VILLAGE OF BELLWOOD, ILLINOIS ANNUAL FINANCIAL REPORT. For the Year Ended December 31, Prepared by Department of Finance

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1 ANNUAL FINANCIAL REPORT For the Year Ended December 31, 2015 Prepared by Department of Finance

2 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Officers and Officials... i FINANCIAL SECTION INDEPENDENT AUDITOR S REPORT GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS Management s Discussion and Analysis... MD&A 1-8 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position... 4 Statement of Activities Fund Financial Statements Governmental Funds Balance Sheet Reconciliation of Fund Balances of Governmental Funds to the Governmental Activities in the Statement of Net Position Statement of Revenues, Expenditures and Changes in Fund Balances Reconciliation of the Governmental Funds Statement of Revenues, Expenditures and Changes in Fund Balances to the Governmental Activities in the Statement of Activities Proprietary Funds Statement of Net Position Statement of Revenues, Expenses and Changes in Fund Net Position Statement of Cash Flows

3 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS (Continued) Basic Financial Statements (Continued) Fund Financial Statements (Continued) Fiduciary Funds Statement of Fiduciary Net Position Statement of Changes in Fiduciary Net Position Notes to Financial Statements Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund New South TIF Fund New North TIF Fund Prairie View I TIF Fund Prairie View II TIF Fund Park Place TIF Fund New Central Metro TIF Fund New Addison Creek A TIF Fund Schedule of Funding Progress Other Postemployment Benefit Plan Schedule of Employer Contributions Illinois Municipal Retirement Fund Police Pension Fund Firefighters Pension Fund Other Postemployment Benefit Plan Schedule of the Village s Proportionate Share of the Net Pension Liability Illinois Municipal Retirement Fund Schedule of Changes in the Employer s Net Pension Liability and Related Ratios Police Pension Fund Firefighters Pension Fund Notes to Required Supplementary Information... 86

4 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES MAJOR GOVERNMENTAL FUNDS Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Debt Service Fund Capital Projects Fund TIF Projects Fund NONMAJOR GOVERNMENTAL FUNDS Combining Balance Sheet Combining Statement of Revenues, Expenditures and Changes in Fund Balances Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Motor Fuel Tax Fund Emergency 911 Fund Police Seizure Fund Illinois Municipal Retirement Fund Social Security Fund Addison Creek A TIF Fund Central Metro TIF Fund North TIF Fund South TIF Fund CDBG Fund MAJOR ENTERPRISE FUNDS Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Water and Sewer Fund Schedule of Expenses - Budget and Actual Water and Sewer Fund Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual 25 th and Lake Street Properties Fund

5 TABLE OF CONTENTS (Continued) Page(s) FINANCIAL SECTION (Continued) COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES NONMAJOR ENTERPRISE FUNDS Schedule of Revenues, Expenses and Changes in Net Position - Budget and Actual Property Commission Fund

6 INTRODUCTORY SECTION

7 OFFICERS AND OFFICIALS DECEMBER 31, 2015 ELECTED OFFICIALS Frank A. Pasquale Village Mayor Michael Ciavattone Annie N. Delgado Gloria Holman Dr. Phylistine Murphy Ronald Nightengale M.C. Robinson Village Board of Trustees Lena M. Moreland Village Clerk APPOINTED OFFICIALS Peter Tsiolis Chief of Staff Michael Castaldo Jr. Corporation Counsel Mark Walsh Emergency Management Tonita LeShore HR/Community/Economic Development Director Ronald Kolimas Director of Finance Andre Harvey Public Safety Director/Fire Chief Floyd Green Public Services Director Marty Walker Public Works Superintendent - i -

8 FINANCIAL SECTION

9 INDEPENDENT AUDITOR S REPORT Honorable Mayor and Board of Trustees Village of Bellwood, Illinois We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Bellwood, Illinois (the Village), as of and for the year ended December 31, 2015, and the related notes to financial statements, which collectively comprise the Village s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Police Pension Trust Fund, which represents 54%, 54% and 37%, respectively, of the assets, net position/fund balance and revenues of the aggregate remaining fund information. Those statements were audited by other auditors whose report has been furnished to us and, our opinion, insofar as it relates to the amounts included for the Police Pension Fund, is based solely on the report of the other auditors. 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 auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the Village 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 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

10 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the report of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the Village of Bellwood, Illinois, as of December 31, 2015, 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. Change in Accounting Principle As discussed in Note 11 to the financial statements, the Village adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions An Amendment of GASB Statement No. 27 which established standards for measuring and recognizing liabilities, deferred inflows and outflows of resources, and expenses; and modified certain disclosures in the notes to financial statements and the required supplementary information. Our opinion is 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 management s discussion and analysis and required supplementary information 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. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Village s basic financial statements. The introductory section and combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements

