HomeMy Public PortalAboutComprehensive Annual Financial Report Year Ended June 30, 2015Comprehensive Annual Financial Report
Year Ended
June 30, 2015
Town of Hillsborough,
North Carolina
Tom Stevens
Mayor
Eric J. Peterson
Town Manager
Heidi Lamay
Finance Director
Town of Hillsborough Finance Department
Carolyn Glasgow, Assistant Finance Director
Robert TeCarr, Financial Analyst
Sarah Butcher, Accounts Payable Clerk
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Town of Hillsborough, North Carolina
TABLE OF CONTENTS
Page No.
INTRODUCTORY SECTION
List of Principal Officials ............................................................................ i
Organizational Chart ................................................................................. ii
Letter of Transmittal .................................................................................. iii
GFOA Certificate of Achievement ............................................................. ix
FINANCIAL SECTION
Independent Auditors’ Report ................................................................... 1
Management’s Discussion and Analysis .................................................. 5
Exhibit Basic Financial Statements
Government-Wide Financial Statements:
1 Statement of Net Position ...................................................................... 19
2 Statement of Activities ........................................................................... 20
Fund Financial Statements:
3 Balance Sheet - Governmental Funds .................................................. 22
4 Statement of Revenues, Expenditures and Changes in Fund
Balance - Governmental Funds ........................................................... 23
5 Statement of Revenues, Expenditures and Changes in Fund
Balance - Budget and Actual - General Fund ..................................... 25
6 Statement of Net Position - Proprietary Fund ....................................... 26
7 Statement of Revenues, Expenses and Changes in Net
Position - Proprietary Fund .................................................................. 27
8 Statement of Cash Flows - Proprietary Fund ........................................ 28
Notes to Financial Statements .................................................................. 31
Exhibit Required Supplementary Financial Data
Law Enforcement Officers’ Special Separation Allowance
Required Supplementary Information
A-1 Schedule of Funding Progress .............................................................. 81
A-2 Schedule of Employer Contributions ..................................................... 82
Notes to the Required Schedules.......................................................... 82
Town of Hillsborough, North Carolina
TABLE OF CONTENTS (Continued)
Exhibit Required Supplementary Financial Data (Continued) Page No.
Other Postemployment Benefits Required Supplementary
Information
B-1 Schedule of Funding Progress .............................................................. 83
B-2 Schedule of Employer Contributions ..................................................... 84
Notes to the Required Schedules.......................................................... 84
Local Government Employees’ Retirement System Required
Supplementary Information
C-1 Schedule of the Proportionate Share of the Net Pension
Liabilities (Asset) ................................................................................... 85
C-2 Schedule of Contributions ...................................................................... 86
Schedule Supplementary Information
Combining and Individual Fund Financial Statements Section
Governmental Funds
1 General Fund - Schedule of Revenues, Expenditures, and
Changes in Fund Balance - Budget and Actual .................................. 89
2 Schedule of Revenues and Expenditures Compared with
Budget - General Capital Projects Fund .............................................. 93
3 Schedule of Revenues and Expenditures Compared with
Budget - General Capital Reserve Fund ............................................. 94
4 Combining Balance Sheet - Nonmajor Governmental Funds .............. 95
5 Combining Statement of Revenues, Expenditures and
Changes in Fund Balances - Nonmajor Governmental Funds ........... 96
6 Schedules of Revenues and Expenditures Compared with
Budget - Downtown Improvements Capital Project Fund ................... 97
7 Schedules of Revenues and Expenditures Compared with
Budget - Town Barn Improvements Capital Project Fund .................. 98
8 Schedule of Revenues and Expenditures Compared with
Budget - Riverwalk Phase II Capital Project Fund .............................. 99
9 Schedule of Revenues and Expenditures Compared with
Budget - Riverwalk Phase III Capital Project Fund ............................. 100
10 Schedule of Revenues and Expenditures Compared with
Budget - Riverwalk CMAQ Capital Project Fund ................................. 101
Town of Hillsborough, North Carolina
TABLE OF CONTENTS (Continued)
Schedule Supplementary Information (Continued) Page No.
Enterprise Fund
11 Schedule of Revenues Compared with Budget (Non-GAAP) -
Water and Sewer Fund ........................................................................ 102
12 Schedule of Expenditures Compared with Budget (Non-
GAAP) - Water and Sewer Fund ......................................................... 103
13 Schedule of Revenues and Expenditures Compared with
Budget (Non-GAAP) - Water and Sewer Capital Projects
Fund ..................................................................................................... 106
14 Schedule of Revenues and Expenditures Compared with
Budget (Non-GAAP) - Water and Sewer Capital Reserve
Fund ..................................................................................................... 107
Fiduciary Fund
15 Statement of Changes in Assets and Liabilities - Special
Assessment Debt Agency Fund .......................................................... 108
Schedule Additional Financial Data
16 Schedule of Ad Valorem Taxes Receivable ............................................. 111
17 Analysis of Current Tax Levy .................................................................... 112
Table STATISTICAL SECTION
Financial Trends Information
1 Net Position by Component ................................................................... 117
2 Changes in Net Position… .................................................................... 118
3 Fund Balances, Governmental Funds................................................... 119
4 Changes in Fund Balances, Governmental Funds ............................... 120
Revenue Capacity Information
5 Program Revenues by Function/Program ............................................. 122
6 Tax Revenues by Source, Governmental Funds .................................. 123
7 Assessed Value and Actual Value of Taxable Property ....................... 124
8 Direct and Overlapping Property Tax Rates ......................................... 125
9 Property Tax Review and Collections ................................................... 126
10 Principal Property Taxpayers ................................................................ 127
11 Water Sold by Type of Customer and In and Out of Town ................... 128
12 Water and Sewer Rates ........................................................................ 129
Town of Hillsborough, North Carolina
TABLE OF CONTENTS (Continued)
Table STATISTICAL SECTION (Continued) Page No.
Debt Capacity Information
13 Ratios of Outstanding Debt by Type ..................................................... 131
14 Ratios of General Bonded Debt Outstanding ........................................ 132
15 Direct and Overlapping Governmental Activities Debt .......................... 133
16 Legal Debt Margin Information .............................................................. 134
Demographic and Economic Information
17 Demographic and Economic Statistics .................................................. 136
18 Principal Employers ............................................................................... 137
19 Full-Time Equivalent City Government Employees by
Function/Program ................................................................................. 138
Operating Information
20 Operating Indicators by Function/Program ........................................... 140
21 Capital Asset Statistics by Function/Program ....................................... 141
Schedule
COMPLIANCE SECTION
Report on Internal Control over Financial Reporting and on
Compliance and Other Matters Based on an Audit of Financial
Statements Performed in Accordance with Government
Auditing Standards .................................................................................. 145
Report on Compliance with Requirements Applicable to Its
Major Federal Program and Internal Control over Compliance
in Accordance with OMB Circular A-133 and the State Single
Audit Implementation Act ......................................................................... 147
15 Schedule of Findings and Questioned Costs ........................................... 149
16 Schedule of Prior Year Audit Findings ...................................................... 151
17 Schedule of Expenditures of Federal and State Awards .......................... 152
INTRODUCTORY SECTION
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Town of Hillsborough, North Carolina
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LIST OF PRINCIPAL OFFICIALS
Board of Town Commissioners
Tom Stevens, Mayor
Brian J. Lowen ................................................................. Mayor Pro Tem
L. Eric Hallman ................................................................. Commissioner
Evelyn P. Lloyd ................................................................. Commissioner
Jenn Weaver..................................................................... Commissioner
Kathleen Ferguson ........................................................... Commissioner
Town Officials
Eric J. Peterson, Town Manager
Heidi Lamay, Finance Director
Emily Bradford, Budget Officer
Kenneth Keel, Town Engineer/Utilities Director
Katherine Cathey, Town Clerk/Personnel Officer
Duane Hampton, Police Chief
Margaret Hauth, Planning Director
Ken Hines, Public Works Director
Catherine Wright, Public Information Officer
Jennifer Della Valle, Management Analyst/Assistant PIO
Robert Hornik, Town Attorney
Town of Hillsborough, North Carolina
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ORGANIZATIONAL CHART
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December 31, 2015
Honorable Mayor Stevens,
Board of Town Commissioners,
and Citizens of Hillsborough
Hillsborough, North Carolina 27278
The Comprehensive Annual Financial Report of Hillsborough, North Carolina for the fiscal year
ended June 30, 2015, is submitted for your review and use. The Town, like all other local
governments in the state, is required by state law to publish a complete set of financial statements
within four months of the close of each fiscal year. Responsibility for the accuracy of the data and
the completeness and fairness of the presentation, including all disclosures, rests with the Town. As
management, we assert that, to the best of our knowledge, this financial report is complete and
reliable in all material respects, and is reported in a manner designed to fairly present the financial
position and results of the operations of the governmental and business-type activities. All
disclosures necessary to gain the maximum understanding of the Town’s financial affairs have been
included.
The Town’s management is responsible for establishing and maintaining an internal control structure
that is designed to ensure the Town’s assets are protected from loss, theft or misuse, and to ensure
adequate accounting data are compiled to allow for the preparation of financial statements which
conform with accounting principles generally accepted in the United States of America (GAAP).
Since the cost of internal controls should not outweigh their benefits, the Town’s internal control
structure has been designed to provide reasonable rather than absolute assurance that the financial
statements will be free from material misstatement.
North Carolina statutes and the Town’s Ordinance require an annual audit by independent certified
public accountants. The accounting firm of Dixon Hughes Goodman LLP, a firm of licensed certified
public accountants, was selected and awarded the contract for Fiscal Year 2015. The goal of an
independent audit is to provide reasonable assurance that the financial statements are free of
material misstatement. An independent audit involves examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements; assessing the accounting
principles used and the significant estimates made by management; and evaluating the overall
financial statement presentation. Generally accepted accounting principles require that management
provide a narrative introduction, overview and analysis to accompany the basic financial statements
in the form of Management’s Discussion and Analysis (MD&A). This transmittal letter is designed to
complement the Management’s Discussion & Analysis and should be read in conjunction with it. The
Town’s MD&A can be found immediately following the independent auditor’s report.
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THE REPORTING ENTITY AND ITS SERVICES
Founded in 1754, Hillsborough, the county seat of Orange County, is located at the intersection of
interstates 85 and 40, near several urban centers and universities. The small town setting is six to 30
miles from Chapel Hill, Durham, and Raleigh. Hillsborough’s 6,398 residents have easy access to
employment opportunities within the Research Triangle Park area. Within Hillsborough, the economy
is centered on government, retail, service providers, and manufacturing. Orange County and the
Town of Hillsborough are major local employers. The Town’s historical sites attract a large number
of tourists.
The Town is operated under the council-manager form of government. Commissioners on the five-
member, nonpartisan board serve four-year staggered terms and are elected at large. The mayor,
also elected at large, serves a two-year term, chairs the board meetings, and votes when a tie
occurs.
The Town provides a full range of municipal services, including police, fire inspection and protection,
parks, street maintenance, solid waste collection, and cemetery. The Town provides financial
support to certain boards, agencies and commissions to assist their efforts in serving citizens. The
Town has evaluated its relationship with each of these entities according to criteria established by
Governmental Accounting Standards Board Statement 14 and has determined that the Hillsborough
Tourism Development Authority and Hillsborough Tourism Board are required to be included in the
financial report.
The Town operates its own water and sanitary sewer systems. The Town’s water treatment plant
has a capacity of three million gallons per day (MGD) and is currently treating an average daily flow
of 1.161 MGD. The Town’s water system serves a total population of 14,709, which includes Town
residents and customers from outlying areas. The sanitary sewer system has a treatment capacity of
3 MGD, with a current average daily flow of 0.950 MGD.
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ECONOMIC CONDITIONS AND OUTLOOK
The Town of Hillsborough, Orange County and the Research Triangle Park area are considered to be
among the most desirable areas of the country to live and work, according to several national
surveys. The economy of Hillsborough is diversified with government, manufacturing, wholesale and
retail businesses, as well as numerous service providers. Approximately 42.00% of Hillsborough’s
tax base is commercial in nature - this is a strong indicator of a healthy and diverse property tax
base. Local industries are involved in a range of operations, from simple assembly to complex
manufacturing processes resulting in products such as hydraulic equipment, electronic equipment,
and computerized medical diagnostic equipment.
The Town’s unemployment rate has been below state and national rates over the past 18 years.
This trend continued during the current year in which the Town’s unemployment rate, as of June
2015 was 3.9% for Orange County, while the state and national rates were 5.3% and 5.9%,
respectively.
The Town’s economy is expected to remain stable because of the benefits derived from a lower
unemployment rate, a stable employment base, and the March 2004 annexation of a 337-acre
mixed-use development called Waterstone. While taking longer to develop than expected,
Waterstone is expected to increase the Town’s population by 25% and increase the tax base by 25%
over the next seven years. The single-family and townhome developments started construction in
2014 and sales have been brisk in 2015. Work on the apartment complex also began in 2015. These
three residential projects alone will add over 500 residential units and more than 1,000 residents to
Hillsborough. U.N.C. Hospitals officially opened in July of 2015. The medical office section opened
in 2013 and this includes administrative offices and a variety of medical services.
In addition to the Waterstone development, Hillsborough is seeing growth throughout town. Current
projects which are in the process of construction include: Corbin Creek Woods (18 units), Forrest
Ridge (233 units), and Elfin Pond Townhomes (104 units). The combination of these developments
and growth in Waterstone will roughly increase Hillsborough's population by 30% over the next four
years. Other projects, commercial and residential, are currently in the planning stages by various
developers throughout town.
The Town's investment several years ago in the 20-acre lot primarily obtained as a rail station site is
strategically located adjacent to both of the rail lines, downtown, Daniel Boone Villages, and the
Collins property (138 acres of undeveloped land). This is the planned site for a rail station and
potential public-private partnership for development in this area. The Sustainable Cities Design
Academy grant was awarded to the Town in early 2014 and provided a concept plan in 2015 to help
with economic development efforts in this area. This encourages the type of infill development that is
congruent with the Town's long-term vision, as well as being more sustainable and affordable from a
municipal service provision perspective. NCDOT has included approximately $7-8 million in its
Transportation Improvement Plan for this project in FY2019. Environmental and risk planning will
start in early 2016.
The stable outlook reflects the continued economic development within the Town and maintenance of
the Town’s good financial position. Reserve levels are sufficient and within the Town’s adopted
policy. The outlook also reflects the expectation that the Town will effectively manage its debt burden
and capital needs.
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LONG-TERM FINANCIAL PLANNING AND MAJOR INITIATIVES
Each year, the Town prepares a multiyear operational and capital improvement budget. While this is
the eighteenth year a multiyear financial planning format has been used; FY08 was the first year that
a balanced scorecard system was used to implement and communicate the board’s mission, vision,
and strategic priorities. During the year, the Town funded and managed many significant projects
including the following:
The Wastewater Plant upgrade began in September 2011. The project is to be completed in
two phases. Phase I was substantially completed by June of 2014. Final close-out on the
project was completed in 2015. Phase II is estimated to begin construction 7 to 12 years from
now. The upgrade was needed due to the limitations in hydraulic capacity and to meet the
new Falls Lake nutrient reduction criteria, which go into effect in 2016.
Completed the third year of a four-year $2.0 million street repaving and repair plan. The plan
is being funded without debt and uses the Town's Powell Bill (gas tax allocation) and General
Fund revenues to pay for the four-year project. The plan addresses (1) the highest priority
street repaving and repair needs and, (2) will identify the average annual cost and lane miles
for repaving, while also decreasing the life cycle costs associated with maintaining the street
system.
Riverwalk Phases II and III were completed and a grand opening celebration was held in
October of 2014 ($2.24 million with annual debt payments of about $128,000 starting in
FY14). The Riverwalk runs from Allison Street near Occoneechee Mountain east, through
downtown, and connects with Orange County’s River Park, passing just south of Cameron
Street, and extending west until connection with the Classical American Homes Preservation
Trust property near the Historic Occoneechee Speedway and its trail system, ending near
Cameron Street. The Trust plans to complete trail and bridge work in 2016 that will extend the
connection to the Speedway, as well as the Mountains to Sea Trail.
Congestion Mitigation and Air Quality (CMAQ) Grant Sidewalk, Pedestrian Safety and
Accessibility Project ($124,000) - Pedestrian and bicycle connectors for Nash, Calvin and
Allison streets; sidewalk/accessibility; curb, gutter and other improvements; and connections
for Gold Park and Riverwalk. This would complete the western connection from Gold Park to
Allison Street and add a sidewalk with access trails near Occoneechee Mountain State
Natural Area. The project cost of $124,000 to leverage $496,000 of CMAQ funds is
scheduled for 2016.
The Town is in the process of addressing future capital facility needs that will be critical in
serving Hillsborough's growing population. Land and buildings have been acquired near the
current Town Hall that can eventually be used to relocate the Town Hall Annex, Police
Department headquarters, and Fire Station that are currently located downtown. All three
facilities are outdated, in need of upgrade, and are occupying property that would be better
used to compliment current business uses in the downtown district. Town staff worked on a
space study in early 2015 to help plan for operational facility needs over the next 20 years.
An RFP for Architectural Design will be issued early in 2016. It is likely that a second fire
station will soon be needed in the southern part of town. In addition, the current public works
facilities are in exceptionally poor shape and located adjacent to the Eno River in the flood
plain.
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To address long-term water supply needs and accommodate the type of growth that
match the Town's vision, Phase 2 expansion of the West Fork Eno River Reservoir is
currently in the design stage. Phase 2 will yield an additional 1.2 million gallons per day
of water capacity. Construction must be completed by the end of calendar year 2018 to
comply with the current permit. Delay in construction means that new permit
requirements could more than double the current $8.6 million estimate for the project.
Construction is projected to start in 2016.
DEBT ADMINISTRATION
Hillsborough’s current debt burden is above the North Carolina state average and below the
national average for municipalities, with net overall debt at $4,161 per capita. Additional debt
incurred over recent years will support robust projected growth, provide vital services to the
Town’s new citizens, and is not atypical of a growing community like Hillsborough. Responsible
financial planning and revenues resulting from growth will ensure the Town maintains a stable
financial position. There has been no new general bonded debt over the last 17 fiscal years, and
no debt service expenditures on general obligation bonded debt have been incurred in the
General Fund during the last 17 fiscal years. The Town has avoided a heavy debt load, which
has plagued many municipalities, in its General Fund. Debt service costs make up 7.70% of
General Fund expenditures. This includes short-term debt for equipment needs like garbage
trucks, leaf collection equipment, fire trucks, etc. Additionally, no bonded debt is recorded in the
Water and Sewer Fund. While there is no bonded debt, other debt payments account for
31.11% of expenditures, which is an increase over the previous fiscal year. The primary reason
for this increase is a new wastewater treatment plant ($1.5 million in debt to the fund) and
continued emphasis on maintaining the water and sewer infrastructure of the Town.
FINANCIAL POLICIES
The Town of Hillsborough has adopted a policy to maintain a General Fund balance level
between 20% and 60% of operating expenditures, with a target of 33% or the equivalent of four
months of operating expenditures.
The Town has diversified its investment by security type and institution to avoid incurring
unreasonable risks inherent in over-investing in specific instruments, individual financial
institutions or maturities. Without exception, no more than 50% of the Town’s total investment
portfolio will be invested in a single security type or with a single financial institution.
OTHER INFORMATION
The Government Finance Officers Association (GFOA) of the United States and Canada
awarded a Certificate of Achievement for Excellence in Financial Reporting to the Town of
Hillsborough for its comprehensive annual financial report (CAFR) for the fiscal year ended
June 30, 2014. The Certificate of Achievement is a prestigious national award recognizing
conformance with the highest standards for preparation of a state and local government financial
report.
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To be awarded a Certificate of Achievement, a governmental unit must publish an easily
readable and efficiently organized comprehensive annual financial report that conforms to
program standards. The annual report must satisfy both generally accepted accounting
principles and applicable legal requirements.
A Certificate of Achievement is valid for a period of one year. The Town of Hillsborough has
received a Certificate of Achievement for the last 20 consecutive years (fiscal years ended 1994
through 2014). We believe our current report continues to conform to the Certificate of
Achievement program requirements, and we will submit it to the GFOA.
ACKNOWLEDGMENTS
We appreciate the assistance and dedication of the Finance Department staff throughout the
year, especially during the preparation of this report. We would like to thank all members of the
department who contributed to its preparation and to the independent certified public
accountants, Dixon Hughes Goodman LLP, for their assistance. The cooperation of each Town
department is appreciated, as we work together in conducting the Town’s financial operations.
We also express our appreciation to the mayor and the members of the Board of Commissioners
for their continued support, guidance, and advice in planning and conducting the financial
activities of the Town in a responsible and progressive manner. The Town’s improving financial
condition in the General Fund and willingness to address the challenges facing the Water and
Sewer Fund are a tribute to that involvement.
Respectfully submitted,
Eric J. Peterson Heidi Lamay
Town Manager Finance Director
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FINANCIAL SECTION
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- 1 -
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor and Members
of the Board of Town Commissioners
Town of Hillsborough
Hillsborough, North Carolina
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the aggregate discretely presented component units, each major fund,
and the aggregate remaining fund information of the Town of Hillsborough, North Carolina, as of
and for the year ended June 30, 2015, and the related notes to the financial statements, which
collectively comprise the Town of Hillsborough’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 and the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States. Those standards
require that we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The financial statements of the
Hillsborough Tourism Development Authority and the Hillsborough Tourism Board were not
audited in accordance with Government Auditing Standards.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor’s
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity’s internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
financial statement presentation of the financial statements.
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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the financial position of the governmental activities, the business-type activities, the aggregate
discretely presented component units, each major fund, and the aggregate remaining fund
information of the Town of Hillsborough, North Carolina, as of June 30, 2015, and the respective
changes in its financial position and cash flows, where appropriate, thereof, and the respective
budgetary comparison for the General Fund for the year then ended in accordance with
accounting principles generally accepted in the United States of America.
Emphasis of Matter
Change in Accounting Principle
As discussed in Note 7 to the financial statements, beginning balances were restated due to the
implementation of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in
2015 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to
the Measurement Date. Our opinion is not modified with respect to these changes.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that
Management’s Discussion and Analysis on pages 5 through 15, the Law Enforcement Officers’
Special Separation Allowance and the Other Postemployment Benefits Schedules of Funding
Progress and Employer Contributions on pages 81 through 82 and pages 83 through 84,
respectively and the Local Government Employees’ Retirement System’s Schedules of the
Proportionate Share of the Net Pension Asset and Contributions on pages 85 and 86
respectively, 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 the 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 consist 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 provided us with sufficient evidence to
express an opinion or provide any assurance.
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Supplementary and Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the Town of Hillsborough’s basic financial statements. The introductory
section, combining and individual fund financial statements, budgetary schedules, other
schedules, and the statistical section, as well as the schedule of expenditures of federal and
state awards as required by U.S. Office of Management and Budget Circular A-133, Audits of
States, Local Governments, and Non-Profit Organizations and the State Single Audit
Implementation Act, are presented for purposes of additional analysis and are not a required
part of the basic financial statements.
The combining and individual fund financial statements, budgetary schedules, other schedules
and the schedule of expenditures of federal and state awards are the responsibility of
management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to
the auditing procedures applied in the audit of the basic financial statements and certain
additional procedures, including comparing and reconciling such information directly to the
underlying accounting and other records used to prepare the basic financial statements or to the
basic financial statements themselves, and other additional procedures in accordance with
auditing standards generally accepted in the United States of America. In our opinion, the
combining and individual fund financial statements, budgetary schedules, other schedules and
the schedule of expenditures of federal and state awards are fairly stated, in all material
respects, in relation to the basic financial statements taken as a whole.
The introductory information and the statistical sections have not been subjected to the auditing
procedures applied in the audit of the basic financial statements and, accordingly, we do not
express an opinion or provide any assurance on them.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
December 31, 2015, on our consideration of the Town of Hillsborough’s internal control over
financial reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements and other matters. The purpose of that report is to describe
the scope of our testing of internal control over financial reporting and compliance, and the
results of that testing, and not to provide an opinion on internal control over financial reporting or
on compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the Town of Hillsborough’s internal control over
financial reporting and compliance.
High Point, North Carolina
December 31, 2015
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TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
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As management of the Town of Hillsborough (the “Town”), we offer readers of the Town’s financial
statements this narrative overview and analysis of the financial activities of the Town for the fiscal
year ended June 30, 2015. Readers are encouraged to consider this information in conjunction with
additional information furnished in the Town’s financial statements, which follow this narrative.
Financial Highlights
The assets and deferred outflows of resources of the Town exceeded its liabilities and
deferred inflows of resources at the close of the fiscal year by $57,515,476.
The Town’s total net position increased by $4,207,716 primarily due to infrastructure
improvements, an increase in the sewer rates and developer-paid capital facility fees in the
business-type activities net position.
As of the close of the current fiscal year, the Town’s governmental funds reported ending fund
balances of $6,999,012, a net decrease of $76,093 in comparison to the prior year. This is
the result of increased capital project investment. Approximately 23.24% of this total amount
or $1,626,635 is nonspendable, or restricted.
At the end of the current fiscal year, unassigned fund balance for the General Fund was
$3,805,372, or 39.86% of total General Fund expenditures, including other financing uses, for
the fiscal year.
The Town’s total debt decreased by $425,428 during the current fiscal year. The Town had
additional borrowing on revolving loans payable of $928,301 and installment purchases of
$1,214,368. These additional borrowings were offset by retirement of $2,568,097 in existing
debt during the year.
The Town maintained its A2 (Moody’s Investor Service) and A (Standard & Poor’s) bond
ratings for the 20th consecutive year.
Overview of the Financial Statements
This discussion and analysis are intended to serve as an introduction to the Town of Hillsborough’s
basic financial statements. The Town’s basic financial statements consist of three components:
(1) government-wide financial statements, (2) fund financial statements, and (3) notes to the financial
statements (see Figure 1). The basic financial statements present two different views of the Town
through the use of government-wide statements and fund financial statements. In addition to the
basic financial statements, this report contains other supplemental information that will enhance the
reader’s understanding of the financial condition of the Town of Hillsborough.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
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Required Components of Annual Financial Report
Figure 1
Basic Financial Statements
The first two statements (Exhibits 1 and 2) in the basic financial statements are the Government-
Wide Financial Statements. They provide both short- and long-term information about the Town’s
financial status.
The next statements (Exhibits 3 through 8) are Fund Financial Statements. These statements
focus on the activities of the individual parts of the Town’s government. These statements provide
more detail than the government-wide statements. There are four parts to the Fund Financial
Statements: (1) the governmental funds statements; (2) the budgetary comparison statements;
(3) the proprietary fund statements; and (4) the fiduciary fund statements.
The next section of the basic financial statements is the notes section. The notes to the financial
statements explain in detail some of the data contained in those statements. After the notes,
supplemental information is provided to show details about the Town’s individual funds. Budgetary
information required by the General Statutes also can be found in this part of the statements.
Management’s
Discussion and
Analysis
Basic
Financial
Statements
Notes to the
Financial
Statements
Fund
Financial
Statements
Government-Wide
Financial
Statements
Summary Detail
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 7 -
Government-Wide Financial Statements
The government-wide financial statements are designed to provide the reader with a broad overview
of the Town’s finances, similar in format to the financial statements of a private-sector business. The
government-wide statements provide short-and long-term information about the Town’s financial
status as a whole.
The two government-wide statements report the Town’s net position and how they have changed.
Net position is the difference between the Town’s total assets and deferred outflows of resources and
total liabilities and deferred inflows of resources. Measuring net position is one way to evaluate the
Town’s financial condition.
The government-wide statements are divided into three categories: (1) governmental activities;
(2) business-type activities; and (3) component units. The governmental activities include most of the
Town’s basic services such as public safety, fire, street maintenance, solid waste collection,
cemetery and general administration. Property taxes and state and federal grant funds finance most
of these activities. The business-type activities are those that the Town charges customers to
provide. These include the water and sewer services offered by the Town. The final category is the
component units. Although legally separate from the Town, the Tourism Development Authority and
the Tourism Board are important to the Town. The Town exercises control over these entities by
appointing its members and remits a percentage of taxes collected to each of these entities.
