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Nantucket CAFR 2017TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year July 1, 2016 – June 30, 2017 On the cover: The lighthouse on Sankaty Head in the East End of the Island was erected in 1850. Set on the bluff 100 feet above sea level, it remains a historical site as well as a landmark mariners have continuously relied upon. Despite its presence, it is estimated that hundreds of ships have wrecked on the shoals of Sankaty over the course of history. Above: The Island is famous for its spectacular and breathtaking sunsets. Many visitors can be seen on a clear day with camera in hand trying to catch the moment and treasurer a memory. TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2017 C. Elizabeth Gibson, Town Manager Prepared by the Finance Department Brian E. Turbitt, Director of Municipal Finance TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS Page(s) INTRODUCTORY SECTION Letter of Transmittal ....................................................................................................................... 1-10 Certificate of Achievement For Excellence in Financial Reporting…………………………….....14 Organizational Chart ........................................................................................................................ 15 Principal Town Officials .................................................................................................................. 16 FINANCIAL SECTION Independent Auditor’s Report ....................................................................................................... 17-19 Management’s Discussion and Analysis ....................................................................................... 21-33 Basic Financial Statements: Statement of Net Position.......................................................................................................... 36 Statement of Activities ............................................................................................................... 37 Balance Sheet –Governmental Funds.......................................................................................38 Reconciliation of the Governmental Funds Balance Sheet Total Fund Balances to the Statement of Net Position ............................................................................................ 39 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds ........................................................................................................... 40 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities .....................................41 Statement of Net Position – Proprietary Funds .......................................................................... 42 Statement of Revenues, Expenses, and Changes in Net Position – Proprietary Funds.............. 43 Statement of Cash Flows – Proprietary Funds ........................................................................... 44 Statement of Fiduciary Net Position .......................................................................................... 45 Statement of Changes in Fiduciary Net Position ....................................................................... 46 Notes to Basic Financial Statements ....................................................................................... 47-91 Required Supplementary Information: Schedule of Town’s Proportionate Share of Net Pension Liability………………………...…94Schedule of Town’s Contributions to Pension Plan……………………………………….......94Schedule of County’s Proportionate Share of Net Pension Liability…………………...…......95 Liabbbbb…………………………………….88 Liability……………………………87Schedule of County’s Contributions to Pension Plan…………………………………...….....95 Plan…………………………………………....87Schedule of Landbank’s Proportionate Share of Net Pension Liability……………………....96 Pension…………………………………..89 Liability……………………………87Schedule of Landbank’s Contributions to Pension Plan…………………………………...….96 PPlanPlan…………………………………………....87Schedule of Commonwealth’s Collective Share of Net Pension Liability –Massachusetts Teacher’s Retirement System…………………………………………......…..97Schedules of Funding Progress – OPEB………………………….……………………...……98Schedules of Contribution Funding – OPEB…………………………...………………..……98Schedule of Changes in Net OPEB Liability and Related Ratios…………………………......99Schedule of Contributions to OPEB Plan……………………………………………….…....100Schedule of Investment returns – OPEB Plan……………………………………………......100Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget and Actual – General Fund …………………………………………………………….101-106 Notes to Required Supplementary Information………………………………………….107-108 TOWN OF NANTUCKET, MASSACHUSETTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2017 TABLE OF CONTENTS Page(s) Combining Statements: Nonmajor Governmental Funds………………………………………………………………..... 109-111 Combining Balance Sheet – Nonmajor Governmental Funds…………………..……112-114 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds ......................................................... 116-118 Internal Service Funds ........................................................................................................... 120 Combining Statement of Net Position – Internal Service Funds ..................................... 121 Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds ............................................................................................. ......122 Combining Statement of Cash Flows – Internal Service Funds ....................................... 123 Fiduciary Funds ...................................................................................................................... 124 Statement of Changes in Assets and Liabilities – Agency Fund ..................................... 125 STATISTICAL SECTION Narrative ..................................................................................................................................... .127 Net Position by Component – Last Ten Fiscal Years ...................................................................... 128 Changes in Net Position – Last Ten Fiscal Years ....................................................................... 129-130 Fund Balances, Governmental Funds – Last Ten Fiscal Years ....................................................... 131 Changes in Fund Balances, Governmental Funds – Last Ten Fiscal Years .................................... 132 Assessed Value and Estimated Actual Value of Taxable Property By Classification and Tax Rates – Last Ten Fiscal Years ............................................................................ 133 Principal Taxpayers – Current Year and Nine Years Ago ..............................................................134 Property Tax Levies and Collections – Last Ten Fiscal Years ........................................................ 135 Ratios of Outstanding Debt and General Obligation Debt – Last Ten Fiscal Years ....................... 136 Computation of Legal Debt Margin – Last Ten Fiscal Years ......................................................... 137 Direct and Overlapping Governmental Activities Debt .................................................................. 138 Demographic and Economic Statistics – Last Ten Fiscal Years ..................................................... 139 Principal Employers (Excluding Town) – Current Year and Nine Years Ago ............................... 140 Full-time Equivalent Town Employees by Functions – Last Ten Fiscal Years .............................. 141 Operating Indicators by Function/Program – Last Ten Fiscal Years .............................................. 142 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years .......................................... 143 This page intentionally left blank. INTRODUCTORY SECTION Nantucket Race Week is a nine-day experience that marshals the entire Nantucket community together in a fun-filled week of regattas, awards ceremonies, and parties. The races provide sport for everyone from young dinghy sailors and families in the household to grand prix racers at the very top of their profession. Town and County of Nantucket Board of Selectmen County Commissioners Dawn E. Hill Holdgate, Chair Matthew Fee, Vice Chair Jason Bridges Rita Higgins James Kelly 16 Broad Street Nantucket, Massachusetts 02554 _________________ Telephone (508) 228-7255 Facimile (508) 228-7272 www.nantucket-ma.gov _________________ C. Elizabeth Gibson Town & County Manager Letter of Transmittal October 20, 2017 Honorable Board of Selectmen and Citizens of the Town of Nantucket, Massachusetts: We are pleased to acknowledge that the Town of Nantucket has completed its fourth annual Comprehen- sive Annual Financial Report (CAFR). The report, which was prepared by the Town’s Department of Municipal Finance, is for the fiscal year ended June 30, 2017. This transmission is the continuation of what is becoming an annual endeavor. The Town is responsible for the accuracy, completeness and fairness of the data presented in the CAFR. This letter of transmittal and the management’s discussion and analysis, located in the financial section of the CAFR, provide a comprehensive financial overview of the Town and ensure that the financial and general operations of Town government remain transparent, and therefore open for easy viewing. The CAFR represents a complete set of financial statements prepared in conformity with generally ac- cepted accounting principles (GAAP) in the United States of America, that are audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. This CAFR meets and exceeds those requirements and presents itself as an informative resource for all those interest- ed in the financial activities of the Town. The report is designed to be used by the elected and appointed officials of the Town and others who are concerned with its management and progress such as bond analysts, banking institutions and rating agen- cies as well as its citizens and taxpayers. Since the report consists of management’s representations concerning the finances of the Town, manage- ment assumes full responsibility for the completeness and reliability of all of the information presented. In addition, management of the Town is responsible for establishing and maintaining an internal control structure designed to ensure the assets of the Town are protected from loss, theft or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformi- ty with GAAP. Because the cost of internal controls should not outweigh their benefits, the Town of Nantucket’s comprehensive framework of internal controls has been designed to provide reasonable ra- ther than absolute assurance that the financial statements will be free from material misstatement. Town of Nantucket, Massachusetts Page 1 of 143 Comprehensive Annual Financial Report The Town of Nantucket’s financial statements have been audited by Roselli, Clark and Associates, a firm of licensed certified public accountants. The goal of the independent audit is to provide reasonable assur- ance that the financial statements of the Town are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the Town’s financial statements for the fiscal year ended June 30, 2017 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the Town is part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administra- tion of federal awards. These reports are available in the Town’s separately issued Single Audit Reports Pursuant to the Uniform Guidance. GAAP requires 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 letter of transmittal is designed to complement that analysis and should be read in conjunction with it. The MD&A can be found immediately following the report of the independent auditors. Profile of the Town The Town is located on Nantucket Island and the adjacent islets of Tuckernuck and Muskeget. It is situ- ated in the Atlantic Ocean and lies approximately 25 miles south of Cape Cod. It is bound by Nantucket Sound on the north and west, and by the Atlantic Ocean on the south and east. The Town has a total area of 304 square miles of which 45 square miles is land and 259 square miles is water. The island comprises the County of Nantucket, the smallest county in Massachusetts by land area. Town of Nantucket, Massachusetts Page 2 of 143 Comprehensive Annual Financial Report Nantucket was deeded in 1641 by the English to merchants from Watertown, Massachusetts and Martha’s Vineyard. In 1659 these merchants sold their interest in Nantucket to a group of investors led by Tristram Coffin for 30 pounds and two beaver hats. These investors began to populate Nantucket and in the 1670s the Nantucket whaling industry began. It was part of Dukes County, New York until 1691 when it was transferred to the Province of Massachusetts Bay and became Nantucket County. Nantucket’s whaling industry boomed until around the mid 1800’s when it was surpassed by New Bedford. This coupled with the great fire of 1846 sent the Town into an economic decline from which it took the better part of a cen- tury to recover. In the 1950’s speculative developers began buying large parts of the island and restoring or developing them to eventually create a high-end market destination in the Northeast United States which is what it has evolved into in the present day. Nantucket is often credited as having home values amongst the highest in the United States, and presently, the Town’s equalized valuation (market value) ranks fourth in Massachusetts behind Boston, Cambridge and Newton. In addition, according to the US Department of Commerce, Bureau of Economic Analysis, out of $3,144 county and county equivalents it is the 8th wealthiest county in the United States and the wealthiest in the Commonwealth of Massachu- setts as of calendar year 2015. Nantucket is a tourist destination and summer colony. The population of the island increases from just over 10,000 year round to approximately 50,000 in the summer. It is approximately 90 air miles from Boston and 170 air miles from New York City. The island is accessible year-round via ferry ser- vice served by the Woods Hole, Martha’s Vine- yard and Nantucket Steamship Authority (Steamship Authority) from the port of Hyannis. In calendar year 2016, the Steamship Authority transported about 660,500 passengers, 67,450 passenger vehicles and 50,500 commercial vehi- cles to Nantucket Island. These all increased between 2% to 6% compared to 2015. The island is also served by Hy-line Cruises (the Hy-line), which operates one high speed ferry year-round and until recently, a larger, traditional ferry during peak seasons. Hy-line had about 575,000 embarkations in calendar year 2016; up 11.2% from 2015, and is very popular with professional daily commuters and contractors due to the speed of the transport, large capacity and frequency of travel. There are a number of seasonal ferry services to the island. The Freedom Cruise Line has been transporting passengers from Harwich, Massachusetts to Nantucket since 1994. The SeaStreak began operating two ferry routes in recent years, one originating from New Bed- ford, Massachusetts and the other, from New York City. Together, these seasonal services transported over 55,000 passengers during the summer of 2016. This is almost double the number of passengers from 2015 when the SeaStreak ferries lines were not fully opera- tional. Town of Nantucket, Massachusetts Page 3 of 143 Comprehensive Annual Financial Report The Nantucket Regional Transit Authority ("NRTA") provides seasonal fixed route shuttle ser- vice and year- round advanced reservation van ser- vice (“Your Island Ride”) for elders and persons with disabilities in Nantucket. The fixed route ser- vice operates daily mid-May through early October with complementary para-transit service; and a less frequent schedule operates before Memorial Day and after Labor Day. The Your Island Ride van ser- vice operates year-round Monday through Friday. The Town owns and operates its own municipal airport, Nantucket Memorial Airport, which provides daily service to Boston, New York, Hyannis, Martha’s Vineyard and New Bedford, in ad- dition to less frequent travel to Philadelphia and Washington D.C. The airport is serviced by 5 airlines, some of which are seasonal. Governed by the Nantucket Airport Commis- sion, the airport is a self-supporting enter- prise fund. It is located 3 miles southeast of the center of town and in calendar 2016 with approximately 125,000 enplanements it was the second busiest airport in the Common- wealth trailing only Logan International Air- port in Boston. The Town provides a full range of other tra- ditional municipal services including police and fire protection, education, maintenance of streets, a sanitary landfill with materials recovery and composting facilities, water and sewer services, parks and recreational facili- ties and a town-owned pier. In addition, Nantucket also owns and operates Our Island Home, a nursing facility that provides long- term skilled nursing, short-term rehabilitation, palliative care and respite care for elderly island residents. It is a 45-bed smoke-free facility dually licensed in Medicaid and Medicare. Nantucket prides itself on the quality of its school system. During fiscal year 2017 the Town adminis- tered three schools in Nantucket: 1. Nantucket High School (grades 9 – 12) 2. Cyrus Pierce Middle School (grades 6 – 8) 3. Nantucket Elementary School (grades PK – 5) In May 2017, the Town completed the construction of the new Nantucket Intermediate School. The in- tention of this facility is to service children in the 3rd to 5th grades with a realignment of the above catego- ries effective with the fiscal 2018 school year. The Intermediate School is part of a planned $50 million improvement to the entire District which also includes the addition of classrooms to certain of the existing schools. It is constructed to enroll approximately 400 students and alleviate the space challenges of a growing student population. Town of Nantucket, Massachusetts Page 4 of 143 Comprehensive Annual Financial Report The Nantucket Public Schools are set up campus style and are all within walking distance of each other. The new facility is located adjacent to the existing elementary school which has been converted to pre-k through 2. The Intermediate School is in the shaded area on the right hand side of the sketch below along with the entrance to the new facility: The executive branch of the public schools consists of a five-member School Committee elected to three- year terms on a staggered basis. The School Committee is the policy setting board. The Superintendent of Schools acts as the Chief Executive Officer responsible for enforcing the policies of the School Com- mittee, and the School Business Manager acts as the Chief Financial Officer. School enrollment for fiscal year 2017 was 1,588 (up 30% since 2007) and funding for schools is provid- ed via taxation and governmental revenues based on a minimum net school spending formula established by the Massachusetts Department of Elementary and Secondary Education (ESE). The Town currently spends almost double the minimum legal requirement on each student. The mission of the Nantucket Public Schools, in partnership with the community, is a “commitment to providing a challenging curriculum, skilled instruction, and a learning environment that responds to indi- vidual student academic needs. Work is guided by research and the belief that every student is capable of attaining high levels of educational achievement in preparation for meeting the rigorous demands of the twenty-first century.” The Town operates under the selectmen, town manager and open town meeting form of government. The five elected Selectmen make policy decisions and the Town Manager is responsible for carrying out and enforcing the policies of the Selectmen and for managing the day to day operations of the Town. An annual operating budget is approved by Town Meeting in April. This annual budget serves as the foundation for the Town’s financial planning and control. The budget is prepared by fund, function (e.g. general government), department (e.g. finance) and category (e.g. Personnel Services, Purchase of Ser- vices, Supplies, Other Charges & Expenses) allowing the department heads to allocate resources within the department. Transfers between categories need approval from Town Meeting unless specifically ex- empted by state statute. Town of Nantucket, Massachusetts Page 5 of 143 Comprehensive Annual Financial Report Factors Affecting Economic Condition Property Taxes The growth of the Town’s main source of revenues, property taxes, is capped by Proposition 2 ½ and can only be overridden through a vote of Town Meeting and a ballot vote by the voters. While revenue in- creases have been limited in recent years, fixed costs, including health insurance and pension costs, have increased more proportionally. As a result, balancing the annual budget can be a challenge. Given its ge- ographical location and the limitations of being an island, the Town does not have a large commercial and industrial property tax base so it relies heavily on residential property taxes. Approximately 89% of the Town’s property taxes are derived from residential taxes therefore new growth is essential to revenue growth and the ability to sustain the Town’s annual costs. Table 1 summarizes the Town’s building activi- ty and new growth over the prior 5 calendar years: The Town’s strong growth as summarized in Table 1 has allowed the Town’s taxpayers the benefit of re- duced property taxes through a large levy capacity. In fact as a result of the strong unused levy capacity, the taxpayers benefitted from an average real estate tax savings of approximately 3.4% over the past 5 years. This is summarized in Table 2 below: Calendar # of Residential Non-Residential Total Year Permits Value Value Value 2016 780 188,525,945$ 80,796,833$ 269,322,778$ 2015 966 206,697,965 21,942,351 228,640,316 2014 924 192,783,729 20,912,023 213,695,752 2013 1,384 155,601,701 18,099,456 173,701,157 2012 1,485 147,981,125 14,540,467 162,521,592 Total 5,539 891,590,465$ 156,291,130$ 1,047,881,595$ Table 1 Fiscal Levy Unused Year Limit Levy Levy Capacity Tax savings 2017 75,399,121$ 74,553,652$ 845,469$ 1.12% 2016 72,429,696 69,636,374 2,793,322 3.86% 2015 69,792,303 66,329,953 3,462,350 4.96% 2014 67,372,224 64,647,039 2,725,185 4.04% 2013 65,695,822 63,618,274 2,077,548 3.16% 350,689,166$ 338,785,292$ 11,903,874$ 3.39% Table 2 Town of Nantucket, Massachusetts Page 6 of 143 Comprehensive Annual Financial Report Industry Tourism represents a significant portion of the Town’s private employment on the Island, and thus is an important component of the Town’s economy. The manage- ment of Nantucket's tourism industry is aided by the Town’s Visitor Services department, which is supported through reve- nues from the local option Room Occupancy Tax collections. The Town received $3.5 million, $3.4 million, $3.0 million, $2.6 million and $2.3 million in fiscal 2017, 2016, 2015, 2014 and 2013 respectively from this source. In addition, robust construction over the past 7 years which is expected to continue had a dramatic impact on these local revenues as workers are often on the island for weeks at a time and stay at guest houses and other available lodging. Throughout the year, the Island hosts numerous events, the ma- jor ones being summarized in the table to the right. This has in effect lengthened the tourist season and had a positive impact on the local economy. Boston Pops Daffodil Festival Independence Day Fireworks Cranberry Festival Sailing Week Event Month Daffodil Festival April Wine Festival May Book Festival June Dance Festival June Film Festival June Independence Day Fireworks July Independence Day Downtown Celebration July Comedy Festival July Sailing Week August Boston Pops August Cranberry Festival October Arts Festival October Holiday Stroll Weekend December Town of Nantucket, Massachusetts Page 7 of 143 Comprehensive Annual Financial Report Economic Development Harbor Place - The Town’s downtown center remains a vibrant hub for small retail establishments, hos- pitality/resorts and restaurants. The Nantucket Island Chamber of Commerce, founded in 1937 and in- corporated in 1954, has a diverse membership comprised of more than 650 businesses. The Town, includ- ing the Nantucket Planning and Eco- nomic Develop- ment Commission and Visitor Ser- vices department, has an on-going relationship with the Chamber in- volving the Town's economic issues. In 2008 at the an- nual town meeting, the town approved a study of an area called Harbor Place; previously referred to as the Wilkes Square Re- development site, which includes National Grid, ReMain Nantuck- et, Winthrop Man- agement LLP, and Nantucket Island Resorts properties. To that end, the Board of Selectmen established a Downtown Revi- talization Committee and charged it with identifying goals for the Nantucket downtown area that balance economic strength with community preservation, and encourage greater venues for social activity while recognizing the importance of planning. The focus of the study was to: Attract a wide range of individuals through a multifunctional environment including: housing, work, shopping, culture, entertainment, government, and tourist attractions. Balance the human, social, and economic needs with the infrastructure requirements of parking, public transportation, bike racks, road access, traffic flow, sidewalks, and water front walkways. Attract commercial business to locate downtown by providing guidance on financing, zoning, and preliminary site design. Protect the unique qualities, historical significance, and feel of the Town. Incorporate attractive space for civic gatherings. The study area is approximately a 5.65-acre area bounded by Main Street, Commercial Street, Washington Street, and New Whale Street. The site is currently owned by multiple land owners. The site’s close proximity to downtown and its wa- Town of Nantucket, Massachusetts Page 8 of 143 Comprehensive Annual Financial Report terfront location, present an extraordinary opportunity for the Town to develop its waterfront into a mixed-use gateway that will be a common ground for year-round residents as well as seasonal residents and visitors. The vision for the site offers strategic opportunities to resolve or clarify long-standing infrastructure and transportation issues in Town, affords a strong vision for the program including a hotel, residential development, retail, dining and social venues. Recently, the land owners, who consist of National Grid, Winthrop Management LLP, ReMain Nantucket and Nantucket Island Resorts collaborated to roll out a conceptual framework for the plan that includes 3 phases; (1) a transportation center, (2) relocation of the grocery store, and (3) a facelift of the area closest to the waterfront with a mixed use component in the center of the new layout. The current roadways would be realigned after the relocation/reconfiguration of the existing parking lot. Key to the plan is the removal of the fuel tank farm behind Stop and Shop. In 2016, the Town executed a purchase and sale agreement with Harbor Fund Corporation to relocate the fuel tank farm to an area out- side the downtown. It is estimated that completion of the relocation will take several years but the first major step is now underway with the purchase and sale agreement. Another major step is the transporta- tion center which is intended to include a bus station, a multi-story paid parking garage and pedestrian services. This is expected to accommodate the increase in activity of fast-boat traffic and make space available for parking with the ultimate goal to attract year-round activity to the down-town area and thus boosting the future, local economy even further. As part of the preliminary plan, the Town would ulti- mately own the transportation facility as part of a 99 year lease. Nantucket Cottage Hospital (NCH) – One of the largest construction projects currently underway on the island is the new Nantucket Cottage Hospital. NCH is the only medical facility on the island providing primary, urgent, emergency and surgical care, as well as outpatient services and appointments with medi- cal and surgical specialists. Town of Nantucket, Massachusetts Page 9 of 143 Comprehensive Annual Financial Report In recent years, the community has outgrown the 104 year old facility as studies have shown it is in need of costly major maintenance and repairs; and despite its affiliation with Massachusetts General Hospital MGH, arguably one of the finest facilities in the world, it is in danger of losing its accreditation with the Massachusetts Department of Public Health. In order to address this dire need, NCH has undergone a fund-raising campaign; and as of July 1, 2017 had raised $95 million of a planned $120 million total cost. This project was expanded to complete the hospital campus with new housing for medical staff. MGH has committed to donating $20 million and 65 other benefactors each donated at least $250,000. No tax- payer dollars have been solicited as part of this project. The new building will be roughly 106,000 square feet and will be designed to maximize privacy, safety, and efficiency in the way modern health care is delivered. The plan also calls for improvements to the entire grounds. Old South Road Properties Richmond Great Point Development LLC (RGPD) has recently begun con- struction of a planned mixed market rate/affordable rate 3 phase complex along Old South Road near Nantucket Memorial Airport. The goal of RGPD is to make the best and most appropriate use of the compa- ny’s land portfolio through the development of a thoughtful mixed-use plan; and thus providing a solu- tion to the critical lack of diverse housing stock on the island. One of the largest housing developments in Island history, the project moved a major step forward in March 2017 when both Phase 2 and Phase 3 were ap- proved by the Planning Board. The vote was unani- mous with no public comment. The three phases of the development are summarized as follows: Phase 1 (Meadows I) consists of rental apartments that include 28 market rate apartment units. These are studio, one and two bedroom options. Phase 2 (Meadows II) sits on 14.5 acres that include 225 apartment units that include both market and af- fordable rate units. These are also studio, one and two-bedroom. Phase 3 (Sandpiper Place) consists of 94 single fami- ly homes for 2, 3 and 4 bedroom homes which are both mixed and affordable rate housing. Phase 1 - As of March 2017 Town of Nantucket, Massachusetts Page 10 of 143 Comprehensive Annual Financial Report Unassigned Fund Balances One of the methods the Town uses to maintain reserves from year to year is to conservatively forecast revenues. This allows the Town to use free cash (surplus) for reserves, capital projects or other non- operating one-time expenses. Since the Town has a significant level of unused levy capacity as previously discussed, the challenge of conservatively forecasting revenue is diminished and as a result, the Town has been able to maintain and/or increase reserves from year to year. The Town’s unassigned fund balance trend since 2010 is illustrated below: Long-term Financial Planning The Town prepares rolling five-year operating budget projections. The Town believes this will (1) pro- vide better insight when preparing annual budgets; (2) alert the Town to any potential budget issues far ahead of when these situations become real; and (3) allow the Town to determine when available financ- ing for its capital needs can be provided or if a need for borrowing to finance projects is required. The following represents the Town’s five-year revenue projections: The Town expects that annual budget sources as forecasted will be sufficient to fund annual appropria- tions. The above projections do not include those of the solid waste or our island home activities. Those are included in the GAAP presentation in the financials as governmental activities but are treated as en- terprise funds by the Town. 0.0 2.0 4.0 6.0 8.0 10.0 12.0 14.0 16.0 18.0 20.0 2010 2011 2012 2013 2014 2015 2016 2017 Unassigned Fund Balances (Millions) Fiscal Real and Personal Motor Vehicle Rooms and Year Property Taxes Excise Meals Excise Permits State Aid Miscellaneous Total 2018 79,657,082 2,250,000 3,850,000 1,677,065 3,271,156 3,398,071 94,103,374 2019 84,455,329 2,350,000 3,866,000 1,405,300 3,320,527 2,847,540 98,244,696 2020 88,913,598 2,348,600 3,962,700 1,440,400 3,320,527 2,502,263 102,488,088 2021 93,718,918 2,407,300 4,061,800 1,476,500 3,320,527 2,526,760 107,511,805 2022 98,505,772 2,467,500 4,163,300 1,506,100 3,320,527 2,551,502 112,514,701 Town of Nantucket, Massachusetts Page 11 of 143 Comprehensive Annual Financial Report Capital Improvements The Town continues to invest aggressively in capital improvements. In the past several years the Town has invested approximately $250 million in improving facilities and adding much needed infrastructure, and renovations to the Island. The following were key capital initiatives: Improvement to Nantucket Memorial Airport, much of which was funded from Federal grants, over $70 million. A new Public Safety (Police) building approximately $15.5 million. Renovation of the Town Pier (financed mostly with storm assistance from FEMA) Improvements to municipal water infrastructure almost $25 million. Improvements to Siasconset water infrastructure almost $9 million. Improvements to municipal sewer infrastructure over $70 million; some of this funded through the State subsidized, low interest loan program. Improvements to Schools over $40 million (approximately $18 million in 2017 as part of a planned $50 million new school). Improvements to roads, sidewalks, curbs and catch basins almost $15 million; of which almost half was funded through the State Chapter 90 Road Funding Program. In addition, the Town has prepared a capital improvement plan that includes the purchase and/or con- struction of almost $300 million over the next ten years. These include major improvements to wastewater ($200 million), fire station ($17 million), and new administrative offices ($30 million). Some of these are still going through the discovery and approval process and there are no guarantees they will ultimately be approved. Awards and Acknowledgements The Government Finance Officers Association of the United States and Canada (GFOA) awards a Certifi- cate of Achievement for Excellence in Financial Reporting. This is a very prestigious award and in order to be awarded a Certificate of Achievement, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted ac- counting principles and applicable legal requirements. The GFOA awarded this Certificate of Achievement for Excellence in Financial Reporting to the Town of Nantucket for its comprehensive annual financial report for the fiscal year ended June 30, 2016. This was the third year that the Town has achieved this prestigious award. A Certificate of Achievement is valid for a period of one year only. We believe that our current compre- hensive annual financial report will meet the Certificate of Achievement Program’s requirements, and we are submitting it to the GFOA to determine its eligibility for this certificate. Town of Nantucket, Massachusetts Page 12 of 143 Comprehensive Annual Financial Report The publication of this CAFR represents an important achievement in the ability of the Town of Nantuck- et to provide enhanced financial information and accountability to its citizens, elected and appointed offi- cials, and investors. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff in the Finance Office. Special thanks also go to the certified public accounting firm of Roselli, Clark and Associates for their advice and assistance in the preparation of this report. Respectfully submitted, C. Elizabeth Gibson Town Manager Brian E. Turbitt Director of Municipal Finance Town of Nantucket, Massachusetts Page 13 of 143 Comprehensive Annual Financial Report Certificate of Presented to Town of Nantucket For its Comprehensive Annual June 30, 2016 Executive Director/CEO Financial Report for the Fiscal Year Ended Reporting in Financial for Excellence Achievement Text38:Massachusetts Government Finance Officers Association Town of Nantucket, Massachusetts Page 14 of 143 Comprehensive Annual Financial Report Nantucket Voters Elected Boards & Officials Moderator Town Clerk School Committee Superintendent School Business Manager Elementary School Pierce Middle High School Community School Nantucket Water Commission Siasconset Water Commission Harbor & Shellfish Advisory Historic District Commission Board of Selectmen Town Manager Public Safety Fire Police Marine Emergency Management Public Works & Parks Engineering Central Fleet Maintenance Operations Public Facilities Solid Waste Management Human Services Our Island Home Senior Services Council on Aging Veterans' Services Commission on Disability General Admin Licenses & Permits Human Resources IT & GIS Visitor Services Energy Office Finance & Budget Accounting Assessor Budgeting Collector Treasurer Natural Resources Conservation Commission Endangered Species Resource Management Water Quality Planning & Land Use Services Building Health HDC Staff Planning Zoning Real Estate Register of Deeds Land Bank Commission Community Preservation Committee Planning Board NP&EDC Nantucket Housing Authority Town of Nantucket, Massachusetts Page 15 of 143 Comprehensive Annual Financial Report PRINCIPAL TOWN OFFICIALS As of June 30, 2017 Elected Officials Board of Selectmen Dawn E. Hill Holdgate, Chairman Matthew Fee, Vice Chairman James Kelly Jason Bridges Rita Higgins Town Moderator Town Clerk Sarah Alger, Esquire Catherine Flanagan Stover School Committee Melissa Murphy, Chairman Dr. Timothy Lepore, Vice Chairman Jennifer Iller, Vice Chairman Zona Tanna- Butler, Secretary Pauline Proch Appointed Financial Committees Audit Committee James Kelly, Chairman Dawn E. Hill Holdgate David D. Worth Finance Committee David D. Worth, Chairman Stephen Maury, Vice Chairman Clifford J. Williams Peter A. McEachern Henry Sanford Joseph T. Grause, Jr. Christopher A. Glowacki Joanna Roche Denice Kronau Principal Executive Officers Town Manager C. Elizabeth Gibson Superintendent of Schools W. Michael Cozort Director of Finance Brian E. Turbitt Town of Nantucket, Massachusetts Page 16 of 143 Comprehensive Annual Financial Report FINANCIAL SECTION The empty piers in the offseason remind us of how quiet the Island can be at times. Above, the tranquil scene of a desolate pier as the sun sets provides no hint of how active it will become in the months ahead as the weather warms and the visitors begin to descend to the Island. INDEPENDENT AUDITOR’S REPORT Honorable Board of Selectmen Town of Nantucket, Massachusetts Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the Town of Nantucket, Massachusetts, (the “Town”) as of and for the year ended June 30, 2017 which collectively comprise the Town’s basic financial statements as listed in the table of contents. We did not audit the financial statements of the Nantucket Islands Land Bank, a discretely presented component unit that represents 100% of the Nantucket Islands Land Bank Component unit column as presented in the financial statements. Those financial statements were audited by other auditors whose report has been furnished to us, and our opinion, insofar as it relates to the amounts included for this discretely presented component unit, is based solely on the report of the other auditors. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes 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 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 presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Town of Nantucket, Massachusetts Page 17 of 143 Comprehensive Annual Financial Report Town of Nantucket Page Two Opinions In our opinion, based on our audit and the report of the other auditor, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component units, each major fund and the aggregate remaining fund information of the Town, as of June 30, 2017, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Restatement of Prior Year Ending Balances As more fully described in Note IV, a restatement of prior year ending net position balances was made to the Town’s governmental activities, business-type activities and the Solid Waste and Our Island Home Enterprise Funds, in addition to the prior year fund balances of the General Fund and Town Capital Projects Fund. Our opinion was not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis, the schedules of the Town’s proportionate share of net pension liability and the Town’s contributions to pension plan, the schedule of the Commonwealth’s share of the net pension liability of the Massachusetts Teacher’s Retirement System, the funding progress and contribution funding for other postemployment benefits, and budgetary comparison information as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town’s basic financial statements. The introductory section, combining statements, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining statements 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 Town of Nantucket, Massachusetts Page 18 of 143 Comprehensive Annual Financial Report Town of Nantucket Page Three with auditing standards generally accepted in the United States of America. In our opinion, the combining statements are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required By Government Auditing Standards In accordance with Government Auditing Standards, we have also issued a report October 20, 2017, on our consideration of the Town of Nantucket, Massachusetts’ internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Roselli, Clark and Associates Certified Public Accountants Woburn, Massachusetts 01801 October 20, 2017 Town of Nantucket, Massachusetts Page 19 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 20 of 143 Comprehensive Annual Financial Report Management’s Discussion and Analysis Town of Nantucket, Massachusetts Page 21 of 143 Comprehensive Annual Financial Report MANAGEMENT’S DISCUSSION AND ANALYSIS As the management of the Town, we offer readers of the accompanying financial statements this narrative overview and analysis of the financial activities of the Town and its component units for the fiscal year ended June 30, 2017. Financial Highlights During the year ended June 30, 2017 the Town was required to restate its beginning net position balance for both its governmental and business-type activities. These adjustments were a result of reporting the activities of the Our Island Home nursing facility and the Town’s Solid Waste facility as governmental activities instead of business-type activities. These activities have not been self- supporting for a number of years and thus are more appropriately classified as governmental activities. The correlative impact of this restatement was also made to the individual proprietary funds and the general fund. In addition the Town restated capital assets in both the governmental and business-type activities with a correlative impact to the proprietary funds. This was necessary to properly report capital assets for the prior year that resulted from conducting a comprehensive inventory of capital assets during fiscal 2017. All changes in net position discussions that follow have removed the impact of these adjustments from the analysis. The adjustments can be reviewed in more detail in Note IV to the financial statements. The assets and deferred outflows of resources of the Town exceeded its liabilities and deferred inflows of resources at the close of the most recent fiscal year by approximately $298.2 million (total net position). The government’s total net position increased by approximately $2.3 million (less than 1% of total net position) over the prior year. This consisted of a decrease in governmental activities’net position by approximately $1.3 million (less than 1%of total governmental activities’ net position) and an increase in business-type activities’net position of approximately $3.6 million (2.8% of business-type activities’ net position).Detail of these changes is provided in the Government-wide financial analysis section of the Management Discussion and Analysis. The Town’s unassigned fund balance reported in the General Fund was approximately $17.9 million (18.9% of General Fund expenditures). Total fund balance in the General Fund was approximately $38.7 million (40.9% of General Fund expenditures). The Town reported a deficit of $0.7 million in its Town Capital Projects Fund and reported total fund balances of approximately $14.3 million in the Combined Nonmajor Governmental Funds. Detail of these changes is provided under the Governmental Funds section of the Management Discussion and Analysis. The Town’s total debt increased by almost $25.8 million during the fiscal year. Detail of this net decrease is provided under the capital and debt administration section of the Management Discussion and Analysis. The Town’s bond rating was increased to Aa1 from Aa2 during fiscal 2015 and was affirmed during fiscal 2017. The rating was provided by Moody’s Investor Services. Town of Nantucket, Massachusetts Page 22 of 143 Comprehensive Annual Financial Report Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Town’s basic financial statements. The Town’s basic financial statements are comprised of three components: 1) government- wide financial statements, 2) fund financial statements, 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. The layout and relationship of the financial statements and supplementary information is visually illustrated as follows: Government-wide Financial Statements – The government-wide financial statements are designed to provide readers with a broad overview of the Town’s finances, in a manner similar to a private-sector business. The statement of position presents information on all of the Town’s assets, deferred outflows of resources, liabilities and deferred inflows of resources, with the difference between these reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Town is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave.) Required Supplementary Information Management Discussion and Analysis Basic Financial Statements Government-wide Financial Statements Governmental Fund Financial Statements Proprietary Fund Financial Statements Fiduciary Fund Financial Statements Notes to the Basic Financial Statements Required Supplementary Information – Other than MD&A Budgetary Reporting with Notes, Pension Schedules And Other Postemployment Benefit Schedules Other Supplementary Information Combining Fund Financial Statements/Schedules Town of Nantucket, Massachusetts Page 23 of 143 Comprehensive Annual Financial Report The government-wide financial statements consist of three classifications; (1) those whose activities are principally supported by taxes and intergovernmental revenue (governmental activities); (2) those whose activities are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities), and (3) component units. The Town’s governmental activities consist of: 1. General government; 2. Public safety; 3. Education; 4. Public works; 5. Health and human services; 6. Culture and recreation; and, 7. Interest expense. The Town’s business-type activities consist of: 1. Siasconset Water District; 2. Wannacomet Water District; 3. Sewer; and 4. Nantucket Memorial Airport. The Town’s component units consist of: 1. Nantucket County; and 2. Nantucket Islands Land Bank. Fund Financial Statements - A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Town, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the Town can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Accounting guidelines distinguish fund balance between amounts that are considered nonspendable, such as fund balance associated with inventories, and other amounts that are classified based on the relative strength of the constraints that control the purposes for which specific amounts can be spent. Beginning with the most binding constraints, fund balance amounts will be reported in the following classifications: • Restricted—amounts constrained by external parties, constitutional provision, or enabling legislation • Committed—amounts constrained by a government using its highest level of decision-making authority • Assigned—amounts a government intends to use for a particular purpose • Unassigned—amounts that are not constrained at all will be reported in the general fund or in other major funds if negative Town of Nantucket, Massachusetts Page 24 of 143 Comprehensive Annual Financial Report Governmental funds – Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. The Town maintains numerous individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General Fund, and Town Capital Projects Fund which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these Nonmajor governmental funds is provided in the form of combining statements. The Town adopts an annual appropriated budget for its general fund and its enterprise funds. A budgetary comparison schedule has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds – The Town maintains two types of proprietary funds. 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 all the business-type activities previously discussed. Internal service funds are used to report activities that service all other Town Departments. The Town uses an internal service fund to account for self-insured health insurance claims. Fiduciary funds – Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statement because the resources of those funds are not available to support the Town’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. 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. Other Information - In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the Town’s proportionate share of net pension liability, contributions to pension plan, information regarding the Town’s special funding situation for teacher contributions to pensions and funding and contribution progress of the Town’s other postemployment benefits to its employees as well as the Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund. Town of Nantucket, Massachusetts Page 25 of 143 Comprehensive Annual Financial Report Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the Town, assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by approximately $298.2 million at the close of the most recent fiscal year. The condensed Statement of Net Position is as follows: By far, the largest portion (approximately $308.6 million) of the Town’s net position reflects its investment in capital assets (e.g. land, buildings, infrastructure, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. 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 related debt the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion, approximately $23.5 million, of the Town’s net position represents resources that are subject to external restrictions on how they may be used. Unrestricted net position reflects the remainder of net position; a deficit of approximately $33.9 million. This consisted of Governmental activities unrestricted net position which is in a deficit position of approximately $59.9 million. This is due to the recognition of other postemployment benefits (net OPEB obligation) of approximately $44.2 million since the implementation of Governmental Accounting Standards Board Statement (“GASB”) No. 45, Accounting and Financial Reporting by Employers for Postemployment Benefit Plans Other Than Pension Plans, in fiscal year 2009, and the implementation of GASB 68 in 2015, which, has resulted in the recognition of approximately $58.1 million in net pension liability. In similar fashion, the Business- type activities included a net OPEB obligation of almost $4.4 million and a net pension liability of approximately $11.5 million. Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2017 2016 2017 2016 2017 2016 Assets Currrent and other assets 86,638,521$ 80,457,455$ 42,956,027$ 44,340,535$ 129,594,548$ 124,797,990$ Capital assets, net 291,294,903 251,855,905 201,323,626 210,049,039 492,618,529 461,904,944 Total assets 377,933,424 332,313,360 244,279,653 254,389,574 622,213,077 586,702,934 Deferred outflows of resources 8,559,406 3,375,671 2,424,182 1,487,713 10,983,588 4,863,384 Liabilities Long-term liabilities 193,019,363 125,678,452 92,037,701 114,690,043 285,057,064 240,368,495 Other liabilities 25,947,225 41,112,150 23,113,521 14,166,065 49,060,746 55,278,215 Total liabilities 218,966,588 166,790,602 115,151,222 128,856,108 334,117,810 295,646,710 Deferred inflows of resources 744,362 - 146,984 - 891,346 - Net Position Net investment in capital assets 203,168,454 186,717,700 105,477,803 120,659,914 308,646,257 307,377,614 Restricted 23,523,901 27,131,162 - - 23,523,901 27,131,162 Unrestricted (59,910,475) (44,950,433) 25,927,826 6,361,265 (33,982,649) (38,589,168) Total Net Position 166,781,880$ 168,898,429$ 131,405,629$ 127,021,179$ 298,187,509$ 295,919,608$ Town of Nantucket, Massachusetts Page 26 of 143 Comprehensive Annual Financial Report Condensed changes in net position data is presented as follows: Governmental Activities Business-Type Activities Total June 30, June 30, June 30, June 30, June 30, June 30, 2017 2016 2017 2016 2017 2016 Revenues Program revenues: Charges for services 17,095,061$ 7,159,934$ 27,063,403$ 39,612,391$ 44,158,464$ 46,772,325$ Operating grants and contributions 10,995,900 9,241,317 70,458 133,570 11,066,358 9,374,887 Capital grants and contributions 508,050 1,881,938 2,680,075 3,175,471 3,188,125 5,057,409 General revenues: Property taxes 74,061,321 68,978,062 - - 74,061,321 68,978,062 Hotel and meals excise 4,535,824 4,486,662 - - 4,535,824 4,486,662 Intergovernmental 190,963 179,523 - - 190,963 179,523 Other 5,956,843 5,792,302 71,855 62,084 6,028,698 5,854,386 Total Revenues 113,343,962 97,719,738 29,885,791 42,983,516 143,229,753 140,703,254 Expenses General government 15,652,032 13,375,694 - - 15,652,032 13,375,694 Public safety 17,548,899 17,211,310 - - 17,548,899 17,211,310 Education 46,524,011 40,296,659 - - 46,524,011 40,296,659 Public works 20,248,200 5,404,039 - - 20,248,200 5,404,039 Health and human services 7,705,797 1,544,941 - - 7,705,797 1,544,941 Culture and recreation 4,770,808 4,646,084 - - 4,770,808 4,646,084 Debt service 2,147,432 1,478,749 - - 2,147,432 1,478,749 Siasconset water - - 749,495 811,237 749,495 811,237 Wannacomet water - - 4,345,647 4,088,800 4,345,647 4,088,800 Sewer - - 6,110,762 6,338,700 6,110,762 6,338,700 Nantucket Memorial Airport -- 15,087,914 14,287,119 15,087,914 14,287,119 Our Island Home - -- 8,358,350 - 8,358,350 Solid Waste - -- 11,587,152 - 11,587,152 Total Expenses 114,597,179 83,957,476 26,293,818 45,471,358 140,890,997 129,428,834 Change in net position before transfers (1,253,217) 13,762,262 3,591,973 (2,487,842) 2,338,756 11,274,420 Transfers - (8,659,384) - 8,659,384 - - Change in net position (1,253,217) 5,102,878 3,591,973 6,171,542 2,338,756 11,274,420 Net position, beginning of year 168,898,429 166,225,136 127,021,179 117,719,854 295,919,608 283,944,990 Restatement for Our Island Home (1,737,063) - 1,737,063 - -- Restatement for Solid Waste 214,483 - (214,483) - -- Restatement for capital assets 659,248 (2,429,585) (538,126) 3,129,783 121,122 700,198 Restatement for 'look-back'- - (191,977) - (191,977) - Net position, beginning of year, as restated 168,035,097 163,795,551 127,813,656 120,849,637 295,848,753 284,645,188 Net position, end of year 166,781,880$ 168,898,429$ 131,405,629$ 127,021,179$ 298,187,509$ 295,919,608$ Town of Nantucket, Massachusetts Page 27 of 143 Comprehensive Annual Financial Report Governmental Activities – The governmental activities experienced a net decrease in net position by approximately $ 1.2 million (less than 1% of governmental activities’ net position) as compared to an approximate $5.1 million increase in the prior year. This was due mainly to the inclusion of Our Island Home and Solid Waste as part of governmental activities in the current year instead of business-type activities. These activities have not been self-supporting in recent years and thus are more appropriately classified as governmental-activities. Revenues Total revenue increases were $15.6 million. Specifically, property taxes, which made up 65.3% of total revenues increased by approximately $5.1 million; this was in line with the amount budgeted by the Town during its rate setting process and was within the permissible amount allowable by statute that limits the increase in taxes to 2.5% of the prior year plus any new growth. The Town still manages to maintain a healthy levy capacity despite the increase. Operating grants increased by nearly $1.8 million; the Town has a special funding situation with respect to teacher pensions and distributions from the Commonwealth; these increased $2.4 million due to a new actuarial study conducted by the Commonwealth. There was a net reduction in a number of other much smaller grants to account for the difference. This will have the same impact to education expenses. Capital grants decreased by over $1.3 million; this was due to the Town being the recipient of FEMA funds in the prior year due to storm damage to the Town pier. Charges for services increased by over $9.9 million; approximately $9.3 million was related to charges associated with Our Island Home and the Solid Waste facility since these have been presented as governmental activities for the first time. The Town’s Other Revenue category consists of local receipts such as motor vehicle excise, departmental receipts and other revenues not specifically classified. These were consistent with the prior year. Expenses Total expense increases were approximately $30.6 million. Specifically, general government which represented 13.7% of total expenses increased by $1.8 million; this was due primarily to general fund articles that included public building expenses, legal services, and numerous small non-capitalized capital items. These are non-recurring costs. Education which is the Town’s largest expense and represents 40.0% of total expenses increased by approximately $6.2 million; this was primarily due to the special funding situation discussed under revenues as this is the expense side impact, which was $2.4 million greater than last year. In addition, OPEB and pension costs increased across all 65.34%9.70% 0.45%15.08% 5.26%4.00%0.17% Revenues Property taxes Operating grants and contributions Capital grants and contributions Charges for services Other Hotel and meals excise Intergovernmental (unrestricted) 14% 15% 40% 18% 7%4% 2% Expenses General government Public safety Education Public works Health and human services Culture and recreation Interest expense Town of Nantucket, Massachusetts Page 28 of 143 Comprehensive Annual Financial Report functions and the amount allocated to education made up the majority of the difference. Current year public works includes the activities of the solid waste facility which had direct expenses of $8.2 million, expenses associated with the landfill closure of $1.2 million and its share of benefits allocation increases that accounted for the majority of the over $14.8 million total increase. Health and human services include the activities of Our Island Home; the entire increase in expenses of nearly $6.2 million is directly related to including this activity in the current year. The remainder of the total expense increase of $1.8 million includes an increase of $0.6 million for debt service due to increasing debt levels and a number of minor increases not material individually. Fiscal Year 2017 Expenses and Program Revenues – governmental activities are graphically presented as follows: Net position of the business-type activities increased by approximately $3.5 million from the prior year balances. Change in net position for each business-type fund is broken down individually as follows: In its Business-type activities, the Town does not budget for depreciation and OPEB charges which are components of the “change in net position” but does budget for principal payback of debt which is a component of the “change in net position”. With respect to Siasconset, Wannacomet and Sewer principal payback of debt is larger than depreciation and OPEB, therefore positive results are expected; also seasonal weather patterns contributed to increased usage and positive operations. $0 $5,000,000 $10,000,000 $15,000,000 $20,000,000 $25,000,000 $30,000,000 $35,000,000 $40,000,000 $45,000,000 $50,000,000 Functional expenses Program Revenues Siasconset Water District 337,243$ Wannacomet Water District 1,895,919 Sewer 1,982,925 Nantucket Memorial Airport (696,570) Total Change 3,519,517$ Town of Nantucket, Massachusetts Page 29 of 143 Comprehensive Annual Financial Report Airport depreciation and OPEB in aggregate are much greater than principal payback of debt therefore, despite the Airport being cash positive, the operating deficit disclosed in the table above exists. Fund-wide Financial Analysis of the Government’s Funds As noted earlier, the Town uses fund accounting to ensure and demonstrate compliance with finance- related legal requirements. Governmental funds – The focus of the Town’s governmental funds is to provide information on near- term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the Town’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the close of the current fiscal year, the Town’s governmental funds balance sheet reported a combined ending fund balance of approximately $52.3 million, an increase of approximately $10.2 million over the prior year. Unassigned fund balance in the general fund was approximately $17.9 million or 18.9% of general fund expenditures. This is available for spending at the government’s discretion. Assigned fund balance of $7.3 million; committed fund balance of approximately $2.0 million and restricted fund balance of $11.5 million bring total general fund balance to $38.7 million or 40.9% of general fund expenditures. Favorable budget results (see budget discussion) and the presentation of Our Island Home and the Solid Waste activities led to this increase over the prior year. The timing of capital costs verses bond proceeds was primarily responsible for an increase in capital projects of almost $2.9 million. The Combined Nonmajor Funds ended the year with a balance of $14.3 which was consistent with the prior year as operations were consistent with expectations. The majority of this was restricted. Proprietary funds – The Town’s proprietary funds are made up of the same type of information found in the government-wide financial statements under business-type activities, but in more detail; and (2) the Town’s Internal Service Fund which accounts for the Town’s Health Claims Fund. The Health Claims Fund has a Net Position balance of approximately $3.3 million. This represents an increase of nearly $1.0 million over the prior year. Reinsurance proceeds of approximately $0.8 million and positive claims experience were primarily responsible for these positive operating results. Fiduciary Fund – The Town’s fiduciary fund is comprised primarily of the Town’s Private Purpose Trust Funds and its Other Postemployment Benefits Trust. Total Net Position of these two funds is approximately $5.3 million. 