11 The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory section has not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on it. Naperville, Illinois June 24,

12 GENERAL PURPOSE EXTERNAL FINANCIAL STATEMENTS

13 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 As management of the Village of Bellwood ( Village ), we offer readers of the Village s financial statements this narrative overview and analysis of the financial activities of the Village for the fiscal year ended December 31, Since the Management s Discussion and Analysis ( MD&A ) is designed to focus on the current year s activities, resulting changes and currently known facts, it should be read in conjunction with the Village s financial statements. Comparative analysis is provided but not in the detail that the reader may also find in the consolidated financial statements and the related Notes to the Financial Statements. Financial Highlights In January 2010, a new management team was retained by the Village s elected officials to oversee financial and administrative operations. Steps were immediately taken to ensure increased accountability and enhanced review of the financial operations of the Village. The highlights of key initiatives and results of financial operations included in this MD&A address financial operations and results from both 2014 and 2015; as improvement efforts made by the new management team in 2010 have continued through 2014 and into The General Fund is the primary operating fund of the Village. During the year ended December 31, 2015 revenues exceeded expenditures by $3,253,042, a continued significant turnaround under the plan implemented at the direction of the new management team. 1. The Village Finance staff, with the concurrence of the Mayor and Village Board of Trustees, implemented austere spending controls for all operating departments of the Village. 2. Since January 2010 many existing contracts with outside consultants have been terminated and significant fee modifications have been made to ongoing relationships. In addition, an evaluation of services provided across departments has led to additional savings. In some cases, the services were brought in-house and in other instances the services were privatized. 3. Prior to engaging the new management team, a large inventory of properties was purchased between 2005 and 2009 at all-time high real estate prices for either economic development or housing code controls purposes. The Village s new management team implemented an aggressive plan to actively sell many of these assets in the private marketplace beginning in Although the Village s plan in 2010 was to sell these assets to bolster the Village s General and Enterprise Funds, due to the on-going national and international economic turmoil, the sale of these properties was not possible at the rate or terms desired at the time they were purchased. The sale of all of these surplus properties was completed by December 31, While the sale of certain properties has not met the expectations or forecasts established at the time of purchase, this experience is not unique to Bellwood, but rather, prevalent throughout the State of Illinois (the State) and across the country. As such, the new management team s plan to retain ownership of the more significant acquisitions until the recent increase in the values of real estate did prevent a further decrease in net position. This has resulted in a double digit increase in sales price during this period that would not be possible if the properties were sold earlier. MD&A 1

14 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 For the fiscal year ending December 31, 2015, revenues from Governmental activities totaled $30,414,469, an increase of $63,320 from Of those revenues, property taxes generated 55% of the Village s revenues or $16,845,654 in There had been a major decline in equalized assessed value (EAV) state-wide which has negatively affected tax increment financing (TIF) revenue. To counteract the loss of TIF revenue, the Village terminated the non-performing TIF Districts and re-established them with the significantly lower 2012 and 2013 EAV. This effort has already produced over $242,733 increment in two of the new TIF districts. Business-type activity revenues, consisting primarily of the Water and Sewer Fund, increased by $178,057 in 2015 to $6,695,028. If you subtract a $500,000 grant received in 2014, then the increase between 2014 and 2015 would be a significant increase in revenue of $678,057. Expenses totaled $6,146,824 a $2,624,479 decrease from This was due to management s emphasis of controlling water loss through a rigorous multiphased plan. Governmental Activities expenses totaled $34,685,461, an increase of $ 3,534,122 from The majority of this increase is pension expense recorded in accordance with the implementation of GASB Statement No. 68 ($4,720,716). If you factor out the pension expense, the expenses decreased $1,186,594 from Total Combined Governmental Activities and Business Type Activities Assets and Deferred outflow of resources in 2015 was $84,804,701, an increase of $ 14,409,602 over Total Liabilities and Deferred inflows of resources was $160,937,715 an increased deficit of $ 41,233,848 over The combined change in net position was an increased deficit of 26,824,246. This change is due to the implementation of GASB 68, which for the first time is including future pension liabilities to the Village on the face of the basic financial statements. Because of the ongoing concerns for the national and local economies, steps continued to be taken in 2015 to further reduce and reverse the financial impact of these negative trends by extensive review of all operations of the Village as well as continued oversight of revenues and expenditures, especially as they relate to the Village s efforts in housing and economic development activities. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Village s basic financial statements. The statements comprise three components: 1) village-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. Village-wide Financial Statements The Village-wide financial statements are designed to provide readers with a broad overview of the Village s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the Village s assets and deferred outflows of resources and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time the increases or decreases in net position may serve as a useful indicator of whether the financial position of the Village is improving or deteriorating. MD&A 2