The government-wide financial statements are on pages 19 through 21 of this report.
Fund Financial Statements
The fund financial statements (see Figure 1) provide a more detailed look at the Town’s most
significant activities. 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 Town of Hillsborough,
like all other governmental entities in North Carolina, uses fund accounting to ensure and reflect
compliance (or noncompliance) with finance-related legal requirements, such as the General Statutes
or the Town’s budget ordinance. All of the funds of the Town can be divided into three categories:
governmental funds, proprietary funds and fiduciary funds.
Governmental Funds - Governmental funds are used to account for those functions reported as
governmental activities in the government-wide financial statements. Most of the Town’s basic
services are accounted for in governmental funds. These funds focus on how assets can readily be
converted into cash flow in and out, and what monies are left at year end that will be available for
spending in the next year. Governmental funds are reported using an accounting method called
modified accrual accounting that provides a short-term spending focus. As a result, the
governmental fund financial statements give the reader a detailed short-term view that helps him or
her determine if there are more or less financial resources available to finance the Town’s programs.
The relationship between governmental activities (reported in the Statement of Net Position and the
Statement of Activities) and governmental funds is described in a reconciliation that is a part of the
fund financial statements.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 8 -
The Town of Hillsborough adopts an annual budget for its General Fund, as required by the General
Statutes. The budget is a legally adopted document that incorporates input from the citizens of the
Town, the management of the Town, and the decisions of the Board about which services to provide
and how to pay for them. It also authorizes the Town to obtain funds from identified sources to
finance these current-period activities. The budgetary statement provided for the General Fund
demonstrates how well the Town complied with the budget ordinance and whether or not the Town
succeeded in providing the services as planned when the budget was adopted. The budgetary
comparison statement uses the budgetary basis of accounting and is presented using the same
format, language, and classifications as the legal budget document. The statement shows four
columns: (1) the original budget as adopted by the Board; (2) the final budget as amended by the
Board; (3) the actual resources, charges to appropriations, and ending balances in the General Fund;
and (4) the difference or variance between the final budget and the actual resources and charges.
To account for the difference between the budgetary basis of accounting and the modified accrual
basis, a reconciliation showing the differences in the reported activities is shown at the end of the
budgetary statement.
Proprietary Funds - The Town of Hillsborough has one type of proprietary fund. Enterprise Funds
are used to report the same functions presented as business-type activities in the government-wide
financial statements. The Town uses enterprise funds to account for its water and sewer activity.
These funds are the same as those functions shown in the business-type activities in the Statement
of Net Position and the Statement of Activities.
Fiduciary Funds - Fiduciary funds are used to account for resources held for the benefit of parties
outside of the government. The Town of Hillsborough has one fiduciary fund, which is an agency
fund.
Notes to the Financial Statements - The notes provide additional information that is essential to a
full understanding of the data provided in the government-wide and fund financial statements. The
notes to the financial statements are on pages 31 through 77 of this report.
Other Information - In addition to the basic financial statements and accompanying notes, this
report includes certain required supplementary information concerning the Town’s progress in
funding its obligation to provide pension benefits to its employees. Required supplementary
information can be found beginning on page 81 of this report.
Interdependence with Other Entities - The Town depends on financial resources flowing from, or
associated with, both the federal government and the State of North Carolina. Because of this
dependency, the Town is subject to changes in specific flows of intergovernmental revenues based
on modifications to federal and state laws and federal and state appropriations.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 9 -
Government-Wide Financial Analysis
The Town of Hillsborough’s Net Position
Figure 2
2015 2014 2015 2014 2015 2014
Current assets $ 8,034,257 $ 8,346,930 10,895,848$ $ 10,566,525 $ 18,930,105 $ 18,913,455
Other assets 302,808 19,673 174,356 - 477,164 19,673
Capital assets, net 16,404,558 14,504,644 51,857,285 49,452,191 68,261,843 63,956,835
Deferred outflows of resources 241,287 211,525 178,067 121,817 419,354 333,342
Total assets and deferred
outflows of resources 24,982,910 23,082,772 63,105,556 60,140,533 88,088,466 83,223,305
Long-term liabilities outstanding 4,356,104 4,434,736 20,089,420 22,027,085 24,445,524 26,461,821
Other liabilities 1,635,422 1,560,803 3,301,647 1,865,115 4,937,069 3,425,918
Total liabilities 5,991,526 5,995,539 23,391,067 23,892,200 29,382,593 29,887,739
Deferred inflows of resources 765,450 27,806 424,947 - 1,190,397 27,806
Net position:
Net investment in capital asset 11,870,401 10,924,631 30,507,881 27,110,293 42,378,282 38,034,924
Restricted 1,558,393 1,700,808 2,591,600 2,591,211 4,149,993 4,292,019
Unrestricted 4,797,140 4,433,988 6,190,061 6,546,829 10,987,201 10,980,817
Total net position $ 18,225,934 $ 17,059,427 $ 39,289,542 $ 36,248,333 $ 57,515,476 $ 53,307,760
Governmental Activities Business-Type Activities Total
As noted earlier, net position may serve over time as one useful indicator of a government’s financial
condition. The assets and deferred outflows of resources of the Town exceeded its liabilities and
deferred inflows of resources at the close of the fiscal year by $57,515,476 as of June 30, 2015. The
Town’s net position increased by $4,207,716 for the fiscal year ended June 30, 2015. However, the
largest portion (73.68%) reflects the Town’s net investment in capital assets (e.g., land, buildings,
machinery, equipment, distribution and collection systems and infrastructure, less any related debt
still outstanding that was issued to acquire those items). The Town uses these capital assets to
provide services to citizens; consequently, these assets are not available for future spending.
Although the Town’s investment in its capital assets is reported net of the outstanding related debt,
the resources needed to repay that debt must be provided by other sources, since the capital assets
cannot be used to liquidate these liabilities. An additional portion of the Town of Hillsborough’s net
position, $4,149,993 (7.22%) represents resources that are subject to external restrictions on how
they may be used. The remaining balance of $10,987,201 (19.10%) is unrestricted and may be used
to meet the Town’s ongoing obligation to citizens and creditors.
Also, the Town of Hillsborough implemented GASB Statement 68 this year. With the new reporting
change, the Town is allocated its proportionate share of the Local Government Employees’
Retirement System’s net pension asset, deferred outflows of resources, deferred inflows of
resources, and pension expense. A restatement to record the effects of the new reporting guidance
decreased beginning net position by $627,349. Decisions regarding the allocations are made by the
administrators of the pension plan, not by the Town of Hillsborough’s management.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 10 -
Several particular aspects of the Town’s financial operations positively influenced the total
unrestricted net position:
Continued diligence in the collection of property taxes by maintaining a tax collection
percentage of 98.72%.
Numerous cost savings measures implemented by all departments.
Many departments finishing the year with expenditures under budget.
Increase to the sewer rate yielding higher than expected revenues.
Continued low cost of debt due to the Town’s good bond rating and low interest rates.
The Town of Hillsborough’s Changes in Net Position
Figure 3
Governmental Activities Business-Type Activities Total
2015 2014 2015 2014 2015 2014
Revenues:
Program revenues:
Charges for services $ 387,014 $ 144,942 $ 8,939,712 $ 9,025,607 $ 9,326,726 $ 9,170,549
Operating grants and contributions 10,610 316,576 -- 10,610 316,576
Capital grants and contributions 253,460 3,741,958 1,484,316 1,028,171 1,737,776 4,770,129
General revenues:
Property taxes 5,434,983 5,404,126 -- 5,434,983 5,404,126
Local option sales taxes 1,215,819 1,114,306 -- 1,215,819 1,114,306
Gross receipts on short-term rental 9,163 7,117 --9,163 7,117
property
Privilege licenses 30,902 43,891 --30,902 43,891
Motor vehicle license fees 3,477 31,420 --3,477 31,420
Solid waste disposal 4,064 2,451 --4,064 2,451
Unrestricted intergovernmental 998,629 809,190 --998,629 809,190
revenues
Other 42,139 42,108 745 2,601 42,139 42,108
Total revenues 8,390,260 11,658,085 10,424,773 10,056,379 18,815,033 21,714,464
Expenses:
General government 1,416,316 1,524,025 -- 1,416,316 1,524,025
Public safety 3,929,568 3,619,529 -- 3,929,568 3,619,529
Transportation 130,485 $500,491 --130,485 500,491
Environmental protection 963,296 833,623 --963,296 833,623
Economic and physical development 387,801 367,389 --387,801 367,389
Community activities and projects 220,890 119,251 --220,890 119,251
Parks and recreation 74,137 55,849 --74,137 55,849
Interest on long-term debt 101,260 126,250 --101,260 126,250
Water and sewer -- 7,383,564 6,271,311 6,271,311 6,271,311
Total expenses 7,223,753 7,146,407 7,383,564 6,271,311 14,607,317 13,417,718
Increase in net position 1,166,507 4,511,678 3,041,209 3,785,068 4,207,716 8,296,746
Net position - beginning, previously
reported 17,457,542 12,945,864 36,477,567 32,692,499 53,935,109 45,638,363
Restatement (398,115) - (229,234) - (627,349) -
Net position - beginning, restated 17,059,427 12,945,864 36,248,333 32,692,499 53,307,760 45,638,363
Net position - ending $18,225,934 $ 17,457,542 $39,289,542 $ 36,477,567 $57,515,476 $53,935,109
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 11 -
Governmental Activities. Governmental activities increased the Town’s net position by $1,166,507,
thereby accounting for 27.72% of the total growth in the net position of the Town of Hillsborough. Key
elements of this increase are as follows:
Continued diligence in the collection of property taxes.
Maintaining consistent levels of expenses.
Increases in unrestricted intergovernmental revenues.
Business-Type Activities. Business-type activities increased the Town’s net position by
$3,041,209, accounting for 72.28% of the total growth in the government’s net position. Key
elements of this increase are as follows:
An increase in sewer revenue resulting from a sewer rate increase of 8.8%.
Contributions of capital assets in the amount of $1,484,316.
Cost-cutting measures resulting in lower than expected expenses.
Financial Analysis of the Town of Hillsborough’s Funds
As noted earlier, the Town of Hillsborough uses fund accounting to ensure and demonstrate
compliance with finance-related legal requirements.
Governmental Funds. The focus of the Town’s governmental funds is on providing information on
near-term inflows, outflows, and balances of usable resources. Such information is useful in
assessing the Town’s financing requirements.
The General Fund is the chief operating fund of the Town. At the end of the current fiscal year, the
Town of Hillsborough’s fund balance available in the General Fund was $5,199,235, while total fund
balance reached $6,217,183. The Governing Body of the Town of Hillsborough has determined that
the Town should maintain a fund balance of 20% to 60% (with a targeted or preferred goal of 33%) of
general fund expenditures in case of unforeseen needs or opportunities, in addition to meeting the
cash flow needs of the Town. The Town currently has fund balance available for appropriation of
62.4% of general fund expenditures, while total fund balance represents 74.62% of the same
amount.
At June 30, 2015, the governmental funds of the Town reported a combined fund balance of
$6,999,012, with a net decrease in fund balance of $76,093. This decrease is partially related to
increased investment in capital projects. This investment was driven mostly by increased demand for
housing and development within the Town of Hillsborough and surrounding geographic areas.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 12 -
General Fund Budgetary Highlights. During the fiscal year, the Town revised the budget on
several occasions. Generally, budget amendments fall into one of three categories: (1) amendments
made to adjust the estimates that are used to prepare the original budget ordinance once exact
information is available; (2) amendments made to recognize new funding amounts from external
sources, such as federal and state grants; and (3) increases in appropriations that become
necessary to maintain services.
The difference between the original budget and the final budget is attributed in part to the following:
$600,000 to conduct improvements on West Fork-Eno River infrastructure.
$612,054 to purchase real property for the planning and development of the Town’s new
administrative, police, and fire complex.
Actual operating revenues for the General Fund were more than the budgeted amount by $788,474.
Expenditures were $566,495 less than budgeted, primarily due to the delaying of purchases and bids
coming in lower than anticipated.
Proprietary Funds. The Town’s proprietary funds provide the same type of information found in the
government-wide statements, but in more detail. Unrestricted net position of the Water and Sewer
Fund at the end of the fiscal year amounted to $6,190,061, a 5.45% or $356,768 decrease from the
previous year. The decrease is largely attributed to investments in the Town’s water and sewer
capital infrastructure. The total growth in net position was $3,041,209. Other factors concerning the
fund’s finances have been addressed in the discussion of the Town’s business-type activities.
Capital Asset and Debt Administration
Capital Assets. The Town’s investment in capital assets for its governmental and business-type
activities as of June 30, 2015 totals $68,261,843 (net of accumulated depreciation). These assets
include buildings, land, machinery and equipment, infrastructure, park facilities and vehicles.
Major capital asset transactions during the year include the following:
The continued construction of the Wastewater Treatment Plant ($62,274)
The continued development of Riverwalk Phase II and III ($387,637)
Street resurfacing ($264,921)
Major developer-dedicated capital asset transactions during the year include the following:
Corbin Creek Woods water and sewer lines ($205,000)
Waterstone Estates Subdivision Phase I water and sewer lines ($157,619)
Waterstone Estates Subdivision Phase IV water and sewer lines ($263,892)
Waterstone Terrace Phase I water and sewer lines ($312,451)
Forest Ridge Subdivision Phase I, IIA, and IIIA water and sewer lines ($545,354)
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 13 -
The Town of Hillsborough’s Capital Assets
(Net of Accumulated Depreciation)
Figure 4
Governmental Activities Business-Type Activities Total
2015 2014 2015 2014 2015 2014
Land $ 3,523,007 $ 2,672,428 $ 6,005,443 $ 6,005,443 $ 9,528,450 $ 8,677,871
Construction in progress 325,015 2,179,190 2,468,749 19,796,803 2,793,764 21,975,993
Buildings and improvements 4,871,396 2,815,842 20,408,398 2,078,652 25,279,794 4,894,494
Plant and distribution
systems -- 21,917,564 20,724,837 21,917,564 20,724,837
Infrastructure 6,599,774 6,003,162 499,002 492,676 7,098,776 6,495,838
Equipment 125,020 84,798 430,263 257,636 555,283 342,434
Vehicles 960,346 749,224 127,866 96,144 1,088,212 845,368
Total $ 16,404,558 $ 14,504,644 $51,857,285 $49,452,191 $68,261,843 $ 63,956,835
Additional information on the Town’s capital assets can be found in Note 4.A.5. of the basic financial
statements.
Long-Term Debt. As of June 30, 2015, the Town of Hillsborough had no outstanding bonded debt.
The Town’s debt represents revolving loans payable and installment purchases secured solely by
revenues of the project or specified purchases.
The Town of Hillsborough’s Outstanding Debt
Revolving Loans Payable and Installment Purchases
Figure 5
Governmental Activities Business-Type Activities Total
2015 2014 2015 2014 2015 2014
Revolving loan
payable $ - $ - $ 18,605,655 $ 18,644,077 $ 18,605,655 $ 18,644,077
Installment purchases 4,606,799 4,024,586 2,970,088 3,939,307 7,576,887 7,963,893
Total $4,606,799 $ 4,024,586 $ 21,575,743 $ 22,583,384 $ 26,182,542 $ 26,607,970
The Town’s total debt decreased by $425,428 during the current fiscal year, primarily due to
repayments on installment purchases.
As mentioned in the financial highlights section of this document, the Town maintained, for the 19th
consecutive year, its A2 bond rating from Moody’s Investor Service and A rating from Standard and
Poor’s Corporation. This bond rating is a clear indication of the sound financial condition of the Town
of Hillsborough. This achievement is a primary factor in keeping interest costs low on the Town’s
outstanding debt.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 14 -
North Carolina General Statutes limit the amount of general obligation debt that a unit of government
can issue to 8% of the total assessed value of taxable property located within that government’s
boundaries. The legal debt margin for the Town of Hillsborough is $ $58,383,907. The Town does
not have any bonds authorized but unissued at June 30, 2015.
Additional information regarding the Town’s long-term debt can be found in Note 4.B.8 of the basic
financial statements.
Economic Factors and Next Year’s Budgets and Rates
The following key economic indicators reflect the stability and prosperity of the Town of Hillsborough.
Low unemployment. Orange County’s unemployment rate of 3.9% as of June 30, 2015, is
well below the state average of 5.9%.
Water/sewer rate increase. In the new fiscal year, beginning July 1, 2015, the water rate
remained the same and the sewer rate increased by 8.8%.
No increase in property tax rate. The property tax rate will not increase in FY 16.
No general obligation debt in the General Fund.
Budget Highlights for the Fiscal Year Ending June 30, 2016
Governmental Activities: With new development starting to ramp up in FY15 and an increase
expected for FY16, forecasts for the primary sources of revenue (e.g., property and sales tax) were
calculated using a 0.36% growth factor. As in prior years, the Town’s budget development was
guided by three principles: (1) take care of what we’ve got; (2) invest in Hillsborough’s future; and
(3) minimize rate impacts on the citizens/customers.
Original budgeted operational expenditures in the General Fund were expected to increase 2.4% or
$452,974 over FY15 original budget. Appropriated fund balance of $1,282,029 was recommended to
balance the FY16 budget. The largest increments are in employee compensation, including funding
compensation and benefits adjustments, new positions, street repair, and the first year of debt
service on Riverwalk Phases II and III.
Other budget highlights in brief:
Expenses to increase by 2.4%
Merit system budgeted at 3.25% average raise for employees
TOWN OF HILLSBOROUGH, NORTH CAROLINA
MANAGEMENT’S DISCUSSION AND ANALYSIS
June 30, 2015
- 15 -
Business-Type Activities: Water rates will not increase in 2016, while sewer rates will increase by
8.8% to cover loan payments associated with the wastewater treatment expansion in FY16.
Original budgeted operational expenditures in the Water/Sewer Fund are expected to increase by 3%
to $304,556 over FY 2015 original budget. Actual expenditures for FY 2015 were $2,127,519 under
budget, primarily due to debt financing the entire South Zone Water Tank rather than using capital
reserve fees to reduce the debt issuance amount. Debt service payments will begin in FY16 with the
capital reserve funds being used to cover the payments for the first few years. Many cuts and
deferments were made to this year’s budget to avoid a more significant rate increase and to limit the
further use of net position.
It was determined through an engineering and financial analysis in early 2007 that it is considerably
more cost effective for Hillsborough to upgrade and expand its wastewater treatment plant, which is
more than 35 years old, than to pipe the Town’s wastewater to the City of Durham for treatment
($17.5 million vs. $108 million). Now a $19.2 million upgrade/expansion, this project is critical, as the
Town must meet new, more stringent nitrogen discharge limits into the local Eno River. This project
is now complete.
The Town continues work to correct sewer inflow and infiltration problems ($50,000 annually). This
project is critical, as inflow and infiltration create a variety of serious issues, such as decreased plant
treatment capacity, pump station overflows, lower quality treatment of discharged water and
increased operational costs.
Other budget highlights in brief:
Continue design work on West Fork Eno Reservoir Phase II expansion ($600,000). Design
began in FY14 ($200,000).
Merit system budgeted at 3.25% average raise for employees.
High-deductible health insurance alternative offered at no cost to employees and given initial
monies for deposit to health savings account.
Requests for Information
This report is designed to provide an overview of the Town’s finances. Questions concerning any of
the information found in this report or requests for additional information should be directed to the
Director of Finance, Town of Hillsborough, 137 North Churton Street, Post Office Box 429,
Hillsborough, North Carolina 27278.
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BASIC FINANCIAL STATEMENTS
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Exhibit 1
Hillsborough
Tourism Hillsborough
Governmental Business-Type Development Tourism
ASSETS Activities Activities Total Authority Board
Current assets:
Cash and investments 6,287,006$ 6,587,188$ 12,874,194$ 168,778$ 222,358$
Receivables:
Taxes receivable, net 159,544 - 159,544 - -
Accrued interest receivable, property
taxes 5,053 - 5,053 - -
Accounts receivable, net 46,946 1,111,431 1,158,377 - -
Due from other governments 744,920 - 744,920 - -
Due from primary government - - - 13,837 61,216
Prepaid expenses 52,326 3,812 56,138 - 788
Restricted assets
Cash and investments 738,462 3,193,417 3,931,879 - -
Total current assets 8,034,257 10,895,848 18,930,105 182,615 284,362
Noncurrent assets:
Net pension asset 302,808 174,356 477,164 - -
Capital assets:
Land and construction-in-progress 3,848,022 8,474,192 12,322,214 - -
Other capital assets, net of
depreciation 12,556,536 43,383,093 55,939,629 - -
Total capital assets 16,404,558 51,857,285 68,261,843 - -
Total noncurrent assets 16,707,366 52,031,641 68,739,007 - -
Total assets 24,741,623 62,927,489 87,669,112 182,615 284,362
DEFERRED OUTFLOWS OF RESOURCES
Contributions to pension plan in current
fiscal year 241,287 138,937 380,224 - -
Deferred loss on defeasance of debt - 39,130 39,130 - -
241,287 178,067 419,354 - -
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 648,412 926,658 1,575,070 - 33,231
Payable from restricted
assets - customer deposits 102,265 414,608 516,873
Accrued interest payable 34,642 84,455 119,097 - -
Due to component units 75,053 - 75,053 - -
Current portion of long-term liabilities 775,050 1,875,926 2,650,976 - -
Total current liabilities 1,635,422 3,301,647 4,937,069 - 33,231
Long-term liabilities:
Due in more than one year 4,356,104 20,089,420 24,445,524 - -
Total liabilities 5,991,526 23,391,067 29,382,593 - 33,231
DEFERRED INFLOWS OF RESOURCES
Pension deferrals 738,017 424,947 1,162,964 - -
Unearned revenue 27,433 - 27,433 - -
765,450 424,947 1,190,397 - -
NET POSITION
Net investment in capital assets 11,870,401 30,507,881 42,378,282 - -
Restricted for:
Stabilization by state statute 994,838 - 994,838 13,837 61,216
Streets 99,406 - 99,406 - -
Capital projects 464,149 - 464,149 - -
Water and sewer projects - 2,591,600 2,591,600 - -
Unrestricted 4,797,140 6,190,061 10,987,201 168,778 189,915
Total net position 18,225,934$ 39,289,542$ 57,515,476$ 182,615$ 251,131$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF NET POSITION
June 30, 2015
Primary Government Component Units
The accompanying notes are an integral part of this statement.
- 19 -
Operating Capital
Charges Grants and Grants and
Functions/Programs Expenses for Services Contributions Contributions
Primary government:
Governmental activities:
General government 1,416,316$ 182,109$ 10,610$ -$
Public safety 3,929,568 12,068 - -
Transportation 130,485 187,682 - -
Environmental protection 963,296 - - 653
Economic and physical development 387,801 - - -
Community activities and projects 220,890 - - -
Parks and recreation 74,137 5,155 - 252,807
Interest on long-term obligations 101,260 - - -
Total governmental activities 7,223,753 387,014 10,610 253,460
Business-type activities:
Water and sewer 7,383,564 8,939,712 - 1,484,316
Total business-type activities 7,383,564 8,939,712 - 1,484,316
Total primary government 14,607,317$ 9,326,726$ 10,610$ 1,737,776$
Component units:
Hillsborough Tourism Development Authority 4,977$ -$ -$ -$
Hillsborough Tourism Board 280,913 - - -
Total component units 285,890$ -$ -$ -$
General revenues:
Taxes:
Property taxes, levied for general purposes
Local option sales taxes
Gross receipts on short-term rental property
Privilege licenses
Motor vehicle license fees
Solid waste disposal
Unrestricted intergovernmental revenues
Investment earnings, unrestricted
Payment from Town of Hillsborough
Miscellaneous
Total general revenues not including transfers
Transfers
Total general revenues and transfers
Change in net position
Net position - beginning, previously reported
Restatement
Net position - beginning, restated
Net position - ending
Program Revenues
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF ACTIVITIES
Year Ended June 30, 2015
The accompanying notes are an integral part of this statement.
- 20 -
Exhibit 2
Tourism
Governmental Business-Type Development Tourism
Activities Activities Total Authority Board
(1,223,597)$ -$ (1,223,597)$
(3,917,500) - (3,917,500)
57,197 - 57,197
(962,643) - (962,643)
(387,801) - (387,801)
(220,890) - (220,890)
183,825 - 183,825
(101,260) - (101,260)
(6,572,669) - (6,572,669)
- 3,040,464 3,040,464
- 3,040,464 3,040,464
(6,572,669) 3,040,464 (3,532,205)
(4,977)$ -$
- (280,913)
(4,977) (280,913)
5,434,983 - 5,434,983 - -
1,215,819 - 1,215,819 - -
9,163 - 9,163 - -
30,902 - 30,902 - -
3,477 - 3,477 - -
4,064 - 4,064 - -
998,629 - 998,629 - -
1,177 745 1,922 - -
- - -70,536 318,172
40,962 - 40,962 - -
7,739,176 745 7,739,921 70,536 318,172
- - - - -
7,739,176 745 7,739,921 70,536 318,172
1,166,507 3,041,209 4,207,716 65,559 37,259
17,457,542 36,477,567 53,935,109 117,056 213,872
(398,115) (229,234) (627,349) - -
17,059,427 36,248,333 53,307,760 117,056 213,872
18,225,934$ 39,289,542$ 57,515,476$ 182,615$ 251,131$
Primary Government Component Units
Net Revenue (Expense) and Changes in Net Position
- 21 -
Exhibit 3
Consolidated
General Capital Total Total
General Projects Nonmajor Governmental
ASSETS Fund Fund Funds Funds
Cash and investments 6,010,757$ -$ 276,249$ 6,287,006$
Taxes receivable 159,544 - - 159,544
Accounts receivable, net 46,946 - - 46,946
Prepaid items 68,242 - - 68,242
Due from other governments 699,788 - 45,132 744,920
Restricted assets
Cash and investments 274,313 464,149 - 738,462
Total assets 7,259,590$ 464,149$ 321,381$ 8,045,120$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities 644,711$ -$ 3,701$ 648,412$
Payable from restricted assets - customer deposits 102,265 - - 102,265
Due to component units 75,053 - - 75,053
Total liabilities 822,029 - 3,701 825,730
DEFERRED INFLOWS OF RESOURCES 220,378 -- 220,378
FUND BALANCES
Nonspendable
Prepaid items 68,242 - - 68,242
Restricted for:
Stabilization by state statute 949,706 - 45,132 994,838
Streets 99,406 - - 99,406
Capital projects - 464,149 - 464,149
Committed for:
Capital projects - - 272,548 272,548
Assigned for:
Sidewalks 12,428 - - 12,428
Subsequent year’s expenditures 1,282,029 - - 1,282,029
Unassigned 3,805,372 - -3,805,372
Total fund balances 6,217,183 464,149 317,680 6,999,012
Total liabilities, deferred inflows of
resources and fund balances 7,259,590$ 464,149$ 321,381$
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 not reported in the funds.16,404,558
Net pension asset 302,808
Contributions to the pension plan in the current fiscal year are
deferred outflows of resources on the statement of net position.241,287
Liabilities for earned but deferred revenues in the fund statements,
including accrued interest receivable on property taxes.197,998
Prepaid expenses in the fund statements for debt service payments that
represent a reduction of long-term obligations in governmental activities.(63,026)
Certain expenditures in the fund statements for future period
obligations are prepaid expenditures on the statement of net position.47,110
Some liabilities, including accrued interest, are not due and payable
in the current period,and therefore are not reported in the funds.(5,165,796)
Pension related deferrals (738,017)
Net position of governmental activities 18,225,934$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
BALANCE SHEET - GOVERNMENTAL FUNDS
June 30, 2015
Major Funds
The accompanying notes are an integral part of this statement.
