,958,409 12/31/15 627,481 15.6% 3,451,537 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 56 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Plan Contribution Information (cont.) The funded status of the plan as of January 1, 2016, the most recent actuarial valuation date, was as follows: Actuarial accrued liability (AAL) $ 4,640,528 Actuarial value of plan assets (913,345) Unfunded Actuarial Accrued Liability (UAAL) $ 3,727,183 Funded ratio (actuarial value of plan assets/AAL) 19.7% Covered payroll (active plan members) $ 5,931,076 UAAL as a percentage of covered payroll 63% Actuarial valuations of an ongoing plan involve estimates for the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. The accompanying schedule of employer contributions presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement No. 43. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal costs for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 57 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Plan Contribution Information (cont.) Projections of benefits for financial reporting purposes are based on the substantive plan (the plan is understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2016 actuarial valuation, the unit credit actuarial cost method was used. The actuarial assumptions include a 4% investment rate of return and an annual healthcare cost trend rate of 3.7% initially, increased by decrements to an ultimate rate of 4.0% after 75 years. Both rates include an inflationary assumption. The actuarial value of Retiree Health Plan assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a three- year period. The plan’s unfunded actuarial accrued liability is being amortized in level dollar payments. The amortization period at December 31, 2017, was 30 years. Plan Description – OPEB Trust Plan administration. The Village Retirement System (VRS) administers the Village Retirement Benefits Plan (VRBP), a single-employer defined benefit plan that is used to provide postemployment benefits other than pensions (OPEB) for all permanent full-time general and public safety employees of the village. Management of the VRBP is vested in the VRS Board of Trustees (VRS Board), which consists of two members, who are appointed by the Village Board. Plan membership. At December 31, 2017, VRBP membership consisted of the following: Inactive plan members or beneficiaries currently receiving benefit payments 13 Inactive plan members entitled to but not yet receiving benefit plans 4 Active plan members 180 Total 197 The village does not pay any portion of the premiums for fire and rescue employees hired after August 17, 2009, non-represented employees hired after July 1, 2010, and police employees hired after January 1, 2011. Benefits provided. VRBP provides healthcare and vision benefits for retirees and their dependents. Benefits are provided through a third-party insurer, and the full cost of benefits is covered by the plan. Article XII of the Declaration of Trust grants the authority to establish and amend the benefit terms to the VRS Board. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 58 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Plan Description – OPEB Trust (cont.) Contributions. Article VII of the Declaration of Trust grants the authority to establish and amend the contribution requirements of the village and plan members to the VRS Board. The Board establishes rates based on an actuarially determined rate. For the year ended December 31, 2017, the village’s average contribution rate was 2.1 percent of covered-employee payroll. Plan members are not required to contribute to the plan. Investments Investment policy. VRBP does not currently