15 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 The statement of activities presents information showing how the Village s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. The Governmental Activities reflect the Village s basic services, including administration, public safety, highways and streets and culture and recreation. Property taxes, shared state taxes and local utility taxes finance the majority of these services. The Business-Type Activities reflect private sector type operations, where the fee for service typically covers all or most of the cost of operations, including depreciation. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Village uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Village can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the Village-wide financial statements. However, unlike the Village-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Because the focus of governmental funds is narrower than that of the Village-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the Village-wide financial statements. By doing so, readers may better understand the long-term impact of the Village s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The Village maintains 15 funds classified major governmental as well as other funds, totaling 29 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the Governmental Fund s Statement of Revenues, Expenditures and Changes in Fund Balances for the General Fund, the Debt Service Fund, the Capital Projects Fund, the TIF Projects Fund, the Prairie View I Tax Increment Financing ( TIF ) Fund, the Prairie View II TIF Fund, the National Terminals TIF Fund, the Park Place TIF Fund, the New Central Metro TIF Fund, the New South TIF Fund, the New North TIF and the New Addison Creek TIF A D Funds, all of which are considered to be major funds. Information from the Village s other governmental funds is combined into a single column presentation. Individual fund information for these non-major governmental funds is provided beginning on page 90. The Village maintains enterprise funds as its proprietary fund type. Enterprise funds are used to report the same functions presented as business-type activities in the Village-wide financial statements. The Village uses enterprise funds to account for its water and sewer operations, the 25 th & Lake Street Properties, the Housing Enterprise Program and the Property Commission to account for property acquisitions. MD&A 3

16 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 Proprietary funds provide the same type of information as the Village-wide financial statements. The proprietary fund financial statements provide separate information for the 25 th & Lake Street Properties and the Water and Sewer Fund, which are considered to be major funds of the Village. The Property Commission Fund and Housing Enterprise Program Fund are non-major funds which are also presented in the proprietary fund financial statements. Fiduciary funds are used to account for resources held for the benefit of parties outside the Village. Fiduciary funds are not reflected in the Village-wide financial statements because the resources of those funds are not available to support the Village s own programs. The accounting used for fiduciary funds is similar to that used by proprietary funds. The Village uses fiduciary funds to account for the activities of the Police Pension Fund and Firefighters Pension Fund. Village-Wide Financial Analysis The following chart reflects the condensed statement of net position: Governmental Activities Business-Type Activities Assets/Deferred Outflows Increase/ Increase/ (Decrease) (Decrease) Total Assets/Deferred Outflows 65,886,844 71,396,105 $5,509,261 $4,508,255 $13,408,596 $8,900,341 Liabilities Current Liabilities 3,928,068 5,209,346 1,281, , ,910 (322,650) Noncurrent Liabilities 76,564, ,234,938 55,670,929 22,218,145 6,644,772 (15,573,373) Deferred Inflows 16,184,085 16,336, ,026-25,638 25,638 Total Liabilities/Deferred Inflows 96,676, ,780,395 57,104,233 23,027,705 7,157,320 (15,870,385) Net Position Net investment in capital assets 5,198,490 4,386,833 (811,657) 2,153,217 2,216,295 63,078 Restricted 17,611,637 11,032,903 (6,578,734) Unrestricted (53,599,445) (97,804,026) (44,204,581) (20,672,667) 4,034,981 24,707,648 Total Net Position ($30,789,318) ($82,384,290) ($51,594,972) ($18,519,450) $6,251,276 $24,770,726 As stated earlier, net position may serve over time as a useful indicator of a government s financial position. The largest part of the Village s net position reflects its investment in capital assets (land, buildings and improvements, infrastructure, and vehicles and equipment); less any related debt used to acquire those assets that is still outstanding. The Village uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the Village s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. MD&A 4