- 22 -
Exhibit 4
Page 1 of 2
Consolidated
General
Capital Total Total
General Projects Nonmajor Governmental
Fund Fund Funds Funds
Revenues
General revenues
Ad valorem taxes 5,437,266$ -$ -$ 5,437,266$
Other taxes and licenses 1,263,425 - - 1,263,425
Unrestricted intergovernmental revenues 998,629 - - 998,629
Restricted intergovernmental revenues 347,469 - 295,263 642,732
Investment earnings 1,048 129 - 1,177
Other general revenues 56,727 - - 56,727
Total general revenues 8,104,564 129 295,263 8,399,956
Functionally related revenues
Use and rental fees 194,177 - - 194,177
Total revenues 8,298,741 129 295,263 8,594,133
Expenditures
General government 1,439,585 1,325,271 14,951 2,779,807
Public safety 3,845,174 - - 3,845,174
Transportation 1,194,204 - - 1,194,204
Environmental protection 1,007,805 - 810 1,008,615
Economic and physical development 388,611 - - 388,611
Community activities and projects 836,258 - - 836,258
Parks and recreation 74,138 - 349,675 423,813
Debt service
Principal retirement 632,155 - - 632,155
Interest and fiscal charges 101,228 - - 101,228
Total expenditures 9,519,158 1,325,271 365,436 11,209,865
Revenues over (under) expenditures (1,220,417) (1,325,142) (70,173) (2,615,732)
Other financing sources (uses)
Transfer to General Fund - (133,124) - (133,124)
Transfer to General Capital Projects Fund (25,500) - - (25,500)
Transfer to Riverwalk Phase II Fund (1,858) - - (1,858)
Transfer from General Fund - - 27,358 27,358
Transfer from General Capital Projects Fund 133,124 - - 133,124
Contribution from property owners - 1,325,271 - 1,325,271
Installment purchase obligations issued 1,214,368 - - 1,214,368
Total other financing sources 1,320,134 1,192,147 27,358 2,539,639
Net change in fund balances 99,717 (132,995) (42,815) (76,093)
Fund balances, beginning 6,117,466 597,144 360,495 7,075,105
Fund balances, ending 6,217,183$ 464,149$ 317,680$ 6,999,012$
Year Ended June 30, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS
Major Funds
The accompanying notes are an integral part of this statement.
- 23 -
Exhibit 4
Page 2 of 2
Reconciliation of the Governmental Funds Statement of Revenues,
Expenditures and Changes in Fund Balance to the Statement of Activities:
Net change in fund balances - total governmental funds (76,093)$
Amounts reported for governmental activities in the statement of activities are
different because:
Governmental funds report capital outlays as expenditures. However, in the
statement of activities, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense. This is the amount by which
capital outlays ($2,619,910) exceeded depreciation ($719,996) in the current
period.1,899,914
Contributions to the pension plan in the current fiscal year are not included
in the statement of activities 226,808
Governmental funds report prepayments of future period obligations as expenditures.
However, in the statement of activities, these costs are recognized when incurred. 47,110
Revenues in the statement of activities that do not provide current financial
resources are not reported as revenues in the funds.
Change in deferred revenues related to property taxes. (2,283)
Change in deferred revenues related to grants receivable. (201,588)
The repayment of the principal of long-term debt ($632,155) consumes the
current financial resources of governmental funds. This transaction has no effect
on net position.632,155
The issuance of the principal of long-term debt ($1,214,368) provides current
financial resources to governmental funds. This transaction has no effect
on net position.(1,214,368)
Some expenses reported in the statement of activities do not require the use of
current financial resources and, therefore, are not reported as expenditures in
governmental funds.
Change in accrued and prepaid interest on general long-term debt (212)
Compensated absences (54,296)
Net pension obligation (30,550)
Pension expense (22,615)
Net OPEB obligation (37,475)
Changes in net position of governmental activities 1,166,507$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS
Year Ended June 30, 2015
The accompanying notes are an integral part of this statement.
- 24 -
Exhibit 5
Variance
Original Final Positive
Budget Budget Actual (Negative)
Revenues
General revenues
Ad valorem taxes 5,227,550$ 5,252,700$ 5,437,266$ 184,566$
Other taxes and licenses 1,157,500 1,124,400 1,263,425 139,025
Unrestricted intergovernmental revenues 355,000 723,001 998,629 275,628
Restricted intergovernmental revenues 180,150 180,150 347,469 167,319
Investment earnings 100 100 1,048 948
Other general revenues 38,000 58,610 56,727 (1,883)
Total general revenues 6,958,300 7,338,961 8,104,564 765,603
Functionally related revenues
Use and rental fees 120,000 171,306 194,177 22,871
Total revenues 7,078,300 7,510,267 8,298,741 788,474
Expenditures
General government 1,635,901 1,681,083 1,530,797 150,286
Public safety 3,983,877 4,107,828 3,989,596 118,232
Transportation 992,151 1,267,487 1,194,204 73,283
Environmental protection 1,144,007 1,148,007 1,151,765 (3,758)
Economic and physical development 4,500 407,000 388,611 18,389
Community activities and projects 468,967 1,057,985 915,918 142,067
Parks and recreation 415,716 415,716 348,267 67,449
Contingency 100,000 547 - 547
Total expenditures 8,745,119 10,085,653 9,519,158 566,495
Revenues over (under) expenditures (1,666,819) (2,575,386) (1,220,417) 1,354,969
Other financing sources (uses)
Transfer to General Capital Projects Fund - (25,500) (25,500) -
Transfer to Riverwalk Phase II Fund - (1,858) (1,858) -
Transfer from General Capital Projects Fund - 7,070 7,070 -
Transfer from General Capital Reserve Fund 126,054 126,054 126,054 -
Installment purchase obligations issued 757,770 1,214,368 1,214,368 -
Total other financing sources 883,824 1,320,134 1,320,134 -
Appropriated fund balance 782,995 1,255,252 - (1,255,252)
Net change in fund balance -$ -$ 99,717 99,717$
Fund balance, beginning 6,117,466
Fund balance, ending 6,217,183$
GENERAL FUND
Year Ended June 30, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
The accompanying notes are an integral part of this statement.
- 25 -
Exhibit 6
Proprietary
Fund Type
ASSETS Enterprise
Current assets:
Cash and investments 6,587,188$
Accounts receivable, net 1,111,431
Prepaid expenses 3,812
Restricted assets:
Cash and investments 3,193,417
Total current assets 10,895,848
Noncurrent assets:
Net pension asset 174,356
Capital assets:
Land and construction-in-progress 8,474,192
Other capital assets, net of depreciation 43,383,093
Total capital assets 51,857,285
Total noncurrent assets 52,031,641
Total assets 62,927,489
DEFERRED OUTFLOWS OF RESOURCES
Pension deferrals 138,937
Deferred loss on defeasance of debt 39,130
178,067
LIABILITIES
Current liabilities:
Accounts payable and accrued liabilities 926,658
Payable from restricted assets - customer deposits 414,608
Accrued interest payable 84,455
Current portion of long-term liabilities 1,875,926
Total current liabilities 3,301,647
Long-term liabilities:
Due in more than one year 20,089,420
Total liabilities 23,391,067
DEFERRED INFLOWS OF RESOURCES
Pension deferrals 424,947
NET POSITION
Net investment in capital assets 30,507,881
Restricted for:
Water and sewer projects 2,591,600
Unrestricted 6,190,061
Total net position 39,289,542$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF NET POSITION - PROPERIETARY FUND
June 30, 2015
The accompanying notes are an integral part of this statement.
- 26 -
Exhibit 7
Proprietary
Fund Type
Enterprise
OPERATING REVENUES
Charges for services 7,859,823$
Other operating revenues 1,079,889
TOTAL OPERATING REVENUES 8,939,712
OPERATING EXPENSES
Personnel services 2,449,953
Depreciation 1,466,442
Other current charges 2,808,784
Loss on disposal of capital assets 163
TOTAL OPERATING EXPENSES 6,725,342
OPERATING INCOME 2,214,370
NONOPERATING REVENUES (EXPENSES)
Investment earnings 745
Interest and fees (658,222)
TOTAL NONOPERATING EXPENSES (657,477)
INCOME BEFORE CAPITAL
CONTRIBUTIONS AND TRANSFERS 1,556,893
CAPITAL CONTRIBUTIONS AND TRANSFERS
Capital contribution from developer 1,484,316
TOTAL CAPITAL CONTRIBUTIONS
AND TRANSFERS 1,484,316
CHANGE IN NET POSITION 3,041,209
NET POSITION, BEGINNING OF YEAR, PREVIOUSLY
REPORTED 36,477,567
RESTATEMENT (229,234)
NET POSITION, BEGINNING OF YEAR 36,248,333
NET POSITION, END OF YEAR 39,289,542$
Year Ended June 30, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF REVENUES, EXPENSES AND
CHANGES IN NET POSITION - PROPRIETARY FUND
The accompanying notes are an integral part of this statement.
- 27 -
Exhibit 8
Page 1 of 2
Proprietary
Fund-Type
Enterprise
CASH FLOWS FROM OPERATING ACTIVITIES
Cash received from customers 8,984,242$
Cash paid for goods and services (2,835,101)
Cash paid to or on behalf of employees for services (2,483,311)
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,665,830
CASH FLOWS FROM CAPITAL AND RELATED FINANCING
ACTIVITIES
Acquisition and construction of capital assets (1,724,927)
Proceeds from sale of capital assets 770
Proceeds from issuance of long-term debt 928,301
Principal paid on bonds, notes and installment purchases (1,935,942)
Interest paid on bonds and installment purchases (580,476)
NET CASH USED BY CAPITAL AND
RELATED FINANCING ACTIVITIES (3,312,274)
CASH FLOWS FROM INVESTING ACTIVITIES
Interest on investments 745
NET CASH PROVIDED BY
INVESTING ACTIVITIES 745
NET INCREASE IN CASH
AND CASH EQUIVALENTS 354,301
CASH AND CASH EQUIVALENTS, BEGINNING 9,426,304
CASH AND CASH EQUIVALENTS, ENDING 9,780,605$
CASH AND CASH EQUIVALENTS
Unrestricted 6,587,188$
Restricted 3,193,417
TOTAL CASH AND CASH EQUIVALENTS 9,780,605$
Year Ended June 30, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF CASH FLOWS - PROPRIETARY FUND
The accompanying notes are an integral part of this statement.
- 28 -
Exhibit 8
Page 2 of 2
Proprietary
Fund-Type
Enterprise
Year Ended June 30, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
STATEMENT OF CASH FLOWS - PROPRIETARY FUND
RECONCILIATION OF OPERATING INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
Operating income 2,214,370$
Adjustments to reconcile operating income to net cash
provided by operating activities:
Depreciation 1,466,442
Pension expense (108,788)
Loss on disposal of capital assets 163
Changes in assets and liabilities:
Decrease in accounts receivable 24,445
Increase in prepaid expense 533
Increase in accounts payable and accrued liabilities (9,794)
Increase in deposits 20,085
Increase in OPEB liability 22,485
Increase in deferred outflows of resources for pensions (8,792)
Increase in compensated absences payable 44,681
NET CASH PROVIDED BY
OPERATING ACTIVITIES 3,665,830$
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND
FINANCING ACTIVITIES
Capital asset additions included in accounts payable and
accrued liabilities 663,226$
Capital contribution from developer 1,484,316$
The accompanying notes are an integral part of this statement.
- 29 -
- 30 -
THIS PAGE LEFT INTENTIONALLY BLANK.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 31 -
Note 1. Summary of Significant Accounting Policies
The accounting policies of the Town of Hillsborough (the “Town”) conform to accounting
principles generally accepted in the United States of America (“GAAP”) as applicable to
governments. The Governmental Accounting Standards Board (“GASB”) is the accepted
standard-setting body for establishing governmental accounting and financial reporting
principles. The following is a summary of the more significant accounting policies:
A. Reporting Entity
The Town of Hillsborough is a municipal corporation which is governed by an elected
mayor and a five-member board. As required by GAAP, these financial statements
present the Town and its component units, which are legally separate entities for which the
Town is financially accountable. The discretely presented component units presented
below are reported in separate columns in the Town’s financial statements in order to
emphasize that they are legally separate from the Town.
Hillsborough Tourism Development Authority (the “Authority”)
The Authority was created on April 9, 2012 by resolution of the Town, under the
authority of the North Carolina General Assembly. The Authority is responsible for
promoting travel and tourism in the Hillsborough area. The Authority receives revenue
from a three percent occupancy tax, which is levied and collected by the Town and the
remitted net of administration fees. The members of the Authority are appointed by
the Town’s Board of Commissioners.
Hillsborough Tourism Board (“the Board”)
The Board was created on November 8, 1993, by resolution of the Town, under the
authority of the North Carolina General Assembly. The Board is responsible for
promoting tourism within the Town of Hillsborough. The Board receives revenues
through a one percent prepared food and beverage tax, which is levied and collected
by the Town and remitted net of administration fees. The Board is composed of nine
members appointed by the Town’s Board of Commissioners.
Requests for complete financial statements for each of the component units may be
directed to the Finance Officer, c/o Hillsborough Tourism Development Authority or c/o
Hillsborough Tourism Board, Hillsborough, North Carolina, or by telephone at (919)
732-2104.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 32 -
Note 1. Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation
Government-Wide Statements: The statement of net position and the statement of
activities include the financial activities of the overall government. These statements
distinguish between the governmental and business-type activities of the Town.
Governmental activities generally are financed through taxes, intergovernmental revenues,
and other non-exchange transactions. Business-type activities are financed in whole or in
part by fees charged to external parties.
The statement of activities presents a comparison between direct expenses and program
revenues for the different business-type activities of the Town and for each function of the
Town’s governmental activities. Direct expenses are those that are specifically associated
with a program or function and, therefore, are clearly identifiable to a particular function.
Indirect expense allocations that have been made in the funds have been reversed for the
statement of activities. Program revenues include (a) fees and charges paid by the
recipients of goods or services offered by the programs, and (b) grants and contributions
that are restricted to meeting the operational or capital requirements of a particular
program. Revenues that are not classified as program revenues, including all taxes, are
presented as general revenues.
Fund Financial Statements: The fund financial statements provide information about the
Town’s funds. Separate statements for each fund category - governmental and
proprietary - are presented. The emphasis of fund financial statements is on major
governmental and enterprise funds, each displayed in a separate column. All remaining
governmental and enterprise funds are aggregated and reported as nonmajor funds.
Proprietary fund operating revenues, such as charges for services, result from exchange
transactions associated with the principal activity of the fund. Exchange transactions are
those in which each party receives and gives up essentially equal values. Nonoperating
revenues, such as subsidies and investment earnings, result from nonexchange
transactions or ancillary activities.
The Town’s fiduciary fund is presented in the fund financial statements as an agency fund.
Since by definition these assets are being held for the benefit of a third party and cannot
be used to address activities or obligations of the government, these funds are not
incorporated into the government-wide statements.
The Town reports the following major governmental funds:
General Fund - The General Fund is the general operating fund of the Town. It is
used to account for all financial resources except those required to be accounted for in
another fund. The primary revenue sources are ad valorem taxes, state grants, and
various other taxes and licenses. The primary expenditures are for general
government administration, public safety, street maintenance and construction, and
sanitation services.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 33 -
Note 1. Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation (Continued)
General Capital Projects Fund - This fund is used to accumulate expenditures
related to multiple capital projects budgeted to be completed within one year. The
General Capital Reserve Fund is consolidated in the General Capital Projects Fund.
The Town reports the following nonmajor governmental funds:
Downtown Improvements Capital Project Fund - This fund will account for certain
improvements to the downtown area of the Town.
Town Barn Improvements Capital Project Fund - The will account for various
renovations and upgrades to the Town Barn, including certain data processing
equipment.
Riverwalk Phase II Capital Project Fund - The project will connect Gold
Park/Riverwalk Phase I to downtown. The connection will serve as a highly desirable
recreation amenity, pedestrian route and economic development investment by adding
an additional attraction to downtown that should draw more tourists.
Riverwalk Phase III Capital Project Fund - Phase III of Riverwalk will extend
Riverwalk east toward lands owned by Classical American Home Preservation Trust
to make its outside connections to the trails at the Historic Occoneechee Speedway.
This trail portion will have a natural, unpaved surface to protect sensitive lands and
denote a transition from an urban greenway to less formal trails operated by the trust
for the public’s use.
Riverwalk CMAQ Capital Project Fund - Three important sidewalk components are
grouped for funding purposes through the Congestion Mitigation and Air Quality
program within the Department of Transportation. Riverwalk provides a viable
alternative to driving by allowing many residents of Hillsborough to walk or bike into
downtown, whether for work, shopping, or recreation. These sidewalk connections
are along Eno Mountain Road and provide access into the Occoneechee State natural
area (connecting to Gold Park); South Nash Street near the commercial area and the
rail trestle, and Calvin Street, connecting to Gold Park and Riverwalk.
The Town reports the following major enterprise fund:
Water and Sewer Fund - This fund is used to account for the Town’s water and
sewer operations. For financial reporting purposes, the Water and Sewer Capital
Projects Fund (“WS Capital Projects Fund”) and Water and Sewer Capital Reserve
Fund (“WS Capital Reserve Fund”) have been consolidated with the Water and Sewer
Fund.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 34 -
Note 1. Summary of Significant Accounting Policies (Continued)
B. Basis of Presentation (Continued)
The Town reports the following fiduciary fund:
Special Assessment Debt Agency Fund - This fund is used to account for proceeds
that the Town has received from special assessments that have not been remitted to
Regions Bank. Regions Bank is the Trustee of the Series 2013 Special Revenue
Bonds.
C. Measurement Focus and Basis of Accounting
In accordance with North Carolina General Statutes, all funds of the Town are maintained
during the year using the modified accrual basis of accounting.
Government-Wide and Proprietary Fund Financial Statements. The government-wide and
proprietary fund financial statements are reported using the economic resources
measurement focus. The government-wide and proprietary fund financial statements are
reported using the accrual basis of accounting. Revenues are recorded when earned and
expenses are recorded at the time liabilities are incurred, regardless of when the related
cash flows take place. Nonexchange transactions, in which the Town gives (or receives)
value without directly receiving (or giving) equal value in exchange, include property taxes,
grants, and donations. On an accrual basis, revenue from property taxes is recognized in
the fiscal year for which the taxes are levied. Revenue from grants and donations is
recognized in the fiscal year in which all eligibility requirements have been satisfied.
Amounts reported as program revenue include (1) charges to customers or applicants for
goods, services, or privileges provided, (2) operating grants and contributions, and
(3) capital grants and contributions, including special assessments. Internally dedicated
resources are reported as general revenues rather than as program revenues. Likewise,
general revenues include all taxes.
Proprietary funds distinguish operating revenues and expenses from 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 Town’s enterprise funds are charges to customers
for sales and services. The Town also recognizes as operating revenue the portion of tap
fees intended to recover the cost of connecting new customers to the water and sewer
system. Operating expenses for enterprise funds include the cost of sales and services,
administrative expenses, and depreciation on capital assets. All revenues and expenses
not meeting this definition are reported as nonoperating revenues and expenses.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 35 -
Note 1. Summary of Significant Accounting Policies (Continued)
C. Measurement Focus and Basis of Accounting (Continued)
Governmental Fund Financial Statements. Governmental funds are reported using the
current financial resources measurement focus and the modified accrual basis of
accounting. Under this method, revenues are recognized when measurable and available.
Expenditures are recorded when the related fund liability is incurred, except for principal
and interest on general long-term debt, claims and judgments, and compensated
absences, which are recognized as expenditures to the extent they have matured.
General capital asset acquisitions are reported as expenditures in governmental funds.
Proceeds of general long-term debt and acquisitions under capital leases are reported as
other financing sources.
The Town considers all revenues available if they are collected within 90 days after year
end, except for property taxes. Ad valorem taxes receivable are not accrued as a revenue,
because the amount is not susceptible to accrual. At June 30, taxes receivable for
property other than motor vehicles are materially past due and are not considered to be an
available resource to finance the operations of the subsequent year. Also, as of
September 1, 2013, state law altered the procedures for the assessment and collection of
property taxes on registered motor vehicles in North Carolina. Effective with this change in
the law, the State of North Carolina is responsible for billing and collecting the property
taxes on registered motor vehicles on behalf of all municipalities and special tax districts.
Property taxes are due when vehicles are registered. The billed taxes are applicable to the
fiscal year in which they are received. Uncollected taxes that were billed in periods prior to
September 1, 2013 and for limited registration plates are shown as a receivable in these
financial statements and are offset by deferred inflows of resources.
Sales taxes and certain intergovernmental revenues, such as utilities franchise tax,
collected and held by the state at year end on behalf of the Town, are recognized as
revenue. Sales taxes are considered a shared revenue for the Town because the tax is
levied by Orange County and then remitted to and distributed by the State.
Intergovernmental revenues and sales and services are not susceptible to accrual,
because generally they are not measurable until received in cash. Grant revenues that are
unearned at year end are recorded as deferred inflows of resources. Under the terms of
grant agreements, the Town funds certain programs by a combination of specific cost-
reimbursement grants, categorical block grants and general revenues. Thus, when
program expenses are incurred, there are both restricted and unrestricted net position
available to finance the program. It is the Town’s policy to first apply cost-reimbursement
grant resources to such programs, followed by categorical block grants, and then by
general revenues.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 36 -
Note 1. Summary of Significant Accounting Policies (Continued)
D. Budgetary Data
The Town’s budgets are adopted by the governing board as required by the North Carolina
General Statutes. An annual budget is adopted for the General Fund and the Water and
Sewer Fund. All annual appropriations lapse at the fiscal year end. Project ordinances are
adopted for the Downtown Improvements Capital Project Fund, Town Barn Improvements
Capital Project Fund, Riverwalk Phase II Capital Project Fund, Riverwalk Phase III Capital
Project Fund, Riverwalk CMAQ Capital Project Fund, General Capital Projects Fund,
Water and Sewer Capital Projects Fund, and the Water and Sewer Capital Reserve Fund.
The enterprise fund projects and capital reserve are consolidated with the Water and
Sewer Fund for reporting purposes. All budgets are prepared using the modified accrual
basis of accounting. Expenditures may not legally exceed appropriations at the functional
level for all annually budgeted funds and at the object level for the multiyear funds. The
Town Manager is authorized by the budget ordinance to transfer appropriations and may
allow any amount of money to be transferred between functional areas within a fund. The
Town Manager is also authorized to effect interdepartmental transfers within the same
fund, not to exceed 10% of the appropriated monies for the department whose allocation is
reduced. The Finance Director may make minor adjustments to the budget without
obtaining prior governing board approval by formal budget amendment. Such changes
must be within a fund and not between two or more funds. The Finance Director is
required to inform the board at the next meeting after the budget adjustment is made.
Budget amendments typically involve larger sums of money and require the governing
board’s approval. During the year, several amendments to the original budget were
necessary.
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity
1.Deposits and Investments
All deposits of the Town are made in board-designated official depositories and are
secured as required by state law (G.S. 159-31). The Town may designate, as an
official depository, any bank or savings association whose principal office is located in
North Carolina. Also, the Town may establish time deposit accounts such as NOW
and SuperNOW accounts, money market accounts, and certificates of deposit.
State law [G.S. 159-30(c)] authorizes the Town to invest in obligations of the United
States or obligations fully guaranteed both as to principal and interest by the United
States; obligations of the state of North Carolina; bonds and notes of any North
Carolina local government or public authority; obligations of certain nonguaranteed
federal agencies; certain high quality issues of commercial paper and bankers’
acceptances; and the North Carolina Capital Management Trust (“NCCMT”). The
Town’s investments are reported at fair value as determined by quoted market prices.
The securities of the NCCMT Cash Portfolio, a Security Exchange Commission-
registered (2a-7) money market mutual fund, are valued at fair value, which is the
NCCMT’s share price.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 37 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
2. Cash and Cash Equivalents
The Town pools money from several funds to facilitate disbursement and investment
and to maximize investment income. Therefore, all cash and investments are
essentially demand deposits and are considered cash and cash equivalents.
For purposes of the statement of cash flows, the Enterprise Fund considers all short-
term and long-term fixed-income investments (including restricted assets) to be cash
equivalents.
3. Restricted Assets
The Water and Sewer Fund, Riverwalk Phase II Fund, and Riverwalk Phase III Fund
have unexpended debt proceeds that are classified as restricted assets because their
use is completely restricted to the purpose for which the debt agreements were
originally issued. Customer deposits held by the Town before any services are
supplied are restricted to the service for which the deposit was collected. Powell Bill
funds are also classified as restricted cash because they can only be expended for the
purposes of maintaining, repairing, constructing, reconstruction or widening of local
streets per G.S. 136-41.4. In addition, contributions from developers that are
restricted by Town ordinance are restricted to the purpose of the donation.
Town of Hillsborough Restricted Cash
Governmental Activities
General Fund
Streets $ 99,406
Customer deposits 102,265
Unspent debt proceeds 72,642
General Capital Reserve Fund
Developer donations - future capital projects 464,149
Total Governmental Activities 738,462
Business-Type Activities
Water and Sewer Fund
Unspent debt proceeds 187,209
Customer deposits 414,608
Developer donations - perpetual maintenance 441,138
Developer donations - water and sewer needs 2,150,462
Total Business-Type Activities 3,193,417
Total Restricted Cash $ 3,931,879
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 38 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
4.Ad Valorem Taxes Receivable
In accordance with state law [G.S. 105-347 and G.S. 159-13(a)], the Town levies ad
valorem taxes on property other than motor vehicles on July 1, the beginning of the
fiscal year. The taxes are due on September 1 (lien date); however, interest does not
accrue until the following January 6. These taxes are based on the assessed values
as of January 1, 2015. As allowed by state law, the Town has established a schedule
of discounts that apply to taxes that are paid prior to the due date. In the Town’s
General Fund, ad valorem tax revenues are reported net of such discounts.
5.Allowances for Doubtful Accounts
All receivables that historically experience uncollectible accounts are shown net of an
allowance for doubtful accounts. This amount is estimated by analyzing the
percentage of receivables written off in prior years.
6. Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and
are recorded as prepaid items in both government-wide and fund statements, and
expensed as items are used.
7. Capital Assets
Capital assets, which include property, plant, equipment, and infrastructure assets
(e.g., roads, bridges, sidewalks, and similar items) are reported in the applicable
governmental or business-type activities columns in the government-wide financial
statements. Capital assets are defined by the government as assets with an initial,
individual cost of more than a certain cost and an estimated useful life in excess of two
years.
Minimum capitalization costs are as follows:
Cost
Land and easements $ 1
Buildings, improvements 10,000
Distribution system 15,000
Vehicles, furniture and equipment 5,000
Infrastructure 35,000
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 39 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
7. Capital Assets (Continued)
Assets are recorded at historical cost or estimated historical cost, if purchased or
constructed. Donated capital assets are recorded at their estimated fair value at time of
donation. The cost of normal maintenance and repairs that do not add to the value of
the asset or materially extend assets’ lives are not capitalized.
Capital assets are depreciated using the straight-line method over their estimated useful
lives:
Useful Life
Buildings and building improvements 30 years
Infrastructure 40 years
Plant and distribution systems 50 years
Furnishings, fixtures, equipment and
computers 5 to 10 years
Vehicles 3 to 5 years
8. Deferred Outflows/Inflows of Resources
In addition to assets, the statement of financial position will sometimes report a separate
section for deferred outflows of resources. This separate financial statement element,
Deferred Outflows of Resources, represents a consumption of net position that applies
to a future period and so will not be recognized as an expense or expenditure until then.
The Town’s contributions made to the pension plan in the 2015 fiscal year, certain
pension deferrals, and the deferred loss on defeasance of debt meet this criterion. In
addition to liabilities, the statement of financial position will sometimes report a separate
section for deferred inflows of resources. This separate financial statement element,
Deferred Inflows of Resources, represents an acquisition of net position that applies to a
future period and so will not be recognized as revenue until then. The Town has several
items that meet the criterion for this category: taxes receivable, grants receivable and
deferrals of pension expense that result from implementation of GASB Statement 68. In
addition, the Town has unearned revenue items that meet the criterion for this category.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 40 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
9. Long-Term Obligations
In the government-wide financial statements and the proprietary fund types in the fund
financial statements, long-term debt and other long-term obligations are reported as
liabilities in the applicable governmental activities or business-type activities, or
proprietary fund-type statement of net position. Long-term debt premiums and
discounts are deferred and amortized over the life of the debt using the straight-line
method that approximates the effective interest method. Long-term debt is reported net
of the applicable premiums or discounts. Debt issuance costs, except for prepaid
insurance costs, are expensed in the reporting period in which they are incurred.