10 12 14 16 18 Revenues Expenses Health Claims Fund Town of Nantucket, Massachusetts Page 30 of 143 Comprehensive Annual Financial Report The Private Purpose Trust Funds make up almost $3.4 million; These assets are used strictly for purposes outside of the public domain such as scholarships and public assistance. In addition, the Town has elected to establish a trust under Chapter 32B Section 20 of the MGL whose sole purpose will be to accumulate funds to reduce the Town’s unfunded Postemployment Benefits. This fund increased by approximately $0.6 million due to a contribution made by the Town in excess of premiums paid for retirees. The Town anticipates the use of an annual dedicated budget source to fund a portion of the Actuarially Determined Contribution (ADC). General Fund Budgetary Highlights Differences between the original budget and the final amended budget were for the most part not significant (less than 1%); except increased transfers to other funds of over $1.5 million for capital purposes. The total budget ended the year with a favorable variance of over $7.4 million. For the fifth consecutive year revenues exceeded forecast (almost $2.8 million). This was due to (1) the Town continuing its philosophy of conservatively forecasting revenue, and (2) the results of the continuation in the expanding economy felt mostly in motor vehicle excise and room occupancy. Favorable expenditure variances contributed over $4.6 million to this positive result and were mainly spread over many expenditure categories and due to effective cost controls put in place mid-way through the year. Further detail of budget to actual comparisons may be reviewed as part of the Required Supplementary Information following the footnotes to the report. 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, 2017 amounts to approximately $492.6 million (net of accumulated depreciation) an increase from the previous year’s balance of approximately $30.7 million. This investment in capital assets includes land, buildings and improvements, infrastructure, machinery, equipment, and software. The total increase is due to capital investments exceeding depreciation for the year. Additional information on the Town’s capital assets can be found in Note II subsection D. Additional information on the Town’s short-term and long-term debt can be found in Note II under subsections F and G. Town of Nantucket, Massachusetts Page 31 of 143 Comprehensive Annual Financial Report Long-term Debt – State statutes limit the amount of general obligation debt a governmental entity may issue to 5.0 % of its total assessed valuation. The current debt limitation for the Town is approximately $1.1 billion, which is significantly in excess of the Town’s outstanding general obligation debt classified as inside the debt limit. The Town is assigned an Aa1 credit rating from Moodys’ Investor Services and an AA+ credit rating from Standard and Poors’. Both are one notch below the top credit rating for each of the respective credit agencies. At the end of the current fiscal year, the Town had total debt outstanding of approximately $149.0 million. Almost $76.1 million is related to the Town’s Governmental activities and over $72.9 million is related to the Town’s Business-type activities. The entire amount comprises debt backed by the full faith and credit of the government. In addition, the Town issues bond anticipation notes prior to permanent financing to fund the initial stages of capital projects. At June 30, 2017 the bond anticipation note payable balances approximated $37.2 million. The Town’s total debt increased by approximately $25.8 million during the fiscal year due to following: . Regular scheduled maturities: Governmental Activities (5,785,385)$ Business-Type Activities (5,434,835) Issuance of refunding bonds: Governmental Activities 3,515,450 Business-Type Activities 10,884,550 Payments to Escrow Agent: Governmental Activities (3,761,500) Business-Type Activities (11,352,000) Issuance of debt: Governmental Activities 35,735,550 Business-Type Activities 1,953,000 25,754,830$ Town of Nantucket, Massachusetts Page 32 of 143 Comprehensive Annual Financial Report Economic Factors and Next Year’s Budgets and Rates Consistent with both State and National work force trends, the Town’s unemployment rates have trended near historically low levels in recent years. The Town’s employment is seasonal however and subject to fluctuations during any given year. Anticipated economic expansion on the Island will smooth this over the next several years. The Town’s real estate tax base is made up predominantly of residential taxes, which comprise nearly 87.8% of the Town’s real estate tax base. The Town also relies heavily on its commercial and industrial real estate tax base, which in aggregate comprise 10.2 % of the Town’s real estate tax base. In addition, Chapter 580 of the Acts of 1980, more commonly referred to as Proposition 2 ½, limits the Town’s ability to increase taxes in any one year by more than two and one-half percent (2 ½%) of the previous year tax levy plus new growth. The Town’s housing market continues to be vibrant and consistently outpaces the state and national indexes. Average home prices approximate $1.5 million and the average residential tax rate is 3.67 per $1,000. The Town neared or exceeded $1 billion in property sales each year between 2014 and 2016. All of the above items were considered when the Town developed its budget for fiscal year 2018. The budget was adopted in April 2017 and the Town is expected to set its tax rate in December 2017. Requests for Information This financial report is designed to provide a general overview of the Town’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or request for additional financial information should be addressed to the Office of the Director of Finance, 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket County may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Islands Land Bank may be obtained by contacting Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Complete stand-alone financial statements for Nantucket Memorial Airport may be obtained from the Office of the Director of Finance 37 Washington Street, Nantucket, Massachusetts 02554 Town of Nantucket, Massachusetts Page 33 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 34 of 143 Comprehensive Annual Financial Report Basic Financial Statements Town of Nantucket, Massachusetts Page 35 of 143 Comprehensive Annual Financial Report Nantucket Governmental Business-Type Nantucket Islands Activities Activities Total County Land Bank Assets Cash and cash equivalents 70,182,068$ 37,444,344$ 107,626,412$ 4,601,257$ 12,397,287$ Investments 8,287,683 200,122 8,487,805 - 4,781,484 Investments, designated - -- -2,458,663 Receivables, net: Property taxes 2,275,305 - 2,275,305 - - User fees 892,847 1,911,138 2,803,985 - - Departmental and other 1,519,906 912,645 2,432,551 - 174,321 Tax liens 2,760,660 - 2,760,660 - - Intergovernmental 1,000,764 1,761,667 2,762,431 47,523 - Inventory - 445,399 445,399 - 380,395 Prepaid items - -- -- Other assets - -- -109,066 Internal balances (280,712) 280,712 - -- Restricted cash and cash equivalents - -- -1,849,756 Restricted investments - -- -2,792,955 Cash surrender value of life insurance - -- -906,881 Land conservation rights - -- -30,000 Capital assets not being depreciated 226,654,652 35,436,522 262,091,174 3,283,842 300,699,215 Capital assets, net of depreciation 64,640,251 165,887,104 230,527,355 1,951 16,658,612 Total Assets 377,933,424 244,279,653 622,213,077 7,934,573 343,238,635 Deferred Outflows of Resources Deferred losses on refunding 186,608 770,879 957,487 - 196,386 Deferred outflows related to pensions 8,372,798 1,653,303 10,026,101 73,202 161,944 Total Deferred Outflows of Resources 8,559,406 2,424,182 10,983,588 73,202 358,330 Liabilities Warrants and accounts payable 3,910,763 412,759 4,323,522 - 374,675 Accrued payroll and withholdings 2,996,409 223,835 3,220,244 59,563 - Retainage payable 364,692 - 364,692 - - Accrued expenses - -- -750,532 Health claims incurred but not reported 1,315,778 - 1,315,778 - - Accrued interest 1,121,783 671,920 1,793,703 - - Other liabilities 447,800 418,794 866,594 - - Bond anticipation notes payable 15,790,000 21,386,213 37,176,213 - - Noncurrent liabilities: Due within one year 7,112,709 6,190,348 13,303,057 - 3,883,814 Due in more than one year 185,906,654 85,847,353 271,754,007 783,714 19,930,578 Total Liabilities 218,966,588 115,151,222 334,117,810 843,277 24,939,599 Deferred Inflows of Resources Deferred inflows related to pensions 744,362 146,984 891,346 95,296 210,826 Net Position Net investment in capital assets 203,168,454 105,477,803 308,646,257 3,285,793 294,927,019 Restricted: Nonexpendable permanent funds 44,805 - 44,805 - - Federal and State grants 1,329,152 - 1,329,152 - - Community preservation 3,995,004 - 3,995,004 - - Capital outlay 10,612,909 - 10,612,909 - - Public safety revolving funds 4,465,114 - 4,465,114 - - Gift funds 945,239 - 945,239 - - Other purposes 2,131,678 - 2,131,678 3,501,038 4,642,711 Unrestricted (59,910,475) 25,927,826 (33,982,649) 282,371 18,876,810 Total Net Position 166,781,880$ 131,405,629$ 298,187,509$ 7,069,202$ 318,446,540$ TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF NET POSITION JUNE 30, 2017 See accompanying notes to basic financial statements. Primary Government Component Units Town of Nantucket, Massachusetts Page 36 of 143 Comprehensive Annual Financial Report Program Revenues Net (Expenses) Revenues and Changes in Net Position Operating Capital Nantucket Charges for Grants and Grants and Governmental Business-Type Nantucket Islands Functions/Programs Expenses Services Contributions Contributions Activities Activities Total County Land Bank Primary government: Governmental activities: General government 15,652,032$ 1,215,294$ 746,525$ 82,402$ (13,607,811)$ (13,607,811)$ Public safety 17,548,899 4,145,232 356,215 - (13,047,452) (13,047,452) Education 46,524,011 1,817,891 9,471,861 - (35,234,259) (35,234,259) Public works 20,248,200 3,505,449 - -(16,742,751) (16,742,751) Health and human services 7,705,797 5,977,366 83,770 - (1,644,661) (1,644,661) Culture and recreation 4,770,808 433,829 87,529 425,648 (3,823,802) (3,823,802) Interest expense 2,147,432 - 250,000 - (1,897,432) (1,897,432) Total governmental activities 114,597,179 17,095,061 10,995,900 508,050 (85,998,168) (85,998,168) Business-type activities: Siasconset water 749,495 1,088,973 - -339,478$ 339,478 Wannacomet water 4,345,647 6,234,423 - -1,888,776 1,888,776 Sewer 6,110,762 6,635,003 - 1,470,195 1,994,436 1,994,436 Nantucket Memorial Airport 15,087,914 13,105,004 70,458 1,209,880 (702,572) (702,572) Total business-type activities 26,293,818 27,063,403 70,458 2,680,075 3,520,118 3,520,118 Total Primary Government 140,890,997$ 44,158,464$ 11,066,358$ 3,188,125$ (85,998,168) 3,520,118 (82,478,050) Component units: Nantucket County 918,526$ 1,044,276$ 170,201$ -$ 295,951 - Nantucket Islands Land Bank 8,342,059 23,302,810 103,505 - -15,064,256 Total Component units 9,260,585$ 24,347,086$ 273,706$ -$ 295,951 15,064,256 General Revenues: Property taxes 74,061,321 - 74,061,321 - - Motor vehicle and boat excise 2,949,704 - 2,949,704 - - Hotel and meals excise 4,535,824 - 4,535,824 - - Community Preservation Fund surcharges 2,088,375 - 2,088,375 - - Grants and contributions not restricted to specific programs 190,963 - 190,963 - - Penalties and interest on taxes 687,316 - 687,316 - - Unrestricted investment income 231,448 71,855 303,303 9,234 141,988 Transfers (net)- -- -- Total general revenues and transfers 84,744,951 71,855 84,816,806 9,234 141,988 Change in Net Position (1,253,217) 3,591,973 2,338,756 305,185 15,206,244 Net Position: Beginning of year, as restated (see Note IV)168,035,097 127,813,656 295,848,753 6,764,017 303,240,296 End of year 166,781,880$ 131,405,629$ 298,187,509$ 7,069,202$ 318,446,540$ See accompanying notes to basic financial statements. TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2017 Component Units Town of Nantucket, Massachusetts Page 37 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS BALANCE SHEET JUNE 30, 2017 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Assets Cash and cash equivalents 34,177,829$ 14,676,146$ 16,413,364$ 65,267,339$ Investments 8,118,453 - 169,230 8,287,683 Receivables, net of allowance for uncollectibles: Property taxes 2,099,199 - 176,106 2,275,305 User charges 892,847 - -892,847 Departmental and other 1,153,310 - 277,675 1,430,985 Tax liens 2,760,660 - -2,760,660 Intergovernmental - -1,000,764 1,000,764 Due from other funds 306,357 - -306,357 Total Assets 49,508,655 14,676,146 18,037,139 82,221,940 Total Deferred Outflows of Resources - -- - Total Assets and Deferred Outflows of Resources 49,508,655$ 14,676,146$ 18,037,139$ 82,221,940$ Liabilities: Warrants and accounts payable 1,738,129$987,688$ 885,319$ 3,611,136$ Accrued payroll and withholdings 2,865,455 - 130,954 2,996,409 Retainage payable - 364,692 - 364,692 Other liabilities 249,847 - 197,953 447,800 Due to other funds - -306,357 306,357 Bond anticipation notes payable - 13,990,000 1,800,000 15,790,000 Total Liabilities 4,853,431 15,342,380 3,320,583 23,516,394 Deferred Inflows of Resources Unavailable revenue - property taxes 4,416,666 - 176,106 4,592,772 Unavailable revenue - user charges 892,847 - -892,847 Unavailable revenue - other 620,681 - 277,675 898,356 Total Deferred Inflows of Resources 5,930,194 - 453,781 6,383,975 Fund Balances: Nonspendable - -44,805 44,805 Restricted 346,780 8,807,345 14,524,327 23,678,452 Committed 13,140,419 - -13,140,419 Assigned 7,295,378 - -7,295,378 Unassigned 17,942,453 (9,473,579) (306,357) 8,162,517 Total Fund Balances 38,725,030 (666,234) 14,262,775 52,321,571 Total Liabilities , Deferred Inflows of Resources and Fund Balances 49,508,655$ 14,676,146$ 18,037,139$ 82,221,940$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 38 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TOTAL FUND BALANCES TO THE STATEMENT OF NET POSITION JUNE 30, 2017 Total Governmental Fund Balances 52,321,571$ Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.291,294,903 Other long-term assets are not available to pay for current period expenditures and, therefore, are reported as unavailable revenue in the funds 6,383,975 Deferred outflows and inflows of resources to be recognized in the future are not available resources and, therefore, are not reported in the funds: Deferred charge on refunding 186,608 Net difference between projected and actual earnings on pension plan investments 3,302,258 Changes in proportion and differences between Town contributions and the proportionate share of contributions 1,624,348 Changes of assumptions 3,446,192 Differences between expected and actual experience (744,362) Assets and liabilities of the Town's internal service funds are included in the Statement of Net Position, but are not reported in the governmental funds.3,063,302 In the Statement of Activities, interest is accrued on outstanding long-term debt whereas in the governmental funds, interest is not reported until due.(1,121,783) Long-term liabilities are not due and payable in the current period and therefore are not reported in the government funds: Bonds and notes payable (76,064,664) Unamortized premiums on bonds (2,234,575) Landfill closure liability (10,131,000) Compensated absences (2,231,171) Other postemployment benefits (44,219,409) Net pension liability (58,094,313) Net Position of Governmental Activities 166,781,880$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 39 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS GOVERNMENTAL FUNDS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30, 2017 Town Nonmajor Total General Capital Governmental Governmental Fund Projects Funds Funds Revenues: Property taxes 73,938,122$ -$ -$ 73,938,122$ Intergovernmental 8,348,629 82,402 2,576,308 11,007,339 Motor vehicle and other excises 2,788,569 - 35,086 2,823,655 User charges 9,229,547 - -9,229,547 Hotel and meals taxes 4,535,824 - -4,535,824 Community preservation surcharges - -2,072,835 2,072,835 Licenses and permits 1,698,765 - -1,698,765 Penalties and interest on taxes 687,316 - -687,316 Fines and forfeitures 334,451 - -334,451 Investment income 213,399 - 15,465 228,864 Departmental and other revenue 2,007,077 - 3,837,275 5,844,352 Contributions and donations 63,192 - 624,382 687,574 Total Revenues 103,844,891 82,402 9,161,351 113,088,644 Expenditures: Current: General government 8,575,483 947,118 726,877 10,249,478 Public safety 9,860,988 442,387 997,879 11,301,254 Education 25,995,852 28,558,217 3,757,457 58,311,526 Public works 11,816,054 5,701,017 325,847 17,842,918 Health and human services 6,497,929 424,208 335,966 7,258,103 Culture and recreation 1,133,997 - 3,201,616 4,335,613 Pension and fringe benefits 23,325,610 - -23,325,610 State and county assessments 606,206 - -606,206 Debt service: Principal 5,376,592 - 408,793 5,785,385 Interest 1,571,305 - 27,801 1,599,106 Total Expenditures 94,760,016 36,072,947 9,782,236 140,615,199 Excess (Deficiency) of Revenues Over (Under) Expenditures 9,084,875 (35,990,545) (620,885) (27,526,555) Other Financing Sources (Uses): Issuance of bonds and notes - 35,470,000 265,550 35,735,550 Premiums from bonds and notes 163,051 1,537,379 - 1,700,430 Issuance of refunding bonds 3,515,450 - -3,515,450 Premiums from refunding bonds 504,063 - -504,063 Payments to refunding escrow agent (3,976,820) - -(3,976,820) Sale of capital assets - -208,199 208,199 Transfers in 65,000 1,918,154 465,000 2,448,154 Transfers out (2,383,154) (65,000) - (2,448,154) Total Other Financing Sources (Uses)(2,112,410) 38,860,533 938,749 37,686,872 Net Change in Fund Balances 6,972,465 2,869,988 317,864 10,160,317 Fund Balances - Beginning, as restated (see Note IV)31,752,565 (3,536,222) 13,944,911 42,161,254 Fund Balances - Ending 38,725,030$ (666,234)$ 14,262,775$ 52,321,571$ See acompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 40 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2017 Net Change in Fund Balances - Total Governmental Fund Balances 10,160,317$ 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. In addition, when a capital asset is disposed of, a gain or loss is calculated and reported in the Statement of Activities whereas the in the governmental funds, proceeds are reported as revenues. The net amounts are reflected here as reconciling items: Capital outlays 37,425,500 Depreciation expense (5,296,709) Disposal of capital assets (2,741,888) Net effect of reporting capital assets 29,386,903 In the Statement of Activities, Internal Service Funds established to administer the Town's health insurance and worker's compensation activities are included within the Statement of activities whereas these activities are not presented in the Statement of Revenues, Expenditures and Changes in Fund Balances.1,107,736 The issuance of long-term debt provides current financial resources to governmental funds, while the repayment of the principal of long-term debt consumes the financial resources of governmental funds. Neither has any effect on net position. Also governmental funds report the effect of issuance costs, premiums, discounts, and similar items when debt is first issued, whereas these amounts are amortized in the Statement of Activities. The net amounts are reflected here as reconciling items: Issuance of bonds and notes (35,735,550) Premiums from general obligation bonds and notes (1,700,430) Issuance of refunding bonds (3,515,450) Premiums from refunding bonds (504,063) Bonds refunded 3,761,500 Deferred charge on refunding 186,608 Repayments of debt 5,785,385 Net effect of reporting long-term debt (31,722,000) Revenues in the Statement of Activities that do not provide current financial resources are unavailable in the Statement of Revenues, Expenditures and Changes in Fund Balances. Therefore, the recognition of revenue for various types of accounts receivable differ between the two statements. The amount presented represents the following differences derived . from unavailable revenue.252,734 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 the governmental funds: Accrued interest expense (612,662) Amortization of premiums on bonds and notes payable 93,048 Landfill closure (1,228,000) Compensated absences 69,274 Pension benefits (4,445,797) Other postemployment benefits (4,314,770) Net effect of reporting long-term liabilities (10,438,907) Change in Net Position of Governmental Activities (1,253,217)$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 41 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF NET POSITION JUNE 30, 2017 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Assets: Current assets: Cash and cash equivalents 1,362,934$ 7,781,629$ 15,923,788$ 12,375,993$ 37,444,344$ 4,914,729$ Investments - -- 200,122 200,122 - Receivables (net): User charges 123,402 604,677 808,390 374,669 1,911,138 - Privilege fees - -912,645 - 912,645 - Intergovernmental - -184,053 395,172 579,225 - Inventory - 84,433 - 360,966 445,399 - Reinsured claims receivable - -- -- 88,921 Total current assets 1,486,336 8,470,739 17,828,876 13,706,922 41,492,873 5,003,650 Noncurrent assets: Receivables (net): Intergovernmental - -1,182,442 - 1,182,442 - Nondepreciable capital assets 2,764,634 9,156,514 17,578,862 5,936,512 35,436,522 - Capital assets (net of depreciation)9,304,779 31,025,768 66,870,019 58,686,538 165,887,104 - Total noncurrent assets 12,069,413 40,182,282 85,631,323 64,623,050 202,506,068 - Total Assets 13,555,749 48,653,021 103,460,199 78,329,972 243,998,941 5,003,650 Deferred Outflows of Resources Deferred losses on refunding 329,165 344,103 97,611 - 770,879 - Deferred outflows related to pensions 20,052 414,078 252,657 966,516 1,653,303 - Total Deferred Outflows of Resources 349,217 758,181 350,268 966,516 2,424,182 - Total Assets and Deferred Outflows of Resources 13,904,966$ 49,411,202$ 103,810,467$ 79,296,488$ 246,423,123$ 5,003,650$ Liabilities: Current liabilities: Warrants and accounts payable 5,249$ 54,713$ 220,730$ 132,067$ 412,759$ 299,627$ Accrued payroll and withholdings 1,247 39,514 40,902 142,172 223,835 - Health claims incurred but not reported - -- -- 1,315,778 Accrued interest 28,173 129,587 427,728 86,432 671,920 - Other liabilities - -- 418,794 418,794 - Bond anticipation notes payable - 4,358,000 10,920,000 6,108,213 21,386,213 - Compensated absences - 104,574 43,449 321,480 469,503 - Workers' compensation claims --- -- 44,231 Bonds and notes payable 455,171 1,881,851 2,542,503 841,320 5,720,845 - Total current liabilities 489,840 6,568,239 14,195,312 8,050,478 29,303,869 1,659,636 Noncurrent liabilities: Compensated absences - 104,574 43,449 321,480 469,503 - Other postemployment benefits 311,500 686,960 430,297 2,968,066 4,396,823 - Net pension liability 139,131 2,873,063 1,753,056 6,706,133 11,471,383 - Bonds and notes payable 5,648,361 17,226,084 37,327,946 9,307,253 69,509,644 - Total noncurrent liabilities 6,098,992 20,890,681 39,554,748 19,302,932 85,847,353 - Total Liabilities 6,588,832 27,458,920 53,750,060 27,353,410 115,151,222 1,659,636 Deferred Inflows of Resources Deferred inflows related to pensions 1,783 36,813 22,462 85,926 146,984 - Total Liabilities and Deferred Inflows of Resources 6,590,615 27,495,733 53,772,522 27,439,336 115,298,206 1,659,636 Net Position: Net investment in capital assets 6,295,046 17,060,450 33,756,043 48,366,264 105,477,803 - Unrestricted 1,019,305 4,855,019 16,281,902 3,490,888 25,647,114 3,344,014 Total Net Position 7,314,351$ 21,915,469$ 50,037,945$ 51,857,152$ 131,124,917 3,344,014$ Adjustment to report the cumulative internal balance for the net effect of the activity between the internal service funds and the enterprise funds over time 280,712 Net position of business-type activities (page 35)131,405,629$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 42 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS PROPRIETARY FUNDS STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION YEAR ENDED JUNE 30, 2017 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Operating Revenues: Charges for services 1,078,025$ 5,851,114$ 6,371,320$ 13,105,004$ 26,405,463$ -$ Employee contributions - -- -- 2,111,438 Employer contributions - -- -- 14,294,926 Other 10,948 383,309 263,683 - 657,940 760,647 Total Operating Revenues 1,088,973 6,234,423 6,635,003 13,105,004 27,063,403 17,167,011 Operating Expenses: Operating costs 304,767 2,637,893 2,787,902 11,147,113 16,877,675 - Depreciation 248,385 1,125,643 2,219,146 3,294,782 6,887,956 - Maintenance - -- 271,591 271,591 - Employee benefits - -- -- 16,181,380 Total Operating Expenses 553,152 3,763,536 5,007,048 14,713,486 24,037,222 16,181,380 Total Operating Income (loss)535,821 2,470,887 1,627,955 (1,608,482) 3,026,181 985,631 Nonoperating Revenues (Expenses): Intergovernmental - -- 70,458 70,458 - Investment income - 21,717 - 50,138 71,855 2,584 Interest expense (198,578) (596,685) (1,115,225) (418,564) (2,329,052) - Total Nonoperating Revenues (Expenses)(198,578) (574,968) (1,115,225) (297,968) (2,186,739) 2,584 Income (Loss) Before Capital Contributions and Transfers 337,243 1,895,919 512,730 (1,906,450) 839,442 988,215 Capital Contributions Intergovernmental - -200,123 1,209,880 1,410,003 - Privilege fees - -1,270,072 - 1,270,072 - -- 1,470,195 1,209,880 2,680,075 - Change in Net Position 337,243 1,895,919 1,982,925 (696,570) 3,519,517 988,215 Net Position at Beginning of Year, as restated (See note IV)6,977,108 20,019,550 48,055,020 52,553,722 2,355,799 Net Position at End of Year 7,314,351$ 21,915,469$ 50,037,945$ 51,857,152$ 3,344,014$ Restatement of the net effect of prior year activity between the internal service funds and the enterprise funds (see note IV)191,977 Adjustment for the net effect of the current year activity between the internal service funds and the enterprise funds (119,521) Changes in net position of business-type activities (page 36)3,591,973$ See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 43 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2017 Governmental Activities Nantucket Internal Siasconset Wannacomet Memorial Service Water Water Sewer Airport Total Fund Cash Flows from Operating Activities: Receipts from users 1,097,827$ 5,925,474$ 6,410,884$ 13,033,756$ 26,467,941$ -$ Employee contributions - -- -- 2,111,438 Employer contributions - -- -- 14,294,926 Receipts from other operating revenues 10,948 383,309 263,683 - 657,940 868,964 Payments to employees - (1,462,562) (925,752) (4,456,134) (6,844,448) - Payments to vendors (281,865) (1,103,896) (1,639,011) (6,299,211) (9,323,983) - Payments for interfund services used - -- -- (14,804,526) Net Cash Provided by (Used in) Operating Activities 826,910 3,742,325 4,109,804 2,278,411 10,957,450 2,470,802 Cash Flows from Noncapital Financing Activities: Operating grants - -- 70,458 70,458 - Net Cash Provided by (Used in) Noncapital Financing Activities - -- 70,458 70,458 - Cash Flows from Capital and Related Financing Activities: Proceeds from the issuance of bonds and notes - 1,750,000 - 203,000 1,953,000 - Sewer privilege fees - -783,080 - 783,080 - Proceeds from capital grants - --814,708 814,708 - Acquisition and construction of capital assets (149,056) (2,635,702) (3,482,386) (1,826,372) (8,093,516) - Premiums on general obligation bonds - 135,677 - -135,677 - Premiums on refunding bonds 469,889 816,077 177,361 - 1,463,327 - Proceeds from the issuance of refunding bonds 3,639,900 5,972,400 1,272,250 - 10,884,550 - Payments to refunding bond escrow agent (4,109,789) (6,788,477) (1,449,611) - (12,347,877) - Proceeds from bond anticipation notes - 4,358,000 10,920,000 3,802,100 19,080,100 - Repayments of bond anticipation notes - (2,562,000) (3,896,008) (1,942,867) (8,400,875) - Principal payments on bonds and notes (385,000) (1,615,800) (2,418,649) (839,000) (5,258,449) - Interest payments on bonds and notes (201,998) (629,633) (1,007,893) (458,378) (2,297,902) - Net Cash Provided by (Used in) Capital and Related Financing Activities (736,054) (1,199,458) 898,144 (246,809) (1,284,177) - Cash Flows from Investing Activities: Investment income - 21,717 - 50,138 71,855 2,584 Investment of operating cash - -- (200,122) (200,122) - Net Cash Provided by Investing Activities - 21,717 - (149,984) (128,267) 2,584 Net Change in Cash and Cash Equivalents 90,856 2,564,584 5,007,948 1,952,076 9,615,464 2,473,386 Cash and Cash Equivalents: Beginning of the year 1,272,078 5,217,045 10,915,840 10,423,917 27,828,880 2,441,343 End of the year 1,362,934$ 7,781,629$ 15,923,788$ 12,375,993$ 37,444,344$ 4,914,729$ Reconciliation of Operating Income (Loss) to Net Cash Provided by (Used in) Operating Activities: Operating Income (Loss)535,821$ 2,470,887$ 1,627,955$ (1,608,482)$ 3,026,181$ 985,631$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 248,385 1,125,643 2,219,146 3,294,782 6,887,956 - Changes in assets, deferred outflows, liabilities and deferred inflows Receivables 19,802 74,360 39,564 (71,415) 62,311 108,317 Prepaid items - -- -- 1,183,200 Inventory - (31,662) - 49,600 17,938 - Accounts payable and accrued expenses (18,154) (118,993) 63,635 (243,200) (316,712) (162,894) Accrued benefits payable 41,056 222,090 159,504 856,959 1,279,609 356,548 Other liabilities - -- 167 167 - Net Cash Provided by (Used in) Operating Activities 826,910$ 3,742,325$ 4,109,804$ 2,278,411$ 10,957,450$ 2,470,802$ Noncash investing capital and financing activities: Intergovernmental subsidies of debt service -$ -$ 376,509$ -$ 376,509$ -$ Amortization of bond premiums 65,624 203,022 24,391 25,449 318,486 - Deferred charge on refunding 329,165 344,103 97,611 - 770,879 - See accompanying notes to basic financial statements. Business-Type Activities Town of Nantucket, Massachusetts Page 44 of 143 Comprehensive Annual Financial Report TOWN OF NANUCKET, MASSACHUSETTS FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2017 Other Postemployment Private Benefits Purpose Agency Trust Fund Trust Funds Funds Assets: Cash and cash equivalents 8,913$ 1,237,000$ 1,376,104$ Investments 1,894,912 2,182,272 - Receivables, net of allowance for uncollectibles - - 146,000 Total Assets 1,903,825 3,419,272 