17 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 There was an increase in the net position deficit from governmental activities of $51,594,972. The 2015 increase in the deficit was attributable in most part to a change in reporting due to the implementation of GASB 68 to include pension costs and liabilities. Governmental Activities Business-Type Activities Increase/ Increase/ (Decrease) (Decrease) Revenues Fees, Fines and Charges for Service 5,387,092 5,473,577 86,485 5,951,130 6,682, ,648 Operating Grants and Contributions 565, , , Capital Grants and Contributions 1,102,454 18,542 (1,083,912) 500,000 - (500,000) General Revenues Property Taxes 16,450,628 16,845, , Other Taxes 4,018,396 3,841,540 (176,856) Other General Revenue 2,827,247 3,534, ,470 65,841 12,250 (53,591) Total Revenues 30,351,149 30,414,469 63,320 6,516,971 6,695, ,057 Expenses General Government 11,239,339 10,182,971 (1,056,368) Police 6,577,408 9,446,905 2,869, Fire 3,468,718 5,120,762 1,652, Other Public Safety 1,494,546 1,545,765 51, Highway and Streets 3,983,017 3,443,398 (539,619) Garbage Disposal 1,220,959 1,262,601 41, Welfare 9,107 10,720 1, Civil Defense 326, ,135 22, Interest 2,831,606 3,323, , Water and Sewer ,431,159 5,268,046 (163,113) Property Commission , ,937 (476,526) 25 th & Lake Street Properties ,743, ,841 (1,984,840) Enterprise Housing Program Total Expenses 31,151,339 34,685,461 3,534,122 8,771,303 6,146,824 (2,624,479) Transfers and Loss (992,830) (24,369,380) (23,376,550) 992,830 24,369,380 23,376,550 Change in Net Position (1,793,020) (28,640,372) (26,847,352) (1,261,502) 24,917,584 26,179,086 Net Position/(Deficit) January 1 as Previously Stated (25,886,345) (30,789,318) (4,902,973) (18,519,450) Prior Period Adjustments (3,109,953) (22,954,600) (19,844,647) (146,858) Net Position/(Deficit) January 1 Restated (28,996,298) (53,743,918) (24,747,620) (17,257,948) (18,666,308) (1,408,360) Net Position/(Deficit) December 31 (30,789,318) (82,384,290) (51,594,972) (18,519,450) 6,251,276 24,770,726 MD&A 5

18 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 Revenue increased $63,320 from governmental activities over 2014 which was largely due to an increase in a variety of taxes. Total expenses increased $909,643 over 2014 due primarily to costs reported in accordance with GASB Statement No. 68. The increased expenses were offset by ongoing efforts to tighten budget controls and eliminating other expenses. Financial Analysis of the Village s Funds Governmental Funds As noted earlier, the Village of Bellwood uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. The focus of the Village s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing financing requirements. Unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the fiscal year ended December 31, 2015, the Village s governmental fund balances totaled $12,582,194. Proprietary Funds In fiscal year 2015, revenues exceeded expenses (excluding transfers and contributions) in the Village s proprietary funds by a combined total of $548,204, this represents a $479,455 improvement from $68,749 in 2014 and a significant improvement over 2013 in which operating expenses exceeded operating revenues by $1,310,703. Debt Administration The Village retired a net total $2,144,931 in the Governmental and Business-type activity bonds, notes payable and loans payable in An additional $137,363 of loan payments related to an IEPA loan was also retired. The Village of Bellwood is not subject to the legal debt limitation of 8.625% of Equalized Assed Value ( EAV ) as set by the State of Illinois because it is a home rule community. Further information on the Village s long-term debt can be found on Note 4 of the basic financial statements. Economic Factors Events in the national, state and local economies affect the Village of Bellwood s financial condition and its ability to provide municipal services. Negative revenue trends earlier in this decade required the Village to tap into reserve balances to maintain the level of municipal services to citizens and businesses. Though this trend continued into early 2014, the trend had ended by the close of In most cases, municipal expenses are dominated by essential services provided by the Police, Fire and Public Works departments. The management team and elected officials have aggressively pursued ongoing budgetary savings in all operations of the Village including the implementation of budgetary reforms; the renegotiation or elimination of professional consulting and legal contracts and salary reductions resulting in estimated net savings exceeding $8 million dollars over two years and the staff continues to find opportunities for the liquidation of non-performing assets. Additionally, the Village continues negotiating with developers to provide new growth in Bellwood. MD&A 6

19 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 Notwithstanding the gloomy news that has plagued all local governments these past several years, the Village has continued to address both the basic needs of its residents and taxpaying businesses as well as continuing to either take advantage of grant opportunities and utilizing efficiencies in operations to allow for improvements to continue to be made. Some of those improvements and projects include: Continued resurfacing of streets and the replacement of water and sewer mains. With the assistance of the six major railroads and the State and federal government work continued in 2015 on the 25 th Avenue Grade Separation project, which will result in a bridge (overpass) over the Union Pacific/Metra line on the border of the Villages of Bellwood and Melrose Park. The project received final funding in 2014 and construction began in the 4 th Quarter of Upon completion in 2016, daily vehicle traffic will increase from 21,000 to 55,000 cars. Both developers and consultants forecast an increase in retail development along 25 th Avenue as a result of the overpass. The property owned by the Village at 25 th and Lake was sold at a higher sales price based on the anticipated traffic increase at the conclusion of the project. Several other properties have sold along 25 th Avenue in anticipation of the near completion of the bridge. Several vacant buildings along St. Charles Road were purchased in 2014 further bolstering the redevelopment of the corridor. Construction of a national fast food chain, Chicago-based clothing retailer and manufacturing company, began in 2014 and have exceeded expectations in revenue projections. The redevelopment plan and funding were finalized for a $20,000, unit senior citizen complex in the Central TIF district in Construction began in April of 2014 and the building opened in spring The redevelopment of the 1100 block of Bellwood Avenue was completed in 2015 with the construction of a new park and the sale of five single family homes. Phase II of our new housing initiative began in 2015 with the construction of three new single family homes known as the Englewood Estates. Phase III of this initiative also began in 2015 with the site preparation for Randolph Estates with twelve new single family homes. The construction of a 19-acre water detention reservoir spearhead by the Metropolitan Water Reclamation District of Greater Chicago was approved in 2015 and the site in the Village will greatly reduce flooding within the village and surrounding communities. Upon completion of this massive project, estimated to cost over $100,000,000, will increase the values of homes in the village by remove some 800 properties from FEMA s floodplain and remove them from the mandatory flood insurance. Other Information In addition to the basic financial statements this report also includes certain required supplementary information related to budgetary information and the Village s progress in funding its obligation to provide pension benefits to its employees. Combining and individual fund information can be found immediately following the required supplementary information. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the information provided in the village-wide and fund financial statements and begin on page 21. MD&A 7