Prepaid insurance costs are expensed over the life of the debt.
In fund financial statements, governmental fund types recognize debt premiums and
discounts, as well as debt issuance costs, during the current period. The face amount
of debt issued is reported as other financing sources, while discounts on debt issuances
are reported as other financing uses. Issuance costs, whether or not withheld from the
actual debt proceeds received, are reported as debt service expenditures.
10. Compensated Absences
The vacation policy of the Town provides for the accumulation of up to 240 hours
earned vacation leave, with such leave being fully vested when earned. For the
Town’s government-wide and proprietary funds, an expense and a liability for
compensated absences and the salary-related payments are recorded as the leave is
earned. The Town has assumed a first-in, first-out method of using accumulated
compensated time. The portion of that time that is estimated to be used in the next
fiscal year has been designated as a current liability and included in the long-term
liabilities due within one year on the government-wide financial statements.
The Town’s sick leave policy provides for an unlimited accumulation of earned sick
leave. Sick leave does not vest, but any unused sick leave accumulated at the time of
retirement may be used in determination of length of service for retirement benefit
purposes. Since the Town has no obligation for the accumulated sick leave until it is
actually taken, no accrual for sick leave has been made.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 41 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
11.Net Position/Fund Balances
Net Position
Net position in government-wide and proprietary fund financial statements is
classified as net investment in capital assets, restricted, and unrestricted.
Restricted net position represent constraints on resources that are either
externally imposed by creditors, grantors, contributors, or laws or regulations of
other governments, or imposed by law through state statute.
Fund Balances
In the governmental fund financial statements, fund balance is comprised of five
classifications designed to disclose the hierarchy of constraints placed on how the
fund balance can be spent.
The governmental fund types classify fund balances as follows:
Nonspendable Fund Balance - This classification includes amounts that
cannot be spent because they are either (a) not in spendable form, or
(b) legally or contractually required to be maintained intact.
Prepaid items - Portion of fund balance that is not available for
appropriation because it represents the year-end fund balance of
prepaid items, which are not expendable, available resources.
Restricted Fund Balance - This classification includes amounts that are
restricted to specific purposes externally imposed by creditors or imposed by
law.
Restricted for Stabilization by State Statute - Portion of fund balance
that is restricted by state statute [G.S. 159-8(a)].
Restricted for Streets - Powell Bill portion of fund balance that is
restricted by revenue source for street construction and maintenance
expenditures. This amount represents the balance of the total
unexpended Powell Bill funds.
Restricted for Capital Projects - Portion of fund balance representing
unexpended contributions from developers and debt proceeds that are
restricted by Town ordinance and the developers for future general
capital projects.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 42 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
11. Net Position/Fund Balances (Continued)
Fund Balances (Continued)
Committed Fund Balance - Portion of fund balance that can only be used
for specific purposes imposed by the government through majority vote of the
Town’s governing body - the Board of Town Commissioners (highest level of
decision-making authority). The Board of Town Commissioners can, by
adoption of an ordinance prior to the end of the fiscal year, commit fund
balance. Once adopted, the limitation imposed by the ordinance remains in
place until a similar action is taken (the adoption of another ordinance) to
remove or revise the limitation.
Committed for Capital Projects - Portion of fund balance that can
only be used for the construction of capital projects.
Assigned Fund Balance - Portion of fund balance the Town of Hillsborough
intends to use for specific purposes that are considered neither restricted nor
committed. Unassigned fund balances may be assigned by the Town Board,
Town Manager, or Finance Director for specific purposes through the budget
process or agenda items.
Assigned for Sidewalks - Portion of fund balance that is to be used for
the future construction of sidewalks.
Assigned for Subsequent Year’s Expenditures - Portion of fund
balance that is appropriated in the next year’s budget that is not already
classified in restricted or committed. The governing body approves the
appropriation.
Unassigned Fund Balance - Portion of fund balance that has not been
restricted, committed, or assigned to specific purposes or other funds.
The Town of Hillsborough has a revenue-spending policy that provides guidance
for programs with multiple revenue sources. The Finance Officer will use
resources in the following hierarchy: bond and installment financing proceeds,
federal funds, state funds, local non-town funds, and town funds. For purposes of
fund balance classification, expenditures are to be spent from restricted fund
balance first, followed in order by committed fund balance, assigned fund balance
and, finally, unassigned fund balance. The Finance Officer has the authority to
deviate from this policy, if it is in the best interest of the Town.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 43 -
Note 1. Summary of Significant Accounting Policies (Continued)
E. Assets, Liabilities, Deferred Outflows/Inflows of Resources and Fund Equity (Continued)
11. Net Position/Fund Balances (Continued)
Fund Balances (Continued)
The Town of Hillsborough has adopted a policy to maintain the General Fund
fund balance level between 20% and 60% of operating expenditures, with a target
of 33%, or the equivalent of four months of operating expenditures.
12. Pensions
For purposes of measuring the net pension asset, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information
about the fiduciary net position of the Local Governmental Employee’s Retirement
System (LGERS) and additions to/deductions from LGERS’ fiduciary net position have
been determined on the same basis as they are reported by LGERS. For this purpose,
plan member contributions are recognized in the period in which the contributions are
due. The Town’s employer contributions are recognized when due and the Town has
a legal requirement to provide the contributions. Benefits and refunds are recognized
when due and payable in accordance with the terms of LGERS. Investments are
reported at fair value.
Note 2. Reconciliation of GAAP and Budgetary Basis Expenditures
The accompanying schedule reconciles certain General Fund transactions, which are
treated differently on Exhibit 4 (GAAP basis) and Exhibit 5 (budgetary basis). These
differences relate to capital lease transactions and are summarized below:
Increase
Exhibit 4 (Decrease) Exhibit 5
General government $ 1,439,585 $ 91,212 $ 1,530,797
Public safety 3,845,174 144,422 3,989,596
Environmental protection 1,007,805 143,960 1,151,765
Community activities and projects 836,258 79,660 915,918
Parks and recreation 74,138 274,129 348,267
Debt service
Principal retirement 632,155 (632,155) (1) -
Interest and fiscal charges 101,228 (101,228) (1) -
(1) Reclassification of debt service payments.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 44 -
Note 3. Stewardship, Compliance and Accountability
A. Excess of Expenditures over Appropriations
For the fiscal year ended June 30, 2015, expenditures made in the Town’s General Fund
exceeded the authorized appropriations made by the governing board for environmental
protection by $3,758. The over-expenditure of environmental protection occurred because
the Town did not budget for the payment of pass through grant funds to Orange County for
the purchase of recycling carts. Management and the board will more closely review the
budget to actual reports to ensure compliance in future years.
Note 4. Detail Notes on All Funds
A. Assets
1. Deposits
All of the deposits of the Town, the Authority, and the Board are either insured or
collateralized by using one of two methods. Under the Dedicated Method, all deposits
that exceed the federal depository insurance coverage level are collateralized with
securities held by the Town’s, the Authority’s, or the Board’s agents in the entities’
names. Under the Pooling Method, which is a collateral pool, all uninsured deposits
are collateralized with securities held by the State Treasurer’s agent in the name of
the State Treasurer. Since the State Treasurer is acting in a fiduciary capacity for the
Town, the Authority, and the Board, these deposits are considered to be held by their
agents in the entities’ names. The amount of the pledged collateral is based on an
approved averaging method for noninterest-bearing deposits and the actual current
balance for interest-bearing deposits. Depositories using the Pooling Method report to
the State Treasurer the adequacy of their pooled collateral covering uninsured
deposits. The State Treasurer does not confirm this information with the Town, the
Authority, the Board, or the escrow agent.
Because of the inability to measure the exact amounts of collateral pledged for the
Town, the Authority, or the Board under the Pooling Method, the potential exists for
under-collateralization, and this risk may increase in periods of high cash flows.
However, the State Treasurer of North Carolina enforces strict standards of financial
stability for each depository that collateralizes public deposits under the Pooling
Method. The Town has no formal policy regarding custodial credit risk for deposits,
but relies on the State Treasurer to enforce standards of minimum capitalization for all
pooling method financial institutions and to monitor them for compliance. The Town
complies with the provisions of G.S. 159-31 when designating official depositories and
verifying that deposits are properly secured. The Authority and the Board have no
formal policy regarding custodial credit risk for deposits.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 45 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
1. Deposits (Continued)
At June 30, 2015, the Town’s deposits had a carrying amount of $6,480,811 and a
bank balance of $6,732,778. Of the bank balance, $500,000 was covered by federal
depository insurance and $6,232,778 in interest-bearing deposits were covered under
the Pooling Method. The Town had $1,050 in petty cash on hand at June 30, 2015.
At June 30, 2015, the Authority’s deposits had a carrying amount of $168,778 and a
bank balance of $168,778. All of the bank balance was covered by federal depository
insurance.
At June 30, 2015, the Board’s deposits had a carrying amount of $222,358 and a bank
balance of $222,358. All of the bank balance was covered by federal depository
insurance.
2.Investments
At June 30, 2015, the Town had $10,324,212 invested with the North Carolina Capital
Management Trust’s Cash Portfolio, which carried a credit rating of AAAm by
Standard and Poor’s. The Town has no policy regarding credit risk of its investments.
3.Due from Other Governments
Amounts due from other governments consist of the following:
Governmental
Activities
General Fund
Sales and use tax distribution $ 341,561
Utilities franchise and telecommunications
tax 160,381
Other government agencies 67,632
Sales tax refunds 130,214
699,788
Riverwalk CMAQ Capital Project Fund
CMAQ grant funds 45,132
$ 744,920
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 46 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
4. Receivables - Allowance for Doubtful Accounts
The amounts presented in the Balance Sheet and the Statement of Net Position for
the year ended June 30, 2015 is net of the following allowances for doubtful accounts,
which are based on historical percentages of receivables not expected to be collected.
General Fund
Taxes receivable $ 69,990
Enterprise Fund $ 245,000
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 47 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
5. Capital Assets
Governmental capital asset activity for the year ended June 30, 2015 was as follows:
Beginning Ending
Balances Increases Decreases Transfers Balances
Governmental
activities:
Capital assets not
being depreciated:
Land $ 2,672,428 $ 615,368 $ - $ 235,211 $ 3,523,007
Construction-in-
progress 2,179,190 618,147 - (2,472,322) 325,015
Total capital
assets not
being
depreciated 4,851,618 $ 1,233,515 $ - $ (2,237,111) 3,848,022
Capital assets
being depreciated:
Buildings and
improvements 4,160,980 $ - $ - $ 2,237,111 6,398,091
Infrastructure 6,259,657 757,221 --7,016,877
Equipment 530,609 60,383 --590,992
Vehicles 2,861,905 568,791 (34,661) -3,396,036
Total capital
assets being
depreciated 13,813,151 $ 1,386,395 $ (34,661) $ 2,237,111 17,401,996
Less accumulated
depreciation for:
Buildings and
improvements 1,345,138 $ 181,557 $ - $ -1,526,695
Infrastructure 256,495 160,608 --417,103
Equipment 445,811 20,161 --465,972
Vehicles 2,112,681 357,670 (34,661) -2,435,689
Total
accumulated
depreciation 4,160,125 $ 719,996 $ (34,661) $ - 4,845,460
Total capital
assets being
depreciated,
net 9,653,026 12,556,536
Governmental
activity capital
assets, net $ 14,504,644 $ 16,404,558
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 48 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
5. Capital Assets (Continued)
Depreciation expense was charged to functions/programs of the primary government
as follows:
General government $ 224,303
Public safety 251,675
Transportation 130,468
Environmental protection 113,550
$ 719,996
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 49 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
5. Capital Assets (Continued)
Business-type capital asset activity for the year ended June 30, 2015 was as follows:
Beginning Ending
Balances Increases Decreases Transfers Balances
Business-type
activities:
Capital assets not
being depreciated:
Land $ 6,005,443 $ - $ - $ - $ 6,005,443
Construction-in-
progress 19,796,803 2,115,763 - (19,443,817) 2,468,749
Total capital
assets not
being
depreciated 25,802,246 $ 2,115,763 $ - $ (19,443,817) 8,474,192
Capital assets
being depreciated:
Buildings and
improvements 8,454,240 $ - $ - $ 19,061,577 27,515,817
Plant and
distribution
systems 28,068,010 1,484,316 (22,403) 298,317 29,828,240
Infrastructure 533,316 19,665 --552,981
Equipment 1,322,631 172,660 (112,569) 83,923 1,466,645
Vehicles 642,932 80,063 (20,968) -702,027
Total capital
assets being
depreciated 39,021,129 $ 1,756,704 $ (155,940) $ 19,443,817 60,065,710
Less accumulated
depreciation for:
Buildings and
improvements 6,375,588 $ 731,831 $ - $ -7,107,419
Plant and
distribution
systems 7,343,173 589,906 (22,403) -7,910,676
Infrastructure 40,640 13,339 --53,979
Equipment 1,064,995 83,024 (111,637) -1,036,382
Vehicles 546,788 48,342 (20,969) -574,161
Total
accumulated
depreciation 15,371,184 $ 1,466,442 $ (155,009) $ - 16,682,617
Total capital
assets being
depreciated,
net 23,649,945 43,383,093
Business-type
activity capital
assets, net $ 49,452,191 $ 51,857,285
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 50 -
Note 4. Detail Notes on All Funds (Continued)
A. Assets (Continued)
5.Capital Assets (Continued)
Construction Commitments
The Town has active construction projects as of June 30, 2015 with the following
remaining commitments:
Remaining
Project Spent-to-Date Commitment
Riverwalk CMAQ-Sidewalk $ 56,545 $ 44,247
West Fork Eno Reservoir 531,124 250,147
Waterstone Water Tank 1,553,225 155,775
Bank of America parking lot restoration 129,828 2,520
Total $ 2,270,722 $452,689
B. Liabilities
1.Pension Plan and Postemployment Obligations
a. Local Governmental Employees’ Retirement System
Plan Description. The Town of Hillsborough is a participating employer in the
statewide Local Governmental Employees’ Retirement System (LGERS), a cost-
sharing multiple-employer defined benefit pension plan administered by the state of
North Carolina. LGERS membership is comprised of general employees and local law
enforcement offers (LEOs) of participating local governmental entities. Article 3 of
G.S. Chapter 128 assigns the authority to establish and amend benefit provisions to
the North Carolina General Assembly. Management of the plan is vested in the
LGERS Board of Trustees, which consists of 13 members - nine appointed by the
Governor, one appointed by the State Senate, one appointed by the House of
Representatives, and the State Treasurer and State Superintendent, who serve as ex-
officio members. The Local Governmental Employees’ Retirement System is included
in the Comprehensive Annual Financial Report (CAFR) for the state of North Carolina.
The State’s CAFR includes financial statements and required supplementary
information for LGERS. That report may be obtained by writing to the Office of the
State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410, or by
calling (919) 981-5454.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 51 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
a. Local Governmental Employees’ Retirement System (Continued)
Benefits Provided. LGERS provides retirement and survivor benefits. Retirement
benefits are determined as 1.85% of the member’s average final compensation times
the member’s years of creditable service. A member’s average final compensation is
calculated as the average of a member’s four highest consecutive years of
compensation. Plan members are eligible to retire with full retirement benefits at age
65 with five years of creditable service, at age 60 with 25 years of creditable service,
or at any age with 30 years of creditable service. Plan members are eligible to retire
with partial retirement benefits at age 50 with 20 years of creditable service or at age
60 with five years of creditable service. Survivor benefits are available to eligible
beneficiaries of members who die while in active service or within 180 days of their
last day of service and who have either completed 20 years of creditable service
regardless of age or have completed five years of service and have reached age 60.
Eligible beneficiaries may elect to receive a monthly Survivor’s Alternate Benefit for life
or a return of the member’s contributions. The plan does not provide for automatic
post-retirement benefit increases. Increases are contingent upon actuarial gains of the
plan.
Contributions. Contribution provisions are established by General Statute 128-30 and
may be amended only by the North Carolina General Assembly. Town employees are
required to contribute 6% of their compensation. Employer contributions are actuarially
determined and set annually by the LGERS Board of Trustees. The Town’s
contractually required contribution rate for the year ended June 30, 2015, was 7.07%
for general employees, actuarially determined as an amount that, when combined with
employee contributions, is expected to finance the costs of benefits earned by
employees during the year. Contributions to the pension plan from the Town were
$357,402 for the year ended June 30, 2015.
Refunds of Contributions. Town employees who have terminated service as a
contributing member of LGERS, may file an application for a refund of their
contributions. By state law, refunds to members with at least five years of service
include 4% interest. State law requires a 60 day waiting period after service
termination before the refund may be paid. The acceptance of a refund payment
cancels the individual’s right to employer contributions or any other benefit provided by
LGERS.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 52 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
a. Local Governmental Employees’ Retirement System (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions
At June 30, 2015, the Town reported an asset of $477,164 for its proportionate share of
the net pension asset. The net pension asset was measured as of June 30, 2014. The
total pension liability used to calculate the net pension asset was determined by an
actuarial valuation as of December 31, 2013. The total pension liability was then rolled
forward to the measurement date of June 30, 2014 utilizing update procedures
incorporating the actuarial assumptions. The Town’s proportion of the net pension asset
was based on a projection of the Town’s long-term share of future payroll covered by
the pension plan, relative to the projected future payroll covered by the pension plan of
all participating LGERS employers, actuarially determined. At June 30, 2014, the
Town’s proportion was 0.0809%, which was an increase of 0.0012% from its proportion
measured as of June 30, 2013.
For the year ended June 30, 2015, the Town recognized pension expense of $35,635.
At June 30, 2015, the Town reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
Deferred Deferred
Outflows of Inflows of
Resources Resources
Differences between expected and actual
experience $ - $ 52,138
Changes of assumptions - -
Net difference between projected and actual
earnings on pension plan investments - 1,110,826
Changes in proportion and differences
between Town contributions and proportionate
share of contributions 22,822 -
Town contributions subsequent to the
measurement date 357,402 -
Total $ 380,224 $ 1,162,964
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 53 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions (Continued)
$357,402 of the amount reported as deferred outflows of resources related to Town
contributions subsequent to the measurement date that will be recognized as an
increase of the net pension asset in the year ended June 30, 2016. Other amounts
reported as deferred outflows and inflows of resources related to pensions will be
recognized in pension expense as follows:
Year Ended June 30:
2016 $ (285,055)
2017 (285,055)
2018 (285,055)
2019 (284,977)
2020 -
Thereafter -
Actuarial Assumptions. The total pension liability in the December 31, 2013 actuarial
valuation was determined using the following actuarial assumptions, applied to all
periods included in the measurement:
Inflation 3.0 percent
Salary increases 4.25 to 8.55 percent, including inflation
and productivity factor
Investment rate of return 7.25 percent, net of pension plan
investment expense, including inflation
The plan currently uses mortality tables that vary by age, gender, employee group (i.e.
general, law enforcement officer) and health status (i.e. disabled and healthy). The
current mortality rates are based on published tables and based on studies that cover
significant portions of the U.S. population. The healthy mortality rates also contain a
provision to reflect future mortality improvements.
The actuarial assumptions used in the December 31, 2013 valuation were based on
the results of an actuarial experience study for the period January 1, 2005 through
December 31, 2009.
Future ad hoc COLA amounts are not considered to be substantively automatic and
are therefore not included in the measurement.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 54 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions (Continued)
The projected long-term investment returns and inflation assumptions are developed
through review of current and historical capital markets data, sell-side investment
research, consultant whitepapers, and historical performance of investment strategies.
Fixed income return projections reflect current yields across the U.S. Treasury yield
curve and market expectations of forward yields projected and interpolated for multiple
tenors and over multiple year horizons. Global public equity return projections are
established through analysis of the equity risk premium and the fixed income return
projections. Other asset categories and strategies’ return projections reflect the
foregoing and historical data analysis. These projections 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 as of June 30, 2014 are summarized in the following table:
Long-Term
Expected
Asset Class Target Real Rate
Allocation of Return
Fixed income 36.0% 2.5%
Global equity 40.5% 6.1%
Real estate 8.0% 5.7%
Alternatives 6.5% 10.5%
Credit 4.5% 6.8%
Inflation protection 4.5% 3.7%
Total 100.0%
The information above is based on 30-year expectations developed with the
consulting actuary for the 2013 asset liability and investment policy study for the North
Carolina Retirement Systems, including LGERS. The long-term nominal rates of
return underlying the real rates of return are arithmetic annualized figures. The real
rates of return are calculated from nominal rates by multiplicatively subtracting a long-
term inflation assumption of 3.19%. All rates of return and inflation are annualized.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 55 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and
Deferred Inflows of Resources Related to Pensions (Continued)
A new asset allocation policy was finalized during the fiscal year ended June 30, 2014
to be effective July 1, 2014. The new asset allocation policy utilizes different asset
classes, changes in the structure of certain asset classes, and adopts new
benchmarks. Using the asset class categories in the preceding table, the new long-
term expected arithmetic real rates of return are: Fixed Income 2.2%, Global Equity
5.8%, Real Estate 5.2%, Alternatives 9.8%, Credit 6.8% and Inflation Protection 3.4%.
Discount Rate. The discount rate used to measure the total pension liability was
7.25%. The projection of cash flows used to determine the discount rate assumed
that contributions from plan members will be made at the current contribution rate and
that contributions from employers will be made at statutorily required rates, actuarially
determined. Based on these assumptions, the pension plan’s fiduciary net position
was projected to be available to make all projected future benefit payments of the
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 Town’s proportionate share of the net pension asset to changes in
the discount rate. The following presents the Town’s proportionate share of the net
pension asset calculated using the discount rate of 7.25 percent, as well as what the
Town’s proportionate share of the net pension asset or net pension liability would be if
it were calculated using a discount rate that is one percentage point lower (6.25
percent) or one percentage point higher (8.25 percent) than the current rate:
1% Discount 1%
Decrease Rate Increase
(6.25%) (7.25%) (8.25%)
Town’s proportionate share of
the net pension liability (asset) $ 1,619,700 $ (477,164) $ (2,242,655)
Pension plan fiduciary net position. Detailed information about the pension plan’s
fiduciary net position is available in the separately issued Comprehensive Annual
Financial Report (CAFR) for the State of North Carolina.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 56 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
b. Law Enforcement Officers’ Special Separation Allowance
Plan Description. The Town of Hillsborough administers a public employee retirement
system (the “Separation Allowance”), a single-employer defined benefit pension plan
that provides retirement benefits to the Town’s qualified sworn law enforcement
officers. The Separation Allowance is equal to 0.85% of the annual equivalent of the
base rate of compensation most recently applicable to the officer for each year of
creditable service. The retirement benefits are not subject to any increases in salary
or retirement allowances that may be authorized by the General Assembly.
Article 12D of G.S. Chapter 143 assigns the authority to establish and amend benefit
provisions to the North Carolina General Assembly. A stand-alone financial statement
has not been issued for this plan.
All full-time law enforcement officers of the Town are covered by the Separation
Allowance. At December 31, 2014, the Separation Allowance’s membership
consisted of:
Retirees receiving benefits 1
Terminated plan members entitled
to, but not yet receiving benefits -
Active plan members 29
Total 30
Summary of Significant Accounting Policies:
Basis of Accounting. The Town has chosen to fund the Separation Allowance on a
pay-as-you-go basis. Pension expenditures are made from the General Fund, which
is maintained on the modified accrual basis of accounting. Benefits and refunds are
recognized when due and payable in accordance with the terms of the plan.
The Separation Allowance has no assets accumulated in a trust that meets the
following criteria which are outlined in GASB Statements 67 and 68:
Contributions to the pension plan and earnings of those contributions are
irrevocable
Pension plan assets are dedicated to providing benefits to plan members
Pension plan assets are legally protected from the creditors or employers,
nonemployer contributing entities, the plan administrator, and plan members.
Method Used to Value Investments. No funds are set aside to pay benefits and
administration costs. These expenditures are paid as they come due.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 57 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
b. Law Enforcement Officers’ Special Separation Allowance (Continued)
Contributions:
The Town is required by Article 12D of G.S. Chapter 143 to provide these retirement
benefits and has chosen to fund the benefit payments on a pay-as-you-go basis
through appropriations made in the General Fund operating budget. The Town’s
obligation to contribute to this plan is established and may be amended by the North
Carolina General Assembly. There were no contributions made by employees.
The annual required contribution for the current year was determined as part of the
December 31, 2014 actuarial valuation using the projected unit credit actuarial cost
method. The actuarial assumptions included (a) a 5.0% investment rate of return and
(b) projected salary increases ranging from 4.25% - 7.85% per year. Both (a) and (b)
included an inflation component of 3.0%. The assumptions did not include post-
employment benefit increases.
Annual Pension Cost and Net Pension Obligation. The Town’s annual pension cost
and net pension obligation to the Separation Allowance for the current year were as
follows:
Annual required contribution $ 60,907
Interest on net pension asset (984)
Adjustment to annual required contribution 1,662
Annual pension cost 61,585
Contributions made 31,035
Increase in net pension liability 30,550
Net pension obligation (asset), beginning of year (19,673)
Net pension obligation (asset), end of year $ 10,877
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 58 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
b. Law Enforcement Officers’ Special Separation Allowance (Continued)
Three-Year Trend Information:
Fiscal Annual Percentage Net Pension
Year Pension of APC Obligation
Ended Cost (APC) Contributed (Asset)
6/30/2013 $ 52,458 91.75% $ (23,548)
6/30/2014 53,533 92.76% (19,673)
6/30/2015 61,585 50.39% 10,877
Funded Status and Funding Process: As of December 31, 2014, the most recent
actuarial valuation date, the plan was not funded. The actuarial accrued liability for
benefits and the unfunded actuarial accrued liability (“UALL”) were $428,191. The
covered payroll (annual payroll of active employees covered by the plan) was
$1,561,351, and the ratio of the UAAL to the covered payroll was 27.42%.
The schedule of funding progress, presented as required supplementary information
following the notes to the financial statements, presents multiyear trend information
about whether the actuarial value of plan assets are increasing or decreasing over
time relative to the actuarial accrued liability for benefits.
c. Supplemental Retirement Income Plan
Plan Description. The Town of Hillsborough contributes to the Supplemental
Retirement Income Plan (the “Plan”), a defined contribution pension plan administered
by the Department of State Treasurer and a board of trustees. The Plan provides
retirement benefits to law enforcement officers employed by the Town. Article 5 of
G.S. Chapter 135 assigns the authority to establish and amend benefit provisions to
the North Carolina General Assembly. The Supplemental Retirement Income Plan for
Law Enforcement Officers is included in the CAFR for the state of North Carolina. The
state’s CAFR includes the pension trust fund financial statements for the Internal
Revenue Section 401(k) plan that includes the Supplemental Retirement Income Plan
for Law Enforcement Officers. That report may be obtained by writing to the Office of
the State Controller, 1410 Mail Service Center, Raleigh, North Carolina 27699-1410,
or by calling (919) 981-5454. Additionally, the Town has elected to include all
permanent, full-time employees under this plan.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 59 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
1.Pension Plan and Postemployment Obligations (Continued)
c. Supplemental Retirement Income Plan (Continued)
Funding Policy. Article 12E of G.S. Chapter 143 requires the Town to contribute each
month an amount equal to 5% of each officer’s salary, and all amounts contributed are
vested immediately. The Town has elected to contribute each month an amount equal
to 5.0% of each participating general employee’s salary. Also, the participants may
make voluntary contributions to the Plan. Contributions for the year ended June 30,
2015 were $366,421, which consisted of $244,064 from the Town and $122,357 from
employees.
2.Other Postemployment Benefit Obligations
Plan Description. According to a Town resolution, the Town administers a single-
employer defined benefit Healthcare Plan (the “HC Plan”). The HC Plan provides
post-retirement healthcare benefits until they become eligible for Medicare to retirees
of the Town who were hired before February 1, 2009, who have at least 20 years of
creditable service, and who attain age 55 for regular employees and age 52 for law
enforcement employees. Employees hired on or after February 1, 2009, must
complete 30 years of service and attain age 60 for regular employees and age 57 for
law enforcement employees before becoming eligible for post-retirement benefits.