1,522,104 Liabilities: Warrants payable - 75 1,722 Accrued payroll and withholdings - - 34,312 Agency liabilities - - 446,667 Planning board deposits - - 1,039,403 Total Liabilities - 75 1,522,104 Net Position: Held in trust for other postemployment benefits 1,903,825 - - Held in trust for private purposes - 3,419,197 - Total Net Position 1,903,825$ 3,419,197$ -$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 45 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2017 Other Postemployment Private Benefits Purpose Trust Fund Trust Funds Additions Contributions: Employee 448,948$-$ Employer 3,330,644 - Other - 77,429 Total contributions 3,779,592 77,429 Investment income: Interest and dividends 30,390 - Net earnings on investments 32,222 5,621 Net investment earnings 62,612 5,621 Total Additions (net)3,842,204 83,050 Deductions Life and health insurance premiums paid for retirees 3,279,592 - Education - scholarships - 129,380 Health and human services - public assistance - 61,755 Total Deductions 3,279,592 191,135 CHANGE IN NET POSITION 562,612 (108,085) NET POSITION AT BEGINNING OF YEAR 1,341,213 3,527,282 NET POSITION AT END OF YEAR 1,903,825$3,419,197$ See accompanying notes to basic financial statements. Town of Nantucket, Massachusetts Page 46 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2017 I.Summary of Significant Accounting Policies The accompanying basic financial statements of the Town have been prepared in conformity with generally accepted accounting principles (GAAP) as applied to state and local governments. GAAP is prescribed by the Governmental Accounting Standards Board (GASB), which is the primary standard-setting body for state and local government entities. The following is a summary of the more significant policies and practices used by the Town: A.Reporting Entity The Town is located in Nantucket County, twenty-five miles south of Cape Cod and was incorporated as a Town in 1671. An elected five member Board of Selectmen (“Selectmen”) governs the Town and an appointed Town Manager oversees the Town’s daily executive and administrative duties. The Town provides governmental services for the territory within its boundaries, including police and fire protection, public education in grades K-12, water and sewer services, solid waste disposal, street maintenance, elderly housing, parks and recreational facilities and an airport. Discretely Presented Component Units – The Town includes two entities as component units in the Town's reporting entity because of the significance of their operations or financial relationships with the Town are such that exclusion would cause the basic financial statements to be misleading. Unless otherwise indicated, the notes to the basic financial statements pertain only to the primary government. A description of the discretely presented component units is as follows: Nantucket County – The County of Nantucket (“the County”) is presented in a separate column to emphasize that it is legally separate from the Town but included because the County shares the same geographical boundaries as the Town and (1) the economic resources received or held are entirely for the benefit of the Town and its constituents, (2) the Town has the ability to access the economic resources of the County, and (3) those economic resources are significant to the Town therefore exclusion would cause the financial statements to be misleading. The County Commissioners consist of a five-member elected board which operates a Registry of Deeds and Corrections Office. Complete stand-alone financial statements as of June 30, 2017 may be obtained at the County of Nantucket, 16 Broad Street Nantucket, Massachusetts 02554 Nantucket Islands Land Bank – The Nantucket Islands Land Bank (“the Land Bank”) was created by Chapter 669 of the Acts of 1983 of the Commonwealth of Massachusetts to acquire and manage open space and protect natural resources in Nantucket County. The Land Bank is administered by the Nantucket Islands Land Bank Commission, which is comprised of five elected members. It is legally separate from the Town but presented as a discrete component unit due to (1) the economic resources received or held are entirely for the benefit of the Town and its constituents, (2) the Town has the ability to access those economic resources, and (3) those economic resources are significant to the Town therefore exclusion would cause the financial statements to be misleading. Complete stand-alone financial statements as of June 30, 2017 may be obtained at Nantucket Islands Land Bank, 22 Broad Street, Nantucket, Massachusetts 02554. Availability of Financial Information of Certain Town Enterprise Funds – The Nantucket Memorial Airport issues separate stand-alone financial statements which may be obtained by contacting the Airport Commission at 14 Airport Road, Nantucket, MA 02554. Town of Nantucket, Massachusetts Page 47 of 143 Comprehensive Annual Financial Report B.Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements, except interfund services provided and used are not eliminated in the process of consolidation. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise the primary government is reported separately from the legally separate component units for which the primary government is financially accountable. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the fiduciary funds are excluded from the government-wide financial statements. Major individual government funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are aggregated and presented in a single column. Major Fund Criteria – Major funds must be reported if both of the following criteria are met: 1) The total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of an individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type, and 2) The total assets and deferred outflows of resources, liabilities and deferred inflows of resources, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding element for all governmental and enterprise funds combined. Additionally, any other governmental or enterprise fund that management believes is particularly significant to the basic financial statements may be reported as a major fund. C.Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the fiscal year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider are met. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include: 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Town of Nantucket, Massachusetts Page 48 of 143 Comprehensive Annual Financial Report The governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized when susceptible to accrual (i.e. measurable and available). Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Expenditures are recorded when the related fund liability is incurred, except for unmatured interest on general long-term debt which is recognized when due, certain compensated absences, claims and judgments which are recognized when the obligations are due and payable. The Town applies the susceptible to accrual criteria to intergovernmental revenues. In applying the susceptible to accrual concept, there are two types of revenues. In one, moneys must be expended for a specific purpose or project before any amounts will be paid to the; therefore, revenues are recognized as expenditures are incurred. In the other, moneys are virtually unrestricted and are usually revocable only for failure to comply with prescribed requirements. These resources are reflected as revenues when cash is received, or earlier if the susceptible to accrual criteria are met. State aid is accrued as revenue in the year that the funds are appropriated by the Commonwealth. The Town considers property tax revenues to be available if they are collected within 60 days after the end of the fiscal year and are material. Investment income associated with the current fiscal period is susceptible to accrual and has been recognized as revenue of the current fiscal period. All other revenue items are considered to be measurable and available only when the cash is received and are recognized as revenue at that time. The government reports the following major Governmental Funds: General Fund – is the government’s primary operating fund. It accounts for all financial resources of the general government except those required to be accounted for in another fund. Town Capital Projects Fund – is used to account for all financial resources that are restricted, committed or assigned for the acquisition or construction of capital facilities and other capital assets of the governmental funds. Nonmajor Governmental Funds – consist of other special revenue and permanent funds that are aggregated and presented in the Nonmajor Governmental Funds column on the Governmental Funds financial statements. The following describes the general use of these fund types: The Special Revenue Funds are used to account for the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. The Permanent Funds are used to account for financial resources that are restricted to the extent that only earnings, not principal, may be used for purposes that support the governmental programs. The proprietary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Under this method, revenues are recognized when earned and expenses are recorded when the liabilities are incurred. Town of Nantucket, Massachusetts Page 49 of 143 Comprehensive Annual Financial Report Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues are user charges and fees, while operating expenses consist of salaries, ordinary maintenance, assessments and depreciation. All revenues and expenses not meeting this definition are reported as non-operating revenues and expenses. The government reports the following major proprietary funds: Siasconset Water Enterprise Fund – is used to account for the operations of the Town’s water activities in the Siasconset service area of the Town. Wannacomet Water Enterprise Fund – is used to account for the operations of the Town’s water activities in the remaining service areas of the Town. Sewer Enterprise Fund – is used to account for the operations of the Town’s sewer activities. Nantucket Memorial Airport Enterprise Fund – is used to account for the operations of the Town’s airport. Additionally, the following proprietary fund type is reported: Internal Service Fund – is used to account for the Town’s self-insured health insurance and workers’ compensation activities. Because these services primarily benefit governmental rather than business-type activities, they have been included within governmental activities in the government-wide financial statements. Fiduciary fund financial statements are reported using the economic resources measurement focus and use the accrual basis of accounting. Fiduciary funds are used to account for assets held in a trustee capacity and cannot be used to support the governmental programs. The government reports the following fiduciary funds: Other Postemployment Benefits Trust Fund – is used to accumulate funds for future payments of other postemployment benefits for retirees, such as health and life insurance. Private Purpose Trust Fund – is used to account for trust arrangements under which the principal and income benefit individuals, private organizations or other governments. This fund is used for scholarships and affordable housing programs. Agency Fund – is used to account for assets held in a purely custodial capacity. The Town’s agency funds consist primarily of student activities, off-duty work details, escrow and other deposits. D.Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Equity Deposits and Investments – The Town’s cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition. Investments of the Town and its component units are recorded at fair value. Town of Nantucket, Massachusetts Page 50 of 143 Comprehensive Annual Financial Report Receivables – Real estate and personal property taxes are assessed on January 1 every year. Bills are sent quarterly and are due on August 1, November 1, February 1, and May 1, or thirty days subsequent to the mailing date. Interest accrues on delinquent taxes at the rate of 14% per annum. Property taxes levied are recorded as receivables in the fiscal year of the levy. The Town is allowed to take delinquent taxes into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. User charges receivables represent amounts billed for water, sewer, monthly landfill tipping fees, annual commercial landfill user fees, airport travel and fuel sales and nursing home fees. Water and sewer charges are billed monthly and are subject to penalties and interest if not paid by the respective due date. The Town is authorized to take water and sewer fees into tax title fourteen days subsequent to the mailing of a demand for payment of the delinquent taxes. Real estate taxes, water user fees and sewer user fees that are secured through a lien process are considered 100% collectible. Accordingly, an allowance for uncollectible balances for these receivables is not reported. All personal property tax and excise tax receivables are shown net of an allowance for uncollectible balances comprised of those outstanding amounts greater than five years old. Departmental, landfill, airport and nursing home receivables are shown net of an allowance for uncollectible balances based on historical trends and specific account analysis. Sewer privilege fees represent betterments assessed to property owners related to upgrades to the Surfside Wastewater Treatment Plant. These are considered 100% collectible since they are secured through a lien on the owner’s property. Inventories and Prepaid Items – Inventories of the Wannacomet Water Enterprise Fund and Nantucket Memorial Airport Enterprise Fund are valued at the lower of cost or market, with cost determined on a first-in, first out basis. Certain supplies and small tools are expensed when purchased. All other inventories, which are not material to the basic financial statements, are considered to be expenditures at the time of purchase. Restricted Assets – Certain assets of the component units are classified as restricted because their use is restricted by contract covenants. Capital Assets – Capital assets, which include land, land improvements, buildings and improvements, machinery and equipment, vehicles and infrastructure (e.g. roads, water and sewer mains, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets, donated works of art and similar items, and capital assets received in a service concession arrangement are reported at acquisition value rather than fair value. Interest incurred during the construction phase of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. All purchases and construction costs in excess of $10,000 are capitalized at the date of acquisition or construction, respectively, with expected lives of greater than one year. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets lives are not capitalized. Town of Nantucket, Massachusetts Page 51 of 143 Comprehensive Annual Financial Report Capital assets (excluding land and construction-in-process) are depreciated on a straight-line- basis. The estimated useful lives of capital assets being depreciated are as follows: Buildings and improvements 33-50 years Machinery and equipment 5-7 years Vehicles 5-10 years Infrastructure 40-70 years Interfund Balances – Activity between funds that are representative of lending arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds or advances to/from other funds. All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Interfund Transfers – During the course of its operations, resources are permanently reallocated between and within funds. These transactions are reported as transfers in and transfers out in the individual fund statements. Transfers between and within governmental and fiduciary funds are eliminated from the governmental activities in the statement of activities. Any residual balances outstanding between the governmental activities and the business –type activities are reported in the statement of activities as transfers, net. Investment Income – Excluding the permanent funds, investment income derived from major and nonmajor governmental funds is legally assigned to the general fund unless otherwise directed by state law. Investment income of the proprietary funds is assigned to the fund within which it applies. Compensated Absences – It is the Town’s policy to permit employees to accumulate earned but unused sick pay benefits. Vacation time may be carried for a period of 6 months subsequent to year-end and if not used during this period is lost. Compensated absence liabilities related to both governmental and business-type activities are normally paid from the funds reporting payroll and related expenditures. Amounts related to these benefits are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in Governmental Funds only if they have matured. Long-term Obligations – Long-term debt is reported as a liability in the government-wide and proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bond anticipation notes payable are reported net of the applicable bond premium or discount. In the governmental fund financial statements, the face amount of long-term debt issued is reported as other financing sources. Premiums received on a debt issuance are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are exclusively reported as general government expenditures regardless of whether they are withheld from the actual proceeds. 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(s) and so will not be recognized as an outflow of resources Town of Nantucket, Massachusetts Page 52 of 143 Comprehensive Annual Financial Report (expense/expenditure) until then. The Town has two types of items that are reported on the government-wide statement of net position which relate to deferred losses on refunding transactions and outflows from changes in the net pension liability. The deferred losses on refunding will be recognized in interest expense over the life of the refunding bonds issued or the remaining life of the bonds refunded, whichever is shorter. The deferred pensions will be recognized in pension expense in future years as more fully described in Note III, subsection A. 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(s) and thus will not be recognized as an inflow of resources (revenue) until that time. The Town has one type of item that is reported on the government-wide statement of net position which relates to outflows from changes in the net pension liability. The deferred pensions will be recognized in pension expense in future years as more fully described in Note III, subsection A. The Town also one type of item that arises under a modified accrual basis of accounting which qualifies for reporting in this category. Accordingly, the item unavailable revenue is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenue from three sources: property taxes, user charges and other. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Net Position – In the government-wide financial statements, net position reported as “Net investment in capital assets” includes capital assets, net of accumulated depreciation, less the principal balance of outstanding debt used to acquire capital assets. Unspent proceeds of capital related debt are not considered to be capital related debt. Net position is reported as restricted when amounts are not available for appropriation or are legally restricted by outside parties for a specific use. Net position has been restricted for the following: Nonexpendable permanent funds represent the endowment portion of donor restricted trusts that support governmental programs. Federal and State grants represent assets that have restrictions placed on them from federal and state granting agencies. Community preservation represents assets that are restricted by state law for the purposes of acquiring or developing open space and recreational facilities, historic resources and affordable housing. Capital outlay represents assets that are restricted for the purposes of funding capital projects. Public safety revolving funds represent assets that have accumulated from user charges assessed to support specific public safety programs. These amounts are restricted by state law for the purpose of funding those programs for which the user charges were assessed. Gift funds represent assets that are restricted by donors for specific purposes. Other purposes represent assets that are restricted for numerous various minor specific governmental programs and uses. Town of Nantucket, Massachusetts Page 53 of 143 Comprehensive Annual Financial Report Fund Equity – In the fund financial statements, fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent in which the Town is required to honor constraints on the specific purpose for which amounts in the funds can be spent. Fund balance is reported in five components – nonspendable, restricted, committed, assigned, and unassigned as described below: Nonspendable represents amounts that cannot be spent because they are either (a) not in spendable form (i.e. inventory or prepaid) or (b) legally or contractually required to be maintained intact such as the corpus of an endowment. Restricted represents amounts that have constraints placed either externally by third-parties (creditors, grantors, contributors, or laws or regulations of other governments) or by law through constitutional provisions or enabling legislation. Enabling legislation authorizes the Town to assess, levy, charge or otherwise mandate payment of resources (from external resource providers) and includes a legally enforceable requirement (compelled by external parties) that those resources be used only for the specific purposes stipulated in the legislation. Committed represents amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the Town Meeting through Town Meeting Articles, which represent the most binding constraint that give rise to committed fund balance. Those committed amounts cannot be used for any other purpose unless the Town Meeting removes or changes the specified use by taking the same type of action (through Town Meeting Articles) it employed previously to commit those amounts. Assigned represents amounts that are constrained by the Town’s intent to be used for specific purposes, but are neither restricted nor committed. The Town has by ordinance authorized the Director of Municipal Finance to assign fund balance. The Town Meeting may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year’s appropriated budget. Unassigned represents amounts that have not been restricted, committed or assigned to specific purposes within the general fund. The general fund is the only fund that reports a positive unassigned fund balance amount. Other governmental funds besides the general fund can only report a negative unassigned fund balance amount. When both restricted and unrestricted resources are available for use, it is the Town’s policy to use restricted resources first, then unrestricted resources (committed, assigned and unassigned) as they are needed. When unrestricted resources (committed, assigned and unassigned) are available for use it is the Town’s policy to use committed resources first, then assigned, and then unassigned as they are needed. The Town has not established financial policies with respect to maintaining minimum fund balance amounts. Stabilization Fund – The Town maintains a general stabilization fund which may be used for any municipal purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals $5,053,412 at June 30, 2017 and is reported as unassigned fund balance in the General Fund. Town of Nantucket, Massachusetts Page 54 of 143 Comprehensive Annual Financial Report The Town maintains a capital stabilization fund which may be used for any municipal capital purpose upon a two-thirds vote of the Town Meeting. The balance of the fund totals $1,250,000 at June 30, 2017 and is reported as unassigned fund balance in the General Fund. Encumbrances – The Town’s encumbrance policy regarding the general fund is to (1) classify encumbrances that arise from the issuance of purchase orders resulting from normal purchasing activity approved by the Director of Finance as assigned, and (2) classify encumbrances that result from an action of the Town Meeting as committed. Encumbrances of funds already restricted, or committed are included within the classification of those fund balances and not reported separately. The Town reports $2,110,221 of encumbrances from normal purchasing activity in the general fund as assigned and $1,994,598 of encumbrances from Town Meeting Articles in the general fund as committed. There are no encumbrances reported in any other fund. The following table reflects the Town’s fund equity categorizations: Town Nonmajor Capital Governmental General Projects Funds Total Nonspendable: Nonexpendable trust funds -$ -$ 44,805$ 44,805$ Restricted: School grants - - 497,881 497,881 Town grants - - 831,271 831,271 School revolving - - 1,085,239 1,085,239 Ambulance - - 1,140,181 1,140,181 Beach improvements - - 1,213,133 1,213,133 Waterway improvements - - 1,120,591 1,120,591 Other Town revolving - - 2,066,330 2,066,330 Capital outlay - 8,807,345 1,805,564 10,612,909 Community preservation - - 3,818,898 3,818,898 Gift funds - - 820,814 820,814 Expendable trust funds - - 124,425 124,425 Debt service 346,780 - - 346,780 Committed: Nursing home 8,332,853 - - 8,332,853 Solid waste landfill 2,812,968 - - 2,812,968 Capital outlay 1,873,873 - - 1,873,873 Other purposes 120,725 - - 120,725 Assigned: Purchase orders 2,110,221 - - 2,110,221 Subsequent years' budget 5,185,157 - - 5,185,157 Unassigned 17,942,453 (9,473,579) (306,357) 8,162,517 38,725,030$ (666,234)$ 14,262,775$ 52,321,571$ Town of Nantucket, Massachusetts Page 55 of 143 Comprehensive Annual Financial Report E.Excess of Expenditures Over Appropriations During the fiscal year ended, the Town overspent its appropriation for snow and ice removal costs by $206,038. This will be raised through subsequent tax assessments when the Town sets its tax rate for fiscal year 2018. The Town incurred deficits of $9,473,579 for capital outlays which is reported in the Town Capital Projects major fund and $306,357 for roadway construction which is reported in the nonmajor governmental funds. These deficits will be funded through available revenues, grant funds or bond proceeds in future fiscal years. F.Use of Estimates The preparation of basic financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, deferred outflows, liabilities, deferred inflows, disclosure for contingent assets and liabilities at the date of the basic financial statements and the reported amounts of revenues and expenditures/expenses during the fiscal year. Actual results could vary from estimates that were used. II.Detailed Notes to All Funds A.Deposits and Investments A cash and investment pool is maintained that is available for use by all funds. Each fund type’s portion of this pool is displayed on the balance sheet as “cash and cash equivalents”. The deposits and investments of trust funds are held separately from those of other funds. State laws and regulations require the Town to invest funds only in pre-approved investment instruments which include but are not necessarily limited to bank deposits, money markets, certificates of deposit, U.S. obligations, repurchase agreements, and State Treasurer’s investment pool (the Pool). In addition, the statutes impose various limitations on the amount and length of investments and deposits. Repurchase agreements cannot be for a period of over ninety days, and the underlying security must be a United States obligation. The Pool meets the criteria of an external investment pool. The Pool is administered by the Massachusetts Municipal Depository Trust (the MMDT), which was established by the Treasurer of the Commonwealth who serves as Trustee. The fair value of the position in the Pool is the same as the value of the Pool shares. Primary Government (Town) Custodial Credit Risk: Deposits - In the case of deposits, this is the risk that in the event of a bank failure, the government’s deposits may not be returned to it. The Town has adopted a deposit policy which requires that the Treasurer review each bank doing business with the Town on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. Town of Nantucket, Massachusetts Page 56 of 143 Comprehensive Annual Financial Report At year-end, the carrying amount of the Town's deposits was $107,251,164 and the bank balance was $107,818,821. Of the Town's bank balance, $82,787,833 was covered by federal depository insurance or the Depositors Insurance Fund, $15,495,284 was collateralized and the remainder was uninsured. Custodial Credit Risk: Investments – In the case of investments, this is the risk that in the event of the invested party not being able to provide required payments to investors, ceasing to exist, or filing of bankruptcy, the Town may not be able to recover the full amount of its principal investment and/or investment earnings. The Town has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town’s name and tax identification number. The Town’s investments of $2,429,032 in U.S. government obligations, $4,396,249 in corporate debt securities and $2,356,821 in equity securities are held by a broker-dealer where the Town’s assets are segregated from the broker-dealer firm assets and are protected up to $500,000 under coverage through the Securities Investor Protection Corporation (“SIPC”). Additionally, the broker-dealer carries excess insurance to cover claims over the SIPC limit through Lloyd’s with a firm cap of $1 billion with no individual client limit. The Town’s investments of $3,382,887 in certificates of deposit are fully insured by federal depository insurance or the Depositors Insurance Fund. Fair Value of Investments – The Town reports its investments at fair value. When actively quoted observable prices are not available, the Town generally uses either implied pricing from similar investments or valuation models based on net present values of estimated future cash flows (adjusted as appropriate for liquidity, credit, market and/or other risk factors). The Town categorizes its fair value measurements within the fair value hierarchy established by GAAP. This hierarchy is based on valuation inputs used to measure the fair value of the asset or liability. The three levels of the hierarchy are as follows: Level 1 – Inputs are quoted prices in active markets for identical investments at the measurement date. Level 2 – Inputs (other than quoted prices included in Level 1) are either directly or indirectly observable for the investment through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 – Inputs reflect the Town’s best estimate of what market participants would use in pricing the investment at the measurement date. Town of Nantucket, Massachusetts Page 57 of 143 Comprehensive Annual Financial Report The following table presents the Town’s investments carried at fair value on a recurring basis in the statement of net position at June 30, 2017: Debt and equity securities classified in Level 1 are valued using prices quoted in