have a policy to address the allocation of invested assets. Concentrations. The investments of the trust are concentrated in mutual bond funds as follows: VT II Vantagepoint Low Dur Bnd (54%) and VT II Vantagepoint Inflat Foc (25%). Rate of return. For the year ended December 31, 2017, the annual money-weighted rate of return on investments, net of investment expense, was 1.75 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net OPEB Liability The components of the net OPEB liability of the village at December 31, 2017, were as follows: Total OPEB liability $ 4,838,920 Less: plan fiduciary net position (947,285) Village’s Net OPEB Liability $ 3,891,635 Plan fiduciary net position as a percentage of the total OPEB liability 19.58% VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 59 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Net OPEB Liability (cont.) Actuarial assumptions. The total OPEB liability was determined by an actuarial valuation as of December 31, 2016, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Inflation: 4.00% Salary Increases: Inflation Seniority/Merit 3.20% 0.20% - 5.60% Investment Rate of Return: 4.00% Healthcare Cost Trend Rates Year Medical Rate Dental Rate 2019 5.7% 4.8% 2020 5.3% 5.3% 2030 5.7% 4.9% 2040 5.7% 5.0% 2050 5.2% 4.7% 2060 5.0% 4.6% 2070 4.4% 4.2% 2080 4.1% 3.9% 2090 4.1% 3.9% 2092+ 4.0% 3.9% Mortality rates were based on the Wisconsin 2012 Mortality Table (multiplied by 50% for males and females) as the base table and project future improvements with MP-2015 generational improvement scale (multiplied by 50%). The actuarial assumptions used in the valuation were based on the results of an actuarial experience study for the period 2012 – 2014. VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 60 NOTE V – OTHER INFORMATION (cont.) D. O THER POSTEMPLOYMENT BENEFITS (cont.) Net OPEB Liability (cont.) The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of December 31, 2017 (see the discussion of VRBP’s investment policy) are summarized in the following table: Asset Class Long-Term Expected Real Rate of Return U.S. Cash 0.18% U.S. Short Bonds 1.34% U.S. Inflation Indexed Bonds 1.36% Discount rate. The discount rate used to measure the total OPEB liability was 4.00 percent. The projection of cash flows used to determine the discount rate assumed that the village contributions will be made at rates equal to the actuarially determined contribution rates. Based on those assumptions, the OPEB plan’s fiduciary net position will be available to make all projected future benefit payments of current plan members. Therefore, the discount was used based on the long-term expected rate of return on OPEB plan investments to determine the total OPEB liability. Sensitivity of the net OPEB liability to changes in the discount rate. The following presents the net OPEB liability of the village, as well as what the village’s net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (3.00 percent) or 1-percentage-point higher (5.00 percent) than the current discount rate: 1% Decrease (3.00%) Discount Rate (4.00%) 1% Increase (5.00%) Net OPEB liability (asset) $4,237,772 $3,891,635 $3,560,991 Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates. The following presents the net OPEB liability of the village, as well as what the village’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower (3.00 percent) decreasing to 2.0 percent) or 1-percentage-point higher (3.0 percent increasing to 4.0 percent) than the current healthcare cost trend rates: 1% Decrease Healthcare Cost Trend Rates (Current Rate) 1% Increase Net OPEB liability (asset) $3,353,500 $3,891,635 $4,510,864 VILLAGE OF PLEASANT PRAIRIE NOTES TO FINANCIAL