The Town pays the full cost of coverage for these benefits. The Town’s Board of
Commissioners may amend the benefit provisions. A separate report was not issued
for the HC Plan.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 60 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
2.Other Postemployment Benefit Obligations (Continued)
Law Enforcement Non-Law Enforcement
Retired Employees’
Years of Hired Before Hired On or After Hired Before Hired On or After
Creditable Service February 9, 2009 February 9, 2009 February 9, 2009 February 9, 2009
Less than 20 years’
continuous service Not eligible for Not eligible for Not eligible for Not eligible for
coverage coverage coverage coverage
20 or more years’
continuous service:
Before age 52 Not eligible for Not eligible for Not eligible for Not eligible for
coverage coverage coverage coverage
Age 52 to 55 Full coverage Not eligible for Not eligible for Not eligible for
paid for by Town coverage coverage coverage
Age 55 until
eligible for
Medicare Full coverage Not eligible for Full coverage Not eligible for
paid for by Town coverage paid for by Town coverage
30 or more years’
continuous service:
Before age 57 Full coverage Not eligible for Full coverage Not eligible for
paid for by Town coverage paid for by Town coverage
Age 57 to 60 Full coverage Full coverage Full coverage Not eligible for
paid for by Town paid for by Town paid for by Town coverage
Age 60 until
eligible for
Medicare Full coverage Full coverage Full coverage Full coverage
paid for by Town paid for by Town paid for by Town paid for by Town
Membership of the HC Plan consisted of the following at December 31, 2014, the date
of the latest actuarial valuation:
Law
General Enforcement
Employees Officers
Retirees and dependents receiving benefits 2 3
Active plan members 59 27
Total 61 30
Funding Policy. The Town pays the cost of coverage for the healthcare benefits paid
to qualified retirees under a Town resolution that can be amended by the Board of
Commissioners. The Town’s members pay up to $1,208 per month for full family
coverage. The Town has chosen to fund the healthcare benefits on a pay-as-you-go
basis.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 61 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
2.Other Postemployment Benefit Obligations (Continued)
The current annual required contribution of the employer (“ARC”) rate is 2.64% of
annual covered payroll. For the current year, the Town contributed $65,324 or 1.38%
of annual covered payroll. The Town obtains healthcare coverage through private
insurers. The Town’s required contributions, under a Town resolution, for employees
not engaged in law enforcement and for law enforcement officers represented 0.57%
and 0.81% of covered payroll, respectively. The Town’s contributions totaled $65,324
in fiscal year 2015. There were no contributions made by employees, except for
dependent coverage in the amount of $66,283. The Town’s obligation to contribute to
the plan is established and may be amended by the Board of Commissioners.
Summary of Significant Accounting Policies. Postemployment expenditures are made
from the General Fund, which is maintained on the modified accrual basis of
accounting. No funds are set aside to pay benefits and administration costs. These
expenditures are paid as they come due.
Annual Other Postemployment Benefits (“OPEB”) Cost and Net OPEB Obligation.
The Town‘s annual OPEB cost (expense) is calculated based on the ARC, an amount
actuarially determined in accordance with the parameters of GASB Statement 45.
The ARC represents a level of funding that, if paid on an ongoing basis, is projected to
cover normal costs each year and amortize any unfunded actuarial liabilities (or
funding excess) over a period not to exceed 30 years. The following table shows the
components of the Town’s annual OPEB cost for the year, the amount actually
contributed to the plan, and changes in the Town’s net OPEB obligation for the
healthcare benefits:
Annual required contribution $ 124,664
Interest on net OPEB obligation 13,887
Adjustment to annual required contribution (13,267)
Annual OPEB cost 125,284
Contributions made 65,324
Increase in net OPEB obligation 59,960
Net OPEB obligation, beginning of year 347,187
Net OPEB obligation, end of year $ 407,147
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 62 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
2.Other Postemployment Benefit Obligations (Continued)
The Town’s annual OPEB cost, the percentage of annual OPEB cost contributed to
the plan, and the net OPEB obligation for 2015, 2014, and 2013 were as follows:
For the Percentage of
Year Ended Annual OPEB Annual OPEB Net OPEB
June Cost (APC) Cost Contributed Obligation
2013 $ 117,508 48.3% $ 288,479
2014 117,508 50.0% 347,187
2015 125,284 52.1% 407,147
Funded Status and Funding Progress. As of December 31, 2014, the most recent
actuarial valuation date, the plan was not funded. The actuarial accrued liability for
benefits and, thus, the UAAL was $1,008,928. The covered payroll (annual payroll of
active employees covered by the plan) was $4,723,959, and the ratio of the UAAL to
the covered payroll was 21.4%. Actuarial valuations of an ongoing plan involve
estimates of the value of reported amounts and assumptions about the probability of
occurrence of events far into the future. Examples include assumptions about future
employment, mortality, and healthcare trends. Amounts determined regarding the
funded status of the plan and the annual required contributions of the employer are
subject to continual revision, as actual results are compared with past expectations
and new estimates are made about the future. The schedule of funding progress,
presented as required supplementary information following the notes to the financial
statements, presents multiyear trend information about whether the actuarial value of
plan assets is increasing or decreasing over time relative to the actuarial accrued
liabilities for benefits.
Actuarial Methods and Assumptions. Projections of benefits for financial reporting
purposes are based on the substantive plan (the plan as understood by the employer
and the plan members) and include the types of benefits provided at the time of each
valuation, and the historical pattern of sharing of benefit costs between the employer
and plan members at that point. The actuarial methods and assumptions used include
techniques that are designed to reduce the effects of short-term volatility in actuarial
accrued liabilities and the actuarial value assets, consistent with the long-term
perspective of the calculations.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 63 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
2.Other Postemployment Benefit Obligations (Continued)
In the December 31, 2014 actuarial valuation, the projected unit credit actuarial cost
method was used. The actuarial assumptions included a 4% investment rate of return
(net of administrative expenses), which is the expected long-term investment returns
on the employer’s own investments calculated, based on the funded level of the plan
at the valuation date, and an annual medical cost trend increase of 7.50% to 5.00%
annually. The investment rate included a 3.00% inflation assumption. The assumed
rate of return reflects the fact that no assets are set aside with the Town that are
legally held exclusively for retiree health benefits. The UAAL is being amortized as a
level percentage of pay on an open basis. The remaining amortization period at
December 31, 2014 was 30 years.
3.Other Employment Benefit
The Town has also elected to provide death benefits to employees through the Death
Benefit Plan for Members of the Local Governmental Employees’ Retirement System
(“Death Benefit Plan”), a multiple-employer, state-administered, cost-sharing plan
funded on a one-year term cost basis. The beneficiaries of those employees who die
in active service after one year of contributing membership in the System, or who die
within 180 days after retirement or termination of service, and have at least one year
of contributing membership in the System at the time of death, are eligible for death
benefits. Lump-sum death benefit payments to beneficiaries are equal to the
employee’s 12 highest months’ salary in a row during the 24 months prior to the
employee’s death, but the benefit may not exceed $50,000 or be less than $25,000.
All death benefit payments are made from the Death Benefit Plan. The Town has no
liability beyond the payment of monthly contributions. The contributions to the Death
Benefit Plan cannot be separated between the post-employment benefit amount and
the other benefit amount. Contributions are determined as a percentage of monthly
payroll based upon rates established annually by the State. Separate rates are set for
employees not engaged in law enforcement and for law enforcement officers. The
Town considers these contributions to be immaterial.
For the fiscal year ended June 30, 2015, the Town made contributions to the State for
death benefits of $0. The Town’s required contributions for employees not engaged in
law enforcement and for law enforcement officers represented 0.00% and 0.00% of
covered payroll, respectively.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 64 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
3.Other Employment Benefit (Continued)
Due to a surplus in the death benefit, a decision was made by the State to temporarily
stop employer contributions to the LGERS Death Benefit Plan beginning July 1, 2012.
A temporary relief period based on the number of years the employer has contributed
as of December 31, 2010 was established as follows:
Number of Years FY Contributions
Contributing Year Relief Resume
Less than 10 2 2015
20 or more 3 2016
The period of reprieve is determined separately for law enforcement officers. The
Town of Hillsborough will have a three-year reprieve because it has been contributing
for more than 20 years. Contributions will resume in the fiscal year beginning July 1,
2015.
4.Accounts Payable and Accrued Liabilities
Accounts payable and accrued liabilities at June 30, 2015 were as follows:
Governmental Business-Type
Activities Activities Total
Payable to vendors and others $ 392,113 $ 841,412 $ 1,233,525
Accrued payroll and related
liabilities 256,299 85,246 341,545
Total accounts payable
and accrued liabilities $ 648,412 $ 926,658 $ 1,575,070
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 65 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
5.Deferred Outflows and Inflows of Resources
The Town has deferred outflows of resources, which are comprised of $357,402 of
current year LGERS pension contributions, $22,822 of pension deferrals and $39,130
of deferred loss on defeasance of debt.
Deferred inflows of resources at year end is comprised of the following:
Unavailable Unearned
Revenue Revenue
Taxes receivable $ 159,544 $ -
Prepaid privilege license - 435
Grant receivable 33,401 -
Other prepaid receipts - 26,998
$ 192,945 $27,433
Pension deferrals $ 1,162,964
6. Risk Management
The Town is exposed to various risks of loss related to torts; theft of, damage to and
destruction of assets; errors and omissions; injuries to employees; and natural
disasters. The Town participates in three self-funded risk financing pools administered
by the North Carolina League of Municipalities. Through these pools, the Town
obtains general liability coverage of $3 million per occurrence; auto liability coverage
of $2 million per occurrence; property coverage up to the total insurance values of the
property policy; workers’ compensation coverage up to statutory limits; and employee
health coverage with lifetime limit. The property/liability and workers compensation
pools are reinsured through commercial companies for single occurrence claims
against general liability and auto liability in excess of $1 million, property in excess of
$500,000, and $1 million up to statutory limits for workers’ compensation. The health
pool is reinsured for annual employee health claims in excess of $350,000. The
property liability pool has an aggregate limit for the total property losses in a single
year, with the reinsurance limit based upon a percentage of the total insurance values.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 66 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
6.Risk Management (Continued)
The Town carries commercial insurance for all other risks of loss, including property
($47,961,142); general liability ($3 million per occurrence); law enforcement liability
($2 million per occurrence); public employees scheduled bond ($60,000 - includes
$50,000 for the finance director and $10,000 for the deputy tax collector), public
employees blanket bond/crime ($10,000); computer equipment ($290,000); municipal
equipment ($556,174); fine arts ($550,000); animal mortality ($32,800); and public
officials’ liability ($1 million per occurrence). There have been no significant
reductions in insurance coverage in the prior year, and settled claims resulting from
these risks have not exceeded commercial insurance coverage in any of the past
three fiscal years.
The old motor pool facility is in an area of the state that has been mapped and
designated an “A” area (an area close to a river) by the Federal Emergency
Management Agency. Flood coverage on the old, dilapidated facility has been
discontinued since the building is now used for storage only. Other town structures
are designated as “B, C and X” areas (low-risk areas) and are insured for flood
damage through the Interlocal Risk Financing Fund of North Carolina pool for
$5 million per occurrence and aggregate with a $50,000 deductible. There is no
coverage through the Interlocal Fund for structures in any flood zone other than “B, C,
and X.”
The Authority and the Board carried commercial coverage for Public Officials Liability
with coverage of $1,000,000 for all claims. Both the Board and the Authority do not
carry flood insurance nor have any employees.
7.Claims and Contingent Liabilities
The Town has elected to pay the direct cost of employment security benefits in lieu of
paying unemployment taxes. A liability for such payments could accrue in the period
following the discharge of an employee.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 67 -
8. Long-Term Obligations
a. Installment Purchases
Governmental Activities:
Note payable to BB&T, executed April 2008,
in the amount of $1,226,000 for the
construction of a Town Park and
Improvements. The note is payable in 30
semi-annual payments of $40,867 plus
interest at 2.22%, and is secured by such
assets. $ 653,868
Note payable to BB&T, executed in July
2013, in the amount of $438,057 for the
refinance of a note payable for the
purchase of land for municipal operations.
The note is payable in 21 semi-annual
payments of $20,860 plus interest at
2.22%, and is secured by land. The
previous note payable on the land for
municipal operations included interest at
3.92%. 354,617
Note payable to BB&T, executed in July
2013, in the amount of $839,086 for the
refinance of a note payable for the
purchase of real property and a building
to be used as the fleet maintenance
facility. The note is payable in 23 semi-
annual payments of $36,482 plus interest
at 2.44%, and is secured by real property
and a building. The previous note
payable on the fleet maintenance facility
included interest at 3.79%. 693,158
Note payable to SunTrust, executed August
2010, in the amount of $107,000 for the
purchase of a brush truck. The note is
payable in five annual payments of
$23,007 with interest payable at 2.5%,
and is secured by the truck. 22,437
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 68 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
a. Installment Purchases (Continued)
Governmental Activities (Continued):
Note payable to BB&T, executed May 2012,
in the amount of $227,000 for the
purchase of a garbage truck. The note is
payable in ten semi-annual payments of
$23,634 with interest payable at 1.48%,
and is secured by the truck. $ 92,979
Note payable to SunTrust, executed
November 2011, in the amount of
$812,021 for the purchase of a fire truck.
The note is payable in 14 semi-annual
payments of $63,027 with interest
payable at 2.185%, and is secured by the
truck.422,521
Note payable to BB&T, executed August
2013, in the amount of $1,450,000 for the
purchase of land for Riverwalk Phases II
and III. The note is payable in 20 semi-
annual payments of $72,500 plus interest
and matures in August 2023. Interest is
payable at 2.35% and the note payable is
secured by land. 1,232,500
Note payable to BB&T, executed August
2014, in the amount of $615,368 for the
purchase of land for municipal operations.
The note is payable in 30 semi-annual
payments of $20,512 plus interest and
matures in August 2029. Interest is
payable at 2.88% and the note payable is
secured by the land. 594,856
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 69 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
a. Installment Purchases (Continued)
Governmental Activities (Continued):
Note payable to BB&T, executed August
2014, in the amount of $175,000 for the
purchase of a document management
system. The note is payable in 10 semi-
annual principal and interest payments of
$18,189 and matures in July 2019.
Interest is payable at 1.5% and the note
payable is secured by the document
management system. $ 157,723
Note payable to BB&T, executed August
2014, in the amount of $424,000 for the
purchase of a garbage truck and a leaf
truck. The note is payable in 10 semi-
annual principal and interest payments of
$44,068 and matures in July 2019.
Interest is payable at 1.5% and the note
payable is secured by the trucks. 382,140
4,606,799
Less current portion 626,371
$ 3,980,428
The future minimum payments on the notes payable as of June 30, 2015 are
as follows:
Fiscal Year
Ending June 30, Principal Interest Total
2016 $ 626,371 $ 97,172 $ 723,543
2017 666,545 87,742 754,287
2018 624,190 73,719 697,909
2019 628,669 60,127 688,796
2020 444,235 47,143 491,378
2021 - 2025 1,432,178 103,220 1,535,398
2026 - 2030 184,611 13,292 197,903
$ 4,606,799 $ 482,415 $ 5,089,214
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 70 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
a. Installment Purchases (Continued)
Business-Type Activities:
Enterprise Fund - Water/Sewer Fund
Note payable to SunTrust, executed August
2010, in the amount of $450,000 for a
sewer main rehabilitation project. The
note is payable in ten semi-annual
payments of $47,724 with interest
payable at 2.235%, and is secured by the
property. $ 47,196
Note payable to BB&T, executed May 2009,
in the amount of $5,525,000 for the
advance refunding of debt of the 1998
Water serial bonds and the Cedar Grove
Reservoir installment debt. The note was
payable in 20 semi-annual payments of
varying amounts with interest payable at
3.69%. The note was modified on
July 15, 2013. The modifications
separated the debt into two tranches.
The first tranche in the amount of
$1,939,000 has varying annual principal
payments through October 2017 with
interest at 1.66%. The second tranche in
the amount of $1,469,000 has varying
annual principal payments through
October 2019 with interest at 1.88%. The
note is secured by improvements (a). 2,187,000
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 71 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
a. Installment Purchases (Continued)
Business-Type Activities (Continued):
Enterprise Fund - Water/Sewer Fund (Continued)
Note payable to BB&T, executed March
2012, in the amount of $1,051,273 for the
construction of water tanks and lines.
The note is payable in 20 semi-annual
payments of $52,564 plus interest at
2.26%, and is secured by the water tanks
and lines. $ 735,892
2,970,088
Less current portion 768,323
$ 2,201,765
The long-term debt requirements to maturity for the Enterprise Fund are as
follows:
Fiscal Year
Ending June 30, Principal Interest Total
2016 $ 768,323 $ 49,925 $ 818,248
2017 723,127 36,327 759,454
2018 599,127 24,253 623,380
2019 330,127 15,424 345,551
2020 339,127 8,734 347,861
2021 - 2022 210,257 5,940 216,197
$ 2,970,088 $ 140,603 $ 3,110,691
a)The provisions of this loan agreement contain certain financial covenants
related to the maintenance of fund balance. At June 30, 2015, the Town
was in compliance with such covenants.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 72 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
b.General Obligation Indebtedness
The Town’s legal debt margin at June 30, 2015 was $58,383,907.
c.Revolving Loans Payable
On May 7, 2002, the Town was approved for a maximum loan amount of
$1,802,952 from the U.S. Environmental Protection Agency passed through the
North Carolina Department of Environmental and Natural Resources under the
Drinking Water State Revolving Fund. The loan proceeds were used to upgrade
the water plant. The loan is repayable in equal principal payments of $76,222
plus interest of 2.66% through fiscal year ending 2026. The total amount
outstanding at June 30, 2015 was $838,446.
Annual debt service requirements to maturity for this Revolving Loan Payable are
as follows:
Fiscal Year Ending Business-Type Activities
June 30, Principal Interest Total
2016 $ 76,222 $ 22,302 $ 98,524
2017 76,222 20,276 96,498
2018 76,222 18,248 94,470
2019 76,222 16,220 92,442
2020 76,222 14,192 90,414
2021 - 2025 381,114 40,552 421,666
2026 76,222 2,028 78,250
$ 838,446 $ 133,818 $ 972,264
On October 6, 2011, the Town was approved for a maximum loan amount of
$18,894,640 from the U.S. Environmental Protection Agency passed through the
North Carolina Department of Environmental and Natural Resources under the
Clean Water State Revolving Fund. The loan proceeds were used for a
Wastewater Treatment Plant Upgrade and Expansion Project. The loan is
repayable in equal principle payments of $890,500 plus interest of 2.455% through
fiscal year ending 2034. The total amount outstanding at June 30, 2015 was
$16,919,507.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 73 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
c.Revolving Loans Payable
Annual debt service requirements to maturity for this Revolving Loan Payable are
as follows:
Fiscal Year Ending Business-Type Activities
June 30, Principal Interest Total
2016 $ 890,500 $ 415,374 $ 1,305,874
2017 890,500 393,512 1,284,012
2018 890,500 371,650 1,262,150
2019 890,500 349,788 1,240,288
2020 890,500 327,926 1,218,426
2021 - 2025 4,452,500 1,311,708 5,764,208
2026 - 2030 4,452,500 765,160 5,217,660
2031 - 2034 3,562,007 218,620 3,780,627
$ 16,919,507 $ 4,153,738 $ 21,073,245
On October 6, 2014, the Town was approved for a maximum loan amount of
$2,029,398 from the U.S. Environmental Protection Agency passed through the
North Carolina Department of Environmental and Natural Resources under the
Drinking Water State Revolving Fund. The loan proceeds are being used for the
Waterstone Elevated Water Tank Project. Project-to-date drawdowns were
$847,702 at June 30, 2015. The loan is repayable in equal principle payments,
with no interest, through fiscal year ending 2035. The first payment shall be due
not earlier than six months nor later than twelve months after the estimated
completion date of the project of October 10, 2015. As the amount and timing of
the first principle payment is not known at June 30, 2015, the entire loan balance is
included in long-term liabilities.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 74 -
Note 4. Detail Notes on All Funds (Continued)
B. Liabilities (Continued)
8. Long-Term Obligations (Continued)
d.Changes in Long-Term Debt
Current
Balance Portion of
Balance June 30, Long-Term
July 1, 2014 Increases Decreases 2015 Liabilities
Governmental activities:
Installment purchases $ 4,024,586 $ 1,214,368 $ 632,155 $ 4,606,799 $ 626,371
Compensated absences 218,835 202,975 148,679 273,131 148,679
Other postemployment
benefits 202,872 78,303 40,828 240,347 -
Net pension liability (LGERS) 609,640 - 609,640 - -
Net pension obligation (LEO)
(asset) (19,673) 61,585 31,035 10,877 -
Reclassification of LEO net
pension asset 19,673 - 19,673 - -
$ 5,055,933 $ 1,557,231 $ 1,482,010 $ 5,131,154 $ 775,050
Business-type activities:
Installment purchases $ 3,939,307 $ - $ 969,219 $ 2,970,088 $ 768,323
Revolving loans payable 18,644,077 928,301 966,723 18,605,655 966,722
Other postemployment
benefits 144,315 46,982 24,497 166,800 -
Net pension liability (LGERS) 351,051 - 351,051 - -
Compensated absences 178,122 185,562 140,881 222,803 140,881
$ 23,256,872 $ 1,160,845 $ 2,452,371 $ 21,965,346 $ 1,875,926
Compensated absences for governmental activities have typically been liquidated in
the General Fund.
e.Special Assessment Debt
In October 2013, the Town issued $4,630,000 of Special Assessment Revenue
Bonds to finance the construction of public infrastructure in the Waterstone District.
The Town is in no manner obligated to repay this special assessment debt and
functions only as an agent for the property owners by remitting collections of special
assessments to the Trustee. At June 30, 2015, $3,795,000 of special assessment
debt remained outstanding.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 75 -
Note 4. Detail Notes on All Funds (Continued)
C. Interfund Balances and Activity
Transfers to/from other funds:
Transfers to/from other funds at June 30, 2015 consist of the following:
From the General Fund to the Riverwalk
Phase II Fund for partial funding of
construction costs $ 1,858
From the General Fund to the General
Capital Projects Fund for partial funding of
construction costs 25,500
From the General Capital Projects Fund
to the General Fund to transfer the remaining
fund balance and close out the fund 7,070
From the General Capital Reserve Fund to
the General Fund for debt service payments 126,054
$ 160,482
D. Net Investment in Capital Assets
Governmental Business-type
Capital assets $ 16,404,558 $ 51,857,285
Less: related debt
Installment purchases (4,606,799) (2,970,088)
Revolving loans payable - (18,605,655)
Add: deferred loss on defeasance of debt - 39,130
Add: unexpended debt proceeds 72,642 187,209
Net investment in capital assets $ 11,870,401 $ 30,507,881
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 76 -
Note 4. Detail Notes on All Funds (Continued)
E. Fund Balance
The following schedule provides management and citizens with information on the portion
of General Fund fund balance that is available for appropriation.
Total fund balance General Fund $ 6,217,183
Less:
Prepaid items 68,242
Stabilization by state statute 949,706
Streets - Powell Bill 99,406
Sidewalks 12,428
Appropriated fund balance in subsequent
fiscal year’s budget 1,282,029
Working capital/fund balance policy 3,805,372
Remaining fund balance General Fund $ -
The outstanding encumbrances are amounts needed to pay any commitments related to
purchase orders and contracts that remain unperformed at year end.
Encumbrances
General Fund $ 236,373
Riverwalk Phase II Capital Project Fund 5,144
Riverwalk CMAQ Capital Project Fund 44,377
General Capital Projects Fund 5,590
Note 5. Jointly Governed Organization
The Town, in conjunction with seven counties and 37 other municipalities, established the
Triangle J Council of Governments (the “Council”). The participating governments
established the Council to coordinate various funding received from federal and state
agencies. Each participating government appoints one member to the Council’s governing
board. The Town paid membership fees of $1,056 to the Council during the fiscal year
ended June 30, 2015.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NOTES TO FINANCIAL STATEMENTS
June 30, 2015
- 77 -
Note 6. Significant Effects of Subsequent Events
In July 2014, the Town entered into a lease/purchase agreement with Singer Holdings,
LLC for certain property located at 101 East Corbin Street in Hillsborough. Under the
terms of the agreement, the Town was to receive a credit upon closing for a portion of the
rent paid under the agreement from July 2014 through the date of closing. In July 2015, the
Town purchased the property under the agreement for a purchase price of $1,047,000.
Under the terms of the agreement, the Town received a credit of $49,120 for a portion of
the rent paid. The purchase resulted in a loan payable in the amount of $871,850 to
Singer Holdings, LLC. The loan is payable in thirty semi-annual payments of $36,303,
which includes interest at 3.0%, beginning in January 2016. The loan matures in July
2030. The note payable is secured by the property.
In August 2015, the Town entered into a note payable with BB&T in the amount of
$481,000 for the purchase of a fire truck. The note is payable in ten semi-annual
payments of $50,201, which includes interest at 1.57% and matures in August 2020. The
note payable is secured by the related equipment.
Note 7. Change in Accounting Principles/Restatement
The Town implemented Governmental Accounting Standards Board (GASB) Statement
No. 68, Accounting and Financial Reporting for Pensions (an amendment of GASB
Statement No. 27), and GASB Statement No. 71, Pension Transition for Contributions Made
Subsequent to the Measurement Date - an Amendment of GASB Statement No. 68, in fiscal
year ending June 30, 2015. The implementation of the statement required the Town to
record a beginning net pension liability and the effects on net position of contributions made
by the Town during the measurement period (fiscal year ending June 30, 2014). As a result,
beginning net position for the governmental and business-type activities decreased by
$398,115 and $229,234, respectively.
- 78 -
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- 79 -
REQUIRED SUPPLEMENTARY FINANCIAL DATA
This section contains additional information required by generally accepted accounting principles.
Schedule of Funding Progress for the Law Enforcement Officers’ Special Separation
Allowance.
Schedule of Employer Contributions for the Law Enforcement Officers’ Special Separation
Allowance.
Notes to the Required Schedules for the Law Enforcement Officers’ Special Separation
Allowance.
Schedule of Funding Progress for the Other Postemployment Benefits.
Schedule of Employer Contributions for the Other Postemployment Benefits.
Notes to the Required Schedules for the Other Postemployment Benefits.
Schedule of Proportionate Share of Net Pension Asset for Local Government Employees’
Retirement System
Schedule of Contributions to Local Government Employees’ Retirement System
- 80 -
THIS PAGE LEFT INTENTIONALLY BLANK.