active markets for those securities. Interest Rate Risk – The Town limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio. At June 30, 2017, the Town’s investments had the following maturities: 6/30/16 Level 1 Level 2 Level 3 Investments by fair value level Debt securities: U.S. Government obligations 2,429,032$ 2,429,032$ -$ -$ Corporate bonds 4,396,249 4,396,249 - - Certificates of deposit 3,382,887 3,382,887 - - Total debt securities 10,208,168 10,208,168 - - Equity securities: Common stock 2,356,821 2,356,821 - - Total equity securities 2,356,821 2,356,821 - - Total investments by fair value level 12,564,989$ 12,564,989$ -$ -$ Investments measured at amortized cost MMDT 2,997,265 Total investments 15,562,254$ Fair Value Measurements Using Time Until Maturity (Years) Less More Investment Type 6/30/17 Than 1 1-5 6-10 Than 10 Corporate fixed income securities 4,396,249$ 855,201$ 3,541,048$ -$ -$ U.S. government obligations 2,429,032 570,041 1,858,991 - - Certificates of deposit 3,382,887 2,193,975 787,232 401,680 - State investment pool (MMDT)2,997,265 2,997,265 - - - Total Town investments with maturities 13,205,433 6,616,482$ 6,187,271$ 401,680$ -$ Other investments: Equities 2,356,821 Total Town investments 15,562,254$ Town of Nantucket, Massachusetts Page 58 of 143 Comprehensive Annual Financial Report Concentration of Credit Risk – The Town does not place a limit on the amount that may be invested in any one issuer. The Town has 19% of its investments in the MMDT and 16% of its investments in United States government backed securities. No other issuer was greater than 5% of the Town’s investments. Credit Risk – The Town restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. At June 30, 2017, the credit quality ratings of investments were as follows: Discretely Presented Component Unit – Nantucket County Custodial Credit Risk: Deposits- The County has adopted a deposit policy which requires that the Treasurer review each bank doing business with the County on a quarterly basis. The policy does not restrict the value of uninsured or uncollateralized investments held at any time. At year-end, the carrying amount of the County's deposits was $4,601,257 and the bank balance was $4,615,019. Of the County's bank balance, $4,342,993 was covered by either federal depository insurance or by the Depositors’ Insurance Fund (DIF) and the remaining balance was uninsured. Custodial Credit Risk: Investments- The County has adopted an investment policy regarding custodial credit risk that requires all securities not held directly by the Treasurer must be held by a third party custodian approved by the Treasurer in the Town/County’s name and tax identification number Corporate U.S. Government State Fixed Income Agencies & Certificates Investment Securities Treasuries Of Deposit Pool Total AA+-$ 2,429,032$ -$ -$ 2,429,032$ AA 299,141 - - - 299,141 AA-276,312 - - - 276,312 A+ 167,233 - - - 167,233 A 2,045,392 - - - 2,045,392 A-368,294 - - - 368,294 BBB+774,298 - - - 774,298 BB 252,451 - - - 252,451 BB-213,128 - - - 213,128 Not Rated - - 3,382,887 2,997,265 6,380,152 Total - All 4,396,249$ 2,429,032$ 3,382,887$ 2,997,265$ 13,205,433$ Town of Nantucket, Massachusetts Page 59 of 143 Comprehensive Annual Financial Report At year-end, the County’s investments consisted of Certificates of Deposit totaling $42,958 which were covered by federal depository insurance and were not subject to custodial credit risk. These are recorded as cash equivalents at June 30, 2017. Interest Rate Risk - The County limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. The policy limits investments of operating funds to one year or less and limits investment maturities of trust funds and other special funds to periods no longer that seven years, maintaining an average maturity no greater than three years for the investment portfolio Credit Risk - The County restricts the investment of operating funds to U.S. Treasury or Agency securities which carry “AAA” ratings. Trust and other special funds which are longer-term investments may invest in fixed-income securities which are held principally for capital preservation and income potential and corporate debt that carries a rating of “A” or better by either Standard and Poor’s or Moody’s rating services. If a security falls below the “A” rating, the security will be monitored by the Treasurer and advisor and will be noted as an exception to the policy if held in the investment portfolio. The Treasurer will sell the securities if a decline in value is expected. Concentration of Credit Risk – The County does not place a limit on the amount that may be invested in any one issuer. Discretely Presented Component Unit – Nantucket Islands Land Bank Custodial Credit Risk: Deposits -The Land Bank does not have a policy regarding custodial credit risk for deposits. At year-end, the carrying amount of the Land Bank’s deposits was approximately $18,962,000, of which approximately $1,204,000 was exposed to custodial credit risk. The Land Bank is required to hold monies in reserve in accordance with certain land acquisitions and debt service requirements of bond issuances. These reserve funds are included as restricted cash in the financial statements. Restricted Cash consist of the following as of June 30, 2016: Series A Debt Reserve $1,407,036 Mitigation agreements 228,398 Life insurance premium 214,322 $1,849,756 Custodial Credit Risk: Investments -The Land Bank does not have a policy regarding custodial credit risk for investments. At year-end, the Land Bank’s investments include Certificates of Deposit totaling $4,781,484 which were covered by federal depository insurance or DIF and were not subject to custodial credit risk, mature in less than one year, are stated at fair market value and are unrated in terms of credit risk quality ratings. The Land Bank also maintains investments in U.S Treasury bonds totaling $2,792,955 which mature in May 2022 and have a Moody’s quality rating of AAA. At June 30, 2017, all investments are categorized in Level 1 of the fair value hierarchy based on quoted market prices. Town of Nantucket, Massachusetts Page 60 of 143 Comprehensive Annual Financial Report The Land Bank has entered into an agreement with the Town, which requires the Land Bank to establish a working capital reserve fund. This fund, along with the guarantee of the Town of its full faith and credit, secures the Series 2007A, 2009A, 2012A and 2016A bonds outstanding at year-end. In addition, the Land Bank is prohibited from acquiring additional real estate at any time that an amount equal to one year’s debt service relating to the bonds in the reserve fund is not on deposit. Interest Rate Risk -The Land Bank does not have a formal policy regarding interest rate risk. B.Receivables Receivables as of year-end for the Town’s individual major and non-major governmental funds in the aggregate, including the applicable allowances for uncollectible accounts, are as follows: Receivables as of year-end for the Town’s proprietary funds are as follows: Gross Allowance for Net Amount Uncollectibles Amount Receivables: Real estate and personal property taxes 2,412,092$ (312,893)$ 2,099,199$ Tax liens 2,760,660 - 2,760,660 Motor vehicle and other excise taxes 1,196,117 (67,506) 1,128,611 Community preservation surcharges 176,106 - 176,106 Nursing home user charges 337,563 - 337,563 Landfill user charges 653,275 (97,991) 555,284 Ambulance user charges 547,675 (270,000) 277,675 Departmental and other 24,699 - 24,699 Intergovernmental 1,000,764 - 1,000,764 Total 9,108,951$ (748,390)$ 8,360,561$ Gross Allowance for Net Amount Uncollectibles Amount Receivables: Water user charges 728,079$ -$ 728,079$ Sewer user charges 808,390 - 808,390 Sewer privilege fees 912,645 - 912,645 Airport user charges 374,669 - 374,669 Stop loss receivable 88,921 - 88,921 Intergovernmental 1,761,667 - 1,761,667 Total 4,674,371$ -$ 4,674,371$ Town of Nantucket, Massachusetts Page 61 of 143 Comprehensive Annual Financial Report Governmental funds report deferred inflows of resources in connection with receivables for revenues that are not considered to be available to liquate liabilities of the current period. The following identifies the components of deferred inflows of resources in the governmental funds: Massachusetts Clean Water Trust – The Town has entered into numerous loan agreements with the Massachusetts Clean Water Trust (“MCWT”). It is expected that the Town will be subsidized by MCWT on a periodic basis for principal in the amount of $1,366,495 and interest in the amount of $710,254 until the maturity of these agreements. GAAP requires the recognition of gross debt relative to these agreements; therefore, a receivable totaling $1,366,495 has been reported in the Sewer Enterprise Fund. Other General Governmental Fund Funds Total Receivable type: Real estate and personal property taxes 1,656,006$ -$ 1,656,006$ Tax liens 2,760,660 - 2,760,660 Motor vehicle and other excise taxes 595,982 - 595,982 Community preservation surcharges - 176,106 176,106 Nursing home user charges 337,563 - 337,563 Landfill user charges 555,284 - 555,284 Ambulance user charges - 277,675 277,675 Departmental and other 24,699 - 24,699 Total 5,930,194$ 453,781$ 6,383,975$ Town of Nantucket, Massachusetts Page 62 of 143 Comprehensive Annual Financial Report C. Capital Assets Capital asset activity for the year ended June 30, 2017, was as follows: Beginning Ending Balance Increases Decreases Balance Governmental Activities: Capital assets not being depreciated: Land * 167,903,099$ -$ (2,741,888)$ 165,161,211$ Construction in process * 32,598,410 36,293,558 (7,398,527) 61,493,441 Total capital assets not being depreciated 200,501,509 36,293,558 (10,140,415) 226,654,652 Capital assets being depreciated: Buildings and improvements * 66,876,531 825,203 (263,445) 67,438,289 Infrastructure * 37,758,252 5,868,043 (1,215,250) 42,411,045 Machinery and equipment * 11,823,377 754,808 (1,348,990) 11,229,195 Vehicles * 8,143,547 1,082,415 (586,668) 8,639,294 Total capital assets being depreciated 124,601,707 8,530,469 (3,414,353) 129,717,823 Less accumulated depreciation for: Buildings and improvements * (28,845,513) (1,965,850) 263,445 (30,547,918) Infrastructure * (23,215,720) (1,225,717) 1,215,250 (23,226,187) Machinery and equipment * (5,245,461) (1,473,577) 1,348,990 (5,370,048) Vehicles * (5,888,522) (631,565) 586,668 (5,933,419) Total accumulated depreciation (63,195,216) (5,296,709) 3,414,353 (65,077,572) Total capital assets being depreciated, net 61,406,491 3,233,760 - 64,640,251 Total governmental activities capital assets, net 261,908,000$ 39,527,318$ (10,140,415)$ 291,294,903$ Business-Type Activities: Capital assets not being depreciated: Land * 17,324,412$ -$ -$ 17,324,412$ Construction in process 16,357,009 6,483,149 (4,728,048) 18,112,110 Total capital assets not being depreciated 33,681,421 6,483,149 (4,728,048) 35,436,522 Capital assets being depreciated: Buildings and improvements * 53,957,157 4,703,601 (3,106,641) 55,554,117 Infrastructure * 165,912,241 533,096 (127,923) 166,317,414 Machinery and equipment * 21,342,619 774,295 (204,339) 21,912,575 Vehicles * 5,360,331 327,423 (223,584) 5,464,170 Total capital assets being depreciated 246,572,348 6,338,415 (3,662,487) 249,248,276 Less accumulated depreciation for: Buildings and improvements * (10,505,586) (2,119,430) 3,106,641 (9,518,375) Infrastructure * (51,305,491) (3,743,390) 127,923 (54,920,958) Machinery and equipment * (14,524,054) (766,755) 204,339 (15,086,470) Vehicles * (3,800,572) (258,381) 223,584 (3,835,369) Total accumulated depreciation (80,135,703) (6,887,956) 3,662,487 (83,361,172) Total capital assets being depreciated, net 166,436,645 (549,541) - 165,887,104 Total business-type activities capital assets, net 200,118,066$ 5,933,608$ (4,728,048)$ 201,323,626$ * As restated. Town of Nantucket, Massachusetts Page 63 of 143 Comprehensive Annual Financial Report Beginning Ending Balance Increases Decreases Balance Business-type Activities: Siasconset Water Capital assets not being depreciated: Land 2,615,578$ -$ -$ 2,615,578$ Construction in process - 149,056 - 149,056 Total capital assets not being depreciated 2,615,578 149,056 - 2,764,634 Capital assets being depreciated: Buildings and improvements 808,299 - - 808,299 Infrastructure 9,858,124 - - 9,858,124 Machinery and equipment 525,161 - - 525,161 Total capital assets being depreciated 11,191,584 - - 11,191,584 Less accumulated depreciation for: Buildings and improvements (107,404) (29,935) - (137,339) Infrastructure (1,491,921) (193,524) - (1,685,445) Machinery and equipment (39,095) (24,926) - (64,021) Total accumulated depreciation (1,638,420) (248,385) - (1,886,805) Total capital assets being depreciated, net 9,553,164 (248,385) - 9,304,779 Total Siasconset Water capital assets, net 12,168,742$ (99,329)$ -$ 12,069,413$ Business-type Activities: Wannacomet Water Capital assets not being depreciated: Land * 5,596,664$ -$ -$ 5,596,664$ Construction in process 1,267,070 2,292,780 - 3,559,850 Total capital assets not being depreciated 6,863,734 2,292,780 - 9,156,514 Capital assets being depreciated: Buildings and improvements * 2,271,186 - (165,377) 2,105,809 Infrastructure * 37,484,070 342,922 (127,923) 37,699,069 Machinery and equipment * 2,048,640 - (198,758) 1,849,882 Vehicles * 313,541 - - 313,541 Total capital assets being depreciated 42,117,437 342,922 (492,058) 41,968,301 Less accumulated depreciation for: Buildings and improvements * (896,316) (171,554) 165,377 (902,493) Infrastructure * (8,404,441) (835,091) 127,923 (9,111,609) Machinery and equipment * (763,667) (101,385) 198,758 (666,294) Vehicles * (244,524) (17,613) - (262,137) Total accumulated depreciation (10,308,948) (1,125,643) 492,058 (10,942,533) Total capital assets being depreciated, net 31,808,489 (782,721) - 31,025,768 Total Wannacomet Water capital assets, net 38,672,223$ 1,510,059$ -$ 40,182,282$ * As restated. Town of Nantucket, Massachusetts Page 64 of 143 Comprehensive Annual Financial Report Beginning Ending Business-type Activities: Sewer Balance Increases Decreases Balance Capital assets not being depreciated: Land 6,375,583$ -$ -$ 6,375,583$ Construction in process 8,620,891 2,926,135 (343,747) 11,203,279 Total capital assets not being depreciated 14,996,474 2,926,135 (343,747) 17,578,862 Capital assets being depreciated: Buildings and improvements * 368,790 - - 368,790 Infrastructure 82,962,990 162,000 - 83,124,990 Machinery and equipment * 16,010,354 468,665 (5,581) 16,473,438 Vehicles 1,009,568 269,333 - 1,278,901 Total capital assets being depreciated 100,351,702 899,998 (5,581) 101,246,119 Less accumulated depreciation for: Buildings and improvements (167,216) (12,790) - (180,006) Infrastructure (19,225,377) (1,684,812) - (20,910,189) Machinery and equipment (12,235,204) (425,163) 5,581 (12,654,786) Vehicles (534,738) (96,381) - (631,119) Total accumulated depreciation (32,162,535) (2,219,146) 5,581 (34,376,100) Total capital assets being depreciated, net 68,189,167 (1,319,148) - 66,870,019 Total Sewer capital assets, net 83,185,641$ 1,606,987$ (343,747)$ 84,448,881$ Capital assets not being depreciated: Land 2,736,587$ -$ -$ 2,736,587$ Construction in process 6,469,048 1,115,178 (4,384,301) 3,199,925 Total capital assets not being depreciated 9,205,635 1,115,178 (4,384,301) 5,936,512 Capital assets being depreciated: Infrastructure 35,607,057 28,174 - 35,635,231 Buildings and improvements 50,508,882 4,703,601 (2,941,264) 52,271,219 Machinery and equipment 2,758,464 305,630 - 3,064,094 Vehicles 4,037,222 58,090 (223,584) 3,871,728 Total capital assets being depreciated 92,911,625 5,095,495 (3,164,848) 94,842,272 Less accumulated depreciation for: Infrastructure (22,183,752) (1,029,963) - (23,213,715) Buildings and improvements (9,334,650) (1,905,151) 2,941,264 (8,298,537) Machinery and equipment (1,486,088) (215,281) - (1,701,369) Vehicles (3,021,310) (144,387) 223,584 (2,942,113) Total accumulated depreciation (36,025,800) (3,294,782) 3,164,848 (36,155,734) Total capital assets being depreciated, net 56,885,825 1,800,713 - 58,686,538 Total Nantucket Memorial Airport capital assets, net 66,091,460$ 2,915,891$ (4,384,301)$ 64,623,050$ * As restated. Business-type Activities: Nantucket Memorial Airport Town of Nantucket, Massachusetts Page 65 of 143 Comprehensive Annual Financial Report Restatement – The Town conducted an evaluation of its capital assets in fiscal year 2017. As a result of this evaluation, the Town determined that previously reported capital assets of the Governmental Activities were understated by $659,248 and capital assets of the Wannacomet Water Enterprise Fund were overstated by $538,126. Also, the Our Island Home and Solid Waste Enterprise funds are now reported in the General Fund and, therefore, capital assets totaling $9,392,847 which were previously reported in the Business-type Activities are now reported in Governmental Activities. These amounts were reported as a restatement to the Town’s net position at June 30, 2016. Reclassifications were also made to Sewer Enterprise assets. Depreciation expense was charged to functions/programs as follows: Governmental Activities:Business-Type Activities: General government 304,431$ Water 1,374,028$ Public safety 1,550,303 Sewer 2,219,146 Education 1,581,707 Airport 3,294,782 Public works 1,681,154 6,887,956$ Health and human services 179,114 5,296,709$ Discretely Presented Component Unit - Nantucket County Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 3,283,842$ -$ -$ 3,283,842$ Capital assets being depreciated: Machinery and equipment 187,927 - (107,965) 79,962 Less accumulated depreciation for: Machinery and equipment (177,329) (8,647) 107,965 (78,011) Total capital assets being depreciated, net 10,598 (8,647) - 1,951 Total Nantucket County capital assets, net 3,294,440$ (8,647)$ -$ 3,285,793$ Town of Nantucket, Massachusetts Page 66 of 143 Comprehensive Annual Financial Report D.Interfund Receivables, Payables and Transfers The composition of interfund balances at June 30, 2017, was as follows: The outstanding balances between funds result mainly from the timing difference between the dates that (1) reimbursable expenditures occur, (2) the intergovernmental reimbursements are received and (3) the payments to the general fund are made. The composition of interfund transfers for the fiscal year ended June 30, 2017, was as follows: Discretely Presented Component Unit - Nantucket Islands Land Bank Beginning Ending Balance Increases Decreases Balance Capital assets not being depreciated: Land 297,237,702$ 3,461,513$ -$ 300,699,215$ Capital assets being depreciated: Buildings, improvements and equipment 27,666,021 442,113 (208,400) * 27,899,734 Less: accumulated depreciation (10,221,678) (1,025,956) 6,512 (11,241,122) Total capital assets being depreciated, net 17,444,343 (583,843) (201,888) 16,658,612 Total Nantucket Islands Land Bank capital assets, net 314,682,045$ 2,877,670$ (201,888)$ 317,357,827$ * Includes $201,888 that is included as an increase to land. Amount General Fund Nonmajor Governmental Funds -306,357$ Road Improvements Total 306,357$ Receivable Fund Payable Fund Town Nonmajor General Capital Governmental Fund Projects Funds Total General Fund -$ 1,918,154$ 465,000$ 2,383,154$ (1) Town Capital Projects 65,000 - - 65,000 (2) Total 65,000$ 1,918,154$ 465,000$ 2,448,154$ (1) Transfer to town capital projects for various capital outlays; transfer to nonmajor funds to fund community school programs. (2) Transfers to general fund to close out a project. Transfers In Transfers Out Town of Nantucket, Massachusetts Page 67 of 143 Comprehensive Annual Financial Report E. Temporary Debt The Town is authorized to borrow on a temporary basis to fund the following: Current Operating Costs – Prior to collection of revenues, expenditures may be financed through the issuance of revenue or tax anticipation notes (RANS or TANS). Capital Projects and Other Approved Costs – Projects may be temporarily funded through the issuance of bond anticipation notes (BANS) or grant anticipation notes (GANS). In certain cases, prior to the issuance of these temporary notes, the governing body must take the necessary legal steps to authorize the issuance of the general obligation bonds. Temporary notes may not exceed the aggregate amount of bonds authorized or the grant award amount and carry maturity dates that are limited by state law. Interest expenditures and expenses for temporary borrowings are accounted for in the general fund and enterprise funds, respectively. Temporary notes outstanding at June 30, 2017, are payable as follows: Short-term (BANs) issued for nonmajor governmental funds were used for septic betterments ($1,000,000), roadways and sidewalks ($1,250,000), school construction ($10,240,000), landfill closure ($1,000,000), affordable housing ($800,000), nursing home design ($500,000) and fire station construction ($1,000,000). Those issued for business-type funds were issued for water projects ($4,358,000), sewer projects ($10,920,000) and airport projects ($6,108,213). Interest Maturity July 1,June 30, Type Rate Date 2015 Additions Retirements 2016 MCWT 0.00% Matured 265,551$ -$ (265,551)$ -$ MCWT 0.00% 12/31/18 - 1,000,000 - 1,000,000 BAN 1.75% Matured 3,547,000 - (3,547,000)- BAN 2.00% Matured 7,500,000 - (7,500,000)- BAN 1.50% Matured 18,901,650 - (18,901,650) - BAN 1.12% Matured - 2,800,000 (2,800,000)- BAN 2.00% 11/30/17 - 12,240,000 - 12,240,000 BAN 2.00% 06/01/18 - 2,550,000 - 2,550,000 Total Governmental Notes 30,214,201 18,590,000 (33,014,201) 15,790,000 BAN 1.75% Matured 2,106,912 - (2,106,912)- BAN 1.50% Matured 9,100,076 - (9,100,076)- BAN 1.12% Matured - 8,547,962 (8,547,962)- BAN 1.50% 11/30/17 - 2,575,090 - 2,575,090 BAN 2.00% 11/30/17 - 11,828,123 - 11,828,123 BAN 1.25% 11/30/17 - 771,000 - 771,000 BAN 2.00% 06/01/18 - 6,212,000 - 6,212,000 Total Business-Type Notes 11,206,988 29,934,175 (19,754,950) 21,386,213 Total Notes Payable 41,421,189$ 48,524,175$ (52,769,151)$ 37,176,213$ Town of Nantucket, Massachusetts Page 68 of 143 Comprehensive Annual Financial Report The Town is eligible for interim loan financing from the MCWT in anticipation of permanent financing through MCWT for costs related to the Town’s septic management program. The interim loans must be converted to permanent long-term debt no later than December 31, 2018. Short-term MCWT loans totaling $1,000,000 are reported in the non-major governmental funds. F. Long–Term Obligations The Town issues general obligation bonds and notes to provide funds for the acquisition and construction of major capital facilities. General obligation bonds and notes have been issued for both governmental and business-type activities. Additionally, the Town incurs various other long-term obligations relative to associated personnel costs. State law permits a Town, under the provisions of Chapter 44, Section 10, to authorize indebtedness up to a limit of 5.0 percent of its equalized valuation. Debt issued in accordance with this section of the law is designated as being “inside the debt limit.” In addition, a Town may authorize debt in excess of that limit for specific purposes. Such debt, when issued, is designated as being “outside the debt limit”. On November 9, 2016, the Town issued $37,423,000 in general obligation bonds that mature on November, 1, 2041 and pay interest at 2-5% per annum. $25,500,000 of the proceeds from these bonds, along with $753,017 of available funds were used to retire $26,253,017 of BANs that matured on November 10, 2016. The remainder of the bond issue was used as additional funding for school construction. On April 13, 2017, the Town issued a $265,550 note with the MCWT to permanently finance an interim loan note for septic management. The note is interest free and matures on January 15, 2037. Imputed interest on the note is immaterial and has not been reported. Current Year Refunding –On August 3, 2016, the Town issued $14,400,000 of general obligation refunding bonds paying interest rates between 2.0% and 4.0% and maturing on December 15, 2028. The bonds and net premiums from the issuance totaling $16,324,698 were deposited with the refunding escrow agent to advance refund $13,975,000 of general obligation bonds maturing on various dates from 2019 to 2029 and for a current refunding of $1,138,500 of general obligation bonds. As a result of the refunding bonds, the Town reduced its total debt service requirements by $2,469,680, which resulted in an economic gain (difference between the present value of the debt service payments on the old and new debt) of $2,026,392. Prior Year Refunding – In prior years, the Town defeased general obligation bonds by placing the proceeds of the new bonds in an irrevocable trust account to provide for all future debt service payments on the old bonds. Accordingly, the trust account assets and the liability for the defeased bonds are not included in the government’s financial statements. At June 30, 2017, $3,120,000 of defeased bonds remains outstanding. Town of Nantucket, Massachusetts Page 69 of 143 Comprehensive Annual Financial Report The following reflects the current year activity in the long-term liability accounts: The Town’s governmental activities liabilities will be liquidated by the general fund. The business-type liabilities will be liquidated by the respective business-type funds. Beginning Ending Due within Balance Additions Deletions Balance one year Governmental Activities: Bond and note indebtedness * 46,360,549$ 39,251,000$ (9,546,885)$ 76,064,664$ 5,651,238$ Unamortized bond premium 123,130 2,204,493 (93,048) 2,234,575 301,655 Workers' compensation 104,847 44,231 (104,847) 44,231 44,231 Landfill closure * 8,903,000 1,228,000 - 10,131,000 - Compensated absences * 2,300,445 1,080,948 (1,150,222) 2,231,171 1,115,585 Other postemployment benefits * 39,904,639 7,696,529 (3,381,759) 44,219,409 - Net pension liability * 50,081,986 17,484,990 (9,472,663) 58,094,313 - Total Governmental Activities 147,778,596$ 68,990,191$ (23,749,424)$ 193,019,363$ 7,112,709$ Business-Type Activities - Siasconset Water: Bond and note debt 6,050,000$ 3,639,900$ (4,100,000)$ 5,589,900$ 380,000$ Unamortized bond premium 65,624 513,632 (65,624) 513,632 75,171 Other postemployment benefits 281,105 54,218 (23,823) 311,500 - Net pension liability 119,928 48,992 (29,789) 139,131 - Total Siasconset Water 6,516,657 4,256,742 (4,219,236) 6,554,163 455,171 Business-Type Activities - Wannacomet Water: Bond and note debt 18,024,800 7,722,400 (7,900,800) 17,846,400 1,675,000 Unamortized bond premium 440,013 1,024,544 (203,022) 1,261,535 206,851 Compensated absences 275,814 71,241 (137,907) 209,148 104,574 Other postemployment benefits 619,928 119,568 (52,536) 686,960 - Net pension liability 2,474,792 844,301 (446,030) 2,873,063 - Total Wannacomet Water 21,835,347 9,782,054 (8,740,295) 22,877,106 1,986,425 Business-Type Activities - Sewer: Bond and note debt 42,202,679 1,272,250 (3,947,035) 39,527,894 2,487,239 Unamortized bond premium 173,999 192,947 (24,391) 342,555 55,264 Compensated absences 105,390 34,203 (52,695) 86,898 43,449 Other postemployment benefits 388,310 74,895 (32,908) 430,297 - Net pension liability 1,509,261 538,337 (294,542) 1,753,056 - Total Sewer 44,379,639 2,112,632 (4,351,571) 42,140,700 2,585,952 Business-Type Activities - Nantucket Memorial Airport: Bond and note debt 10,624,000 203,000 (839,000) 9,988,000 818,000 Unamortized bond premium 186,022 - (25,449) 160,573 23,320 Compensated absences 591,801 347,059 (295,900) 642,960 321,480 Other postemployment benefits 2,678,453 516,601 (226,988) 2,968,066 - Net pension liability 5,777,980 2,052,289 (1,124,136) 6,706,133 - Total Nantucket Memorial Airport 19,858,256 3,118,949 (2,511,473) 20,465,732 1,162,800 Total Business-Type Activities 92,589,899$ 19,270,377$ (19,822,575)$ 92,037,701$ 6,190,348$ * As restated (see Note IV) Town of Nantucket, Massachusetts Page 70 of 143 Comprehensive Annual Financial Report The following is a summary of outstanding long-term debt obligations as of June 30, 2017: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Governmental Activities: General Obligation Bonds 2.00 - 5.00% * 17,007,309$ 35,470,000$ (4,360,675)$ 48,116,634$ Refunding Bonds 1.50 - 5.00% * 13,366,200 3,515,450 (3,375,200) 13,506,450 USDA Notes 4.13%1,138,500 - (1,138,500) - Massachusetts Clean Water Trust 0.00 - 2.42% 14,848,540 265,550 (672,510) 14,441,580 Total Governmental Activities 46,360,549 39,251,000 (9,546,885) 76,064,664 Add: Unamortized bond premium 123,130 2,204,493 (93,048) 2,234,575 Total Governmental Activities, net 46,483,679$ 41,455,493$ (9,639,933)$ 78,299,239$ Business-Type Activities - Siasconset Water: General Obligation Bonds 2.00 - 5.00% 6,050,000$ -$ (4,090,000)$ 1,960,000$ Refunding Bonds 2.00 - 4.00%- 3,639,900 (10,000) 3,629,900 Total Siasconset Water 6,050,000 3,639,900 (4,100,000) 5,589,900 Business-Type Activities - Wannacomet Water: General Obligation Bonds 2.00 - 5.00% 13,411,000 1,750,000 (7,401,000) 7,760,000 Refunding Bonds 1.50 - 5.00% 4,613,800 5,972,400 (499,800) 10,086,400 Total Wannacomet Water 18,024,800 7,722,400 (7,900,800) 17,846,400 Business-Type Activities - Sewer: General Obligation Bonds 2.00 - 5.00% 3,543,400 - (1,825,200) 1,718,200 Refunding Bonds 2.00 - 5.00%625,000 1,272,250 (100,000) 1,797,250 Massachusetts Clean Water Trust 0.00 - 5.50% 38,034,279 - (2,021,835) 36,012,444 Total Sewer 42,202,679 1,272,250 (3,947,035) 39,527,894 Business-Type Activities - Nantucket Memorial Airport: General Obligation Bonds 2.00 - 5.00% 10,624,000 203,000 (839,000) 9,988,000 Total Nantucket Memorial Airport 10,624,000 203,000 (839,000) 9,988,000 Total Business-Type Activities 76,901,479 12,837,550 (16,786,835) 72,952,194 Add:Unamortized bond premium 865,658 1,731,123 (318,486) 2,278,295 Total Business-Type Activities, net 77,767,137$ 14,568,673$ (17,105,321)$ 75,230,489$ * As restated (see Note IV) Town of Nantucket, Massachusetts Page 71 of 143 Comprehensive Annual Financial Report Payments on general long-term debt obligation bonds and notes due in future years consist of the following: Year Ending Principal Interest June 30 Balance Subsidy Net of Subsidy Balance Subsidy Net of Subsidy Total Governmental Activities 2018 5,651,238$ -$ 5,651,238$ 2,919,601$ (162)$ 2,919,439$ 8,570,677$ 2019 4,324,769 - 4,324,769 2,197,252 (96) 2,197,156 6,521,925 2020 4,317,448 - 4,317,448 2,067,152 (32) 2,067,120 6,384,568 2021 4,332,337 - 4,332,337 1,940,288 - 1,940,288 6,272,625 2022 4,346,741 - 4,346,741 1,792,263 - 1,792,263 6,139,004 2023-2027 18,166,456 - 18,166,456 6,751,825 - 6,751,825 24,918,281 2028-2032 12,767,368 - 12,767,368 4,084,013 - 4,084,013 16,851,381 2033-2037 11,767,542 - 11,767,542 2,406,428 - 2,406,428 14,173,970 2038-2042 10,390,765 - 10,390,765 776,636 - 776,636 11,167,401 Total 76,064,664$ -$ 76,064,664$ 24,935,458$ (290)$ 24,935,168$ 100,999,832$ Business-Type Activities: Siasconset Water 2018 380,000$ -$ 380,000$ 200,360$ -$ 200,360$ 580,360$ 2019 395,000 - 395,000 186,836 - 186,836 581,836 2020 400,000 - 400,000 162,186 - 162,186 562,186 2021 410,000 - 410,000 147,061 - 147,061 557,061 2022 420,000 - 420,000 130,961 - 130,961 550,961 2023-2027 2,325,000 - 2,325,000 395,862 - 395,862 2,720,862 2028-2032 1,169,900 - 