20 MANAGEMENT S DISCUSSION AND ANALYSIS December 31, 2015 Contacting the Village s Financial Management This financial report is designed to provide our citizens, customers, investors and creditors with a general overview of the Village s finances. Questions concerning this report or requests for additional financial information should be directed to: Office of the Village Finance Director Village of Bellwood 3200 Washington Boulevard Bellwood, Illinois, MD&A 8

21 STATEMENT OF NET POSITION December 31, 2015 Primary Government Governmental Business-Type Activities Activities Total ASSETS Cash and investments $ 11,216,449 $ 3,838,060 $ 15,054,509 Receivables, net of allowance, where applicable Property taxes General and pension levies 16,979,298-16,979,298 Intergovernmental 1,385,660-1,385,660 Accounts 193,144 1,009,013 1,202,157 Deposits 78,731-78,731 Interest 1,152-1,152 Miscellaneous 308,107 7, ,107 Inventory 8,503 72,196 80,699 Internal balances 532,429 (532,429) - Prepaid items 325,059 68, ,898 Land held for resale 768, ,333 Restricted cash and investments 148, ,983 Capital assets Nondepreciable 1,916,122 1,824,011 3,740,133 Depreciable (net of accumulated depreciation) 20,299,679 6,902,213 27,201,892 Total assets 54,161,649 13,188,903 67,350,552 DEFERRED OUTFLOWS OF RESOURCES Unamortized loss on refunding 3,600,627-3,600,627 Pension items 13,633, ,693 13,853,522 Total deferred outflows of resources 17,234, ,693 17,454,149 Total assets and deferred outflows of resources 71,396,105 13,408,596 84,804,701 LIABILITIES Accounts payable 831, ,334 1,078,932 Accrued payroll 671,042 1, ,742 Accrued interest payable 303,075 29, ,192 Other payables 1,700,151 14,593 1,714,744 Due to other governments 3,558-3,558 Due to pension trust funds 139, ,084 Noncurrent liabilities Due within one year 1,560, ,166 1,755,004 Due in more than one year 132,234,938 6,644, ,879,710 Total liabilities 137,444,284 7,131, ,575,966 DEFERRED INFLOWS OF RESOURCES Deferred revenue - property taxes 16,018,221-16,018,221 Pension items 317,890 25, ,528 Total deferred inflows of resources 16,336,111 25,638 16,361,749 Total liabilities and deferred inflows of resources 153,780,395 7,157, ,937,715 NET POSITION (DEFICIT) Net investment in capital assets 4,386,833 2,216,295 6,603,128 Restricted for Economic development 9,355,066-9,355,066 Debt service 538, ,850 Highways and streets 607, ,565 Specific purpose 95,257-95,257 Public safety 32,285-32,285 Retirement 403, ,880 Unrestricted (97,804,026) 4,034,981 (93,769,045) TOTAL NET POSITION (DEFICIT) $ (82,384,290) $ 6,251,276 $ (76,133,014) See accompanying notes to financial statements

22 STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 Program Revenues Operating Capital Charges Grants and Grants and FUNCTIONS/PROGRAMS Expenses for Services Contributions Contributions PRIMARY GOVERNMENT Governmental Activities General government $ 10,182,971 $ 1,216,859 $ 220,000 $ 9,139 Public safety Police 9,446,905 1,966,531 14,203 - Fire 5,120,762 9, Other public safety 1,545, , Highways and streets 3,443, , ,236 9,403 Garbage disposal 1,262,601 1,525, Welfare 10, Civil defense 349, Interest 3,323, Total governmental activities 34,685,461 5,473, ,439 18,542 Business-Type Activities Property commission 119,937 42, Water and sewer 5,268,046 6,640, th and Lake Street properties 758, Total business-type activities 6,146,824 6,682, TOTAL PRIMARY GOVERNMENT $ 40,832,285 $ 12,156,355 $ 700,439 $ 18,