Exhibit A-1
Actuarial
Accrued UAAL as a
Actuarial Liability (AAL) - Unfunded Percentage
Actuarial Value of Projected AAL Funded Covered of Covered
Valuation Assets Unit Credit (UAAL) Ratio Payroll Payroll
Date (a) (b) (b) - (a)(a) (b)(c)((b) - (a)) (c)
12/31/2005 -$ 428,649$ 428,649$ 0.00%1,104,377$ 38.81%
12/31/2006 -429,075 429,075 0.00%1,229,480 34.90%
12/31/2007 -478,258 478,258 0.00%1,275,715 37.49%
12/31/2008 -484,358 484,358 0.00%1,466,263 33.03%
12/31/2009 -515,994 515,994 0.00%1,373,891 37.56%
12/31/2010 -460,998 460,998 0.00%1,371,368 33.62%
12/31/2011 -431,911 431,911 0.00%1,358,876 31.78%
12/31/2012 -417,455 417,455 0.00%1,381,255 30.22%
12/31/2013 -405,686 405,686 0.00%1,397,887 29.02%
12/31/2014 -428,191 428,191 0.00%1,561,351 27.42%
TOWN OF HILLSBOROUGH, NORTH CAROLINA
LAW ENFORCEMENT OFFICERS' SPECIAL SEPARATION ALLOWANCE
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF FUNDING PROGRESS
- 81 -
Exhibit A-2
Year Annual Annual
Ended Required Percentage
June 30 Contribution Contributed
2006 37,461$ 130.81%
2007 41,898 129.86%
2008 44,968 166.93%
2009 46,154 186.67%
2010 50,211 171.59%
2011 54,616 127.66%
2012 52,909 120.35%
2013 52,117 92.35%
2014 52,791 94.07%
2015 60,907 50.95%
NOTES TO THE REQUIRED SCHEDULES
Valuation date December 31, 2013
Actuarial cost method Projected unit credit
Amortization method Level dollar closed
Remaining amortization period 17 years
Asset valuation method Market value
Actuarial assumptions:
Investment rate of return * 5.00%
Projected salary increases * 4.25% - 7.85%
* Includes inflation at:3.00%
Cost of living adjustments N/A
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows:
TOWN OF HILLSBOROUGH, NORTH CAROLINA
LAW ENFORCEMENT OFFICERS' SPECIAL SEPARATION ALLOWANCE
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
- 82 -
Exhibit B-1
Actuarial
Accrued UAAL as a
Actuarial Liability (AAL) -Unfunded Percentage
Actuarial Value of Projected AAL Funded Covered of Covered
Valuation Assets Unit Credit (UAAL)Ratio Payroll Payroll
Date (a)(b)(b) - (a)(a) (b)(c)((b) - (a)) (c)
12/31/2008 -$ 1,167,518$ 1,167,518$ 0.00%4,590,807$ 25.4%
12/31/2011 - 1,169,128 1,169,128 0.00%4,337,051 27.0%
12/31/2014 - 1,008,928 1,008,928 0.00%4,723,959 21.4%
TOWN OF HILLSBOROUGH, NORTH CAROLINA
SCHEDULE OF FUNDING PROGRESS
REQUIRED SUPPLEMENTARY INFORMATION
OTHER POSTEMPLOYMENT BENEFITS
- 83 -
Exhibit B-2
Year Annual Annual
Ended Required Percentage
June 30 Contribution Contributed
2011 119,002$ 38.34%
2012 128,907 38.10%
2013 117,508 48.37%
2014 117,508 50.04%
2015 124,664 52.40%
NOTES TO THE REQUIRED SCHEDULES
Valuation date December 31, 2014
Actuarial cost method Projected unit credit
Amortization method Level percent of pay, open
Remaining amortization period 30 years
Asset valuation method Market value
Actuarial assumptions:
Investment rate of return * 4.00%
Medical cost trend rate 7.5% - 5.0%
Year of ultimate trend rate 2020
* Includes inflation at:3.00%
TOWN OF HILLSBOROUGH, NORTH CAROLINA
OTHER POSTEMPLOYMENT BENEFITS
REQUIRED SUPPLEMENTARY INFORMATION
SCHEDULE OF EMPLOYER CONTRIBUTIONS
The information presented in the required supplementary schedules was determined as part of the
actuarial valuations at the dates indicated. Additional information as of the latest actuarial valuation
follows:
- 84 -
Exhibit C-1
2015 2014
Hillsborough's proportion of the net pension liability (asset) (%) 0.0809% 0.0797%
Hillsborough's proportion of the net pension liability (asset) ($) (477,164)$ 960,691$
Hillsborough's covered-employee payroll 4,672,868$ 4,428,097$
Hillsborough's proportionate share of the net pension liability
(asset) as a percentage of its covered-employee payroll -10.21% 21.70%
Plan fiduciary net position as a percentage of the total
pension liability** 102.64% 94.35%
* The amounts presented for each fiscal year were determined as of the prior fiscal year ending June 30.
** This percentage is the same for all participant employers in the LGERS plan.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
PROPORTIONATE SHARE OF NET PENSION LIABILITY (ASSET)
REQUIRED SUPPLEMENTARY INFORMATION
LAST TWO FISCAL YEARS*
Local Government Employees' Retirement System
- 85 -
Exhibit C-2
2015 2014
Contractually required contribution 357,402$ 333,343$
Contributions in relation to the contractually required contribution 357,402 333,343
Contribution deficiency (excess) -$ -$
Hillsborough's covered-employee payroll 4,861,624$ 4,672,868$
Contributions as a percentage of covered-employee payroll 7.35%7.13%
TOWN OF HILLSBOROUGH, NORTH CAROLINA
SCHEDULE OF CONTRIBUTIONS
REQUIRED SUPPLEMENTARY INFORMATION
LAST TWO FISCAL YEARS
Local Government Employees' Retirement System
- 86 -
- 87 -
SUPPLEMENTARY INFORMATION
- 88 -
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Schedule 1
Page 1 of 4
2014
Variance
Positive
Budget Actual (Negative)Actual
Revenues
General revenues
Ad valorem taxes
Current 5,217,700$ 5,398,141$ 180,441$ 5,354,006$
Prior 15,000 15,269 269 35,968
Penalties and interest 20,000 23,856 3,856 39,140
5,252,700 5,437,266 184,566 5,429,114
Other taxes and licenses
Local option sales tax 1,079,500 1,215,819 136,319 1,114,306
Gross receipts on short-term rental property 5,000 9,163 4,163 7,117
Privilege licenses 1,900 30,902 29,002 43,891
Motor vehicle license fees 35,000 3,477 (31,523) 31,420
Solid waste disposal 3,000 4,064 1,064 2,451
1,124,400 1,263,425 139,025 1,199,185
Unrestricted intergovernmental revenues
Franchise tax 330,000 567,970 237,970 399,167
Beer and wine tax 25,000 30,514 5,514 27,536
Food and beverage tax 300,001 327,428 27,427 315,932
Occupancy tax 68,000 72,717 4,717 66,555
723,001 998,629 275,628 809,190
Restricted intergovernmental revenues
Powell Bill 180,000 187,682 7,682 182,284
Local grants - - - 129,998
Rollout cart grant - 57,750 57,750 -
Other 150 102,037 101,887 73,890
180,150 347,469 167,319 386,172
Investment earnings 100 1,048 948 1,854
Other general revenues 58,610 56,727 (1,883) 48,337
Total general revenues 7,338,961 8,104,564 765,603 7,873,852
Functionally related revenues
Use and rental fees
Zoning permits 81,306 98,201 16,895 41,196
Cable franchise 50,000 56,142 6,142 51,620
Time Warner Cable PEG fees 30,000 27,766 (2,234) 34,093
Fire inspection fees 10,000 12,068 2,068 13,893
Total functionally related revenues 171,306 194,177 22,871 140,802
Total revenues 7,510,267 8,298,741 788,474 8,014,654
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
- 89 -
Schedule 1
Page 2 of 4
2014
Variance
Positive
Budget Actual (Negative)Actual
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
Expenditures
General government
Governing body
Personnel services $ 40,738$ $ 38,836$
Other services and charges 164,900 166,903
Reimbursement from enterprise fund (116,138) (115,477)
141,138 89,500 51,638 90,262
Ruffin-Roulhac
Other services and charges 108,519 62,054
Reimbursement from enterprise fund (40,125) (24,606)
23,541 68,394 (44,853) 37,448
Administration
Personnel services 531,733 446,141
Other services and charges 360,293 347,948
Reimbursement from enterprise fund (450,981) (386,041)
486,403 441,045 45,358 408,048
Finance
Personnel services 355,708 366,490
Other services and charges 96,395 100,519
Capital outlay 49,841 -
Reimbursement from enterprise fund (263,563) (201,252)
264,618 238,381 26,237 265,757
Planning
Personnel services 326,817 288,807
Other services and charges 113,641 96,578
460,901 440,458 20,443 385,385
Motor pool
Personnel services 240,265 227,859
Other services and charges 168,138 169,135
Debt service payments 91,212 115,563
Reimbursement from enterprise fund (246,596) (229,799)
304,482 253,019 51,463 282,758
Total general government 1,681,083 1,530,797 150,286 1,469,658
Public safety
Police department
Personnel services 2,157,933 2,067,837
Other services and charges 249,995 277,121
Capital outlay 234,270 84,818
Debt service payments 18,189 -
2,825,799 2,660,387 165,412 2,429,776
- 90 -
Schedule 1
Page 3 of 4
2014
Variance
Positive
Budget Actual (Negative)Actual
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
Fire inspections/code enforcement
Personnel services $ 112,565$ $ 108,374$
Other services and charges 140,356 18,593
Capital outlay - 7,845
Debt service payments 126,233 126,054
253,839 379,154 (125,315) 260,866
Safety
Personnel services 86,760 81,105
Other services and charges 154,364 148,020
Reimbursement from enterprise fund (152,928) (102,377)
159,733 88,196 71,537 126,748
Fire protection
Other services and charges 861,859 764,102
868,457 861,859 6,598 764,102
Total public safety 4,107,828 3,989,596 118,232 3,581,492
Transportation
Street department/Powell Bill
Personnel services 215,199 196,344
Other services and charges 221,784 212,535
Capital outlay 757,221 442,623
1,267,487 1,194,204 73,283 851,502
Total transportation 1,267,487 1,194,204 73,283 851,502
Environmental protection
Sanitation department
Personnel services 250,936 225,899
Other services and charges 178,737 340,847
Capital outlay 434,871 1,380
Debt service payments 143,960 99,902
977,806 1,008,504 (30,698) 668,028
Cemetery
Other services and charges 24,224 22,715
Capital outlay - 69,597
30,750 24,224 6,526 92,312
Stormwater
Personnel services 90,693 85,945
Other services and charges 42,833 54,275
Capital outlay - 20,762
Reimbursement from enterprise fund (14,489) (15,210)
139,451 119,037 20,414 145,772
Total environmental protection 1,148,007 1,151,765 (3,758) 906,112
- 91 -
Schedule 1
Page 4 of 4
2014
Variance
Positive
Budget Actual (Negative)Actual
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
GENERAL FUND
SCHEDULE OF REVENUES, EXPENDITURES AND
CHANGES IN FUND BALANCE - BUDGET AND ACTUAL
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
Economic and physical development
Tourism
Other services and charges $ 388,611$ $ 367,389$
407,000 388,611 18,389 367,389
Total economic and physical
development 407,000 388,611 18,389 367,389
Community activities and projects
Contributions 28,420 28,420
Other services and charges 43,588 90,831
Debt service payments 79,660 59,328
Capital outlay 764,250 -
Total community activities and projects 1,057,985 915,918 142,067 178,579
Parks and recreation
Personnel services 5,582 -
Capital outlay 14,021 -
Other services and charges 54,535 55,850
Debt service payments 274,129 192,322
Total parks and recreation 415,716 348,267 67,449 248,172
Total expenditures 10,085,653 9,519,158 566,495 7,602,904
Revenues over (under) expenditures (2,575,386) (1,220,417) 1,354,969 411,750
Other financing sources (uses)
Transfer to General Capital Projects Fund (25,500) (25,500) - -
Transfer to Riverwalk Phase II Fund (1,858) (1,858) - -
Transfer to Riverwalk Phase III Fund - - - (43,000)
Transfer from General Capital Projects Fund 7,070 7,070 - -
Transfer from General Capital Reserve Fund 126,054 126,054 - 126,054
Installment purchase obligations issued 1,214,368 1,214,368 - -
Proceeds of refunding installment purchases - - - 1,277,143
Debt service - principal on refunding - - - (1,256,353)
Total other financing sources 1,320,134 1,320,134 - 103,844
Appropriated fund balance 1,255,252 - (1,255,252) -
Net change in fund balance -$ 99,717 99,717$ 515,594
Fund balance, beginning 6,117,466 5,601,872
Fund balance, ending 6,217,183$ 6,117,466$
- 92 -
Schedule 2
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Investment earnings 107$ 107$ -$ 107$ -$
Total revenues 107 107 - 107 -
Expenditures
Capital equipment 911,914 911,914 - 911,914 -
Fleet maintenance facility 1,117,257 1,117,257 - 1,117,257 -
Garbage truck 224,512 224,512 - 224,512 -
Municipal operations site 655,622 655,622 - 655,622 -
Construction 4,630,000 1,445,207 1,325,271 2,770,478 1,859,522
Total expenditures 7,539,305 4,354,512 1,325,271 5,679,783 1,859,522
Revenues under
expenditures (7,539,198) (4,354,405) (1,325,271) (5,679,676) 1,859,522
Other financing sources (uses)
Installment purchase obligations
issued 2,838,621 2,838,621 - 2,838,621 -
Contribution from property owners 4,630,000 1,445,207 1,325,271 2,770,478 (1,859,522)
Transfer from General Fund 77,647 77,647 - 77,647 -
Transfer to General Fund (7,070) - (7,070) (7,070) -
Total other financing
sources 7,539,198 4,361,475 1,318,201 5,679,676 (1,859,522)
Net change in fund
balance -$ 7,070$ (7,070) -$ -$
Fund balance, beginning 7,070
Fund balance, ending -
Amounts reported for Revenue, Expenditures and Changes in Fund Balance
are different for the Budgeted/Actual Statement due to consolidation of the
129
(126,054)
590,074
464,149$
Interest on investments
Fund balance, beginning (Capital Reserve Fund)
Fund balance, ending
General Capital Reserve Fund
Transfers out - Capital Reserve Fund
(Consolidated General Capital Projects Fund)
TOWN OF HILLSBOROUGH, NORTH CAROLINA
GENERAL CAPITAL PROJECTS FUND
SCHEDULE OF REVENUES AND EXPENDITURES
COMPARED WITH BUDGET
From Project Inception and for the Year Ended June 30, 2015
Actual
- 93 -
Schedule 3
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Capital contributions 1,105,000$ 1,105,000$ -$ 1,105,000$ -$
Interest on investments 14,207 14,159 129 14,288 81
Total revenues 1,119,207 1,119,159 129 1,119,288 81
Expenditures 464,068 - - - 464,068
Revenues over
expenditures 655,139 1,119,159 129 1,119,288 464,149
Other financing uses
Transfer to General Fund (252,108) (126,054) (126,054) (252,108) -
Transfer to Water Sewer
Capital Reserve Fund (403,031) (403,031) - (403,031) -
Total other financing
uses (655,139) (529,085) (126,054) (655,139) -
Net change in fund
balance -$ 590,074$ (125,925) 464,149$ 464,149$
Fund balance, beginning 590,074
Fund balance, ending 464,149$
BUDGET- GENERAL CAPITAL RESERVE FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR GENERAL CAPITAL RESERVE FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
- 94 -
Schedule 4
Downtown Town Barn Riverwalk Riverwalk Riverwalk
Improvements Improvements Phase II Phase III CMAQ Total
Capital Capital Capital Capital Capital Nonmajor
Projects Reserve Project Project Project Governmental
ASSETS Fund Fund Fund Fund Fund Funds
Cash and investments 4,690$ 8,750$ 173,425$ 21,929$ 67,455$ 276,249$
Due from other governments - - - - 45,132 45,132
Total assets 4,690$ 8,750$ 173,425$ 21,929$ 112,587$ 321,381$
LIABILITIES, DEFERRED INFLOWS OF
RESOURCES AND FUND BALANCES
LIABILITIES
Accounts payable and accrued liabilities -$ 3,701$ -$ -$ -$ 3,701$
Total liabilities - 3,701 - - - 3,701
FUND BALANCES
Restricted for:
Stabilization by state statute - - - - 45,132 45,132
Committed for:
Capital projects 4,690 5,049 173,425 21,929 67,455 272,548
Total fund balances 4,690 5,049 173,425 21,929 112,587 317,680
Total liabilities and fund balances 4,690$ 8,750$ 173,425$ 21,929$ 112,587$ 321,381$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
COMBINING BALANCE SHEET
NONMAJOR GOVERNMENTAL FUNDS
June 30, 2015
- 95 -
Schedule 5
Downtown Town Barn Riverwalk Riverwalk Riverwalk
Improvements Improvements Phase II Phase III CMAQ Total
Capital Capital Capital Capital Capital Nonmajor
Project Project Project Project Project Governmental
Fund Fund Fund Fund Fund Funds
Revenues
Restricted intergovernmental
revenues
Federal grants -$ -$ -$ -$ 45,132$ 45,132$
State grants - - 240,131 - - 240,131
Local grants - - 10,000 - - 10,000
Total revenues - - 250,131 - 45,132 295,263
Expenditures
Current
General government - 14,951 - - - 14,951
Economic and physical development 810 - - - - 810
Parks and recreation - - 114,723 196,302 38,650 349,675
Total expenditures 810 14,951 114,723 196,302 38,650 365,436
Revenues over (under)
expenditures (810) (14,951) 135,408 (196,302) 6,482 (70,173)
Other financing sources
Transfer from General Fund 5,500 20,000 1,858 - - 27,358
Total other financing sources 5,500 20,000 1,858 - - 27,358
Net change in fund balances 4,690 5,049 137,266 (196,302) 6,482 (42,815)
Fund balances, beginning - - 36,159 218,231 106,105 360,495
Fund balances, ending 4,690$ 5,049$ 173,425$ 21,929$ 112,587$ 317,680$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
COMBINING STATEMENT OF REVENUES,
EXPENDITURES AND CHANGES IN FUND BALANCES
NONMAJOR GOVERNMENTAL FUNDS
Year Ended June 30, 2015
- 96 -
Schedule 6
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Expenditures
Design 3,000$ -$ 810$ 810$ 2,190$
Capital equipment 2,500 - - - 2,500
Total expenditures 5,500 - 810 810 4,690
Other financing sources
Transfer from General Fund 5,500 - 5,500 5,500 -
Net change in fund
balance -$ -$ 4,690 4,690$ 4,690$
Fund balance, beginning -
Fund balance, ending 4,690$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR CAPITAL PROJECT FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
BUDGET- DOWNTOWN IMPROVEMENTS CAPITAL PROJECT FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
- 97 -
Schedule 7
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Expenditures
Design 35,000$ -$ 11,250$ 11,250$ 23,750$
Capital equipment 120,000 - - - 120,000
Construction 235,000 - 3,701 3,701 231,299
Contingency 35,000 - - - 35,000
Total expenditures 425,000 - 14,951 14,951 410,049
Other financing sources
Transfer from General Fund 20,000 - 20,000 20,000 -
Installment purchase obligations
issued 405,000 - - - (405,000)
425,000 - 20,000 20,000 (405,000)
Net change in fund
balance -$ -$ 5,049 5,049$ 5,049$
Fund balance, beginning -
Fund balance, ending 5,049$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR CAPITAL PROJECT FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
BUDGET- TOWN BARN IMPROVEMENTS CAPITAL PROJECT FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
- 98 -
Schedule 8
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Restricted intergovernmental
revenues
State grants
PARTF grant 817,000$ 774,544$ 42,456$ 817,000$ -$
NC trails grant 198,766 - 197,675 197,675 (1,091)
Other state grants 40,000 40,000 - 40,000 -
Local grants 20,000 10,000 10,000 20,000 -
Interest on investments 234 234 - 234 -
Total revenues 1,076,000 824,778 250,131 1,074,909 (1,091)
Expenditures
Land acquisition 959,368 959,368 - 959,368 -
Legal and administrative 199,686 133,564 30,139 163,703 35,983
Design 346,595 342,339 810 343,149 3,446
Construction 1,528,715 1,382,195 83,774 1,465,969 62,746
Contingency 72,278 - - - 72,278
Total expenditures 3,106,642 2,817,466 114,723 2,932,189 174,453
Revenues over (under)
expenditures (2,030,642) (1,992,688) 135,408 (1,857,280) 173,362
Other financing sources
Installment purchase obligations
issued 1,209,937 1,210,000 - 1,210,000 63
Transfer from General Fund 820,705 818,847 1,858 820,705 -
Total other financing sources 2,030,642 2,028,847 1,858 2,030,705 63
Net change in fund balance -$ 36,159$ 137,266 173,425$ 173,425$
Fund balance, beginning 36,159
Fund balance, ending 173,425$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR CAPITAL PROJECT FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
BUDGET- RIVERWALK PHASE II CAPITAL PROJECT FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
- 99 -
Schedule 9
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Interest on investments 47$ 47$ -$ 47$ -$
Total revenues 47 47 - 47 -
Expenditures
Land acquisition 232,381 232,381 - 232,381 -
Legal and administrative 3,000 2,830 - 2,830 170
Engineering 3,000 2,750 - 2,750 250
Design 58,000 44,036 13,814 57,850 150
Construction 225,000 21,200 182,488 203,688 21,312
Contingency 47 - - - 47
Total expenditures 521,428 303,197 196,302 499,499 21,929
Revenues under
expenditures (521,381) (303,150) (196,302) (499,452) 21,929
Other financing sources
Installment purchase obligations
issued 240,000 240,000 - 240,000 -
Transfer from General Fund 281,381 281,381 - 281,381 -
Total other financing sources 521,381 521,381 - 521,381 -
Net change in fund balance -$ 218,231$ (196,302) 21,929$ 21,929$
Fund balance, beginning 218,231
Fund balance, ending 21,929$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR CAPITAL PROJECT FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
BUDGET- RIVERWALK PHASE III CAPITAL PROJECT FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
- 100 -
Schedule 10
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Restricted intergovernmental
revenues
State grants 25,000$ -$ -$ -$ (25,000)$
Federal grants 496,000 - 45,132 45,132 (450,868)
Capital contributions 5,000 - - - (5,000)
Total revenues 526,000 - 45,132 45,132 (480,868)
Expenditures
Design 108,300 17,895 38,650 56,545 (51,755)
Construction 541,700 - - - (541,700)
Total expenditures 650,000 17,895 38,650 56,545 (593,455)
Revenues over (under)
expenditures (124,000) (17,895) 6,482 (11,413) 112,587
Other financing sources
Transfer from General Fund 124,000 124,000 - 124,000 -
Net change in fund
balance -$ 106,105$ 6,482 112,587$ 112,587$
Fund balance, beginning 106,105
Fund balance, ending 112,587$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
NONMAJOR CAPITAL PROJECT FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
BUDGET- RIVERWALK CMAQ CAPITAL PROJECT FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
- 101 -
Schedule 11
2014
Variance
Positive
Budget Actual (Negative)Actual
Revenues
Operating revenues
Water charges 3,835,000$ 3,812,455$ (22,545)$ 3,880,029$
Sewer charges 3,712,690 4,047,368 334,678 3,619,154
Other receipts 1,045,126 1,080,659 35,533 1,621,424
8,592,816 8,940,482 347,666 9,120,607
Nonoperating revenues
Interest on investments 250 356 106 2,379
Total revenues 8,593,066$ 8,940,838$ 347,772$ 9,122,986$
Year Ended June 30, 2015 with Comparative
2015
Actual Amounts for Year Ended June 30, 2014
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF REVENUES COMPARED WITH
BUDGET (NON-GAAP) - WATER AND SEWER FUND
- 102 -
Schedule 12
Page 1 of 3
2014
Variance
Positive
Budget Actual (Negative)Actual
Expenditures
Engineering
Personnel services $ 396,052$ $ 377,345$
Other services and charges 1,342,244 1,134,402
Total engineering 1,780,263 1,738,296 41,967 1,511,747
Billing and collection
Personnel services 344,945 330,383
Other services and charges 126,780 107,775
Repairs and maintenance 600 515
Capital outlay 27,462 -
Debt service payments 161,233 161,286
Total billing and collection 710,191 661,020 49,171 599,959
Water plant
Personnel services 518,140 494,037
Other services and charges 314,246 274,343
Repairs and maintenance 49,032 44,878
Capital outlay 68,012 -
Debt service payments 116,613 118,949
Total water plant 1,162,210 1,066,043 96,167 932,207
Water distribution
Personnel services 392,636 376,167
Other services and charges 208,346 234,251
Repairs and maintenance 20,583 18,548
Capital outlay 65,005 48,222
Debt service payments 24,708 25,183
Total water distribution 884,817 711,278 173,539 702,371
Wastewater collection
Personnel services 392,169 375,722
Other services and charges 220,238 237,423
Repairs and maintenance 20,581 12,502
Capital outlay 115,878 24,579
Debt service payments 178,219 197,306
Total wastewater collection 1,083,010 927,085 155,925 847,532
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF EXPENDITURES COMPARED WITH
BUDGET (NON-GAAP) - WATER AND SEWER FUND
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
- 103 -
Schedule 12
Page 2 of 3
2014
Variance
Positive
Budget Actual (Negative)Actual
2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF EXPENDITURES COMPARED WITH
BUDGET (NON-GAAP) - WATER AND SEWER FUND
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
Wastewater plant
Personnel services $ 456,425$ $ 513,206$
Other services and charges 391,042 451,868
Repairs and maintenance 30,882 20,115
Capital outlay 44,094 -
Debt service payments 1,378,647 -
Total wastewater plant 2,392,732 2,301,090 91,642 985,189
Reservoir
Other services and charges 17,931 16,698
Repairs and maintenance 9,284 12,357
Debt service payments 656,998 678,604
Total reservoir 692,823 684,213 8,610 707,659
Total expenditures 8,706,046 8,089,025 617,021 6,286,664
Revenues over expenditures (112,980) 851,813 964,793 2,836,322
Other financing uses
Transfer to Water and Sewer Capital Reserve
Fund (840,120) (840,120) - (2,020,699)
Transfer to Water and Sewer Capital Projects
Fund (975,000) (975,000) - (483,935)
Transfer from Water and Sewer Capital
Projects Fund 179,270 2,647 (176,623) -
Transfer from Water and Sewer Capital
Reserve Fund 1,447,575 1,447,575 - -
Total other financing uses (188,275) (364,898) (176,623) (2,504,634)
Excess of revenues and other
uses over (under) expenditures
and other uses (301,255) 486,915 788,170 331,688
Appropriated fund balance 301,255 - (301,255) -
Excess of revenues and other
uses over expenditures and other
uses -$ 486,915$ 486,915$ 331,688$
- 104 -
Schedule 12
Page 3 of 3
Reconciliation of budgetary basis (modified accrual) to full
accrual basis
Excess of revenues and other sources over expenditures and
other uses 486,915$
Reconciling items:
Interest income from Water and Sewer Capital Reserve Fund 389
Payment of principal on notes, bonds and installment
purchases 1,935,942
Capital outlay 320,451
Noncapitalizable capital project expenditures (56,995)
Depreciation (1,466,442)
Loss on disposal of capital assets (163)
Proceeds from the sale of capital assets (770)
Deferred outflows of resources for contributions made to
pension plan in current fiscal year 130,600
Pension expense (13,020)
Interest expense accrual adjustment (62,599)
Vacation pay accrual adjustment (44,681)
Increase in OPEB liability (22,485)
Capital contributions from developer 1,484,316
Amortization of deferred loss on refunding (15,147)
Transfer from Water and Sewer Capital Projects Fund (2,647)
Transfer to Water and Sewer Capital Projects Fund 975,000
Transfer from Water and Sewer Capital Reserve Fund (1,447,575)
Transfer to Water and Sewer Capital Reserve Fund 840,120
Change in net position 3,041,209$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF EXPENDITURES COMPARED WITH
BUDGET (NON-GAAP) - WATER AND SEWER FUND
Year Ended June 30, 2015 with Comparative
Actual Amounts for Year Ended June 30, 2014
- 105 -
Schedule 13
Variance
Project Prior Current Total Positive
Authorization Years Year to Date (Negative)
Revenues
Restricted intergovernmental
revenues
State grant 492,000$ 492,000$ -$ 492,000$ -$
Federal grant 156,250 156,250 - 156,250 -
Interest on investments 5,021 5,021 - 5,021 -
Total revenues 653,271 653,271 - 653,271 -
Expenditures - wastewater
treatment plant
Expansion design 1,578,595 1,578,595 - 1,578,595 -
Legal and administrative 1,398,024 1,381,766 16,258 1,398,024 -
Construction 16,212,669 16,213,909 - 16,213,909 (1,240)
Miscellaneous 35,934 35,934 - 35,934 -
19,225,222 19,210,204 16,258 19,226,462 (1,240)
Expenditures - sewer outfall
Construction 402,279 402,279 - 402,279 -
Miscellaneous 155 155 - 155 -
402,434 402,434 - 402,434 -
Expenditures - capital improvements
Sewer Outfall Phase II 1,488,043 1,288,043 - 1,288,043 200,000
Lawrence Road 980,260 980,170 90 980,260 -
Lake Ben Johnson 484,119 427,816 56,303 484,119 -
Backwash pump replacement 83,923 83,923 - 83,923 -
W aterstone water tank 1,963,255 96,904 1,664,657 1,761,561 201,694
Water meter replacement 750,000 704,883 2,770 707,653 42,347
Other improvements 300,000 38,074 6,116 44,190 255,810
6,049,600 3,619,813 1,729,936 5,349,749 699,851
Expenditures - West Fork Eno Reservoir
Services and charges 800,000 152,622 378,503 531,125 268,875
800,000 152,622 378,503 531,125 268,875
Total expenditures 26,477,256 23,385,073 2,124,697 25,509,770 967,486
Revenues under expenditures (25,823,985) (22,731,802) (2,124,697) (24,856,499) 967,486
Other financing sources (uses)
Proceeds from state revolving loan 17,810,007 17,729,408 80,599 17,810,007 -
Proceeds from installment purchases 4,215,498 2,252,243 847,702 3,099,945 (1,115,553)
Transfer from Water and Sewer
Capital Reserve Fund 879,553 879,553 - 879,553 -
Transfer from Water and Sewer Fund 3,299,828 2,324,828 975,000 3,299,828 -
Transfer to Water and Sewer Fund (380,901) (200,000) (2,647) (202,647) 178,254
Total other financing sources 25,823,985 22,986,032 1,900,654 24,886,686 (937,299)
Excess of revenues and other
sources over (under)
expenditures and other uses -$ 254,230$ (224,043)$ 30,187$ 30,187$
BUDGET (NON-GAAP) - WATER AND SEWER CAPITAL PROJECTS FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
- 106 -
Schedule 14
Variance
Project Prior Current Total Positive
Authorization Years Year To Date (Negative)
Revenues
Interest on investments 264,139$ 263,993$ 389$ 264,382$ 243$
Expenditures 2,695,694 - - - 2,695,694
Revenues over (under) expenditures (2,431,555) 263,993 389 264,382 2,695,937
Other financing sources (uses)
Transfers from Water and Sewer Fund 5,054,462 5,082,111 840,120 5,922,231 867,769
Transfers from General Capital Reserve
Fund 403,031 403,031 - 403,031 -
Capital contributions 1,066,190 1,066,190 - 1,066,190 -
Transfers to Water and Sewer Fund (2,792,575) (1,345,000) (1,447,575) (2,792,575) -
Transfers to Water and Sewer Capital
Projects Fund (1,299,553) (1,299,553) - (1,299,553) -
Total other financing sources (uses)2,431,555 3,906,779 (607,455) 3,299,324 867,769
Excess of revenues and other
sources over (under) expenditures -$ 4,170,772$ (607,066)$ 3,563,706$ 3,563,706$
BUDGET (NON-GAAP) - WATER AND SEWER CAPITAL RESERVE FUND
From Project Inception and for the Year Ended June 30, 2015
Actual
TOWN OF HILLSBOROUGH, NORTH CAROLINA
ENTERPRISE FUND
SCHEDULE OF REVENUES AND EXPENDITURES COMPARED WITH
- 107 -
Schedule 15
Beginning Ending
Balance Additions Deductions Balance
ASSETS
Cash 171,082$ 579,876$ (750,958)$ -$
LIABILITIES
Due to others 171,082$ 579,876$ (750,958)$ -$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
SPECIAL ASSESSMENT DEBT AGENCY FUND
STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
Year Ended June 30, 2015
- 108 -
- 109 -
ADDITIONAL FINANCIAL DATA
This section contains additional information on property taxes.