STATEMENTS As of and for the Year Ended December 31, 2017 Page 61 NOTE V – OTHER INFORMATION (cont.) E. S IGNIFICANT CUSTOMERS Water Utility The utility has one significant customer who was responsible for 17% of operating revenues in 2017. The significance of this customer is lessened when considering factors including the utility’s ability to apply for a rate increase to cover its costs as well as that a large portion of its costs are variable based on the amount of water purchased. F. S UBSEQUENT EVENTS New membership rates for the Lakeview Rec Plex were approved by Ordinance 17-46 on September 18, 2017 to be effective January 1, 2018. The Village Board approved the creation of Tax Incremental Districts No. 6 and No. 7 on February 5, 2018 and May 7, 2018, respectively. On February 14, 2018, WE Energies gave notification of termination of the water purchase agreement discussed in Note V.C. The plant stopped production in early April with 2018 usage of 94 million gallons. The Village Board approved amendment No. 1 to Tax Incremental District No. 5 on June 18, 2018. The water utility has begun the process of applying to the PSCW for a rate increase to be effective in 2019. G. E FFECT OF NEW ACCOUNTING STANDARDS ON CURRENT-PERIOD FINANCIAL STATEMENTS The Governmental Accounting Standards Board (GASB) has approved the following: > Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions > Statement No. 83, Certain Asset Retirement Obligations > Statement No. 84, Fiduciary Activities > Statement No. 85, Omnibus 2017 > Statement No. 86, Certain Debt Extinguishment Issues > Statement No. 87, Leases > Statement No. 88, Certain Disclosures Related to Debt, Including Direct Borrowings and Direct Placements > Statement No. 89, Accounting for Interest Cost Incurred before the End of a Construction Period When they become effective, application of these standards may restate portions of these financial statements. R E Q U I R E D S U P P L E M E N T A R Y I N F O R M A T I O N VILLAGE OF PLEASANT PRAIRIE DETAILED SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2017 Variance with Original Final Actual Final Budget REVENUES AND OTHER FINANCING SOURCES TAXES General property tax for local purposes 8,600,282 $ 8,600,282 $ 8,600,296 $ 14 $ Taxes - penalties and interest 55,405 55,405 199,400 143,995 Mobile home taxes 125,000 125,000 128,556 3,556 Hotel/motel room tax 60,000 60,000 60,887 887 Other taxes 19,450 19,450 20,063 613 Total Taxes 8,860,137 8,860,137 9,009,202 149,065 INTERGOVERNMENTAL Shared taxes from state 2,025,040 2,025,040 2,033,394 8,354 Fire insurance tax from state 103,983 103,983 122,591 18,608 Law enforcement grants 91,736 91,736 91,362 (374) Ambulance service grant 4,199 4,199 4,201 2 Exempt computer aid 43,503 43,503 42,913 (590) State payment for municipal service 1,800 1,800 1,925 125 Total Intergovernmental 2,270,261 2,270,261 2,296,386 26,125 REGULATION AND COMPLIANCE Liquor and malt beverage licenses 13,000 13,000 34,418 21,418 Cigarette licenses 1,100 1,100 1,500 400 Bartender licenses 7,000 7,000 10,445 3,445 Other miscellaneous licenses 3,000 3,000 3,230 230 Fire department permits 30,000 30,000 120,166 90,166 Dog licenses 7,500 7,500 6,568 (932) Residential building permits 235,000 235,000 219,918 (15,082) Commercial building permits 627,000 627,000 479,629 (147,371) Application and zoning fees 209,087 209,087 256,314 47,227 Miscellaneous permits and fees 129,600 129,600 128,907 (693) Court penalties and costs 331,365 331,365 340,381 9,016 Parking tickets 25,000 25,000 20,442 (4,558) Total Regulation and Compliance 1,618,652 1,618,652 1,621,918 3,266 Budgeted Amounts See independent auditors' report and accompanying notes to required