23 Net (Expense) Revenue and Change in Net Position Primary Government Governmental Business-Type Activities Activities Total $ (8,736,973) $ - $ (8,736,973) (7,466,171) - (7,466,171) (5,111,145) - (5,111,145) (958,743) - (958,743) (2,800,031) - (2,800,031) 263, ,219 (10,720) - (10,720) (349,135) - (349,135) (3,323,204) - (3,323,204) (28,492,903) - (28,492,903) - (77,937) (77,937) - 1,372,732 1,372,732 - (758,841) (758,841) - 535, ,954 (28,492,903) 535,954 (27,956,949) General Revenues Taxes Property and replacement 16,845,654-16,845,654 Sales 1,953,562-1,953,562 Utility 1,404,405-1,404,405 Other 483, ,573 Income 2,029,216-2,029,216 Investment income 30,072-30,072 Miscellaneous 1,475,429 12,250 1,487,679 Transfers (24,369,380) 24,369,380 - Total (147,469) 24,381,630 24,234,161 CHANGE IN NET POSITION (28,640,372) 24,917,584 (3,722,788) NET POSITION (DEFICIT), JANUARY 1 (30,789,318) (18,519,450) (49,308,768) Change in accounting principle (22,954,600) (146,858) (23,101,458) NET POSITION (DEFICIT), JANUARY 1, RESTATED (53,743,918) (18,666,308) (72,410,226) NET POSITION (DEFICIT), DECEMBER 31 $ (82,384,290) $ 6,251,276 $ (76,133,014) See accompanying notes to financial statements

24 BALANCE SHEET GOVERNMENTAL FUNDS December 31, 2015 Prairie Prairie New New View I View II General South TIF North TIF TIF TIF ASSETS Cash and investments $ 2,031,934 $ 24,428 $ 792,593 $ 58,026 $ - Receivables, net of allowance, where applicable Accounts 193, Property taxes 12,433, Intergovernmental 1,007, Deposits 78, Interest 1, Other 303, Inventories 8, Prepaids 311, Land held for resale Advances to other funds 2,853,238-68, Restricted cash and investments - 26, TOTAL ASSETS $ 19,222,792 $ 51,217 $ 860,808 $ 58,026 $ - LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ 353,158 $ 1,751 $ 1,750 $ 1,750 $ 1,750 Accrued payroll 658, Other payables 311, Due to other governments Due to pension trust funds 139, Advances from other funds , ,234 Total liabilities 1,462,687 1, ,883 1, ,984 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 11,749, Total liabilities and deferred inflows of resources 13,212,102 1, ,883 1, ,984 FUND BALANCES (DEFICIT) Nonspendable Inventories 8, Prepaids 311, Advances 2,853, Land held for resale Restricted Economic development - 22,677-56,276 - Debt service - 26, Highways and streets Specific purpose Public safety Retirement Unassigned (deficit) 2,837,049 - (91,075) - (418,984) Total fund balances (deficit) 6,010,690 49,466 (91,075) 56,276 (418,984) TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 19,222,792 $ 51,217 $ 860,808 $ 58,026 $

25 New New New New National New Addison Addison Addison Addison Terminals Park Place Central Metro Creek A Creek B Creek C Creek D TIF TIF TIF TIF TIF TIF TIF $ 252,607 $ - $ 12,156 $ 10,500 $ 10,500 $ 10,500 $ 10, , ,451, , ,700 14, $ 252,607 $ 1,456,115 $ 31,763 $ 131,160 $ 10,500 $ 10,500 $ 10,500 $ 1,750 $ 19,150 $ 6,787 $ 1,751 $ 1,750 $ 1,750 $ 1, ,827 21, ,762, ,220 40,220 40,220 92,577 2,802,563 6,787 1,751 41,970 41,970 41, ,577 2,802,563 6,787 1,751 41,970 41,970 41, ,030-10, , , (1,346,448) - - (31,470) (31,470) (31,470) 160,030 (1,346,448) 24, ,409 (31,470) (31,470) (31,470) $ 252,607 $ 1,456,115 $ 31,763 $ 131,160 $ 10,500 $ 10,500 $ 10,500 (This statement is continued on the following page.) - 8 -