Schedule of Ad Valorem Taxes Receivable
Analysis of Current Tax Levy
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Schedule 16
Uncollected Uncollected
Balance Collections Balance
Fiscal Year July 1, 2014 Additions and Credits June 30, 2015
2014-2015 -$ 5,413,151$ 5,343,909$ 69,242$
2013-2014 102,658 -51,299 51,359
2012-2013 50,908 - 12,711 38,197
2011-2012 22,771 - 3,223 19,548
2010-2011 9,805 - - 9,805
2009-2010 11,836 - - 11,836
2008-2009 15,344 - - 15,344
2007-2008 15,149 - 946 14,203
2006-2007 7,124 - 7,124 -
2005-2006 538 - 538 -
236,133 5,413,151$ 5,419,750$ 229,534
Less allowance
for uncollectible
accounts:
General Fund (77,417) (69,990)
158,716$ 159,544$
Reconciliation of collections and credits with revenues:
Taxes - ad valorem - General Fund 5,437,266$
Motor vehicle license fees - General Fund 3,477
Penalties and interest (23,856)
Adjustments and refunds 2,863
5,419,750$
TOWN OF HILLSBOROUGH, NORTH CAROLINA
SCHEDULE OF AD VALOREM TAXES RECEIVABLE
June 30, 2015
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Schedule 17
Property
Excluding
Registered Registered
Property Total Motor Motor
Valuation** Rate Levy* Vehicles Vehicles
Original levy
Property taxed at current year’s rate 787,350,735$ 0.6800 5,353,985$ 5,032,769$ 321,216$
Motor vehicle taxed at prior year rate 33,088 0.6800 225 - 225
Motor vehicle license fees - 49,750 - 49,750
Penalties and interest - 9,191 9,191 -
Total property valuation 787,383,823$ 5,413,151 5,041,960 371,191
Uncollected taxes at June 30, 2015 69,242 69,188 54
Current year’s taxes collected 5,343,909$ 4,972,772$ 371,137$
Current levy collection percentage 98.72%98.63%99.99%
** Property tax valuation prior to the discoveries and abatements.
Town-Wide
Total Levy
TOWN OF HILLSBOROUGH, NORTH CAROLINA
Year Ended June 30, 2015
ANALYSIS OF CURRENT TAX LEVY
*Total adjusted levy includes discoveries and abatements.
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STATISTICAL SECTION
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Statistical Section
Contents Page
Financial Trends Information 116
These schedules contain trend information to help the reader understand how the
Town's financial performance and well-being have changed over time.
Revenue Capacity Information 121
These schedules contain information to help the reader assess the Town's most
significant local revenue sources, property taxes, and water and sewer charges.
Debt Capacity Information 130
These schedules present information to help the reader assess the affordability
of the Town's current levels of outstanding debt and the Town's ability to issue
additional debt in the future.
Demographic and Economic Information 135
These schedules offer demographic and economic indicators to help the reader
understand the environment within which the Town's financial activities take
place.
Operating Information 139
These schedules contain service and infrastructure data to help the reader
understand how the information in the Town's financial report relates to the
services the Town provides and the activities it performs.
This part of the Town of Hillsborough's comprehensive annual financial report presents detailed
information as a context for understanding what the information in the financial statements, note
disclosures, and required supplementary information says about the Town's overall financial
health.
Sources:Unless otherwise noted, the information in these schedules is derived from the comprehensive
annual financial reports for the relevant year. The Town implemented GASB Statement 34 in 2004;
schedules presenting government-wide information include information beginning in that year.
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Financial Trends Information
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Table 12006200720082009201020112012201320142015Governmental activitiesNet investment in capital assets1,536,427$ 1,774,382$ 1,736,635$ 2,375,505$ 3,268,065$ 5,338,508$ 5,870,981$ 6,723,808$ 10,924,631$ 11,870,401$ Restricted2,282 192,078 1,660,871 563,417 806,780 2,121,546 1,570,832 1,831,742 1,700,808 1,558,393 Unrestricted3,908,306 4,228,407 3,329,482 4,891,494 5,402,272 3,766,961 3,984,264 4,390,314 4,433,988 4,797,140 Total governmental activities net position5,447,015$ 6,194,867$ 6,726,988$ 7,830,416$ 9,477,117$ 11,227,015$ 11,426,077$ 12,945,864$ 17,059,427$ 18,225,934$ Business-type activitiesNet investment in capital assets14,310,390$ 15,946,393$ 20,174,460$ 21,590,822$ 21,736,659$ 24,316,110$ 26,632,441$ 26,017,050$ 27,110,293$ 30,507,881$ Restricted1,834,599 1,607,258 2,011,464 2,438,955 2,128,459 1,721,067 1,974,677 2,590,989 2,591,211 2,591,600 Unrestricted3,685,563 4,031,059 4,268,347 3,495,837 4,020,580 3,518,417 2,674,119 4,084,460 6,546,829 6,190,061 Total business-type activities net position19,830,552$ 21,584,710$ 26,454,271$ 27,525,614$ 27,885,698$ 29,555,594$ 31,281,237$ 32,692,499$ 36,248,333$ 39,289,542$ Primary governmentNet investment in capital assets15,846,817$ 17,720,775$ 21,911,095$ 23,966,327$ 25,004,724$ 29,654,618$ 32,503,422$ 32,740,858$ 38,034,924$ 42,378,282$ Restricted1,836,881 1,799,336 3,672,335 3,002,372 2,935,239 3,842,613 3,545,509 4,422,731 4,292,019 4,149,993 Unrestricted7,593,869 8,259,466 7,597,829 8,387,331 9,422,852 7,285,378 6,658,383 8,474,774 10,980,817 10,987,201 Total primary government net position 25,277,567$ 27,779,577$ 33,181,259$ 35,356,030$ 37,362,815$ 40,782,609$ 42,707,314$ 45,638,363$ 53,307,760$ 57,515,476$ TOWN OF HILLSBOROUGHNET POSITION BY COMPONENTLast Ten Fiscal Years(accrual basis of accounting)- 117 -
Table 2
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
Expenses
Governmental activities:
General government 967,939$ 990,096$ 1,153,096$ 1,341,151$ 1,511,119$ 1,353,757$ 1,402,445$ 1,301,963$ 1,524,025$ 1,416,316$
Public safety 2,801,042 3,165,228 3,320,666 3,477,812 3,389,490 3,379,456 2,597,911 3,395,465 3,619,529 3,929,568
Transportation 467,796 1,189,355 1,217,558 435,870 390,313 486,940 1,510,493 497,540 500,491 130,485
Environmental protection 638,351 49,052 63,118 546,472 534,476 595,447 546,612 580,312 833,623 963,296
Economic and physical
development 198,650 210,430 217,638 237,278 247,420 256,092 243,163 485,977 367,389 387,801
Community activities and
projects 62,521 54,100 227,721 105,026 40,961 49,505 40,996 64,878 119,251 220,890
Parks and recreation - - 12,801 31,657 60,629 36,844 51,500 36,267 55,849 74,137
Unallocated interest
expense 337 10,690 21,248 77,316 107,315 108,598 104,518 105,022 126,250 101,260
Total governmental
activities expenses 5,136,636 5,668,951 6,233,846 6,252,582 6,281,723 6,266,639 6,497,638 6,467,424 7,146,407 7,223,753
Business-type activities:
Water and sewer 5,153,557 5,120,765 5,472,746 5,616,181 6,093,635 5,758,760 6,151,253 6,279,271 6,271,311 7,383,564
Total business-type
activities expenses 5,153,557 5,120,765 5,472,746 5,616,181 6,093,635 5,758,760 6,151,253 6,279,271 6,271,311 7,383,564
Total primary government
expenses 10,290,193$ 10,789,716$ 11,706,592$ 11,868,763$ 12,375,358$ 12,025,399$ 12,648,891$ 12,746,695$ 13,417,718$ 14,607,317$
Program Revenues
Governmental activities:
Charges for services:
General government 99,131$ 140,920$ 159,868$ 113,738$ 131,750$ 149,790$ 160,990$ 326,565$ 126,909$ 182,109$
Public safety 24,573 21,036 15,290 14,453 10,825 10,273 15,593 11,426 13,893 12,068
Transportation - - - - 2,951 - - - - 187,682
Environmental -
protection - - - - - - - - - -
Parks and recreation - - - - - 2,170 2,970 3,190 4,140 5,155
Operating grants and
contributions 195,675 254,312 337,166 309,510 202,067 183,874 228,457 175,347 316,576 10,610
Capital grants and
contributions 29,817 159,063 265,947 686,984 1,001,630 1,191,157 203,301 334,525 3,741,958 253,460
Total governmental
activities program revenues 349,196 575,331 778,271 1,124,685 1,349,223 1,537,264 611,311 851,053 4,203,476 651,084
Business-type activities:
Charges for services:
Water and sewer 5,555,602 6,193,895 6,320,471 6,292,642 6,425,750 6,755,260 7,366,996 7,686,356 9,025,607 8,939,712
Capital grants and
contributions 1,037,089 434,712 3,754,896 290,891 - 658,828 100,000 - 1,028,171 1,484,316
Total business-type
activities program revenues 6,592,691 6,628,607 10,075,367 6,583,533 6,425,750 7,414,088 7,466,996 7,686,356 10,053,778 10,424,028
Total primary government
program revenues 6,941,887$ 7,203,938$ 10,853,638$ 7,708,218$ 7,774,973$ 8,951,352$ 8,078,307$ 8,537,409$ 14,257,254$ 11,075,112$
Net (Expense) Revenue
Governmental activities (4,787,440)$ (5,093,620)$ (5,455,575)$ (5,127,897)$ (4,932,500)$ (4,729,375)$ (5,886,327)$ (5,616,371)$ (2,942,931)$ (6,572,669)$
Business-type activities 1,439,134 1,507,842 4,602,621 967,352 332,115 1,655,328 1,315,743 1,407,085 3,782,467 3,040,464
Total primary government
net expense (3,348,306)$ (3,585,778)$ (852,954)$ (4,160,545)$ (4,600,385)$ (3,074,047)$ (4,570,584)$ (4,209,286)$ 839,536$ (3,532,205)$
General Revenues and
Other Changes in Net
Position
Governmental activities:
Taxes 4,366,328$ 5,056,393$ 5,203,555$ 5,479,986$ 5,898,215$ 5,808,387$ 5,816,041$ 6,371,494$ 6,603,311$ 6,698,408$
Unrestricted inter-
governmental revenues 516,245 544,091 575,308 625,798 615,770 635,907 651,381 734,401 809,190 998,629
Investment earnings,
unrestricted 161,770 219,162 196,325 109,920 29,889 10,838 4,748 3,874 2,209 1,177
Miscellaneous 7,159 21,826 12,508 15,621 35,327 24,141 16,250 26,389 39,899 40,962
Total governmental
activities 5,051,502 5,841,472 5,987,696 6,231,325 6,579,201 6,479,273 6,488,420 7,136,158 7,454,609 7,739,176
Business-type activities:
Investment earnings 190,372 246,246 233,136 107,104 27,967 14,568 6,869 4,177 2,601 745
Miscellaneous - 70 30,691 - - - - - - -
Total business-type
activities 190,372 246,316 263,827 107,104 27,967 14,568 6,869 4,177 2,601 745
Total primary government 5,241,874$ 6,087,788$ 6,251,523$ 6,338,429$ 6,607,168$ 6,493,841$ 6,495,289$ 7,140,335$ 7,457,210$ 7,739,921$
Change in Net Position
Governmental activities 264,062$ 747,852$ 532,121$ 1,103,428$ 1,646,701$ 1,749,898$ 199,062$ 1,519,787$ 4,511,678$ 1,166,507$
Business-type activities 1,629,506 1,754,158 4,866,448 1,074,456 360,084 1,669,896 1,725,643 1,411,262 3,785,068 3,041,209
Total primary government 1,893,568$ 2,502,010$ 5,398,569$ 2,177,884$ 2,006,785$ 3,419,794$ 1,924,705$ 2,931,049$ 8,296,746$ 4,207,716$
TOWN OF HILLSBOROUGH
CHANGES IN NET POSITION
Last Ten Fiscal Years
(accrual basis of accounting)
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Table 32006 2007 2008 2009 2010 2011 2012 2013 2014 2015General fundReserved 626,383$ 743,476$ 852,658$ 904,063$ 1,230,710$ -$ -$ -$ -$ -$ Unreserved 3,451,245 3,671,668 3,766,755 4,030,731 3,832,453 - - - - - Nonspendable - - - - - 477 68,649 4,253 72,156 68,242 Restricted - - - - - 1,047,758 955,064 1,115,688 1,110,734 1,049,112 Committed - - - - - - - - - - Assigned - - - - - 215,354 88,094 330,206 782,995 1,294,457 Unassigned - - - - - 3,478,868 3,803,076 4,151,725 4,151,581 3,805,372 4,077,628 4,415,144 4,619,413 4,934,794 5,063,163 4,742,457 4,914,883 5,601,872 6,117,466 6,217,183 All other governmental fundsReserved - - - - 200,000 - - - - - Unreserved - 154,898 1,566,324 575,855 639,599 - - - - - Nonspendable - - - - - - - 52 - - Restricted - - - - - 1,073,788 227,052 716,054 844,464 509,281 Committed - - - - - 204,943 856,356 131,490 106,105 272,548 Assigned - - - - - - - - 7,070 - Unassigned - - - - - (324,964) (112,038) (20,444) - - - 154,898 1,566,324 575,855 839,599 953,767 971,370 827,152 957,639 781,829 Total fund balances 4,077,628$ 4,570,042$ 6,185,737$ 5,510,649$ 5,902,762$ 5,696,224$ 5,886,253$ 6,429,024$ 7,075,105$ 6,999,012$ TOWN OF HILLSBOROUGHFUND BALANCES, GOVERNMENTAL FUNDSLast Ten Fiscal Years(modified accrual basis of accounting)- 119 -
Table 42006200720082009201020112012201320142015RevenuesAd valorem taxes 3,291,685$ 3,863,679$ 3,843,372$ 4,317,508$ 4,819,371$ 4,610,003$ 4,716,460$ 5,135,469$ 5,429,114$ 5,437,266$ Other taxes and licenses 1,067,530 1,197,964 1,216,236 1,178,406 1,131,562 1,163,501 1,124,696 1,229,425 1,199,185 1,263,425 Unrestricted intergovernmental 516,245 544,091 575,308 625,798 615,770 635,907 651,381 734,401 809,190 998,629 Restricted intergovernmental 221,614 257,092 364,818 755,912 306,662 1,234,870 453,755 308,007 768,716 642,732 Investment earnings 161,770 219,834 195,632 109,920 29,889 10,838 4,748 3,874 2,209 1,177 Capital contributions - 135,000 235,000 235,000 200,000 200,000 100,000 - - - Use and rental 123,704 161,956 175,158 128,191 142,575 160,063 176,583 337,991 140,802 194,177 Other general revenues11,038 42,440 30,733 31,106 31,518 67,071 69,669 34,079 48,337 56,727 Total revenues5,393,586 6,422,056 6,636,257 7,381,841 7,277,347 8,082,253 7,297,292 7,783,246 8,397,553 8,594,133 ExpendituresCurrentGeneral government1,055,473 1,090,839 1,255,061 1,986,459 2,552,912 1,232,665 1,235,107 1,122,514 2,799,302 2,779,807 Public safety 2,788,016 3,281,406 3,349,295 3,499,641 3,263,200 3,347,597 3,164,361 3,134,327 3,455,438 3,845,174 Transportation 677,493 843,439 633,474 408,258 720,627 1,718,386 1,693,664 1,011,557 851,502 1,194,204 Environmental protection 618,358 364,861 510,948 470,448 580,854 583,919 476,415 471,880 806,262 1,008,615 Economic and physical development 198,650 210,430 217,638 237,278 247,420 256,092 243,163 485,977 367,389 388,611 Community activities and projects 62,521 54,461 227,721 105,026 54,137 54,946 325,666 64,878 119,251 836,258 Parks and recreation - 109,096 102,046 1,722,062 344,499 791,184 239,105 430,831 1,675,156 423,813 Debt servicePrincipal retirement 17,246 36,638 62,140 178,595 238,111 303,074 283,126 407,246 474,458 632,155 Interest and fiscal charges 900 7,972 11,938 68,762 93,874 107,928 98,896 111,265 118,711 101,228 Total expenditures5,418,657 5,999,142 6,370,261 8,676,529 8,095,634 8,395,791 7,759,503 7,240,475 10,667,469 11,209,865 Excess of revenues over (under) expenditures (25,071) 422,914 265,996 (1,294,688) (818,287) (313,538) (462,211) 542,771 (2,269,916) (2,615,732) Other financing sources (uses)Transfers in - 111,232 - 43,023 628,118 717,582 440,409 369,627 169,054 160,482 Transfers out- (111,232) - (43,023) (628,118) (717,582) (843,440) (369,627) (169,054) (160,482) Sale of equipment- - - - - - - - - - Insurance recovery- - - - - - 16,250 - - - Contribution from property owners- - - - - - - - 1,445,207 1,325,271 Debt service - principal on refunding- - - - - - - - (1,256,353) - Proceeds from installment notes198,501 69,500 1,349,700 619,600 1,210,400 107,000 1,039,021 - 2,727,143 1,214,368 Total other financing sources 198,501 69,500 1,349,700 619,600 1,210,400 107,000 652,240 - 2,915,997 2,539,639 Net change in fund balances173,430$ 492,414$ 1,615,696$ (675,088)$ 392,113$ (206,538)$ 190,029$ 542,771$ 646,081$ (76,093)$ Capital outlay included in functional expenditures above 416,105$ 484,601$ 313,810$ 2,491,483$ 1,907,332$ 2,280,672$ 1,501,851$ 997,107$ 2,246,332$ 2,619,910$ Debt service as a percentage of noncapital expenditures 0.36% 81.00% 1.22% 4.00% 5.36% 6.72% 6.10% 8.30% 7.04% 8.54%CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDSLast Ten Fiscal Years(modified accrual basis of accounting)TOWN OF HILLSBOROUGH- 120 -
Revenue Capacity Information
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Table 52006200720082009201020112012201320142015Function/programGovernmental activities:General government102,708$ 140,920$ 159,868$ 348,738$ 331,750$ 382,843$ 354,227$ 361,590$ 1,388,937$ 192,719$ Public safety54,323 64,210 134,722 14,453 28,874 10,273 15,593 11,426 13,893 12,068 Transportation185,394 192,890 216,544 274,275 543,741 848,978 228,521 185,847 312,282 187,682 Environmental protection6,611 8,940 - - - - - - 2,059,224 653 Economic and physical development- 16,302 1,190 235 - - - - - - Community activities and projects160 - - - - - - - - - Parks and recreation- 152,069 265,947 486,984 444,858 295,170 12,970 292,190 429,140 257,962 Subtotal governmental activities349,196 575,331 778,271 1,124,685 1,349,223 1,537,264 611,311 851,053 4,203,476 651,084 Business-type activities:Water and sewer6,592,691 6,628,607 10,075,367 6,583,533 6,425,750 7,414,088 7,466,996 7,686,356 10,053,778 10,424,028 Subtotal business-type activities6,592,691 6,628,607 10,075,367 6,583,533 6,425,750 7,414,088 7,466,996 7,686,356 10,053,778 10,424,028 Total primary government6,941,887$ 7,203,938$ 10,853,638$ 7,708,218$ 7,774,973$ 8,951,352$ 8,078,307$ 8,537,409$ 14,257,254$ 11,075,112$ TOWN OF HILLSBOROUGHPROGRAM REVENUES BY FUNCTION/PROGRAMLast Ten Fiscal Years(accrual basis of accounting)- 122 -
Table 6
Fiscal Ad Valorem
Year Taxes
2006 3,291,685$
2007 3,863,679
2008 3,843,372
2009 4,317,508
2010 4,819,371
2011 4,610,003
2012 4,716,460
2013 5,135,469
2014 5,429,114
2015 5,437,266
Change b
2006 - 2015 65.18%
b Ad Valorem tax revenue increased by 65.18 percent in the past ten years. This is primarily due to property
values being re-evaluated every four years. During the last ten years, there were two re-evaluation periods
2005 and 2009. The four-year re-evaluation period along with increasing property values and steady growth
has caused a significant increase in Ad Valorem Revenue from 2006 to 2015.
TOWN OF HILLSBOROUGH
TAX REVENUES BY SOURCE, GOVERNMENTAL FUNDS a
Last Ten Fiscal Years
(modified accrual basis of accounting)
a This table presents the Town's most significant source of revenues. All other taxes and revenues are either
comparatively insignificant or levied by a governmental entity other than the Town of Hillsborough.
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Table 7
Total Assessed
Total Direct Value as a
Fiscal Real Personal Public-Service Assessed Tax Percent of
Year Property * Property Companies Value Rate Actual Value
2006 498,764,816$ 69,532,409$ 11,634,060$ 579,931,285$ 0.5660 100.00%
2007 532,148,273 78,065,817 12,257,142 622,471,232 0.6200 100.00%
2008 535,719,952 81,267,458 11,297,072 628,284,482 0.6350 100.00%
2009 552,914,553 77,727,711 11,612,614 642,254,878 0.6700 100.00%
2010 657,426,788 83,569,294 11,954,916 752,950,998 0.6200 100.00%
2011 653,238,545 84,168,694 10,825,503 748,232,742 0.6200 100.00%
2012 661,688,578 85,866,250 11,371,703 758,926,531 0.6200 100.00%
2013 667,581,857 83,022,657 11,710,268 762,314,782 0.6800 100.00%
2014 674,676,352 99,378,379 11,710,269 785,765,000 0.6800 100.00%
2015 676,291,406 98,629,989 12,462,428 787,383,823 0.6800 100.00%
TOWN OF HILLSBOROUGH
ASSESSED VALUE AND ACTUAL VALUE OF TAXABLE PROPERTY
Last Ten Fiscal Years
Note:Property in the city is reassessed each year. Property is assessed at actual value; therefore, the assessed values are
equal to actual value. Tax rates are per $100 of assessed value.
Source: Annual County Report of Valuation and Property Tax Levies.
* Real property values exclude tax-exempt property.
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Table 8
Fiscal Basic Total Fire
Year Rate Direct District b County
2006 0.566 0.566 - 0.8430
2007 0.620 0.620 - 0.9030
2008 0.635 0.635 - 0.9500
2009 0.670 0.670 - 0.9980
2010 0.620 0.620 - 0.8580
2011 0.620 0.620 - 0.8580
2012 0.620 0.620 - 0.8580
2013 0.680 0.680 - 0.8580
2014 0.680 0.680 - 0.8780
2015 0.680 0.680 - 0.8780
Source: Orange County
TOWN OF HILLSBOROUGH
DIRECT AND OVERLAPPING PROPERTY TAX RATES
Last Ten Fiscal Years
(rate per $100 of assessed value)
b The Fire District Tax applies to properties outside of the city limits.
Municipality Rates
Note:The Town's basic property tax rate may be increased only by a majority vote of the elected Town
Board of Town Commissioners.
a Overlapping rates are those of local and county governments that apply to property owners within the
Town of Hillsborough.