supplementary information. Page 62 VILLAGE OF PLEASANT PRAIRIE DETAILED SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2017 Variance with Original Final Actual Final Budget PUBLIC CHARGES FOR SERVICES Prequalification fees 4,000 $ 4,000 $ 2,070 $ (1,930) Administrative fees 5,000 5,000 25,248 20,248 Publication fees 700 700 815 115 Police department fees 30,763 30,763 42,353 11,590 Fire department fees 35,000 35,000 45,334 10,334 Rescue squad fees 527,302 527,302 538,008 10,706 Highway department fees 615,305 615,305 695,276 79,971 Engineering department fees 230,500 230,500 247,644 17,144 Street lighting 147,000 147,000 140,566 (6,434) Special assessment letters 9,000 9,000 12,865 3,865 Weed control 7,000 7,000 3,350 (3,650) Franchise fees 290,000 290,000 279,056 (10,944) IT department services 7,000 7,000 7,000 - Other 8,000 8,000 24,378 16,378 Total Public Charges for Services 1,916,570 1,916,570 2,063,963 147,393 INTERGOVERNMENTAL CHARGES FOR SERVICES Assessing contracts 247,724 247,724 176,061 (71,663) Total Intergovernmental Charges for Services 247,724 247,724 176,061 (71,663) INVESTMENT INCOME Investment income 61,000 61,000 99,450 38,450 MISCELLANEOUS Miscellaneous 41,500 41,500 61,257 19,757 Recovery of prior year expenditures - - 1,991,954 1,991,954 Tower leases 159,821 159,821 159,656 (165) Village hall rent from utility 91,745 91,745 91,745 - Total Miscellaneous 293,066 293,066 2,304,612 2,011,546 OTHER FINANCING SOURCES Transfers in 850,000 850,000 921,297 71,297 TOTAL REVENUES AND OTHER FINANCING SOURCES 16,117,410 16,117,410 18,492,889 2,375,479 Budgeted Amounts See independent auditors' report and accompanying notes to required supplementary information. Page 63 VILLAGE OF PLEASANT PRAIRIE DETAILED SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND For the Year Ended December 31, 2017 Variance with Original Final Actual Final Budget EXPENDITURES AND OTHER FINANCING USES GENERAL GOVERNMENT Village board 94,966 $ 94,966 $ 92,729 $ 2,237 $ Information technology 938,615 941,615 786,913 154,702 Administration, finance and human resources 1,146,828 1,146,828 977,124 169,704 Assessing 611,425 611,425 501,203 110,222 Municipal buildings 393,554 393,554 458,358 (64,804) Contingency - - 261,220 (261,220) Total General Government 3,185,388 3,188,388 3,077,547 110,841 PUBLIC SAFETY Police 4,222,678 4,222,678 4,138,598 84,080 Municipal court 172,835 172,835 161,127 11,708 Fire and rescue 3,916,531 3,913,531 3,565,627 347,904 Engineering department 345,748 345,748 304,571 41,177 Public safety communications 518,950 518,950 478,741 40,209 Total Public Safety 9,176,742 9,173,742 8,648,664 525,078 PUBLIC WORKS Public works 1,985,883 1,985,883 1,836,001 149,882 Street lighting 285,303 285,303 263,780 21,523 Total Public Works 2,271,186 2,271,186 2,099,781 171,405 CULTURE, RECREATION AND EDUCATION Historical Society 24,372 24,372 24,179 193 Parks 528,959 528,959 510,523 18,436 Total Culture, Recreation and Education 553,331 553,331 534,702 18,629 COMMUNITY DEVELOPMENT Community development 524,716 524,716 487,947 36,769 Inspection 458,848 458,848 422,608 36,240 Total Community Development 983,564 983,564 910,555 73,009 OTHER FINANCING USES Transfers out - - 1,991,954 (1,991,954) TOTAL EXPENDITURES AND OTHER FINANCING USES 16,170,211 16,170,211 17,263,203 (1,092,992) Net Change in Fund Balance (52,801) (52,801) 1,229,686 1,282,487 FUND BALANCE - Beginning of Year 5,160,808 5,160,808 5,160,808 - FUND BALANCE - END OF YEAR 5,108,007 $ 5,108,007 $ 6,390,494 $ 1,282,487 $ Budgeted Amounts See independent auditors' report and accompanying notes to required supplementary information. Page 64 VILLAGE OF PLEASANT PRAIRIE OTHER POSTEMPLOYMENT BENEFITS PLAN