26 BALANCE SHEET (Continued) GOVERNMENTAL FUNDS December 31, 2015 Nonmajor Total Debt TIF Capital Governmental Governmental Service Projects Projects Funds Funds ASSETS Cash and investments $ 300,000 $ 6,149,380 $ 320,581 $ 1,232,744 $ 11,216,449 Receivables, net of allowance, where applicable Accounts ,144 Property taxes 3,868, ,437 16,979,298 Intergovernmental , ,982 1,385,660 Deposits ,731 Interest ,152 Other ,107 Inventories ,503 Prepaids , ,059 Land held for resale , ,333 Advances to other funds - 4,218,836 98,140-8,810,504 Restricted cash and investments 102, ,983 TOTAL ASSETS $ 4,271,477 $ 10,368,216 $ 490,587 $ 2,997,655 $ 40,223,923 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES LIABILITIES Accounts payable $ - $ 388,071 $ 11,522 $ 37,158 $ 831,598 Accrued payroll , ,042 Other payables - 1,211,478-64,697 1,700,151 Due to other governments ,558 3,558 Due to pension trust funds ,084 Advances from other funds 144,095-3,741, ,547 8,278,075 Total liabilities 144,095 1,599,549 3,752, ,356 11,623,508 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 3,629, ,916 16,018,221 Total liabilities and deferred inflows of resources 3,773,985 1,599,549 3,752, ,272 27,641,729 FUND BALANCES (DEFICIT) Nonspendable Inventories ,503 Prepaids , ,059 Advances ,853,238 Land held for resale , ,333 Restricted Economic development - 8,768, ,600 9,355,066 Debt service 497, ,850 Highways and streets , ,565 Specific purpose ,257 95,257 Public safety ,285 32,285 Retirement , ,880 Unassigned (deficit) - - (3,262,278) (29,696) (2,405,842) Total fund balances (deficit) 497,492 8,768,667 (3,262,278) 2,098,383 12,582,194 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 4,271,477 $ 10,368,216 $ 490,587 $ 2,997,655 $ 40,223,923 See accompanying notes to financial statements

27 RECONCILIATION OF FUND BALANCES OF GOVERNMENTAL FUNDS TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF NET POSITION December 31, 2015 FUND BALANCES OF GOVERNMENTAL FUNDS $ 12,582,194 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the governmental funds 22,215,801 Premiums or discounts on long-term liabilities and gains and losses on debt refundings are capitalized and amortized at the government-wide level Discount on bonds 473,608 Premium on bonds (1,628,605) Loss on refunding 3,600,627 Differences between expected and actual experiences, assumption changes and net differences between projected and actual earnings are recognized as deferred outflows and deferred inflows of resources on the statement of net position 13,315,939 Long-term liabilities, including bonds payable, are not due and payable in the current period and, therefore, are not reported in the governmental funds General obligation bonds (82,852,400) Notes payable (49,601) Capital leases payable (286,194) Compensated absences (590,190) Net pension liability Police pension (27,967,732) Firefighters' pension (18,071,831) IMRF (1,873,618) Net other postemployment benefits obligation (949,213) Accrued interest on bonds (303,075) NET POSITION OF GOVERNMENTAL ACTIVITIES $ (82,384,290) See accompanying notes to financial statements

28 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Prairie Prairie New New View I View II General South TIF North TIF TIF TIF REVENUES Property taxes $ 11,506,318 $ 100,766 $ 141,967 $ 74,637 $ 41,139 Other taxes 3,864, Intergovernmental 2,619, Licenses, fees and permits 968, Charges for services 2,163, Fines and forfeitures 2,146, Investment income 22,091 1, Miscellaneous revenue 1,454, Total revenues 24,745, , ,875 74,637 41,139 EXPENDITURES Current General government 7,812, , ,816-3,628 Public safety Police 6,328, Fire 3,414, Other public safety 703, Highways and streets 1,480, Garbage disposal 1,262, Welfare 10, Civil defense 350, Capital outlay Debt service Principal 110,573 11,100 11, ,500 Interest and fiscal charges 17, , ,933 3,628 39,825 Total expenditures 21,491, ,616 1,072,849 3, ,953 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 3,253,042 (335,847) (929,974) 71,009 (444,814) OTHER FINANCING SOURCES (USES) Issuance of refunding bonds - - 4,787, Premium on refunding bonds issued , Payment to escrow agent - - (4,879,861) - - Transfers in , ,835-71,009 Transfers (out) (5,590,775) - - (71,009) - Sale of capital assets 25, Total other financing sources (uses) (5,565,543) 385, ,899 (71,009) 71,009 NET CHANGE IN FUND BALANCES (2,312,501) 49,466 (91,075) - (373,805) FUND BALANCES (DEFICIT), JANUARY 1 8,323, ,276 (45,179) FUND BALANCES (DEFICIT), DECEMBER 31 $ 6,010,690 $ 49,466 $ (91,075) $ 56,276 $ (418,984)