Overlapping Rates a
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Table 9.FiscalYear Taxes Levied CollectionsEnded for the Percentage in Subsequent PercentageJune 30, Fiscal Year Amount of Levy Years Amount of Levy2006 3,333,473$ 3,274,376$ 98.23% 50,591$ 3,324,967$ 99.74%20073,893,091 3,833,657 98.47%59,434 3,893,091 100.00%20084,035,215 3,828,830 94.89%192,182 4,021,012 99.65%20094,380,999 4,295,618 98.05%70,037 4,365,655 99.65%20104,732,461 4,641,581 98.09%79,044 4,720,625 99.75%20114,690,863 4,557,501 97.16%123,557 4,681,058 99.79%20124,755,200 4,641,541 97.61%94,111 4,735,652 99.59%20135,225,057 5,085,225 98.82%101,635 5,186,860 99.27%20145,418,579 5,315,921 98.11%51,299 5,367,220 99.05%20155,413,151 5,343,909 98.72%- 5,343,909 98.72%Sources: Orange County Board of Equalization and Assessment, and Orange County Department of Finance.Fiscal Year of the LevyTotal Collections to DateTOWN OF HILLSBOROUGHPROPERTY TAX REVIEW AND COLLECTIONSLast Ten Fiscal YearsCollected within the- 126 -
Table 10Percentage Percentageof Total City of Total CityTaxable Taxable Taxable TaxableAssessed Assessed Assessed AssessedTaxpayer Value Rank Value Value Rank ValueSports Endeavors 16,370,777$ 1 2.08%Hillsborough Apartments Partners LC 13,675,468 2 1.74%Wal-Mart Real Estate Business 15,182,747 4 1.93% 12,758,748$ 1 2.20%Home Depot Development 10,423,863 3 1.32%PHE Inc 9,628,318 5 1.22% 7,419,828 3 1.28%Daniel Boone Ltd 87,941,758 6 11.16% 8,343,619 2 1.44%SLF II Waterstone LLC 8,539,724 7 1.08% 0.00%Hillsborough Commons Ltd Partners 8,497,192 8 1.08% 6,562,050 7 1.13%MDCO LLC 7,771,800 9 0.99%Brookshire Inc 6,808,295 10 0.86%Boone Square Inc.4,807,691 10 0.83%Artcraft Hillsborough LC7,161,208 4 1.23%R.T. Holdings, LLC6,587,606 6 1.14%CentralTelephone Co.4,991,435 9 0.86%Stihl, Inc.5,680,180 8 0.98%Meadowlands Distributions Co.6,975,686 5 1.20%Total 184,839,942$ 23.46% 71,288,051$ 12.28%Source: Orange County Property Assessment Division2015TOWN OF HILLSBOROUGHPRINCIPAL PROPERTY TAXPAYERSCurrent Year and Nine Years Ago2006- 127 -
Table 11Type of Customer2006 2007 2008 2009 2010 2011 2012 2013 20142015In-town residential 94,742,851 92,359,968 90,776,263 88,082,088 91,194,583 103,459,804 102,937,205 102,755,771 111,836,111 98,914,635 Out-of-town residential 103,325,114 105,793,065 104,552,882 101,568,087 106,627,659 112,868,479 120,107,805 130,921,523 111,241,276 124,805,789 In-town commercial 82,678,001 90,080,216 85,878,132 88,318,823 89,569,350 74,881,598 73,507,962 76,624,165 78,590,500 81,985,440 Out-of-town commercial 30,042,380 29,297,960 28,156,261 23,213,084 22,056,653 18,219,706 18,296,584 18,153,125 17,908,575 29,452,224 Total gallons billed 310,788,346 317,531,209309,363,538301,182,082 309,448,245309,429,587 314,849,556 328,454,584 319,576,462 335,158,088 Total water and sewer charges (revenue) 5,215,333$ 5,699,410$ 5,743,722$ 6,043,820$ 6,194,638$ 6,405,307$ 6,928,835$ 7,262,510$ 7,499,183$ 7,859,823$ Total average rate per 1,000 gallons 16.78$ 17.95$ 18.57$ 20.07$ 20.02$ 20.00$ 22.00$ 22.11$ 23.47$ 23.45$ Source: Town of Hillsborough, Water Billing Office.Revenue collected includes late payment penalties.TOWN OF HILLSBOROUGHIN AND OUT OF TOWNWATER SOLD BY TYPE OF CUSTOMER ANDLast Ten Fiscal Years- 128 -
Table 12Rate perRate perRate per Rate perRate per Rate perRate per Rate perFiscal 0-30001,0000-30001,0000-30001,0000-30001,000YearGallons Gallons Gallons GallonsGallons Gallons Gallons Gallons2006 * 19.35$ 6.45$ 19.02$ 6.34$ 37.74$ 12.58$ 37.11$ 12.37$ 200719.95 6.65 20.52 6.84 38.91 12.97 40.02 13.34 200820.16 6.72 21.33 7.11 39.30 13.10 41.61 13.87 200921.75 7.25 22.74 7.58 42.40 14.13 44.36 14.79 201021.75 7.25 22.74 7.58 42.40 14.13 44.36 14.79 201121.75 7.25 23.88 7.96 42.42 14.14 46.56 15.52 201223.04 7.68 25.98 8.66 44.94 14.98 50.67 16.89 201324.21 8.07 28.26 9.42 47.22 15.74 55.11 18.37 201421.79 8.07 30.11 11.15 42.50 15.74 58.70 21.74 201521.79 8.07 30.75 10.25 47.22 15.74 59.97 27.68 Rate changes are effective with July 1 water usage unless otherwise stated.Prior to 7/1/15, a flat charge was billed for 0 to 2,700 gallons. Any usage over 2,700 gallons was billed per 1,000 gallons rate.Beginning 7/1/15, a flat charge is billed for 0 to 2,600 gallons. Any usage over 2,600 gallons is billed per 1,000 gallons rate.*Rates effective September 1, 2005Theconstruction of a reservoir in 1998 and renovations of an aging water and wastewater treatment plant have caused significant increases in water and sewerrates over the past ten years. TOWN OF HILLSBOROUGHWATER AND SEWER RATESLast Ten Fiscal YearsOut-of-Town WaterOut-of-Town SewerIn-Town WaterIn-Town Sewer- 129 -
Debt Capacity Information
- 130 -
Table 13GovernmentalActivitiesGeneralTotalFiscalInstallmentObligationRevolvingInstallmentPrimaryPerYearLoansBondsLoansLoansGovernmentCapita a2006198,501$ 4,575,000$ 1,524,446$ 3,781,350$ 10,079,297$ 1,777$ 2007231,363 4,189,000 1,448,224 3,388,902 9,257,489 1,502 20081,518,923 3,803,000 1,372,001 2,978,369 9,672,293 1,550 20091,959,928 122,000 1,295,779 6,172,366 9,550,073 1,450 20102,932,216 86,000 1,219,557 6,258,012 10,495,785 1,572 20112,736,142 50,000 1,143,336 5,741,602 9,671,080 1,582 20123,440,001 14,000 5,575,878 5,871,812 14,901,691 2,388 20133,084,791 - 16,247,369 4,914,368 24,246,528 3,850 20144,024,586 - 18,644,077 3,939,307 26,607,970 4,170 20154,606,799 - 18,605,655 2,970,088 26,182,542 4,161 Note: Details regarding the Town's outstanding debt can be found in the notes to the financial statements.TOWN OF HILLSBOROUGHRATIOS OF OUTSTANDING DEBT BY TYPELast Ten Fiscal YearsBusiness-Type Activitiesa See Table 17 for population data. These ratios are calculated using population for the prior calendar year.- 131 -
Table 14
Percentage of
General Actual Taxable
Fiscal Obligation Value a of Per
Year Bonds Total Property Capita b
2006 4,575,000$ 4,575,000$ 0.79%742$
2007 4,189,000 4,189,000 0.67%671
2008 3,803,000 3,803,000 0.61%578
2009 122,000 122,000 0.00%18
2010 86,000 86,000 0.00%13
2011 50,000 50,000 0.00%8
2012 14,000 14,000 0.00%2
2013 - - 0.00%-
2014 - - 0.00%-
2015 - - 0.00%-
a See Table 7 for property value data.
b Population data can be found in Table 17.
General Bonded Debt Outstanding
Note: Details regarding the Town's outstanding debt can be found in the notes to the financial statements.
TOWN OF HILLSBOROUGH
RATIOS OF GENERAL BONDED DEBT OUTSTANDING
Last Ten Fiscal Years
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Table 15
.
Town's
Orange Co. Estimated
G.O. Bonds Estimated Share of
Outstanding Percentage Overlapping
Governmental Unit Debt Applicable a Debt
Debt repaid with property taxes 214,322,108$ 5.05% 10,817,136$
Town's overlapping debt 10,817,136
Town's direct debt 4,606,799
Total direct and overlapping debt 15,423,935$
Sources:Budgeted revenues used to estimate applicable percentages. Debt outstanding provided by
Orange County, NC Finance Dept.
TOWN OF HILLSBOROUGH
DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT
June 30, 2015
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Table 16Assessed value 787,383,823$ Debt limit (8% of assessed value) 62,990,706 Debt applicable to limit:Installment loans (4,606,799) Legal debt margin 58,383,907$ 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015Debt limit 46,394,503$ 49,797,699$ 50,262,759$ 51,380,390$ 60,236,080$ 59,858,619$ 60,714,122$ 60,985,183$ 62,861,200$ 62,990,706$ Total net debt applicable to limit 198,501 231,363 1,518,923 1,959,928 2,932,216 2,736,142 3,440,001 3,084,791 4,024,586 4,606,799 Legal debt margin 46,196,002$ 49,566,336$ 48,743,836$ 49,420,462$ 57,303,864$ 57,122,477$ 57,274,121$ 57,900,392$ 58,836,614$ 58,383,907$ Total net debt applicable to the limit as a percentage of debt limit 0.43% 0.46% 3.02% 3.81% 4.87% 4.57% 5.67% 5.06% 6.40% 7.31%TOWN OF HILLSBOROUGHLEGAL DEBT MARGIN INFORMATIONLast Ten Fiscal YearsLegal Debt Margin Calculation for Fiscal Year 2015Note: Under state finance law, the Town's outstanding general obligation debt should not exceed 8 percent of total assessed property value. - 134 -
Demographic and Economic Information
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Table 17PersonalPerIncomeCapita(thousandsPersonalMedianSchool UnemploymentYearPopulationof dollars)Income Age Enrollment Rate 2006 6,162 5,205,261 42,637 32.30 1,203 3.6%2007 6,240 5,772,365 46,279 33.00 1,180 3.9%2008 6,584 6,107,990 48,100 33.10 1,272 4.6%2009 6,677 6,186,352 47,925 33.30 1,272 7.0%2010 6,751 6,268,886 46,713 33.18 1,279 6.6%2011 6,113 * * 33.42 1,305 7.3%2012 6,239 * * 33.62 1,420 7.1%2013 6,298 * * 33.99 1,433 5.3%2014 6,381 4,905,216 34,949 33.101,3704.8%20156,2925,287,926 37,658 33.501,3933.9%*Information not yet availableNote:Population,median age, and education level information are based on surveys conducted during the last quarter of the calendar year.Personal income information is a total for the year. Unemployment rate information is an adjusted yearly average. School enrollment is based on thecensus at the start of the school year.TOWN OF HILLSBOROUGHDEMOGRAPHIC AND ECONOMIC STATISTICSLast Ten Calendar YearsSources:Population and median age information provided by the State Library of North Carolina. Personal income information provided by theOrange County Economic Development Office. Unemployment data provided by the Employment Security Commission. School enrollment dataprovided by the Orange County Board of Education.Note:Personal income, per capita personal income, median age, and unemployment are not available at the town level and is reported at the countylevel. Unemployment is reported for the month of June of each year.- 136 -
Table 18Percentage ofPercentage ofTotal Town Total Town EmployerEmployees Population Employees PopulationOrange County Schools 1,019 16.20% 961 15.60%Orange County Government 958 15.23% 830 13.47%Sports Endeavors, Inc. dba Eurosport 350 5.56% - 0.00%PHE 311 4.94% 325 5.27%Wal-Mart Associates Inc 280 4.45% 414 6.72%Brookshire Nursing Center 147 2.34% 130 2.11%Piedmont Electric 91 1.45% 115 1.87%Builders First 78 1.24% 95 1.54%Triangle Sportsplex 52 0.83% 325 5.27%Town of Hillsborough 88 1.40% 83 1.35%OE Inteprises - 0.00% 139 2.26%Total 3,374 53.57% 3,417 55.45%Source: Town Economic Development Division and Employment Security Commission.Note: Information regarding Town's total employment is not available. * Data not available2015TOWN OF HILLSBOROUGHPRINCIPAL EMPLOYERSCurrent Year and Nine Years Ago2006- 137 -
Table 19
Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015
General government
Administration 2 3 3 3 4 4 3 3 5 5
Finance 5 5 4 4 4 4 4 4 4 4
Planning 3 3 3 4 3 3 3 3 4 4
Safety - - 1 1 1 1 1 1 1 1
Stormwater - - - - - - - - 1 1
Police
Officers 25 26 29 29 26 26 25 27 24 28
Civilians 3 1 2 3 2 2 - - -
Public works
Streets 6 3 4 4 4 4 3 3 3 4
Sanitation 4 5 5 4 4 4 4 4 4 4
Motor pool 3 3 3 3 3 3 3 3 3 3
Utilities
Engineering 2 3 3 4 4 4 4 4 4 4
Billing and collection 7 6 6 7 6 5 5 5 5 6
Water 6 6 6 6 6 6 6 6 6 6
Wastewater 10 9 9 10 10 8 8 8 7 6
Water distribution/
wastewater collection 11 10 11 7 8 8 11 11 11 11
Fire inspections 1 1 1 1 1 1 1 1 1 1
Total 88 84 90 90 86 83 81 83 83 88
Source: Town Finance Office. Positions reported at June 30th are positions filled.
TOWN OF HILLSBOROUGH
FULL-TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES
BY FUNCTION/PROGRAM
Last Ten Fiscal Years
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Operating Information
- 139 -
Table 20Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015PolicePhysical arrests 748 792 562 524 546 475 560 538 521 553 Calls for service 8,247 7,273 11,181 12,490 9,619 12,889 15,039 14,569 12,279 15,975 Traffic citations 1,039 1,538 1,877 1,937 1,712 1,182 1,134 1,651 1,212 725 Number of policeman positions 27 27 29 29 29 29 29 26 27 27 FireNumber of stations 1 1 1 1 1 1 1 1 1 1 Emergency responses (EMS and fire) 1,449 1,802 1,960 1,918 1,865 1,835 1,770 1,866 1,950 1,978 Fires extinguished 11 6 6 30 75 19 78 70 45 107 Number of paid firemen 20 19 23 23 24 24 25 24 24 27 Number of volunteers 19 15 15 12 15 12 14 19 15 12 Inspections 297 387 289 269 213 211 258 177 132 171 Refuse collection Refuse collected (tons per day) 6.7 6.3 6.3 6.7 6.1 5.95 - 6.34 5.90 5.54 Recyclables collected (tons per day)********0.02 0.48 Other public worksStreet resurfacing (miles) 2.1 2.2 1.5 0.5 - - - 2.25 2.13 4.70 Potholes repaired 227 84 51 103 45 41 36 30 36 30 Parks and recreationNumber of parks 2 3 6 6 6 6 6 6 6 6 LibraryVolumes in collection 86,272 94,273 84,465 78,770 75,506 86,526 97,536 93,421 93,886 93,656 Total volumes borrowed 167,000 178,911 184,301 209,023 203,450 287,938 351,216 397,379 396,164 412,416 WaterNew connections 1,056 949 841 826 939 815 767 736 799 840 Water main breaks 46 32 36 46 41 10 30 20 15 11 Average daily consumption (millions of gallons per day) 1.168 1.235 1.101 1.143 1.124 1.129 1.048 0.913 1.103 1.071 Peak daily consumption (millions of gallons) 1.721 1.770 1.770 1.938 1.626 1.653 1.576 1.653 1.685 1.815 WastewaterAverage daily sewage treatment (millions of gallons) 0.679 0.726 0.740 0.872 0.888 0.757 0.765 0.902 1.133 0.895EducationNumber of schools a4 3 3 3 3 3 3 3 3 3 Number of teachers 117 113 105 105 111 111 113 113 112 112 Number of students 1,203 1,180 1,272 1,272 1,279 1,305 1,420 1,433 1,370 1,393 Number of classrooms b112 110 95 95 95 65 65 65 65 65 Sources: Various city departments.Last Ten Fiscal YearsOPERATING INDICATORS BY FUNCTION/PROGRAMTOWN OF HILLSBOROUGHYTBD (Yet to be determined)a Alternative school added for students who have not been successful in the traditional school setting in FY06bCore classes only reported in FY11, FY12 and FY13- 140 -
Table 21.Function/Program 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015PoliceStations 2 2 2 2 2 2 2 2 2 2 Patrol units 22 23 23 26 26 28 27 26 27 27 Fire stations 1 1 1 1 1 1 1 1 1 1 Refuse collectionCollection trucks >3 3 3 6 6 6 7 7 8 8 Other public worksStreets (miles) - paved 30.84 32.89 32.89 36.15 36.15 36.15 36.15 36.15 36.15 37.63 Streets (miles) - unpaved 0.86 0.86 0.86 0.73 0.73 0.73 0.73 0.73 0.91 0.69 Streetlights 620 621 623 623 633 633 633 633 678 679 Traffic signals (all state-owned) - - - - - - - - - Parks and recreationAcreage b30.23 30.24 72.62 72.62 72.62 72.62 74.10 74.10 74.10 74.10 Playgrounds 3 3 4 4 4 4 4 4 4 4 WaterWater mains (miles) 121.0 126.0 146.8 146.8 147.0 147.0 148.0 148.0 150 151.0 Fire hydrants 600 ^612 ^622 ^656 ^597 614 663 c621 619 628 Storage capacity (thousands of gallons) 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3,000 3000 3,000 WastewaterSanitary sewers (miles) 64.0 70.0 86.4 86.4 86.4 86.4 89.0 93.0 93 94.0 Storm sewers (miles) a- - 36.0 36.0 73.0 73.0 73.0 73.0 75 75.0 Treatment capacity (millions of gallons) 3.0 3.0 3.0 3.0 3.0 3.0 - 3.0 3 3.0 Area (square miles) 5.390 5.520 5.530 5.740 5.740 5.740 5.740 5.760 5.80 5.800 Sources: Various city departments.a Storm sewer data not available.b Includes two parks owned by the Town but are located outside of the city limits. c 2012 figure included private hydrants - 2013 actual number of hydrants from GIS^ Estimated> Includes brush and leaf trucks 2009 forwardNote: No capital asset indicators are available for the general government or library function.TOWN OF HILLSBOROUGHCAPITAL ASSET STATISTICS BY FUNCTION/PROGRAMLast Ten Fiscal Years- 141 -
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COMPLIANCE SECTION
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REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT
OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH
GOVERNMENT AUDITING STANDARDS
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor, Members of the Board
of Town Commissioners, and the Town Manager
Town of Hillsborough, North Carolina
We have audited, in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States, the accompanying financial
statements of the governmental activities, business-type activities, the aggregate discretely
presented component units, each major fund and the aggregate remaining fund information of
the Town of Hillsborough (the “Town”) as of and for the year ended June 30, 2015, and the
related notes to the financial statements, which collectively comprise the Town’s basic financial
statements, and have issued our report thereon dated December 31, 2015.
Internal Control over Financial Reporting
In planning and performing our audit of the financial statements, we considered the Town’s
internal control over financial reporting (internal control) to determine the audit procedures that
are appropriate in the circumstances for the purpose of expressing our opinions on the financial
statements, but not for the purpose of expressing an opinion on the effectiveness of the Town’s
internal control. Accordingly, we do not express an opinion on the effectiveness of the Town’s
internal control.
Our consideration of internal control over financial reporting was for the limited purpose
described in the preceding paragraph and was not designed to identify all deficiencies in internal
control that might be material weaknesses or significant deficiencies, and therefore material
weaknesses or significant deficiencies may exist that were not identified. However, as
described in the accompanying schedule of findings and responses, we identified a certain
deficiency in internal control that we consider to be a material weakness.
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A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent or detect and correct misstatements on a timely basis. A material weakness is a
deficiency or combination of deficiencies in internal control, such that there is a reasonable
possibility that a material misstatement of the entity’s financial statements will not be prevented
or detected and corrected on a timely basis. We consider the deficiency described in the
accompanying schedule of findings and responses to be a material weakness: 2015-1.
A significant deficiency is a deficiency or a combination of deficiencies in internal control that is
less severe than a material weakness, yet important enough to merit attention by those charged
with governance.
Compliance and Other Matters
As part of obtaining reasonable assurance about whether the Town of Hillsborough’s financial
statements are free of material misstatement, we performed tests of its compliance with certain
provisions of laws, regulations, contracts and grant agreements, noncompliance with which
could have a direct and material effect on the determination of financial statement amounts.
However, providing an opinion on compliance with those provisions was not an objective of our
audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no
instances of noncompliance or other matters that are required to be reported under Government
Auditing Standards.
Town of Hillsborough’s Response to Finding
The Town of Hillsborough’s response to the finding identified in our audit is described in the
accompanying schedule of findings and responses. The Town’s response was not subjected to
the auditing procedures applied in the audit of the financial statements and, accordingly, we
express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity’s internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity’s
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
High Point, North Carolina
December 31, 2015
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REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE
TO ITS MAJOR FEDERAL PROGRAM AND INTERNAL CONTROL
OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133
AND THE STATE SINGLE AUDIT IMPLEMENTATION ACT
INDEPENDENT AUDITORS’ REPORT
To the Honorable Mayor, Members of the Board
of Town Commissioners, and the Town Manager
Town of Hillsborough, North Carolina
Report on Compliance for Its Major Federal Program
We have audited the Town of Hillsborough’s (“the Town”) compliance with the types of
compliance requirements described in the OMB Circular A-133 Compliance Supplement and the
Audit Manual for Governmental Auditors in North Carolina, issued by the Local Government
Commission, that could have a direct and material effect on the Town’s major federal program
for the year ended June 30, 2015. The Town’s major federal program is identified in the
summary of auditors’ results section of the accompanying schedule of findings and questioned
costs.
Management’s Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts
and grants applicable to its federal program.
Auditors’ Responsibility
Our responsibility is to express an opinion on compliance for the Town’s major federal program
based on our audit of the types of compliance requirements referred to above. We conducted
our audit of compliance in accordance with auditing standards generally accepted in the United
States of America; the standards applicable to financial audits contained in Government
Auditing Standards, issued by the Comptroller General of the United States; OMB Circular A-
133, Audits of States, Local Governments, and Non-Profit Organizations; and the State Single
Audit Implementation Act. Those standards, OMB Circular A-133, and the State Single Audit
Implementation Act require that we plan and perform the audit to obtain reasonable assurance
about whether noncompliance with the types of compliance requirements referred to above that
could have a direct and material effect on a major federal program occurred. An audit includes
examining, on a test basis, evidence about the Town’s compliance with those requirements and
performing such other procedures as we considered necessary in the circumstances.
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We believe that our audit provides a reasonable basis for our opinion on compliance for the
major federal program. However, our audit does not provide a legal determination on the
Town’s compliance.
Opinion on the Major Federal Program
In our opinion, the Town complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on its major federal
program for the year ended June 30, 2015.
Report on Internal Control over Compliance
Management of the Town is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In
planning and performing our audit, we considered the Town’s internal control over compliance
with requirements that could have a direct and material effect on a major federal program to
determine the auditing procedures for the purpose of expressing our opinion on compliance for
each major federal program and to test and report on internal control over compliance in
accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the
effectiveness of internal control over compliance. Accordingly, we do not express an opinion on
the effectiveness of the Town’s internal control over compliance.
A deficiency in internal control over compliance exists when the design or operation of a control
over compliance does not allow management or employees, in the normal course of performing
their assigned functions, to prevent or detect and correct noncompliance with a type of
compliance requirement of a federal program on a timely basis. A material weakness in internal
control over compliance is a deficiency or a combination of deficiencies in internal control over
compliance, such that there is a reasonable possibility that material noncompliance with a type
of compliance requirement of a federal program will not be prevented or detected and corrected
on a timely basis. A significant deficiency in internal control over compliance is a deficiency or
combination of deficiencies in internal control over compliance with a type of compliance
requirement of a federal program that is less severe than a material weakness in internal control
over compliance, yet important enough to merit attention by those charged with governance.
Our consideration of internal control over compliance was for the limited purpose described in
the first paragraph of this section and was not designed to identify all deficiencies in internal
control over compliance that might be significant deficiencies or material weaknesses. We did
not identify any deficiencies in internal control over compliance that we consider to be material
weaknesses. However, material weaknesses may exist that have not been identified.
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other
purpose.
High Point, North Carolina
December 31, 2015
TOWN OF HILLSBOROUGH, NORTH CAROLINA Schedule 15
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Page 1 of 2
Year Ended June 30, 2015
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I. Summary of Auditors’ Results
Financial Statements
Type of auditors’ report issued: Unmodified
Internal control over financial reporting:
Material weaknesses identified?X Yes No
Significant deficiencies identified that
are not considered to be material
weaknesses? Yes X None reported
Noncompliance material to financial
statements noted? Yes X No
Federal Awards
Internal control over major federal
program:
Material weaknesses identified?Yes X No
Significant deficiencies identified that
are not considered to be material
weaknesses? Yes X None reported
Noncompliance material to federal
awards? Yes X No
Type of auditors’ report issued on
compliance for major federal programs: Unmodified
Any audit findings disclosed that are
required to be reported in accordance
with Section 510(a) of Circular A-133? Yes X No
Identification of major federal program:
CFDA Number Name of Federal Program or Cluster
66.468 Capitalization Grants for Drinking Water
State Revolving Funds
Dollar threshold used to distinguish between
Type A and Type B programs: $ 300,000
Auditee qualified as low-risk auditee? Yes X No
TOWN OF HILLSBOROUGH, NORTH CAROLINA Schedule 15
SCHEDULE OF FINDINGS AND QUESTIONED COSTS Page 2 of 2
Year Ended June 30, 2015
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II. Financial Statement Findings
MATERIAL WEAKNESS
Finding 2015-1: Financial Accounting Closing Procedures
Criteria: Certain asset and liability accounts were not reconciled and adjusted as of June 30.
Condition: Monthly, quarterly, and annual account reconciliations were not being performed
and reviewed in a timely manner.
Effect: The lack of reconciliation of certain asset and liability accounts resulted in the
identification of several adjusting journal entries during the audit process.
Cause: Due in part to turnover in the accounting staff and complications experienced with a
vendor in the conversion of the accounting system software, the Town did not follow proper
review and reconciliation processes for certain balance sheet accounts.
Recommendation: We recommend the Town establish more effective review and
reconciliation policies and procedures such as reconciliations of all accounts on a routine
basis, whether monthly, quarterly or annually, based on the specific accounts and the nature
of activity during the year. Certain areas where we noted the need for more effective review
and reconciliation policies and procedures include the following balance sheet accounts:
Cash
Property taxes
Water and Sewer Fund accounts receivable
Miscellaneous receivables
Due from other governments
Capital assets retainage payable
Accrued liabilities
Long-term debt
View of Responsible Official and Planned Corrective Action: The Town is in the process of
formalizing its policies and procedures to ensure timely and accurate reconciliations are being
performed. The Town is also working through the complications surrounding the accounting
software conversion and plans to have all issues corrected during the next fiscal year. These
changes should allow for more proper and timely reconciliations and reviews.
III. Federal Awards Findings and Questioned Costs
There were no findings related to the federal awards for the fiscal year ended June 30, 2015.
TOWN OF HILLSBOROUGH, NORTH CAROLINA Schedule 16
SCHEDULE OF PRIOR YEAR AUDIT FINDINGS
Year Ended June 30, 2015
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Finding: 2014-1
Status: See Finding 2015-1
Schedule 17
Federal Federal
CFDA/(Direct and
State Pass-Through) State Local
Grantor/Program Title Number Grant Number Expenditures Expenditures Expenditures
Federal grants:
Noncash Programs:
U.S. Environmental Protection Agency
Passed through the NC Department of
Environmental and Natural Resources
Capitalization Grant for Drinking Water State
Revolving Fund 66.468 FS-984338.13 1,761,561$ -$-$
Total U.S. Environmental Protection Agency 1,761,561 --
Cash Programs:
U.S. Department of Transportation
Passed through the NC Department of
Transportation
Highway Planning and Construction (Federal
Aid Highway Program)20.205 CMS-0712(14)30,816 -7,704
Total U.S. Department of Transportation 30,816 -7,704
Total assistance - federal programs 1,792,377 - 7,704
State grants:
Cash Programs:
NC Department of Transportation
Direct Programs
Powell Bill DOT 4 -278,790 -
Total NC Department of Transportation -278,790 -
NC Department of Environmental and Natural Resources
Direct Programs
NC Recreational Trails Program 5403 - 114,723 144,106
Total NC Department of Environmental and
Natural Resources -114,723 144,106
Total assistance - state programs - 393,513 144,106
Total assistance 1,792,377$ 393,513$ 151,810$
Basis of Presentation
Loans Outstanding
Pass-Through
CFDA Grantor's Amount
Program Title Number Number Outstanding
Capitalization Grant for State Revolving Fund 66.468 FS-984338.13 847,702$
The accompanying schedule of expenditures of federal and state awards includes the federal and
state grant activity of the Town of Hillsborough and is presented on the modified accrual basis of
accounting. The information in this schedule is presented in accordance with the requirements of
OMB Circular A-133,Audits of States, Local Governments, and Non-Profit Organizations , and the
State Single Audit Implementation Act. Therefore, some amounts presented in this schedule may
differ from amounts presented in, or used in, the preparation of the basic financial statements.
TOWN OF HILLSBOROUGH, NORTH CAROLINA
SCHEDULE OF EXPENDITURES OF
FEDERAL AND STATE AWARDS
Year Ended June 30, 2015
The Town of Hillsborough had the following loan balances outstanding at June 30, 2015. These loan
balances outstanding are also included in the federal expenditures presented in the schedule.
NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AND STATE AWARDS
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