SCHEDULE OF EMPLOYER CONTRIBUTIONS AND SCHEDULE OF FUNDING PROGRESS Annual Percentage Net Employer Required of ARC OPEB Year Ended Contributions Contribution (ARC) Contributed Obligation 12/31/2017 125,302$ 405,747 $ 31% 4,177,079$ 12/31/2016 86,170 659,358 13% 3,958,409 12/31/2015 98,037 659,358 15% 3,451,537 Actuarial Accrued UAAL as a Liability Percentage Actuarial Actuarial (AAL) - Unfunded of Valuation Value Projected AAL Funded Covered Covered Date of Assets Unit (UAAL) Ratio Payroll Payroll 1/1/2016 913,345$ 4,640,528$ 3,727,183 $ 20% 5,931,076 $ 63% 1/1/2014 907,951 5,950,119 5,042,168 15% 9,532,739 53% 1/1/2012 328,955 5,552,226 5,223,271 6% 8,798,044 59% See independent auditors' report and accompanying notes to the required supplementary information. Page 65 Proportionate Plan Fiduciary Proportion Proportionate Share of the Net Net Position of the Net Share of the Pension (Asset) / as a Percentage Pension Net Pension Liability as a of the Total Fiscal Liability Liability Covered Percentage of Pension Year Ending (Asset) / Liability (Asset) / Liability Payroll Covered Payroll Liability 12/31/17 0.09609345% 792,039 $ 12,742,390$ 6.22% 99.12% 12/31/16 0.09311995% 1,513,181 11,800,266 12.82% 98.20% 12/31/15 0.09137800% (2,244,494) 11,218,417 20.01% 102.74% Contributions in Relation to the Contributions Contractually Contractually Contribution as a Percentage Fiscal Required Required Deficiency Covered of Covered Year Ending Contributions Contributions (Excess) Payroll Payroll 12/31/17 1,058,738$ 1,058,738 $ - $ 13,042,279$ 8.12% 12/31/16 972,450 972,450 - 12,744,682 7.63% 12/31/15 917,337 917,337 - 11,800,265 7.77% For the Year Ended December 31, 2017 SCHEDULE OF EMPLOYER CONTRIBUTIONS - WISCONSIN RETIREMENT SYSTEM VILLAGE OF PLEASANT PRAIRIE WISCONSIN RETIREMENT SYSTEM For the Year Ended December 31, 2017 SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION (ASSET) / LIABILITY - See independent auditors' report and accompanying notes to the required supplementary information. Page 66 2017 Total OPEB Liability Service cost 174,030$ Interest on the total OPEB liability 189,938 Employer contributions (197,000) Net change in the total OPEB liability 166,968 $ Total OPEB liability, beginning 4,671,952$ Total OPEB liability, ending (a) 4,838,920$ Fiduciary Net Position Employer contributions 197,000 Member contributions - Net investment income 16,273 Benefit payments (197,000) Administrative expenses - Net change in plan fiduciary net position 16,273 $ Total fiduciary net position, beginning 931,012 $ Total fiduciary, ending (b) 947,285$ Net OPEB liability, ending = (a) - (b) 3,891,635 $ Covered payroll 5,931,076 Net OPEB liability as a percent of covered payroll 65.6% Notes to the Schedule: Benefit changes: There are no changes in benefits Changes in assumptions: There are no changes in assumptions VILLAGE OF PLEASANT PRAIRIE *The Plan implemented GASB Statement No. 74 in fiscal year 2017. Information prior to fiscal year 2017 is not available. Last 10 Fiscal Years* SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY See independent auditors' report and notes to required supplementary information Page 67 VILLAGE OF PLEASANT PRAIRIE SCHEDULE OF INVESTMENT RETURNS - OTHER POSTEMPLOYMENT BENEFITS Last 10 Fiscal Years* 2017 Annual money-weighted rate of return, net of investment expense 1.75% *The Plan implemented GASB Statement No. 74 in fiscal year 2017. Information prior to fiscal year 2017 is not available. See independent auditors' report and notes to required supplementary information Page 68 VILLAGE OF PLEASANT PRAIRIE NOTES TO REQUIRED SUPPLEMENTARY INFORMATION December 31, 2017 See independent auditors’ report. Page 69 B UDGETARY INFORMATION