29 New New New New National New Addison Addison Addison Addison Terminals Park Place Central Metro Creek A Creek B Creek C Creek D TIF TIF TIF TIF TIF TIF TIF $ 20,779 $ - $ - $ - $ - $ - $ ,201 4, , ,546 4, ,628 58, ,665 34,657 33,347 33,347 33, ,800 6, , , , , ,874 34,657 33,347 33,347 33,347 17,151 (110,680) (292,328) (30,617) (33,347) (33,347) (33,347) , , ,066 1,877 1,877 1, (4,040) , , ,026 1,877 1,877 1,877 17,151 (73,743) 24, ,409 (31,470) (31,470) (31,470) 142,879 (1,272,705) $ 160,030 $ (1,346,448) $ 24,976 $ 129,409 $ (31,470) $ (31,470) $ (31,470) (This statement is continued on the following page.)

30 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (Continued) GOVERNMENTAL FUNDS For the Year Ended December 31, 2015 Nonmajor Total Debt TIF Capital Governmental Governmental Service Projects Projects Funds Funds REVENUES Property taxes $ 3,783,832 $ - $ - $ 604,952 $ 16,274,390 Other taxes ,313 4,033,072 Intergovernmental - - 9, ,236 3,315,352 Licenses, fees and permits ,360 Charges for services ,163,158 Fines and forfeitures ,106 2,150,169 Investment income ,072 Miscellaneous ,454,896 Total revenues 3,783, ,402 1,463,747 30,389,469 EXPENDITURES Current General government 1, , ,629 9,082,372 Public safety Police ,328,864 Fire ,414,336 Other public safety ,485 1,514,642 Highways and streets ,347 2,252,128 Garbage disposal ,262,601 Welfare ,720 Civil defense ,391 Capital outlay - 790,523 22, ,000 1,032,808 Debt service Principal 630,000-10,624-1,223,697 Interest and fiscal charges 1,584, ,058,763 Total expenditures 2,215,504 1,230,421 32,909 2,017,461 29,531,322 EXCESS (DEFICIENCY) OF REVENUES OVER EXPENDITURES 1,568,328 (1,229,861) (23,507) (553,714) 858,147 OTHER FINANCING SOURCES (USES) Issuance of refunding bonds 3,787, ,574,760 Premium on refunding bonds issued 460, ,940 Payment to escrow agent (3,861,790) (8,741,651) Transfers in - 14,495, ,145 2,146,208 18,491,512 Transfers (out) (1,901,617) (4,497,304) - (15,573,435) (27,638,180) Sale of capital assets ,000 Total other financing sources (uses) (1,515,632) 9,998, ,145 (13,427,227) (8,324,619) NET CHANGE IN FUND BALANCES 52,696 8,768, ,638 (13,980,941) (7,466,472) FUND BALANCES (DEFICIT), JANUARY 1 444,796 - (3,679,916) 16,079,324 20,048,666 FUND BALANCES (DEFICIT), DECEMBER 31 $ 497,492 $ 8,768,667 $ (3,262,278) $ 2,098,383 $ 12,582,194 See accompanying notes to financial statements

31 RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES TO THE GOVERNMENTAL ACTIVITIES IN THE STATEMENT OF ACTIVITIES For the Year Ended December 31, 2015 NET CHANGE IN FUND BALANCES - TOTAL GOVERNMENTAL FUNDS $ (7,466,472) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures; however, they are capitalized and depreciated in the statement of activities 54,385 The issuance of long-term debt is reported as another financing source in governmental funds but as an increase of principal outstanding and premium in the statement of activities (9,538,700) The payment to escrow agent for the refunding of long-term debt is reported as an other financing use in the governmental funds but as A decrease of principal outstanding in the statement of net position 8,685,000 Loss on refunding amortized over the life of the bonds 56,651 The repayment of long-term debt is reported as an expenditure when due in governmental funds but as a reduction of principal outstanding in the statement of activities TIF bonds 442,500 GO bonds 520,000 Notes payable 33,463 Capital lease payable 87,734 Economic development notes 140,000 Changes in net pension liabilities and related deferred inflows/outflows of resources are reported on the statement of activities Police Pension (3,077,467) Firefighters' Pension - IMRF 86,634 Changes in net other postemployment benefits obligations are reported only in the statement of activities (149,605) Changes in accrued compensated absences are reported only in the statement of activities 28,217 Transfers of capital assets and long-term debt from business-type activities to governmental activities are reported as transfers in the statement of activities (15,222,712) Some expenses in the statement of activities do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds Depreciation (1,103,105) Loss on disposal of capital assets (309,205) Amortization of discount on bonds (23,038) Amortization of premium on bonds 41,542 Amortization of deferred loss on refunding (235,783) Change in accrued interest on bonds (47,162) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES $ (26,997,123) See accompanying notes to financial statements