Budgetary information is derived from the annual operating budget and is presented using the same basis of accounting for each fund as described in Note I.C. The budgeted amounts presented include any amendments made during the year. The village administrator may authorize transfers of budgeted amounts within departments. Transfers between departments and changes to the overall budget must be approved by a two-thirds board action. Appropriations lapse at year end unless specifically carried over. There were no carryovers to the following year. Budgets are adopted at the department level of expenditure. W ISCONSIN RETIREMENT SYSTEM The amounts determined for each fiscal year were determined as of the calendar year-end that occurred within the fiscal year. The village is required to present the last ten fiscal years of data; however accounting standards allow the presentation of as many years as are available until ten fiscal years are presented. Changes in benefit terms. There were no changes of benefit terms for any participating employer in the Wisconsin Retirement System. Changes in Assumptions. There were no changes in assumptions. S U P P L E M E N T A R Y I N F O R M A T I O N VILLAGE OF PLEASANT PRAIRIE COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS As of December 31, 2017 Federally Police Forfeited Total Canine Property Nonmajor Unit Fund TID No. 4 TID No. 5 Funds ASSETS Cash and investments 2,622 $ 4,276 $ - $ - $ 6,898$ Taxes receivable - - 3,516 - 3,516 TOTAL ASSETS 2,622 $ 4,276 $ 3,516 $ - $ 10,414$ LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilities Accounts payable - $ - $ - $ 634$ 634 $ Due to other funds - - - 31,719 31,719 Total Liabilities - - - 32,353 32,353 Deferred Inflows of Resources Unearned revenue - - 3,516 - 3,516 Fund Balances (Deficit) Restricted - 4,276 - - 4,276 Committed 2,622 - - - 2,622 Unrestricted (deficit) - - - (32,353) (32,353) Total Fund Balances (Deficit) 2,622 4,276 - (32,353) (25,455) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES 2,622$ 4,276 $ 3,516 $ - $ 10,414$ Special Revenue Funds Capital Project Funds Page 70 VILLAGE OF PLEASANT PRAIRIE COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS For the Year Ended December 31, 2017 Federally Police Forfeited Total Canine Property Nonmajor Unit Fund TID No. 4 TID No. 5 Funds REVENUES Taxes - $ - $ 3,148$ - $ 3,148$ Investment income 40 80 - - 120 Miscellaneous 32,913 - - - 32,913 Total Revenues 32,953 80 3,148 - 36,181 EXPENDITURES Current Public safety 32,891 21,626 - 54,517 Capital outlay - - 3,148 32,353 35,501 Total Expenditures 32,891 21,626 3,148 32,353 90,018 Net Change in Fund Balance 62 (21,546) - (32,353) (53,837) FUND BALANCE - Beginning of Year 2,560 25,822 - - 28,382 FUND BALANCE - END OF YEAR (DEFICIT) 2,622$ 4,276 $ - $ (32,353)$ (25,455) $ Special Revenue Funds Capital Project Funds Page 71 VILLAGE OF PLEASANT PRAIRIE STATEMENT OF CASH FLOWS - COMPONENT UNIT For the Year Ended December 31, 2017 Community Development Authority CASH FLOWS FROM OPERATING ACTIVITIES -$ CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES - Net Change Cash and Cash Equivalents - CASH AND CASH EQUIVALENTS - Beginning of Year - CASH AND CASH EQUIVALENTS - END OF YEAR -$ NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES Transfer of land to the Village (4,983,265)$ Write-down in fair market value of land (2,414,807)$ Page 72 VILLAGE OF PLEASANT PRAIRIE COMBINING STATEMENT OF ASSETS AND LIABILITIES AGENCY FUNDS As of December 31, 2017 Tax Mobile Collection Home Fund Fees Total ASSETS Cash and investments 16,498,441 $ 65,253 $ 16,563,694$ Receivables Taxes 27,471,018 - 27,471,018 Accounts - 15,547 15,547 TOTAL ASSETS 43,969,459 $ 80,800 $ 44,050,259$ LIABILITIES Accounts payable 36,154$ - $ 36,154$ Due to other taxing units 43,933,305 80,800 44,014,105 TOTAL LIABILITIES 43,969,459 $ 80,800 $ 44,050,259$ Page 73 Fleet Insurance Total ASSETS Current Assets Cash and investments 855,517 $ 1,991,954$ 2,847,471 $ Total Current Assets 855,517 1,991,954 2,847,471 Noncurrent Assets Capital assets Intangibles 16,699 - 16,699 Machinery and equipment 9,317,323 - 9,317,323 Accumulated depreciation (5,873,777) - (5,873,777) Accumulated amortization (8,946) - (8,946) Total Noncurrent Assets 3,451,299 - 3,451,299 Total Assets 4,306,816 1,991,954 6,298,770 DEFERRED OUTFLOWS OF RESOURCES Pension-related amounts 79,024 - 79,024 LIABILITIES Current Liabilities Accounts payable 74,240 - 74,240 Accrued liabilities 12,596 - 12,596 Total Current Liabilities 86,836 - 86,836 Noncurrent Liabilities Other post-employment benefits 42,893 - 42,893 Net pension liability 11,096 - 11,096 Total Noncurrent Liabilities 53,989 - 53,989 Total Liabilities 140,825 - 140,825 DEFERRED INFLOWS OF RESOURCES Pension-related amounts 32,585 - 32,585 NET POSITION Net investment in capital assets 3,451,299 - 3,451,299 Unrestricted 761,131 1,991,954 2,753,085 TOTAL NET POSITION 4,212,430 $ 1,991,954 $ 6,204,384 $ VILLAGE OF PLEASANT PRAIRIE COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS As of December 31, 2017 Page 74 Fleet Insurance Total OPERATING REVENUES 1,765,721$ - $ 1,765,721$ OPERATING EXPENSES Operation and maintenance 959,911 - 959,911 Depreciation/amortization 574,797 - 574,797 Total Operating Expenses 1,534,708 - 1,534,708 Operating Income 231,013 - 231,013 NONOPERATING REVENUES Investment income 7,050 - 7,050 Gain on disposal of assets 13,041 - 13,041 Total Nonoperating Revenues 20,091 - 20,091 Income Before Transfers 251,104 - 251,104 TRANSFERS Transfers in - 1,991,954 1,991,954 CHANGE IN NET POSITION 251,104 1,991,954 2,243,058 NET POSITION – Beginning of Year 3,961,326 - 3,961,326 NET POSITION – END OF YEAR 4,212,430 $ 1,991,954 $ 6,204,384 $ VILLAGE OF PLEASANT PRAIRIE COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017 Page 75 Fleet Insurance Total CASH FLOWS FROM OPERATING ACTIVITIES Received from customers 1,765,721 $ - $ 1,765,721$ Paid to suppliers for goods and services (610,993) - (653,903) Paid to employees for services (292,784) - (249,874) Net Cash Flows From Operating Activities 861,944 - 861,944 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers from other funds - 1,991,954 1,991,954 Net Cash Flows From Noncapital Financing Activities - 1,991,954 1,991,954 CASH FLOWS FROM INVESTING ACTIVITIES Investment income 7,050 - 7,050 Net Cash Flows From Investing Activities 7,050 - 7,050 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (793,331) - (793,331) Net Cash Flows From Capital and Related Financing Activities (793,331) - (793,331) Net Change in Cash and Cash Equivalents 75,663 1,991,954 2,067,617 CASH AND CASH EQUIVALENTS - BEGINNING OF YEAR 779,854 - 779,854 CASH AND CASH EQUIVALENTS - END OF YEAR 855,517$ 1,991,954$ 2,847,471 $ RECONCILIATION OF OPERATING INCOM TO NET CASH FROM OPERATING ACTIVITIES Operating income 231,013$ - $ 231,013$ Noncash items included in income Depreciation/amortization 574,797 - 574,797 Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources Accounts payable 40,694 - 40,694 Other current and accrued liabilities (4,960) - (4,960) Pension-related amounts 3,508 - 3,508 Other post employment benefits 16,892 - 16,892 NET CASH FLOWS FROM OPERATING ACTIVITIES 861,944 $ - $ 861,944$ NONCASH CAPITAL AND RELATED FINANCING ACTIVITIES None VILLAGE OF PLEASANT PRAIRIE COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS For the Year Ended December 31, 2017 Page 76