1,169,900 56,025 - 56,025 1,225,925 2033-2036 90,000 - 90,000 5,100 - 5,100 95,100 5,589,900$ -$ 5,589,900$ 1,284,391$ -$ 1,284,391$ 6,874,291$ Business-Type Activities: Wannacomet Water 2018 1,675,000$ -$ 1,675,000$ 641,010$ -$ 641,010$ 2,316,010$ 2019 1,662,000 - 1,662,000 545,620 - 545,620 2,207,620 2020 1,575,000 - 1,575,000 483,389 - 483,389 2,058,389 2021 1,615,000 - 1,615,000 428,025 - 428,025 2,043,025 2022 1,458,000 - 1,458,000 370,914 - 370,914 1,828,914 2023-2027 6,623,600 - 6,623,600 1,046,719 - 1,046,719 7,670,319 2028-2032 2,527,800 - 2,527,800 254,957 - 254,957 2,782,757 2033-2037 710,000 - 710,000 48,750 - 48,750 758,750 17,846,400$ -$ 17,846,400$ 3,819,384$ -$ 3,819,384$ 21,665,784$ Business-Type Activities: Sewer 2018 2,487,239$ (184,053)$ 2,303,186$ 1,054,311$ (179,364)$ 874,947$ 3,178,133$ 2019 2,449,274 (189,738) 2,259,536 978,033 (162,957) 815,076 3,074,612 2020 2,510,251 (205,829) 2,304,422 884,960 (118,631) 766,329 3,070,751 2021 2,564,457 (213,650) 2,350,807 806,334 (100,705) 705,629 3,056,436 2022 2,470,031 (188,761) 2,281,270 730,839 (84,576) 646,263 2,927,533 2023-2027 10,977,068 (384,464) 10,592,604 2,550,094 (63,731) 2,486,363 13,078,967 2028-2032 8,089,307 - 8,089,307 1,425,959 - 1,425,959 9,515,266 2033-2037 6,726,726 - 6,726,726 546,130 - 546,130 7,272,856 2038 1,253,541 - 1,253,541 15,130 - 15,130 1,268,671 39,527,894$ (1,366,495)$ 38,161,399$ 8,991,790$ (709,964)$ 8,281,826$ 46,443,225$ Business-Type Activities: Nantucket Memorial Airport 2018 818,000$ -$ 818,000$ 367,169$ -$ 367,169$ 1,185,169$ 2019 800,000 - 800,000 341,087 - 341,087 1,141,087 2020 680,000 - 680,000 316,338 - 316,338 996,338 2021 605,000 - 605,000 294,362 - 294,362 899,362 2022 610,000 - 610,000 270,938 - 270,938 880,938 2023-2027 2,620,000 - 2,620,000 1,035,850 - 1,035,850 3,655,850 2028-2032 2,485,000 - 2,485,000 584,638 - 584,638 3,069,638 2033-2036 1,370,000 - 1,370,000 146,413 - 146,413 1,516,413 9,988,000$ -$ 9,988,000$ 3,356,795$ -$ 3,356,795$ 13,344,795$ Town of Nantucket, Massachusetts Page 72 of 143 Comprehensive Annual Financial Report MCWT Loan Subsidies – As previously noted in Note I. B., the Town has entered into loan agreements with the MCWT. It is expected that the Town will be subsidized by MCWT on a periodic basis for principal in the amount of $1,366,495 and interest in the amount of $710,254 until the maturity of these agreements. The following represents authorized and unissued debt as of June 30, 2017: Discretely Presented Component Unit – Nantucket Islands Land Bank Project Amount Governmental: Title V septic 1,000,000$ Fire station 16,000,000 School building 14,519,319 Public works 3,300,000 Miscellaneous 340,000 Business-type: Water projects 10,631,885 Sewer projects 62,293,000 Nantucket Memorial Airport 12,068,225 Our Island Home 1,715,000 Solid waste - landfill 2,333,000 Total Authorized and Unissued 124,200,429$ The following reflects the activity in the long-term liability accounts for the Land Bank for the year ended June 30, 2017: Beginning Ending Due within Balance Additions Deletions Balance one year Bond and note indebtedness 26,797,563$ 9,698,781$ (14,251,995)$ 22,244,349$ 3,831,674$ Capital leases 148,037 138,368 (99,946) 186,459 52,140 Net pension liability 1,427,568 246,301 (290,285) 1,383,584 - Total Land Bank 28,373,168$ 10,083,450$ (14,642,226)$ 23,814,392$ 3,883,814$ The following is a summary of outstanding long-term debt obligations as of June 30, 2017: Interest Beginning Ending Description of Issue Rate Balance Additions Maturities Balance Notes payable 3.00 - 6.06% 4,410,582$ -$ (2,710,582)$ 1,700,000$ General obligation bonds 2.00 - 5.00% 22,386,981 9,698,781 (11,541,413) 20,544,349 Total Land Bank 26,797,563$ 9,698,781$ (14,251,995)$ 22,244,349$ Town of Nantucket, Massachusetts Page 73 of 143 Comprehensive Annual Financial Report The general obligation bonds are secured by a second priority security interest in the Land Bank’s present and future transfer fees and unrestricted revenue. The bonds are additionally secured by a guarantee of the Town. Payments on general long-term debt obligation bonds and notes due in future years consist of the following: III.Other Information A. Retirement System Plan Description –The Town, County and Land Bank contribute to the Barnstable County System (the System), a cost-sharing multiple-employer defined benefit pension plan established under MGL Chapter 32 and is administered by the Barnstable County Retirement Board (BCRB). Standalone audited financial statements for the year ended December 31, 2016 were issued and may be obtained by writing to the Barnstable County Retirement System, 750 Attucks Lane, Hyannis, Massachusetts 02601. Membership –Membership in the System as of January 1, 2016, was as follows: Retirees and beneficiaries currently receiving benefits 2,937 Active plan members 4,699 Inactive plan members 622 Total 8,258 Benefit Terms – Membership in the System is mandatory for all full-time employees and non- seasonal, part-time employees who, in general, regularly work more than twenty hours per week. Teachers and certain administrative personnel employed by the Town’s school department participate in a separate pension plan administered by the Massachusetts Teachers’ Retirement System, which is the legal responsibility of the Commonwealth of Massachusetts. Members of the System do not participate in the federal Social Security retirement system. Massachusetts contributory retirement system benefits are uniform from retirement system to system. The System provides for retirement allowance benefits up to a maximum of 80% of a participant’s highest three-year or five-year average annual rate of regular compensation, depending on the participant’s date of hire. Benefit payments are based upon a participant’s age, length of creditable service, level of compensation and job classification. Year Ending June 30 Principal Interest Total 2018 2,131,674$ 267,149$ 2,398,823$ 2019 2,357,902 466,830 2,824,732 2020 2,442,902 397,778 2,840,680 2021 1,592,902 339,988 1,932,890 2022 1,652,902 303,830 1,956,732 2023-2027 7,104,510 890,757 7,995,267 2028-2032 3,261,557 169,580 3,431,137 Total 20,544,349$ 2,835,912$ 23,380,261$ Town of Nantucket, Massachusetts Page 74 of 143 Comprehensive Annual Financial Report The most common benefits paid by the System include normal retirement, disability retirement and survivor benefits. Normal retirement generally occurs at age 65. However, participants may retire after twenty years of service or at any time after attaining age 55, if hired prior to April 2, 2012 or at any time after attaining age 60 if hired on or after April 2, 2012. Participants with hire dates subsequent to January 1, 1978 must have a minimum of ten years’ creditable service in order to retire at age 55. Participants become vested after ten years of service. Benefits commencing before age 65 are provided at a reduced rate. Members working in certain occupations may retire with full benefits earlier than age 65. Ordinary disability retirement is where a participant is permanently incapacitated from a cause unrelated to employment. Accidental disability retirement is where the disability is the result of an injury or illness received or aggravated in the performance of duty. The amount of benefits to be received in such cases is dependent upon several factors, including the age at which the disability retirement occurs, the years of service, average compensation and veteran status. Survivor benefits are extended to eligible beneficiaries of participants whose death occurs prior to or following retirement. Cost-of-living adjustments granted to members of Massachusetts retirement systems granted between 1981 and 1997 and any increases in other benefits imposed by the Commonwealth during those years have been the financial responsibility of the Commonwealth. Beginning in 1998, the funding of cost-of-living amounts became the responsibility of the participating units like the System. The System may be amended or terminated in whole or in part at any time by the Massachusetts Legislature, provided that no such modification, amendment or termination shall be made that would deprive a current member of superannuation pension rights or benefits provided under applicable laws of Massachusetts, if such member has paid the stipulated contributions specified in sections or provisions of such laws. There were no significant changes to the System’s benefit terms in 2015. Contributions Requirements – The Town has elected provisions of Chapter 32, Section 22D (as amended) of Massachusetts General Laws, which require that a funding schedule be established to fully fund the pension plan by June 30, 2040. Under provisions of this law, participating employers are assessed their share of the total retirement cost based on the entry age, normal actuarial cost method. The Town, County and Land Bank contributed $5,612,430, $50,456, and $111,625, respectively, to the System in fiscal year 2017, which equaled the actuarially-determined contribution requirements for the fiscal year. The Town, County and Land Bank contributions as a percentage of covered payroll were 20.5%, 19.8% and 20.1%, respectively, in fiscal year 2017. Net Pension Liability – At June 30, 2017, the Town, County and Land Bank reported liabilities of $69,565,696, $625,399 and $1,383,584, respectively, for the proportionate shares of the net pension liability. The net pension liability was measured as of January 1, 2016 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. These figures were updated by the independent actuary to December 31, Town of Nantucket, Massachusetts Page 75 of 143 Comprehensive Annual Financial Report 2016. There were no material changes to the System’s benefit terms since the actuarial valuation; however, since the last actuarial valuation the System decreased the investment return assumption from 7.75% to 7.625% and changed mortality tables (see below). The Town, County and Land Bank’s proportions of the net pension liability are based on a projection of their long-term share of contributions to the System relative to the projected contributions of all employers. The Town, County and Land Bank’s proportions were approximately 9.901%, 0.089% and 0.197%, respectively, at December 31, 2016, which was consistent with the proportions measured at January 1, 2016. Pension Expense – The Town, County and Land Bank recognized $10,942,808, $75,281 and $166,546, respectively, in pension expense in the statement of activities in fiscal year 2017. Deferred Outflows of Resources and Deferred Inflows of Resources – At June 30, 2017, the Town reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the Town’s pension expense as follows: Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 3,954,327$ -$ Differences between expected and actual experience - 891,346 Changes in assumptions 4,126,681 - Changes in proportion and differences between Town contributions and proportionate share of contributions 1,945,093 - Total 10,026,101$ 891,346$ Year ended June 30, 2018 2,345,555$ 2019 2,345,555 2020 2,321,622 2021 1,102,723 2022 1,019,300 Total 9,134,755$ Town of Nantucket, Massachusetts Page 76 of 143 Comprehensive Annual Financial Report At June 30, 2017, the County reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the County’s pension expense as follows: Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 35,550$ -$ Differences between expected and actual experience - 8,013 Changes in assumptions 37,099 - Changes in proportion and differences between County contributions and proportionate share of contributions 553 87,283 Total 73,202$ 95,296$ Year ended June 30, 2018 (2,017)$ 2019 (2,017) 2020 (2,232) 2021 (13,190) 2022 (2,638) Total (22,094)$ Town of Nantucket, Massachusetts Page 77 of 143 Comprehensive Annual Financial Report At June 30, 2017, the Land Bank reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: The deferred outflows of resources and deferred inflows of resources are expected to be recognized in the County’s pension expense as follows: Actuarial Valuation – The measurement of the System’s total pension liability is developed by an independent actuary. The latest actuarial valuation was performed as of January 1, 2016. The significant actuarial assumptions used in the January 1, 2016 actuarial valuation included: Actuarial cost method: Entry age normal Amortization method: Appropriations increase at 5.28% per year Remaining amortization period: 20 years from July 1, 2016 for 2002 and 2003 Early Retirement Incentives, retiree sherrifs liability and remaining unfunded liability; and 6 years from July 1, 2016 for 2010 Early Retirement Inventive Investment rate of return: 7.625%, net of pension plan investment expenses, including inflation Cost of living adjustments: 3% on the first $16,000 of benefits as of July 1, 2015, $17,000 as of July 1, 2016 and $18,000 as of July 1, 2017 Asset valuation method: A preliminary actuarial value is first determined by taking the actuarial value of assets at the beginning of Deferred Outflows Deferred Inflows of Resources of Resources Net differences between projected and actual earnings on pension plan investments 78,647$ -$ Differences between expected and actual experience - 17,728 Changes in assumptions 82,075 - Changes in proportion and differences between Landbank contributions and proportionate share of contributions 1,222 193,098 Total 161,944$ 210,826$ Year ended June 30, 2018 (4,463)$ 2019 (4,463) 2020 (4,939) 2021 (29,181) 2020 (5,836) Total (48,882)$ Town of Nantucket, Massachusetts Page 78 of 143 Comprehensive Annual Financial Report the year and adding assumed investment earnings (at the assumed actuarial rate of return) and the net new money during the year (contributions less benefit payments and administrative expenses). Twenty percent of the difference between the market value of assets as reported in the Retirement System’s Annual Statement and the preliminary actuarial value of assets is added to the preliminary actuarial value. In order for the actuarial value to not differ too significantly from the market value of assets, the final actuarial value of assets must be within 20% of the market value of assets. Projected salary increases: Varied by length of service with ultimate ranges of 4.25%, 4.50% and 4.75% for groups 1, 2 and 4, respectively Rates of retirement: Varies based upon age for general, police and fire employees Rates of disability: For general employees, it was assumed that 45% of all disabilities are ordinary (55% are service connected); for police and fire employees, 10% of all disabilities are assumed to be ordinary (90% are service connected) Mortality rates: Pre-retirement rates reflect the RP-2000 Employee Mortality Table projected generationally with Scale BB2D for 2009 Healthy retiree rates reflect the RP-2000 Healthy Annuitant Mortality Table projected generationally with Scale BB2D from 2009 Disabled retiree rates reflect the RP-2000 Healthy Annuitant Table projected generationally with Scale BB2D from 2015 The System’s investment policy in regard to the allocation of its invested assets is established by the Commonwealth’s Pension Reserves Investment Management Board. System assets are managed on a total return basis with a long-term objective of achieving a fully-funded status for the benefits provided through the pension plan. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of January 1, 2016 are summarized in the following table: Town of Nantucket, Massachusetts Page 79 of 143 Comprehensive Annual Financial Report Discount Rate – The discount rate used to measure the total pension was 7.625%, which represents a decrease from the 7.75% in the previous actuarial valuation. The projection of cash flows used to determine the discount rate assumed plan member contributions were made at the current contribution rate and that employer contributions will be made at rates equal to the actuarially-determined contribution rates and the member rate. Based on those assumptions, the System’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity Analysis – The following presents the proportionate shares of the net pension liability calculated using the discount rate of 7.625% as well as the proportionate shares of the net pension liability using a discount rate that is one percentage point lower (6.625%) or one percentage point higher (8.625%) than the current rate: 1% Decrease (6.625%) Current Discount (7.625%) 1% Increase (8.625%) Town’s proportionate share of the net pension liability $ 88,523,095 $ 69,565,696 $ 53,576,059 County’s proportionate share of the net pension liability $ 795,825 $ 625,399 $ 481,650 Land Bank’s proportionate share of the net pension liability $ 1,760,733 $ 1,383,584 $ 1,065,360 B.Massachusetts Teachers’ Retirement System Teachers and certain administrative employees of the Town’s school department participate in the Massachusetts Teachers’ Retirement System (“MTRS”), a cost-sharing multiple employer defined benefit pension plan. MTRS is managed by the Commonwealth on behalf of municipal teachers and municipal teacher retirees. Like the Retirement System, MTRS was established under Chapter 32 of Massachusetts General Laws. The Commonwealth’s legislature has the authority to amend or modify the MTRS’s funding policies. Long-Term Target Expected Real Asset Class Allocation Rate of Return Domestic equities 18.00% 6.44% International equities: Developed markets 16.00% 7.40% Emerging markets 6.00% 9.42% Core fixed income 13.00% 2.02% High-yield fixed income 10.00% 4.43% Real estate 10.00% 5.00% Commodities 4.00% 4.43% Hedge fund, GTAA, Risk parity 13.00% 3.75% Private equity 10.00% 10.47% Town of Nantucket, Massachusetts Page 80 of 143 Comprehensive Annual Financial Report The Commonwealth is a nonemployer contributor to the MTRS and is legally responsible by statute for all actuarially determined employer contributions and future benefit requirements of the MTRS. Therefore, the Town is considered to be in a special funding situation as defined by GASB Statement No. 68, Accounting and Financial Reporting for Pensions. For the year ended June 30, 2017, the Commonwealth contributed $2,507,790 to the MTRS on behalf of the Town. The Town’s proportionate share of the collective MTRS net pension liability at this reporting date was 0.222997%, which was based on the actual, actuarially determined contribution made by the Commonwealth on behalf of the Town as a percentage of the total annual contribution made by the Commonwealth on behalf of all employers. The table below presents the Town’s proportionate share of the following: Commonwealth Portion Paid (or assumed) On Behalf of the Town Town Portion Net pension liability $ 49,857,572 $ (49,857,572) $ — Pension expense 5,085,799 (5,085,799) — The Town has recognized intergovernmental revenue and pension expense of $5,085,799 associated with this arrangement. C.Other Postemployment Benefits (OPEB) Plan Description –The Town administers a single-employer defined benefit healthcare plan (the “Plan”). The Plan provides health and life insurance benefits (other postemployment benefits) to current and future retirees, their dependents and beneficiaries in accordance with Massachusetts General Law Chapter 32B Section 20. Specific benefit provisions and contribution rates are established by collective bargaining agreements, state law, and Town ordinance. All benefits are provided through the Town’s self-funded insurance program described previously. The Plan does not issue a stand–alone financial report and is presented as a fiduciary fund in the Town’s financial statements. Under Chapter 32B Section 20 the Town Treasurer is the custodian of the Plan and since the Town has not designated a Board of Trustees the Town Treasurer under this general law is also the Trustee and as such, is responsible for the general supervision of the management, investment and reinvestment of the Plan assets. Plan assets may be invested and reinvested by the custodian consistent with the prudent investor rule established in Chapter 203C and may, with the approval of the State Retiree Benefits Trust Fund Board of Trustees, be invested in the State Retiree Benefits Trust Fund established in Section 24 of Chapter 32A. Plan assets shall be segregated from other funds and shall not be subject to the claims of any general creditor of the Town. For the year ended June 30, 2017 the Town records its net OPEB obligation under GASB 45, however note disclosures are also presented for the Town’s OPEB Plan since those note disclosures are required under GASB 74. All GASB 45 references will be removed in the fiscal year ended June 30, 2018 as they will no longer be applicable. Town of Nantucket, Massachusetts Page 81 of 143 Comprehensive Annual Financial Report Plan Membership - At June 30, 2017, membership in the Plan consisted of: Contributions – The contribution requirements of Plan members and the Town are established and may be amended by the Town, through negotiation with the Town employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the Town. The Town currently contributes enough money to the Plan to satisfy current obligations on a pay-as-you-go basis plus additional contributions of $500,000 annually. The costs of administering the Plan are paid by the Town. Investments – The investment policy for Plan assets is that used for all the Town’s other trust funds; this requires the Town Treasurer to invest in instruments included on the State legal list. Investment Concentration - The Plan did not maintain investments in any one organization that represented more than 5% of the Fiduciary Net Position of the Plan. Rate of Return - For the year ended June 30, 2017, the annual money-weighted rate of return on investments, net of investment expense, was 4.40 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. The following was the adopted asset allocation policy as of June 30, 2017: Net OPEB Liability – The components of the Net OPEB Liability of the Town are as follows as calculated using the methodology highlighted in GASB 74: Inactive employees or beneficiaries currently receiving benefits 372 Active employees 542 Total 914 Target Asset Class Allocation Domestic Equity - Large Cap 50.00% Domestic Fixed Income 49.50% Cash 0.50% 100.00% Total OPEB liability 110,320,559$ Plan Fiduciary Net Position (1,903,825) Net OPEB liability 108,416,734$ Plan Fiduciary Net Position as a percentatge of total liability 1.7% Town of Nantucket, Massachusetts Page 82 of 143 Comprehensive Annual Financial Report Actuarial assumptions - The total OPEB liability was determined by an actuarial valuation as of June 30, 2017, using the following actuarial assumptions, applied to all periods included in the measurement, unless otherwise specified: Changes in Assumptions: Effective June 30, 2017- The following changes in assumptions were made as compared to the actuarial valuation used in prior years: The discount rate was reduced to 4.00% from 4.50%. The Pre-Retirement Mortality: RP-2000 Employees Mortality Table projected generationally with scale BB and a base year 2009 for males and females. Previously the RP-2000 Mortality Table projected generationally with scale AA and base year 2010. The Post Retirement Mortality: RP-2000 Healthy Annuitant Mortality Table projected generationally with scale BB and a base year 2009 for males and females. Previously the RP-2000 Mortality Table projected generationally with scale AA and base year 2010. Actuarial Cost Method Entry Age Normal – Previously Projected Unit Credit. Investment Rate of Return - The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the target asset allocation as of June 30, 2017 (see the discussion of investment policy) are summarized in the following table: Investment rate of return 5.74%, net of OPEB plan investment expense, including inflation. Single Equivalent Discount Rate 4.00%, net of OPEB plan investment expense including inflation. Inflation 2.75% annually as of June 30, 2017 and for future periods. Salary Increases 3.00% annually as of June 30, 2017 and for future periods. Cost of Living Adjustment Not applicable. Pre-Retirement Mortality RP-2000 Employees Mortality Table projected with scale BB and a base year 2009 for males and females Post-Retirement Mortality RP-2000 Healthy Annuitant Table projected generationally with scale BB and a base year 2009 for males and females Disabled Mortality RP-2000 Healthy Annuitant Table projected generationally with scale BB and a base year 2012 for males and females Town of Nantucket, Massachusetts Page 83 of 143 Comprehensive Annual Financial Report Discount rate -The discount rate used to measure the total OPEB liability was 4.0 percent. This was a blended rate of (1) the long-term expected rate of return on OPEB plan investments that are expected to be used to finance the payment of benefits, to the extent that the Plan’s fiduciary net position is projected to be sufficient to make projected benefit payments and are invested using a strategy to achieve that return and; (2) a yield rate for a 20 year, tax exempt general obligation municipal bond with an average rating of AA/Aa or higher when the conditions in (1) are not met. Sensitivity of the net OPEB liability to changes in the discount rate -The following presents the net OPEB liability of the Town, as well as what the Town’s net OPEB liability would be if it were calculated using a discount rate that is one percentage point lower or one percentage-point higher than the current discount rate: Sensitivity of the net OPEB liability to changes in the healthcare cost trend rates - The following presents the net OPEB liability of the Town, as well as what the Town’s net OPEB liability would be if it were calculated using healthcare cost trend rates that are one percentage-point lower or one percentage-point higher than the current healthcare cost trend rates: Expected Investment Rate Asset Class of Return Domestic Equity - Large Cap 4.00% Domestic Fixed Income 2.00% Cash 0.00% Real rate of return 2.99% Inflation assumption 2.75% Total nominal rate of return 5.74% Investment expense - Net investment return 5.74% Current 1% Decrease (3%) Discount Rate (4%) 1% Increase (5%) Net OPEB Liability 127,666,791$ 108,416,734$ 93,431,276$ Service Cost 5,395,649 4,124,710 3,200,521 Healthcare 1% Decrease (4%) Trend Rate (5%) 1% Increase (6%) Net OPEB Liability 89,607,927$ 108,416,734$ 132,941,175$ Service Cost 3,095,701 4,124,710 5,560,100 Town of Nantucket, Massachusetts Page 84 of 143 Comprehensive Annual Financial Report Annual OPEB Cost and Net OPEB Obligation – The Town’s annual OPEB cost is calculated based on the annual required contribution “ARC” of the employer, an actuarially determined amount that is calculated in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded liabilities over a period not to exceed thirty years. The following table reflects the activity regarding the Town’s OPEB obligation: Trend information regarding Town’s annual OPEB cost, the percentage of the annual OPEB cost contributed and the net OPEB obligation is as follows: The annual OPEB cost of $8,461,811 was allocated to functional items as follows: Annual required contribution (ARC)6,980,511$ Interest on net OPEB obligation 1,754,900 Adjustment to ARC (273,600) Annual OPEB cost 8,461,811 Contributions made (3,718,014) Increase in net OPEB obligation 4,743,797 Net OPEB obligation at beginning of year 43,872,435 Net OPEB obligation at end of year 48,616,232$ Percentage Fiscal Year Annual OPEB of AOPEBC Net OPEB Ending Cost Contributed Obligation June 30, 2017 8,461,811 43.9% 48,616,232$ June 30, 2016 7,915,877 33.4% 43,872,435$ June 30, 2015 7,430,993 30.7% 38,596,910$ General Government 779,699$ Public Safety 1,662,886 Education 4,568,414 Public Works 434,661 Health and Human Services 151,267 Culture and Recreation 99,603 Siasconset Water 54,218 Wannacomet Water 119,567 Sewer 74,895 Airport 516,601 8,461,811$ Town of Nantucket, Massachusetts Page 85 of 143 Comprehensive Annual Financial Report Funding Status and Funding Progress – The funded status of the Plan at June 30, 2017, based on the most recent actuarial valuation performed as of June 30, 2017, was as follows (in millions): Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events into the future. Amounts determined regarding the funded status of the Plan and the ARC of the employer are subject to continual revision as estimates are compared to actual results and past expectations. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multi-year trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AAL for benefits. Methods and Assumptions –Projections of benefits for financial reporting purposes are based on the substantive Plan 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 the Plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The significant methods and assumptions as of the latest valuation are as follows: Discretely Presented Component Unit – Nantucket County Plan Description – Nantucket County’s employees participate in the single employer defined benefit healthcare plan administered by the Town which was described previously. Contributions – The contribution requirements of Plan members and the County are established and may be amended by the Town, through negotiation with the County employee unions. Retirees contribute 10 – 20 percent of the calculated contribution through pension benefit deductions. The remainder of the cost is funded by the County. The County currently contributes enough money to the Plan to satisfy current obligations on a pay-as-you-go basis. The costs of administering the Plan are paid by the Town. Actuarial Accrued Liability UAAL as a Actuarial (AAL) Entry Unfunded Percentage Value of Age Normal AAL Funded Covered of Covered Assets Cost (UAAL) Ratio Payroll Payroll (A)(B)(B-A) (A/B)(C)(B-A)/C 1.90$ $ 105.40 $ 103.50 1.81%26.9$ 378.4% Valuation date June 30, 2016 Actuarial cost method Individual Entry Age Amortization method 4,00% per year Remaining amortization period 21 years Interest discount rate 4.00% Inflation rate 2.57% Healthcare/Medical cost trend rate 5.00% Salaries 3.00% Town of Nantucket, Massachusetts Page 86 of 143 Comprehensive Annual Financial Report Annual OPEB Cost and Net OPEB Obligation – The County's annual OPEB cost is calculated based on the annual required contribution (ARC) of the employer, and actuarially determined amount that is calculated in accordance with GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded liabilities over a period not to exceed thirty years. The following table reflects the activity regarding the County's OPEB obligation: D.Risk Financing The Town is exposed to various risks of loss related to torts: theft of, damage to and destruction of assets; errors and omissions; and natural disasters for which the Town carries commercial insurance. The amount of claim settlements has not exceeded insurance coverage in any of the previous three years. Health Insurance – The Town maintains a "reinsured cost reimbursement program" which covers the group health insurance requirements of a majority of Town employees. The Plan is essentially a self-insurance program and employee claims in excess of $150,000 are reinsured by the Plan. The Town accrues an amount representing claims incurred but not reported (IBNR), which is based on a one month claims paid average. At June 30, 2017, the amount of the liability for IBNR health insurance claims totaled $1,315,778. This liability is the best estimate based on available information. In the fund-wide financial statements, the Town reports these self-insured activities in the Internal Service Fund where revenues are recorded when earned and expenses are recorded when the liability is incurred. Changes in the reported liability since July 1, 2015, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2017 $898,614 $14,788,914 $(14,371,750) $1,315,778 $1,315778 Fiscal Year 2016 775,395 13,861,420 (13,738,201) 898,614 898,614 Annual required contribution (ARC)22,731$ Interest on net OPEB obligation 5,715 Adjustment to ARC (891) Annual OPEB cost 27,555 Contributions made (12,107) Increase in net OPEB obligation 15,448 Net OPEB obligation at beginning of year 142,867 Net OPEB obligation at end of year 158,315$ Town of Nantucket, Massachusetts Page 87 of 143 Comprehensive Annual Financial Report Workers’ Compensation – The Town is also self-insured for their workers’ compensation activities. Workers’ compensation claims are administered by a third-party and are funded on a pay-as-you-go basis from an Internal Service Fund, with annual appropriations being made to the fund. The estimated future workers’ compensation liability is based on history and injury type. At June 30, 2017, the amount of the liability for workers’ compensation claims totaled $44,231. This liability is the best estimate based on available information. Changes in the reported liability since July 1, 2015, are as follows: Balance at Beginning of Year Claims and Changes in Estimates Claims Payments Balance at End of Year Current Portion Fiscal Year 2017 $104,847 $212,769 $(273,385) $ 44,231 $ 44,231 Fiscal Year 2016 117,324 261,925 (274,402) 104,847 104,847 E.Commitments The Town is in the planning and construction stages of several major capital projects including a fire station, school building, and sewer and waste water treatment plant improvements. The Town has entered into contracts to expend approximately $15,000,000, $31,000,000, $41,000,000 and $10,000,000, respectively to complete the projects. F.Contingencies The Town is party to certain legal claims, which are subject to many uncertainties, and the outcome of individual litigation matters in these situations cannot be reasonably estimated. Although the amount of liability, if any, in these situations at June 30, 2017, cannot be ascertained, management believes that the resulting liability, if any, should not materially affect the basic financial statements of the Town at June 30, 2017. Other amounts received or receivable from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal and state governments. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the Town expects such amounts, if any, to be immaterial. The Town is subject to certain Federal arbitrage laws in accordance with long-term borrowing agreements. Failure to comply with the rules could result in the payment of penalties. The Town does not believe it has failed to comply with any of these agreements. The Town is contingently liable for 35% of any deficit, including operating and debt service costs, which may be incurred by the Woods Hole, Martha’s Vineyard and Nantucket Steamship Authority (the “Authority”). As of December 31, 2016, the Authority’s reserve fund balance totaled $3,315,500 and bonds outstanding totaled $73,455,146, net of unamortized premiums of $7,145,146. For the fiscal year ended December 31, 2016, the Authority’s revenues exceeded its cost of services by $10,144,684. The Town is not required to make payments to the Authority unless the amount in the Authority’s reserve fund is insufficient. Since 1962, the Town has not made any payments to the Authority. Town of Nantucket, Massachusetts Page 88 of 143 Comprehensive Annual Financial Report G.Landfill Closure and Post-Closure Care Costs The Town operates a landfill under an Administrative Consent Order (ACO) with the Massachusetts Department of Environmental Protection (DEP). The current ACO allows the Town to mine the current landfill for useable materials through fiscal year 2019. The landfill consists of five cells, three lined and two unlined. The largest cell is unlined and has been closed for several years with sections scheduled for excavation under the mining program. Two cells, which are no longer accepting waste, are uncapped and unlined and have been previously excavated under the mining program. Another cell is inactive, lined but uncapped. There is one lined cell that is currently accepting waste. The final capping and closure of the unclosed cells are dependent on construction of new cells and a modified design for the closure will be submitted to the DEP after the conclusion of the mining program. The Town has recognized a closure liability of $10,131,000 in the Governmental Activities. This liability is based on estimates of the cost of all closure and post-closure care for 30 years. Actual costs may change due to inflation, changes in technology, or changes in regulations. H.Implementation of GASB pronouncements Current Year Implementations – In June 2015, the GASB issued GASB Statement No. 74, Financial Reporting for Postemployment Benefit Plans Other than Pension Plans. GASB 74’s objective was to improve the usefulness of information about postemployment benefits other than pensions included in the general purpose external financial reports of state and local governmental OPEB plans for making decisions and assessing accountability. The provisions of this Statement became effective for the Town in fiscal year 2017. The adoption of GASB No. 74 had a material effect on the Town. In August 2015, the GASB issued GASB Statement No. 77, Tax Abatement Disclosures. GASB 77 requires the disclosure of the terms of certain tax abatement agreements entered into by a government with individuals or entities. The provisions of this Statement became effective for the Town in fiscal year 2017. The adoption of GASB No. 77 did not have a material effect on the Town. In December 2015, the GASB issued GASB Statement No. 78, Pensions Provided through Certain Multiple-Employer Defined Benefit Pension Plans. The provisions of GASB 78 were applicable to certain government pension plans that (i) are not administered as a trust by a state or local governmental pension plan, (ii) are shared between governmental and nongovernmental employees, and (iii) have not predominant state of local governmental employer. The provisions of this Statement became effective for the Town in fiscal year 2017. The adoption of GASB No. 78 did not have a material effect on the Town. Town of Nantucket, Massachusetts Page 89 of 143 Comprehensive Annual Financial Report In January 2016, the GASB issued GASB Statement No. 80, Blending Requirements for Certain Component Units. The provisions of GASB 80 apply to component units that are organized as not-for-profit corporations in which the primary government is the sole corporate member. Such component units should be included in the reporting entity financial statements using the blending method. The provisions of this Statement became effective for the Town in fiscal year 2017. The adoption of GASB No. 80 did not have a material effect on the Town. In March 2016, the GASB issued GASB Statement No. 82, Pension Issues – an amendment of GASB Statements No. 67, No. 68, and No. 73. The objective of GASB 73 was to address issues raised with respect to previously issued statements related to pensions. The provisions of this Statement became effective for the Town in fiscal year 2017. The adoption of GASB No. 82 did not have a material effect on the Town. Future Implementations – In June 2015, the GASB issued GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pension Plans. GASB 75 establishes new accounting and financial reporting requirements for governments whose employees are provided with OPEB, as well as for certain nonemployer governments that have a legal obligation to provide financial support for OPEB provided to the employees of other entities. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2017 (fiscal year 2018). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In March 2016, the GASB issued GASB Statement No. 81, Irrevocable Split-Interest Agreements. The objective of the Statement is to improve accounting and financial reporting for irrevocable split-interest agreements by providing recognition and measurement guidance for situations in which a government is a beneficiary of the agreement. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2016 (fiscal year 2018) and should be applied retroactively. The Town is currently evaluating whether adoption will have a material impact on the financial statements. In November 2016, the GASB issued GASB Statement No. 83, Certain Asset Retirement Obligations. The objective of the Statement is to address accounting and financial reporting for certain asset retirement obligations that have legally enforceable liability associated with the retirement of a tangible capital asset. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2018 (fiscal year 2019). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In January 2017, the GASB issued GASB Statement No. 84, Fiduciary Activities. The objective of the Statement is to improve guidance regarding the identification of fiduciary activities for accounting and financial reporting purposes and how these activities should be reported. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2018 (fiscal year 2020). The Town is currently evaluating whether adoption will have a material impact on the financial statements. In May 2017, the GASB issued GASB Statement No. 86, Certain Debt Extinguishment Issues. The objective of the Statement is to improve consistency in accounting and financial reporting for in-substance defeasance of debt. The provisions of this Statement are effective for financial reporting periods beginning after June 15, 2017 (fiscal year 2018). The Town is currently evaluating whether adoption will have a material impact on the financial statements. Town of Nantucket, Massachusetts Page 90 of 143 Comprehensive Annual Financial Report In June 2017, the GASB issued GASB Statement No. 87, Leases. This Statement redefines the manner in which long-term leases are accounted and reported. The provisions of this Statement are effective for financial reporting periods beginning after December 15, 2019 (fiscal year 2021). The Town is currently evaluating whether adoption will have a material impact on the financial statements. IV. Prior Period Restatements A prior period adjustment was made for an increase in the capital assets reported in the Governmental activities and a decrease in the capital assets reported in the Wannacomet Water Enterprise Funds. Also, prior period adjustments were made to reclassify the Our Island Home and Solid Waste Enterprise Funds to the General Fund and Town Capital Projects Fund, which increased the beginning net position of Governmental Activities and the beginning fund balance of the General Fund and Town Capital Projects Fund, while decreasing the beginning net position of the Business-type Activities. A summary of the restatements is as follows: Our Governmental Business-type Wannacomet Island Solid Activities Activities Water Home Waste Prior year as presented 168,898,429$ 127,021,179$ 20,557,676$ (1,737,063)$ 214,483$ Reclass Our Island Home fund 8,465,169 (8,465,169) - (8,465,169) - Reclass Solid Waste fund 1,019,531 (1,019,531) - - (1,019,531) Reclass receivables 1,019,578 (1,019,578) - (330,833) (688,745) Reclass capital assets 9,392,847 (9,392,847) - (1,562,844) (7,830,003) Reclass net pension liability (7,774,825) 7,774,825 - 7,774,825 - Reclass compensated absence liability (311,535) 311,535 - 311,535 - Reclass OPEB liability (4,009,549) 4,009,549 - 4,009,549 - Reclass debt (415,000) 415,000 - - 415,000 Reclass accrued interest (5,796) 5,796 - - 5,796 Reclass landfill closure liability (8,903,000) 8,903,000 - - 8,903,000 Restate capital assets 659,248 (538,126) (538,126) - - As restated 168,035,097$ 128,005,633$ 20,019,550$ -$ -$ Internal Service Look-back Adjustment (191,977) 127,813,656$ Town General Capital Fund Projects Prior year as presented 23,282,845$ (4,551,202)$ Reclass Our Island Home 8,076,889 388,280 Reclass Solid Waste 392,831 626,700 As restated 31,752,565$ (3,536,222)$ Town of Nantucket, Massachusetts Page 91 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 92 of 143 Comprehensive Annual Financial Report Required Supplementary Information Town of Nantucket, Massachusetts Page 93 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2017 SCHEDULE OF THE TOWN'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2016 2015 2014 Town's proportion of the net pension liability (asset)9.90%9.52%9.51% Town's proportionate share of the net pension liability (asset)69,566$ 59,964$ 53,675$ Town's covered-employee payroll 27,426$ 25,827$ 24,938$ Town's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 253.65%232.18%215.23% Plan fiduciary net position as a percentage of the total pension liability 57.28%58.10%60.43% SCHEDULE OF THE TOWN CONTRIBUTIONS TO PENSION PLAN 2016 2015 2014 Actuarially determined contribution 5,612$ 5,143$ 4,959$ Contributions in relation to the actuarially determined contribution 5,612 5,143 4,959 Contribution deficiency (excess)-$ -$ -$ Town's covered-employee payroll 27,426$ 25,827$ 24,938$ Contributions as a percentage of covered-employee payroll 20.5%19.9%19.9% This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. Year Ended December 31, (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended December 31, Town of Nantucket, Massachusetts Page 94 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2017 SCHEDULE OF THE COUNTY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2016 2015 2014 County's proportion of the net pension liability (asset)0.09%0.09%0.09% County's proportionate share of the net pension liability (asset)625$ 551$ 519$ County's covered-employee payroll 252$ 243$ 241$ County's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 248.02%226.75%215.35% Plan fiduciary net position as a percentage of the total pension liability 57.28%58.10%60.43% SCHEDULE OF THE COUNTY CONTRIBUTIONS TO PENSION PLAN 2016 2015 2014 Actuarially determined contribution 50$ 47$ 48$ Contributions in relation to the actuarially determined contribution 50 47 48 Contribution deficiency (excess)-$ -$ -$ County's covered-employee payroll 252$ 243$ 241$ Contributions as a percentage of covered-employee payroll 19.8%19.3%19.9% This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. Year Ended December 31, (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended December 31, Town of Nantucket, Massachusetts Page 95 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2017 SCHEDULE OF THE LAND BANK'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY 2016 2015 2014 Land Bank's proportion of the net pension liability (asset)0.20%0.23%0.26% Land Bank's proportionate share of the net pension liability (asset)1,384$ 1,428$ 1,471$ Land Bank's covered-employee payroll 557$ 629$ 683$ Land Bank's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll 248.47%227.03%215.37% Plan fiduciary net position as a percentage of the total pension liability 57.28%58.10%60.43% SCHEDULE OF THE LAND BANK CONTRIBUTIONS TO PENSION PLAN 2016 2015 2014 Actuarially determined contribution 112$ 122$ 136$ Contributions in relation to the actuarially determined contribution 112 122 136 Contribution deficiency (excess)-$ -$ -$ Land Bank's covered-employee payroll 557$ 629$ 683$ Contributions as a percentage of covered-employee payroll 20.1%19.4%19.9% This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. Year Ended December 31, (dollar amounts are in thousands) (dollar amounts are in thousands) Year Ended December 31, Town of Nantucket, Massachusetts Page 96 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - PENSIONS YEAR ENDED JUNE 30, 2017 Year Ended June 30, 2016 2015 2014 Commonwealth's proportion of the collective net pension liability (asset)100.0%100.0%100.0% Town's proportion of the collective net pension liability (asset)0.0%0.0%0.0% Commonwealth's proportionate share of the net pension liability (asset)22,357,928$ 20,489,643$ 15,896,354$ Commonwealth's actuarially determined contribution 1,124,583$ 1,021,930$ 937,379$ Contributions to MTRS are the responsibility of the Commonwealth of Massachusetts. This schedule is presented to illustrate the requirement to show information for ten years. However, until a full ten-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. (dollar amounts are in thousands) SCHEDULE OF THE COMMONWEALTH'S COLLECTIVE SHARE OF THE NET PENSION LIABILITY MASSACHUSETTS TEACHER'S RETIREMENT SYSTEM Town of Nantucket, Massachusetts Page 97 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2017 UAAL as a Actuarial Actuarial Unfunded Percentage Actuarial Value of Accrued AAL Funded Covered of Covered Valuation Assets Liability (AAL)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)(b-a/c) 07/01/16 1,903,825$ 105,351,555$ 103,447,730$ 1.81%26,900,000$ 385% 07/01/14 248,522 88,841,553 88,593,031 0.28%N/A N/A 07/01/12 - 88,559,116 88,559,116 0.00%N/A N/A 07/01/10 - 82,253,000 82,253,000 0.00%N/A N/A 07/01/09 - 127,923,000 127,923,000 0.00%N/A N/A 07/01/07 - 104,980,000 104,980,000 0.00%N/A N/A Annual (A) Year Ended Required Actual Percentage June 30,OPEB Contribution Contributions Contributed 2017 $ 6,980,511 3,718,014$ 53.3% 2016 7,587,715 2,640,352 34.8% 2015 7,178,910 2,278,693 31.7% 2014 7,343,765 2,869,694 39.0% 2013 6,995,125 2,612,243 37.3% 2012 5,982,000 2,534,000 42.4% N/A - Information not available. See accompanying independent auditors' report. SCHEDULE OF FUNDING PROGRESS SCHEDULES OF CONTRIBUTION FUNDING Town of Nantucket, Massachusetts Page 98 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2017 SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS 2017 Total OPEB liability: Service cost 3,915,845$ Interest 4,305,825 Changes in benefit terms - Changes of benefit terms - Differences between expected and actual experience - Changes in assumptions - Benefit payments (3,230,121) Net change in total OPEB liability 4,991,549 Total OPEB liability - beginning of year 105,329,010 Total OPEB liability - end of year (a)110,320,559$ Plan fiduciary net position: Contributions - employer 500,000$ Net investment income 62,612 Benefit payments - Administrative expenses - Other - Net change in Plan fiduciary net position 562,612 Plan fiduciary net position - beginning of year 1,341,213 Plan fiduciary net position - end of year (b)1,903,825$ Net OPEB liability - end of year (a) - (b)108,416,734$ Plan fiduciary net position as a percentage of the total OPEB liability 1.73% Covered-employee payroll 26,950,000$ Net OPEB liability as a percentage of covered- employee payroll 402.29% Note: This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years in which information is available. Note: This schedule is presented using the optional format of combining the required schedules in paragraph 36a and 36b. See accompanying independent auditor's report. Town of Nantucket, Massachusetts Page 99 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS REQUIRED SUPPLEMENTARY INFORMATION - OPEB YEAR ENDED JUNE 30, 2017 SCHEDULE OF CONTRIBUTIONS 2017 Actuarially-determined contribution 9,698,176$ Contributions in relation to the actuarially- determined contribution (3,730,121) Contribution deficiency (excess)5,968,055$ Covered-employee payroll 26,950,000$ Contribution as a percentage of covered- employee payroll 13.8% Valuation Date June 30, 2017 Actuarial Cost Method Individual Entry Age Normal Amortization Period 30 years Asset Valuation Method Market Value of Assets as of Reporting Date Inflation 2.75% Healthcare cost trend rates 5.00% Salary increases 3.00% Investment rate of return 5.74% SCHEDULE OF INVESTMENT RETURNS 2017 4.40% Note: These schedules are presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, information is presented for those years in which information is available. See accompanying independent auditor's report. Annual money-weighted rate of return, net of investment expense Town of Nantucket, Massachusetts Page 100 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Revenues: Taxes: Real estate taxes 71,837,712$ 72,003,262$ 72,242,532$ -$ 72,242,532 239,270 Personal property taxes 1,452,421 1,452,421 1,400,705 - 1,400,705 (51,716) Tax title - -407,949 - 407,949 407,949 Motor vehicle excise 2,250,000 2,250,000 2,753,692 - 2,753,692 503,692 Boat excise 34,850 34,850 34,877 - 34,877 27 Meals taxes 900,000 900,000 1,061,396 - 1,061,396 161,396 Room occupancy taxes 2,850,000 2,850,000 3,498,400 - 3,498,400 648,400 79,324,983 79,490,533 81,399,551 - 81,399,551 1,909,018 Intergovernmental: State aid - chapter 70 3,067,074 3,067,074 3,067,074 - 3,067,074 - State aid - unrestricted 76,182 76,182 76,182 - 76,182 - State aid - state owned land 114,781 114,781 114,781 - 114,781 - State aid - other 4,913 4,913 4,793 - 4,793 (120) 3,262,950 3,262,950 3,262,830 - 3,262,830 (120) Departmental fees, charges, and other: Payments in lieu of taxes 7,330 7,330 14,706 - 14,706 7,376 Selectmen rentals 469,700 469,700 344,258 - 344,258 (125,442) Planning office filing and inspection fees 84,500 84,500 112,605 - 112,605 28,105 Police department fees 147,600 147,600 130,298 - 130,298 (17,302) Public safety detail charges 60,000 60,000 63,406 - 63,406 3,406 Fire department fees 55,650 55,650 51,350 - 51,350 (4,300) Inspection fees 259,550 259,550 404,143 - 404,143 144,593 Harbormaster fees 180,300 180,300 205,047 - 205,047 24,747 Historic district fees 202,500 202,500 294,592 - 294,592 92,092 Town gas 69,500 69,500 43,196 - 43,196 (26,304) Other miscellaneous 210,700 210,700 337,921 - 337,921 127,221 1,747,330 1,747,330 2,001,522 - 2,001,522 254,192 Licenses and permits: Liquor licenses 230,300 230,300 223,700 - 223,700 (6,600) Building permits 1,010,000 1,010,000 1,222,855 - 1,222,855 212,855 Other licenses and permits 134,700 134,700 252,210 - 252,210 117,510 1,375,000 1,375,000 1,698,765 - 1,698,765 323,765 Fines and forfeitures: Parking and court fines 180,000 180,000 271,187 - 271,187 91,187 Other fines 20,000 20,000 63,264 - 63,264 43,264 200,000 200,000 334,451 - 334,451 134,451 Penalties and interest on taxes 575,000 575,000 687,316 - 687,316 112,316 Interest and investment income 145,000 145,000 199,775 - 199,775 54,775 Total Revenues 86,630,263 86,795,813 89,584,210 - 89,584,210 2,788,397 Town of Nantucket, Massachusetts Page 101 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Expenditures: General Government: Moderator: Salary 180 180 180 - 180 - Operating 1,500 1,500 - -- 1,500 1,680 1,680 180 - 180 1,500 Town Administration: Salary 713,220 703,220 657,737 - 657,737 45,483 Operating 563,914 567,162 414,423 17,483 431,906 135,256 Articles 1,627,733 1,627,733 435,218 1,182,157 1,617,375 10,358 2,904,867 2,898,115 1,507,378 1,199,640 2,707,018 191,097 Finance Committee: Operating 18,680 18,680 18,246 - 18,246 434 Articles 500,000 500,000 - -- 500,000 518,680 518,680 18,246 - 18,246 500,434 Finance and Operations: Salary 710,820 710,820 564,687 - 564,687 146,133 Operating 324,551 324,552 227,432 61,542 288,974 35,578 Articles 7,609 30,288 21,434 7,609 29,043 1,245 1,042,980 1,065,660 813,553 69,151 882,704 182,956 Assessor: Salary 423,921 423,921 396,623 - 396,623 27,298 Operating 142,266 142,266 52,789 2,600 55,389 86,877 566,187 566,187 449,412 2,600 452,012 114,175 Collector: Salary 316,820 316,820 310,542 - 310,542 6,278 Operating 103,094 103,094 87,809 7,304 95,113 7,981 419,914 419,914 398,351 7,304 405,655 14,259 Treasurer: Salary 298,570 298,570 276,770 - 276,770 21,800 Operating 111,447 111,447 8,169 40,010 48,179 63,268 410,017 410,017 284,939 40,010 324,949 85,068 Information Systems/GIS: Salary 549,314 519,570 515,741 - 515,741 3,829 Operating 412,080 441,344 370,823 56,152 426,975 14,369 961,394 960,914 886,564 56,152 942,716 18,198 Legal: Operating 468,602 468,602 394,034 30,923 424,957 43,645 468,602 468,602 394,034 30,923 424,957 43,645 Human Resources: Salary 218,700 218,700 201,706 - 201,706 16,994 Operating 53,439 73,439 46,275 6,765 53,040 20,399 272,139 292,139 247,981 6,765 254,746 37,393 Town Clerk: Salary 257,980 263,980 263,980 - 263,980 - Operating 85,380 105,360 95,418 5,355 100,773 4,587 343,360 369,340 359,398 5,355 364,753 4,587 (continued) Town of Nantucket, Massachusetts Page 102 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Nantucket Planning Office: Salary 755,790 725,790 774,001 - 774,001 (48,211) Operating 353,262 404,262 311,551 43,826 355,377 48,885 1,109,052 1,130,052 1,085,552 43,826 1,129,378 674 Public Buildings: Operating 1,209,984 1,209,984 830,595 57,190 887,785 322,199 1,209,984 1,209,984 830,595 57,190 887,785 322,199 Natural Resources: Salary 518,884 518,884 492,683 - 492,683 26,201 Operating 135,168 160,168 107,301 37,148 144,449 15,719 654,052 679,052 599,984 37,148 637,132 41,920 Insurances: Auto casualty 134,400 134,400 114,194 - 114,194 20,206 Blanket liability 1,561,280 1,268,843 797,240 - 797,240 471,603 Claims deductible 117,000 117,000 24,490 11 24,501 92,499 Insurance consulting 47,583 47,583 35,571 12,445 48,016 (433) 1,860,263 1,567,826 971,495 12,456 983,951 583,875 Total General Government 12,743,171 12,558,162 8,847,662 1,568,520 10,416,182 2,141,980 Public Safety: Police: Salary 4,455,940 4,455,940 4,382,082 - 4,382,082 73,858 Operating 893,107 893,107 703,414 122,263 825,677 67,430 5,349,047 5,349,047 5,085,496 122,263 5,207,759 141,288 Centralized Dispatch: Salary 722,620 722,620 739,126 - 739,126 (16,506) 722,620 722,620 739,126 - 739,126 (16,506) Fire: Salary 2,569,108 2,569,108 2,402,928 - 2,402,928 166,180 Operating 422,903 422,903 214,211 29,294 243,505 179,398 2,992,011 2,992,011 2,617,139 29,294 2,646,433 345,578 Inspectors: Salary 635,969 635,969 620,319 - 620,319 15,650 Operating 21,389 21,389 34,523 475 34,998 (13,609) 657,358 657,358 654,842 475 655,317 2,041 Emergency Management: Operating 7,075 7,075 7,075 - 7,075 - 7,075 7,075 7,075 - 7,075 - Marine: Salary 733,838 733,838 681,926 - 681,926 51,912 Operating 86,743 86,743 56,997 22,303 79,300 7,443 Articles 185,155 350,705 18,387 332,318 350,705 - 1,005,736 1,171,286 757,310 354,621 1,111,931 59,355 Total Public Safety 10,733,847 10,899,397 9,860,988 506,653 10,367,641 531,756 Town of Nantucket, Massachusetts Page 103 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Education: Salary and operating 26,909,544 26,916,315 25,389,317 1,317,616 26,706,933 209,382 Articles 925,905 925,905 184,974 740,931 925,905 - Total Education 27,835,449 27,842,220 25,574,291 2,058,547 27,632,838 209,382 Public Works: Public Works: Salary 2,429,456 2,429,456 2,181,101 - 2,181,101 248,355 Operating 529,349 629,350 523,300 33,878 557,178 72,172 Articles 335,007 335,006 177,676 157,330 335,006 - 3,293,812 3,393,812 2,882,077 191,208 3,073,285 320,527 Street Lighting: Operating 165,000 165,000 84,126 136 84,262 80,738 165,000 165,000 84,126 136 84,262 80,738 Mosquito Control: Operating 105,063 140,063 91,480 16,842 108,322 31,741 105,063 140,063 91,480 16,842 108,322 31,741 Snow and Ice Removal: Operating 82,600 82,600 288,638 - 288,638 (206,038) 82,600 82,600 288,638 - 288,638 (206,038) Gas/Town Vehicles: Operating 446,033 446,033 237,204 29,942 267,146 178,887 446,033 446,033 237,204 29,942 267,146 178,887 Total Public Works 4,092,508 4,227,508 3,583,525 238,128 3,821,653 405,855 Health and Human Services: Health: Salary 263,645 263,645 278,477 - 278,477 (14,832) Operating 67,476 67,476 38,735 9,967 48,702 18,774 331,121 331,121 317,212 9,967 327,179 3,942 Commision on Disability: Salary 10,100 10,100 8,002 - 8,002 2,098 Operating 1,700 1,700 1,218 466 1,684 16 11,800 11,800 9,220 466 9,686 2,114 Senior Services/Council on Aging: Salary 162,640 162,640 162,745 - 162,745 (105) Operating 29,095 29,095 10,112 535 10,647 18,448 191,735 191,735 172,857 535 173,392 18,343 Veterans Services: Salary 15,000 15,000 4,528 - 4,528 10,472 Operating 18,512 18,512 11,600 611 12,211 6,301 33,512 33,512 16,128 611 16,739 16,773 Human Services: Salary 184,370 184,370 74,678 - 74,678 109,692 Operating 15,550 15,550 3,740 244 3,984 11,566 Articles 400,652 400,652 287,536 113,116 400,652 - 600,572 600,572 365,954 113,360 479,314 121,258 Total Health and Human Services 1,168,740 1,168,740 881,371 124,939 1,006,310 162,430 (Continued) Town of Nantucket, Massachusetts Page 104 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Culture and Recreation: Atheneum (Library): Operating 702,165 702,165 702,165 - 702,165 - 702,165 702,165 702,165 - 702,165 - Visitor Services: Salary 288,391 288,391 288,158 - 288,158 233 Operating 184,048 184,048 131,708 25,386 157,094 26,954 472,439 472,439 419,866 25,386 445,252 27,187 Historical District Commission: Salary 112,050 112,050 9,005 - 9,005 103,045 112,050 112,050 9,005 - 9,005 103,045 Town Clock: Operating 4,777 4,777 2,961 52 3,013 1,764 4,777 4,777 2,961 52 3,013 1,764 Total Culture and Recreation 1,291,431 1,291,431 1,133,997 25,438 1,159,435 131,996 State and County Assessments: State assessments and charges 75,025 75,025 80,810 - 80,810 (5,785) Transportation authorities assessments 355,195 355,195 355,195 - 355,195 - County assessments and charges 170,201 170,201 170,201 - 170,201 - Total State and County Assessments 600,421 600,421 606,206 - 606,206 (5,785) Pension and Fringe Benefits: Medical Insurance: Salary 12,141,981 12,141,021 11,549,921 - 11,549,921 591,100 12,141,981 12,141,021 11,549,921 - 11,549,921 591,100 Unemployment: Salary 170,000 170,960 170,960 - 170,960 - 170,000 170,960 170,960 - 170,960 - Workers' Compensation: Salary 197,000 197,000 197,000 - 197,000 - 197,000 197,000 197,000 - 197,000 - Laborer's Union Pension: Salary 44,880 44,880 37,772 4,155 41,927 2,953 44,880 44,880 37,772 4,155 41,927 2,953 Pension Assessments: Barnstable Retirement 3,921,257 3,921,257 3,921,257 - 3,921,257 - 3,921,257 3,921,257 3,921,257 - 3,921,257 - Other Employee Benefits: Salary 386,611 386,611 191,855 - 191,855 194,756 386,611 386,611 191,855 - 191,855 194,756 Total Pension and Fringe Benefits 16,861,729 16,861,729 16,068,765 4,155 16,072,920 788,809 Town of Nantucket, Massachusetts Page 105 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND YEAR ENDED JUNE 30, 2017 Budgeted Amounts Actual Actual Variance Original Final Budgetary Budgetary Positive Budget Budget Amounts Encumbrances Adjusted (Negative) Debt Service 7,080,065 7,080,065 6,894,532 - 6,894,532 185,533 Total Expenditures 82,407,361 82,529,673 73,451,337 4,526,380 77,977,717 4,551,956 Other Financing Sources (Uses) Premiums from debt issurance - -87,658 87,658 87,658 Transfers in 684,300 684,300 684,300 684,300 - Transfers out (10,515,668) (12,058,906) (12,058,727) (12,058,727) 179 Total Other Financing Sources (Uses)(9,831,368) (11,374,606) (11,286,769) (11,286,769)$ 87,837 Excess (Deficiency) of Revenues and Other Financing Sources Over Expenditures/Uses Of Prior Year Budgetary Fund Balance (5,608,466) (7,108,466) 4,846,104$ 7,428,190$ Other Budgetary Items Use of unassigned fund balance (free cash)72,100$ 1,572,100$ Use of excess abatement reserve (overlay surplus)410,160 410,160 Prior year encumbrances 2,546,391 2,546,391 Prior year articles 2,267,807 2,267,807 Encumbrance reversions (73,393) (73,393) Prior year deficits (206,100) (206,100) Total Other Budgetary Items 5,016,965 6,516,965 Net budget and actual (591,501)$ (591,501)$ (Concluded) The notes to the financial statements are an integral part of this statement. The notes to the required supplementary information are and integral part of this statement. Town of Nantucket, Massachusetts Page 106 of 143 Comprehensive Annual Financial Report TOWN OF NANTUCKET, MASSACHUSETTS NOTES TO REQUIRED SUPPLEMENTARY INFORMATION YEAR ENDED JUNE 30, 2017 I. Budgetary Basis of Accounting Budgetary Information –An annual budget is legally adopted for the General Fund and the Enterprise Funds. The annual budgets are prepared by Town Administration, reviewed and approved by the Board of Selectmen, recommended by the Finance Committee and voted by the taxpayers at the Annual Town Meeting. Expenditures may not legally exceed appropriations at the department level, or in the categories of personnel and non-personnel expenses. Transfers between and within departments require approval at a Special Town Meeting, unless allowed under Massachusetts General Law. At the close of each fiscal year, unencumbered appropriation balances lapse and revert to unassigned fund balance. The Town Meeting adopts an annual budget for the general fund in conformity with the guidelines described above. During fiscal year 2017, Town Meeting approved various supplemental budgetary appropriations which increased public safety articles by approximately $165,000 and increased transfers to other funds by approximately $1.5 million. The Finance Director’s Office has the responsibility to ensure that budgetary control is maintained in the manner in which the appropriations were voted by Town Meeting. Budgetary control is exercised through the Town’s accounting system. Budgetary-to-GAAP Reconciliation –The Town’s general fund is prepared on a basis of accounting other than GAAP to conform to the Uniform Municipal Accounting System basis of accounting as prescribed by the Massachusetts Department of Revenue. A reconciliation of the budgetary-basis to GAAP-basis results for the General Fund for the fiscal year ended June 30, 2017, is as follows: Basis of Accounting Fund Perspective Differences Differences Total Revenues on a budgetary basis 89,584,210$ Stabilization revenue -$ 8,857$ 8,857 Nursing home revenues - 5,773,038 5,773,038 Landfill revenues - 3,530,023 3,530,023 Change in revenue accruals (137,036) - (137,036) On behalf payments 5,085,799 - 5,085,799 Revenues on a GAAP basis 4,948,763$ 9,311,918$ 103,844,891$ Expenditures on a budgetary basis 73,451,337$ Reclass indirect transfers against expenditures (412,000)$ -$ (412,000) Nursing home expenditures - 7,787,309 7,787,309 Landfill expenditures - 8,294,336 8,294,336 Change in expenditure accruals 413,414 - 413,414 Refunding transactions 118,086 - 118,086 On behalf payments 5,085,799 - 5,085,799 Reclass transfers to agency fund - 21,735 21,735 Expenditures on a GAAP basis 5,205,299$ 16,103,380$ 94,760,016$ Town of Nantucket, Massachusetts Page 107 of 143 Comprehensive Annual Financial Report Excess of Expenditures Over Appropriations – During the fiscal year ended, the Town overspent its appropriation for snow and ice removal costs by $206,038. This will be raised through subsequent tax assessments when the Town sets its tax rate for fiscal year 2018. Basis of Accounting Fund Perspective Differences Differences Total Other financing (uses) on a budgetary basis (11,286,769)$ Reclass indirect transfers against expenditures (412,000)$ -$ (412,000) Nursing home transfers -2,270,235 2,270,235 Landfill transfers -7,176,303 7,176,303 Refunding transactions 118,086 - 118,086 Reclass transfers to agency fund - 21,735 21,735 Other financing (uses) on a GAAP basis (293,914)$ 9,468,273$ (2,112,410)$ Town of Nantucket, Massachusetts Page 108 of 143 Comprehensive Annual Financial Report Combining Statements Town of Nantucket, Massachusetts Page 109 of 143 Comprehensive Annual Financial Report Nonmajor Governmental Funds Special Revenue Funds – Special revenue funds are used to account for certain revenue generating activities that are legally and/or programmatically restricted to expenditures for a specific purpose. From the Town’s financial ledgers, these activities can be distinctly categorized into the following groupings: School Lunch Fund – This segregated revolving fund accounts for the activities of the child nutrition programs; amounts collected from services include federal and state meal reimbursements and meal charges. School Federal Grants – This fund accounts for educational-based grant programs received either directly from federal agencies or indirectly through pass-through entities. School State Grants – This fund accounts for educational-based grant programs received directly from State agencies. Town Federal Grants – This fund accounts for non-school grant programs received either directly from federal or indirectly through pass-through entities. Town State Grants – This fund accounts for non-school grant programs received directly from State agencies. Community Preservation – This fund accounts for monies received by the Town through a tax surcharge to its taxpayers and a match from the State. The purpose of the fund is for the preservation of space in Nantucket. Road Improvements – This fund accounts for monies received from the State under MGL Chapter 90 for eligible road improvements. School Revolving Funds – This fund accounts for educational-based activities within revolving funds established in accordance with MGL Chapter 44, Section 53E ½ and Chapter 71. Town Revolving Funds – This fund accounts for the non-school related activity within revolving funds established in accordance with MGL Chapter 44, Section 53E ½ and other applicable statutes. Property Sale Proceeds – This fund accounts for receipts collected from the sale of Town owned real property. Gifts – This fund accounts for donated monies which relate to all Town activities. Town of Nantucket, Massachusetts Page 110 of 143 Comprehensive Annual Financial Report Permanent Funds – Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support governmental programs. Cemetery Trust Funds – This fund accounts for contributions earmarked for the perpetual care and maintenance of cemetery facilities and property. Other Trust Funds – This fund accounts for all contributions including: gifts, donations and bequests for which only earnings on the original trust corpus may be expended to benefit government approved programs, other than those associated with cemetery and library activities. Town of Nantucket, Massachusetts Page 111 of 143 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Assets: Cash and cash equivalents 250,667$ 32,100$ 411,246$ 177,025$ 752,776$ Investments - - - - - Receivables, net of allowance for uncollectibles: Property taxes - - - - - Departmental and other - - - - - Intergovernmental - 63,287 - - 937,477 Total Assets 250,667 95,387 411,246 177,025 1,690,253 Total Deferred Outflows of Resources - - - - - Total Assets and Deferred Outflows of Resources 250,667$ 95,387$ 411,246$ 177,025$ 1,690,253$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable 113,182$ 5,322$ 750$ 1,704$ 29,792$ Accrued payroll and withholdings - 2,680 - 4,511 - Other liabilities - - - - - Due to other funds - - - - - Bond anticipation notes payable - - - - 1,000,000 Total Liabilities 113,182 8,002 750 6,215 1,029,792 Deferred Inflows of Resources Unavailable revenue - property taxes - - - - - Unavailable revenue - other - - - - - Total Deferred Inflows of Resources - - - - - Fund Balances: Nonspendable - - - - - Restricted 137,485 87,385 410,496 170,810 660,461 Unassigned - - - - - Total Fund Balances 137,485 87,385 410,496 170,810 660,461 Total Liabilities, Deferred Inflows of Resources and Fund Balances 250,667$ 95,387$ 411,246$ 177,025$ 1,690,253$ JUNE 30, 2017 COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Town of Nantucket, Massachusetts Page 112 of 143 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 4,931,003$ -$ 1,195,617$ 6,030,649$ 1,805,564$ 826,717$ 16,413,364$ - - - - - - - 176,106 - - - - - 176,106 - - - 277,675 - - 277,675 - - - - - - 1,000,764 5,107,109 - 1,195,617 6,308,324 1,805,564 826,717 17,867,909 - - - - - - - 5,107,109$ -$ 1,195,617$ 6,308,324$ 1,805,564$ 826,717$ 17,867,909$ 307,594$ -$ 7,444$ 413,628$ -$ 5,903$ 885,319$ 2,827 - 44,150 76,786 - - 130,954 1,684 - 196,269 - - - 197,953 - 306,357 - - - - 306,357 800,000 - - - - - 1,800,000 1,112,105 306,357 247,863 490,414 - 5,903 3,320,583 176,106 - - - - - 176,106 - - - 277,675 - - 277,675 176,106 - - 277,675 - - 453,781 - - - - - - - 3,818,898 - 947,754 5,540,235 1,805,564 820,814 14,399,902 - (306,357) - - - - (306,357) 3,818,898 (306,357) 947,754 5,540,235 1,805,564 820,814 14,093,545 5,107,109$ -$ 1,195,617$ 6,308,324$ 1,805,564$ 826,717$ 17,867,909$ Town of Nantucket, Massachusetts Page 113 of 143 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2017 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Assets: Cash and cash equivalents -$ -$ -$ 16,413,364$ Investments 151,056 18,174 169,230 169,230 Receivables, net of allowance for uncollectibles: Property taxes - - - 176,106 Departmental and other - - - 277,675 Intergovernmental - - - 1,000,764 Total Assets 151,056 18,174 169,230 18,037,139 Total Deferred Outflows of Resources - - - - Total Assets and Deferred Outflows of Resources 151,056$ 18,174$ 169,230$ 18,037,139$ Liabilities and Fund Balances: Liabilities: Warrants and accounts payable -$ -$ -$ 885,319$ Accrued payroll and withholdings - - - 130,954 Other liabilities - - - 197,953 Due to other funds - - - 306,357 Bond anticipation notes payable - - - 1,800,000 Total Liabilities - - - 3,320,583 Deferred Inflows of Resources Unavailable revenue - property taxes - - - 176,106 Unavailable revenue - other - - - 277,675 Total Deferred Inflows of Resources - - - 453,781 Fund Balances: Nonspendable 44,305 500 44,805 44,805 Restricted 106,751 17,674 124,425 14,524,327 Unassigned - - - (306,357) Total Fund Balances 151,056 18,174 169,230 14,262,775 Total Liabilities, Deferred Inflows of Resources and Fund Balances 151,056$ 18,174$ 169,230$ 18,037,139$ (Concluded) Town of Nantucket, Massachusetts Page 114 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 115 of 143 Comprehensive Annual Financial Report School School Town Town School Federal State Federal State Lunch Grants Grants Grants Grants Revenues: Intergovernmental 231,964$ 519,007$ 344,528$ 304,367$ 537,610$ Motor vehicle and other excises - - - - - Community preservation surcharges - - - - - Investment income - - - 38 - Departmental and other revenue 392,984 - - - 102,227 Contributions and donations - - - - - Total Revenues 624,948 519,007 344,528 304,405 639,837 Expenditures: Current: General government - - - 218,407 150,489 Public safety - - - - 93,832 Education 680,090 571,753 537,740 - - Public works - - - - 8,737 Health and human services - - - - 251,859 Culture and recreation - - - - 22,248 Debt service: Principal - - - - 311,793 Interest - - - - - Total Expenditures 680,090 571,753 537,740 218,407 838,958 Excess (Deficiency) Of Revenues Over (Under) Expenditures (55,142) (52,746) (193,212) 85,998 (199,121) Other Financing Sources (Uses): Issuance of bonds and notes - - - - 265,550 Sale of capital assets - - - - - Transfers in - - - - - Total Other Financing Sources (Uses)- - - - 265,550 Net Change in Fund Balances (55,142) (52,746) (193,212) 85,998 66,429 Fund Balances - Beginning of Year 192,627 140,131 603,708 84,812 594,032 Fund Balances - End of Year 137,485$ 87,385$ 410,496$ 170,810$ 660,461$ Special Revenue Funds FISCAL YEAR ENDED JUNE 30, 2017 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 116 of 143 Comprehensive Annual Financial Report Sub-total Community Road School Town Property Sale Gift Special Preservation Improvements Revolving Revolving Proceeds Funds Revenue Funds 425,648$ -$ -$ 213,184$ -$ -$ 2,576,308$ - - - 35,086 - - 35,086 2,072,835 - - - - - 2,072,835 14,406 - - 788 - - 15,232 17,230 - 1,421,870 1,901,164 - - 3,835,475 - - - - - 624,382 624,382 2,530,119 - 1,421,870 2,150,222 - 624,382 9,159,318 - - - 274,545 5,190 78,246 726,877 - - - 851,133 - 52,914 997,879 - - 1,760,601 - - 207,273 3,757,457 - 306,357 - 10,000 - 753 325,847 - - - 84,025 - 82 335,966 3,083,584 - - 95,784 - - 3,201,616 97,000 - - - - - 408,793 27,801 - - - - - 27,801 3,208,385 306,357 1,760,601 1,315,487 5,190 339,268 9,782,236 (678,266) (306,357) (338,731) 834,735 (5,190) 285,114 (622,918) - - - - - - 265,550 - - - - 208,199 - 208,199 - - 465,000 - - - 465,000 - - 465,000 - 208,199 - 938,749 (678,266) (306,357) 126,269 834,735 203,009 285,114 315,831 4,497,164 - 821,485 4,705,500 1,602,555 535,700 13,777,714 3,818,898$ (306,357)$ 947,754$ 5,540,235$ 1,805,564$ 820,814$ 14,093,545$ (Continued) Town of Nantucket, Massachusetts Page 117 of 143 Comprehensive Annual Financial Report NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES FISCAL YEAR ENDED JUNE 30, 2017 Permanent Funds Total Cemetery Other Sub-total Nonmajor Trust Trust Permanent Governmental Funds Funds Funds Funds Revenues: Intergovernmental -$ -$ -$ 2,576,308$ Motor vehicle and other excises - - - 35,086 Community preservation surcharges - - - 2,072,835 Investment income 203 30 233 15,465 Departmental and other revenue 1,800 - 1,800 3,837,275 Contributions and donations - - - 624,382 Total Revenues 2,003 30 2,033 9,161,351 Expenditures: Current: General government - - - 726,877 Public safety - - - 997,879 Education - - - 3,757,457 Public works - - - 325,847 Health and human services - - - 335,966 Culture and recreation - - - 3,201,616 Debt service: Principal - - - 408,793 Interest - - - 27,801 Total Expenditures - - - 9,782,236 Excess (Deficiency) Of Revenues Over (Under) Expenditures 2,003 30 2,033 (620,885) Other Financing Sources (Uses): Issuance of bonds and notes - - - 265,550 Sale of capital assets - - - 208,199 Transfers in - - - 465,000 Total Other Financing Sources (Uses)- - - 938,749 Net Change in Fund Balances 2,003 30 2,033 317,864 Fund Balances - Beginning of Year 149,053 18,144 167,197 13,944,911 Fund Balances - End of Year 151,056$ 18,174$ 169,230$ 14,262,775$ (Concluded) Town of Nantucket, Massachusetts Page 118 of 143 Comprehensive Annual Financial Report Internal Service Funds Narrative Internal service funds are used to account for the financing of services provided by one department to other departments or governmental units. The Town’s risk financing activities accounts for in the internal service funds can be distinctly categorized into the following groupings: Health Claims – This fund accounts for the group health and dental insurance activity for active Town employees and retirees. Workers’ Compensation Claims – This fund accounts for workers’ compensation benefits, replacement wages and medical claims expenses of employees that qualify for such benefits. Town of Nantucket, Massachusetts Page 119 of 143 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2017 Total Health Workers'Internal Claims Compensation Service Funds Assets: Current assets: Cash and cash equivalents 4,718,635$ 196,094$ 4,914,729$ Reinsured claims receivable 88,921 - 88,921 Total Assets 4,807,556 196,094 5,003,650 Total Deferred Outflows of Resources - - - Total Assets and Deferred Outflows of Resources 4,807,556 196,094 5,003,650 Liabilities: Current liabilities: Warrants and accounts payable 299,547$ 80$ 299,627$ Health claims incurred but not reported 1,315,778 - 1,315,778 Workers' compensation claims - 44,231 44,231 Total Current Liabilities 1,615,325 44,311 1,659,636 Total Deferred Inflows of Resources - - - Total Liabilities and Deferred Inflows of Resources 1,615,325 44,311 1,659,636 Net Position: Unrestricted 3,192,231 151,783 3,344,014 TOTAL NET POSITION 3,192,231$ 151,783$ 3,344,014$ Town of Nantucket, Massachusetts Page 120 of 143 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION FISCAL YEAR ENDED JUNE 30, 2017 Total Health Workers'Internal Service Claims Compensation Funds Operating Revenues: Employee contributions 2,111,438$ -$ 2,111,438$ Employer contributions 13,924,597 370,329 14,294,926 Reinsured claims proceeds 760,647 - 760,647 Total Operating Revenues 16,796,682 370,329 17,167,011 Operating Expenditures: Employee benefits 15,968,611 212,769 16,181,380 Operating Income (loss)828,071 157,560 985,631 Nonoperating Revenues: Investment income - 2,584 2,584 Income (loss) Before Transfers 828,071 160,144 988,215 Change in Net Position 828,071 160,144 988,215 Fund Balances - Beginning of Year 2,364,160 (8,361) 2,355,799 Fund Balances - End of Year 3,192,231$ 151,783$ 3,344,014$ Town of Nantucket, Massachusetts Page 121 of 143 Comprehensive Annual Financial Report INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS FISCAL YEAR ENDED JUNE 30, 2017 Total Health Workers'Internal Service Claims Compensation Funds Cash Flows From Operating Activities: Receipts from employees 2,111,438$ -$ 2,111,438$ Receipts from employer 13,924,597 370,329 14,294,926 Receipts from reinsured claims 868,964 - 868,964 Payments for interfund services used (14,526,808) (277,718) (14,804,526) Net Cash Provided by (Used in) Operating Activities 2,378,191 92,611 2,470,802 Cash Flows From Investing Activities: Investment income - 2,584 2,584 Net Cash Provided by (Used in) Investing Activities - 2,584 2,584 Net Change in Cash and Cash Equivalents 2,378,191 95,195 2,473,386 Cash and Cash Equivalents: Beginning of the Year 2,340,444 100,899 2,441,343 End of the Year 4,718,635$ 196,094$ 4,914,729$ Reconciliation of Operating Income to Net Cash Provided by (Used in) Operating Activities: Operating income (loss)828,071$ 157,560$ 985,631$ Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Changes in assets and liablities: Receivables 108,317 - 108,317 Prepaid items 1,183,200 - 1,183,200 Accounts payable and accrued expenses (158,561) (4,333) (162,894) Accrued benefits payable 417,164 (60,616) 356,548 Net Cash Provided by (Used in) Operating Activities 2,378,191$ 92,611$ 2,470,802$ Town of Nantucket, Massachusetts Page 122 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 123 of 143 Comprehensive Annual Financial Report Fiduciary Funds Agency Funds – Agency funds are used to account for assets maintained in a custodial capacity. Such activities primarily consist of performance bonds and school deposits held, as well as, monies due to Town personnel for certain services rendered that were collected from external parties on their behalf. Town of Nantucket, Massachusetts Page 124 of 143 Comprehensive Annual Financial Report AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FISCAL YEAR ENDED JUNE 30, 2017 Beginning End of Year Additions Deletions of Year Assets Current assets: Cash and cash equivalents 1,433,565$ 1,401,912$ (1,459,373)$ 1,376,104$ Receivables, net of allowance 99,289 656,507 (609,796) 146,000 Total Assets 1,532,854$ 2,058,419$ (2,069,169)$ 1,522,104$ Liabilities Current liabilities: Warrants and accounts payable 19,221$ 629,517$ (647,016)$ 1,722$ Accrued payroll and withholdings 11,797 651,672 (629,157) 34,312 Agency liabilities 504,979 966,233 (1,024,545) 446,667 Planning board deposits 996,857 328,285 (285,739) 1,039,403 Total Liabilities 1,532,854$ 2,575,707$ (2,586,457)$ 1,522,104$ Town of Nantucket, Massachusetts Page 125 of 143 Comprehensive Annual Financial Report This page intentionally left blank. Town of Nantucket, Massachusetts Page 126 of 143 Comprehensive Annual Financial Report STATISTICAL SECTION Although Nantucket is known for its long shores, beaches, and spectacular water scenery many a visitor also enjoys the spring time when trees are flowering throughout the Island in many different variations and colors. The bloom, which lasts from late April to the middle of May can be seen along the basin (above); and along the downtown streets (on the right and below). Statistical Section This part of the comprehensive annual financial report presents 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. Financial Trends 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 These schedules contain information to help the reader assess the Town’s most significant local revenue source, the property tax. Debt Capacity 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 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 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. Sources: Unless otherwise noted, the information in these schedules is derived from the financial statements for the relevant year. Town of Nantucket, Massachusetts Page 127 of 143 Comprehensive Annual Financial Report LAST TEN FISCAL YEARS 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Governmental activities: Invested in capital assets……….…………………. 153,639,878$ 156,034,000$ 171,102,098$ 177,625,537$ 180,988,633$ 179,338,227$ 175,687,378$ 181,710,594$ 186,717,700$ 203,168,454$ Restricted………………………………………………………………………….. 13,803,760 14,401,121 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 20,995,512 27,381,162 23,523,901 Unrestricted……………………………………………………………… 8,821,281 3,072,293 (7,324,139) 2,459,785 1,293,781 (1,831,770) 1,501,847 (36,480,970) (45,200,433) (59,910,475) Total governmental activities net position……………………………………….. 176,264,919$ 173,507,414$ 177,072,954$ 183,235,378$ 184,741,823$ 193,324,843$ 197,700,380$ 166,225,136$ 168,898,429$ 166,781,880$ Business-type activities: Invested in capital assets……….…………………. 78,358,807$ 109,858,055$ 114,762,981$ 119,408,316$ 118,502,610$ 116,596,172$ 112,541,419$ 119,242,898$ 120,659,914$ 105,477,803$ Restricted……………………………...…………………..… - -- -- -- -- - Unrestricted………………………………………………………………. 24,272,569 7,313,124 7,264,425 3,199,868 9,865,892 11,287,299 15,914,047 (1,523,044) 6,361,265 25,927,826 Total business-type activities net position……………………………. 102,631,376$ 117,171,179$ 122,027,406$ 122,608,184$ 128,368,502$ 127,883,471$ 128,455,466$ 117,719,854$ 127,021,179$ 131,405,629$ Primary government: Invested in capital assets……….…………………. 231,998,685$ 265,892,055$ 285,865,079$ 297,033,853$ 299,491,243$295,934,399$ 288,228,797$ 300,953,492$ 307,377,614$ 308,646,257$ Restricted………………………………………………………………………. 13,803,760 14,401,121 13,294,995 3,150,056 2,459,409 15,818,386 20,511,155 20,995,512 27,381,162 23,523,901 Unrestricted…………………………………………………………… 33,093,850 10,385,417 (59,714) 5,659,653 11,159,673 9,455,529 17,415,894 (38,004,014) (38,839,168) (33,982,649) Total primary government net position…………………………………………………. 278,896,295$ 290,678,593$ 299,100,360$ 305,843,562$ 313,110,325$321,208,314$ 326,155,846$ 283,944,990$ 295,919,608$ 298,187,509$ NET POSITION BY COMPONENT Town of Nantucket, Massachusetts Page 128 of 143 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Expenses - Governmental activities: General government…...……………………………………………………8,937,924$ 10,730,618$ 10,319,800$ 10,940,662$ 10,015,072$ 9,765,641$ 10,068,331$ 11,574,757$ 13,375,694$ 15,652,032$ Public safety…..………………………………………………………………10,691,407 14,346,976 14,684,244 12,172,241 13,601,442 14,042,554 14,779,274 15,484,735 17,211,310 17,548,899 Education……..………………………………………………………………….27,607,296 27,861,059 30,380,350 28,867,553 29,011,944 35,190,752 36,829,209 38,839,302 40,296,659 46,524,011 Public works……...……………………………………………………………….3,146,271 4,195,016 4,514,082 4,082,163 4,692,304 4,171,361 4,862,640 5,131,842 5,404,039 20,248,200 Health and human services………………………………………………………7,473,662 9,699,805 9,714,459 2,765,497 3,741,941 2,301,279 1,641,325 1,528,171 1,544,941 7,705,797 Culture and recreation………...……………………………………………………..2,232,982 3,872,616 3,392,381 2,119,755 2,170,903 2,327,315 5,622,457 5,397,098 4,646,084 4,770,808 Interest expense……………………………………………………………………2,419,841 3,189,350 2,351,987 2,354,427 2,082,337 2,368,538 2,075,324 1,616,600 1,478,749 2,147,432 Total government activities expenses……………………………………..62,509,383 73,895,440 75,357,303 63,302,298 65,315,943 70,167,440 75,878,560 79,572,505 83,957,476 114,597,179 Business-type activities: Siasconset Water……………………………………………………………………434,272 577,851 602,507 719,668 682,682 712,820 724,927 738,719 811,237 749,495 Wannacomet Water……………………………………………………………………3,507,036 4,022,463 3,582,097 3,570,999 3,674,493 3,785,742 3,624,731 3,544,191 4,088,800 4,345,647 Sewer……………………………………………………………………4,416,855 5,527,480 5,491,001 5,613,007 5,760,776 6,149,616 6,002,582 6,255,624 6,338,700 6,110,762 Solid waste……………………………………………………………………8,988,076 10,575,310 8,114,794 8,679,984 8,851,378 11,302,336 8,963,029 10,324,817 11,587,152 - Nantucket Memorial Airport……………………………………………………………………13,717,716 11,912,883 13,541,915 13,158,406 15,331,231 14,523,220 15,592,198 15,096,177 14,287,119 15,087,914 Our Island Home……………………………………………………………………- -- 8,808,654 6,923,716 7,079,676 7,670,514 7,945,959 8,358,350 - Total business-type activities expenses……………………………………..31,063,955 32,615,987 31,332,314 40,550,718 41,224,276 43,553,410 42,577,981 43,905,487 45,471,358 26,293,818 Total primary government expenses……………………………………….93,573,338$ 106,511,427$ 106,689,617$ 103,853,016$ 106,540,219$ 113,720,850$ 118,456,541$ 123,477,992$ 129,428,834$ 140,890,997$ Program Revenues - Governmental activities: Charges for services: General government…………………………………………………General government…...……………………………………………………1,018,223$ 211,203$ 1,358,150$ 426,552$ 741,512$ 622,049$ 917,730$ 771,006$ 1,121,165$ 1,215,294$ Public safety………………………………………………………………..Public safety…..………………………………………………………………2,028,994 1,633,813 1,418,330 1,362,466 1,668,420 2,771,517 3,213,998 3,203,714 3,703,493 4,145,232 Education……………………………………………………………….Education……..………………………………………………………………….688,028 515,790 498,985 501,915 780,977 1,488,121 1,490,713 1,433,969 1,500,573 1,817,891 Public works……………………………………………………………….Public works……...……………………………………………………………….69,200 66,298 55,092 59,430 276,502 300,317 340,272 376,600 278,408 3,505,449 Health and human services………………………………………………………3,284,823 3,120,051 3,661,973 35,445 82,788 132,655 188,221 190,627 227,273 5,977,366 Culture and recreation………...……………………………………………………..318,742 321,181 289,279 325,010 522,063 248,089 295,416 346,626 329,022 433,829 Operating grants and contributions……………………………………5,462,762 5,795,452 5,090,233 3,989,493 2,131,096 6,022,440 6,230,362 6,761,994 9,241,317 10,995,900 Capital grants and contributions…………………………………………..1,991,891 1,270,878 1,230,625 1,067,782 1,030,215 1,874,830 289,066 1,886,943 1,881,938 508,050 Total government activities program revenues...……………………………..14,862,663 12,934,666 13,602,667 7,768,093 7,233,573 13,460,018 12,965,778 14,971,479 18,283,189 28,599,011 Business-type activities: Charges for services……………….………………………………….25,376,292 24,172,299 24,820,469 27,568,533 32,847,185 31,799,794 33,592,609 33,738,945 39,612,392 27,063,403 Operating grants and contributions……………………………………1,773,605 1,113,866 776,060 1,287,762 746,499 85,992 91,000 90,820 133,570 70,458 Capital grants and contributions…………………………………………..6,804,856 15,208,679 7,057,702 3,307,275 2,146,931 1,989,292 2,479,717 6,078,185 3,175,470 2,680,075 Total business-type activities program revenues……………………………………..33,954,753 40,494,844 32,654,231 32,163,570 35,740,615 33,875,078 36,163,326 39,907,950 42,921,432 29,813,936 Total primary government program revenues……………………………………….48,817,416$ 53,429,510$ 46,256,898$ 39,931,663$ 42,974,188$ 47,335,096$ 49,129,104$ 54,879,429$ 61,204,621$ 58,412,947$ Net (Expense)/Program Revenue Governmental activities……………………....……………………………..(47,646,720)$ (60,960,774)$ (61,754,636)$ (55,534,205)$ (58,082,370)$ (56,707,422)$ (62,912,782)$ (64,601,026)$ (65,674,287)$ (85,998,168)$ Business-type activities……………………....……………………………..2,890,798 7,878,857 1,321,917 (8,387,148) (5,483,661) (9,678,332) (6,414,655) (3,997,537) (2,549,926) 3,520,118 Total primary government net (expense)/program revenue……………………………………….(44,755,922)$ (53,081,917)$ (60,432,719)$ (63,921,353)$ (63,566,031)$ (66,385,754)$ (69,327,437)$ (68,598,563)$ (68,224,213)$ (82,478,050)$ Note: Beginning in 2017, Our Island Home and Solid Waste business-type activities have been reported as governmental activities; fiscal year 2008 - 2016 were not restated to reflect this.(continued) Town of Nantucket, Massachusetts Page 129 of 143 Comprehensive Annual Financial Report CHANGES IN NET POSITION LAST TEN FISCAL YEARS 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General Revenues and other Changes in Net Position - Governmental activities: Real estate and personal property taxes, net of tax refunds payable…………………………………………………. 55,581,598$ 57,830,875$ 60,956,838$ 61,948,050$ 61,863,287$ 63,594,267$ 64,160,459$ 65,895,498$ 68,978,062$ 74,061,321$ Motor vehicle and other excise taxes…………………………………………………… 2,367,735 2,201,004 1,852,563 1,867,286 2,066,878 2,338,423 2,314,472 2,607,277 2,801,463 2,949,704 Hotel and meals excise……………………………………………..1,343,140 1,237,233 1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 4,026,389 4,486,662 4,535,824 Penalties and interest on taxes………………………………………………………………410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 657,303 687,316 Community Preservation Fund surcharges………………………………………………………………1,535,337 1,616,989 1,669,975 1,666,540 1,724,556 1,745,927 1,782,598 1,835,287 1,944,202 2,088,375 Grants and contributions not restricted to specific programs………………………………………………………………469,868 376,265 587,474 935,761 307,901 737,402 278,049 186,666 179,523 190,963 Unrestricted investment income……………………………………………. 634,539 277,329 160,970 65,960 173,698 66,235 159,229 257,230 389,334 231,448 Gain on sale of capital assets……………………………………………. --1,143,075 73,530 813,011 736,256 1,379,639 2,430,079 -- Other revenue………………………………………………………………583,420 850,819 789,238 748,060 438,678 604,871 ---- Transfers………………………………………………………………(14,811,978) (6,660,946) (3,534,310) (8,967,926) (11,231,986) (8,303,291) (6,942,620) (7,881,295) (8,659,384) - Total governmental activities………………………………………………………………… 48,114,444 58,203,269 65,320,176 61,696,629 59,588,815 65,290,442 67,288,319 70,240,047 70,777,165 84,744,951 Business-type activities: Unrestricted investment income……………………………………………………………… - -- -11,993 55,748 44,030 32,935 62,084 71,855 Gain on sale of capital assets……………………………………….--- --- -829,212 -- Transfers………………………………………………………………18,111,978 6,660,946 3,534,310 8,967,926 11,231,986 8,303,291 6,942,620 7,881,295 8,659,384 - Total business-type activities….………..…………………………………..18,111,978 6,660,946 3,534,310 8,967,926 11,243,979 8,359,039 6,986,650 8,743,442 8,721,468 71,855 Total primary government general revenues and other changes in net position………………………………………………….66,226,422$ 64,864,215$ 68,854,486$ 70,664,555$ 70,832,794$ 73,649,481$ 74,274,969$ 78,983,489$ 79,498,633$ 84,816,806$ Changes in Net Position Governmental activities……………………....……………………………..467,724$ (2,757,505)$ 3,565,540$ 6,162,424$ 1,506,445$ 8,583,020$ 4,375,537$ 5,639,021$ 5,102,878$ (1,253,217)$ Business-type activities……………………....……………………………..21,002,776 14,539,803 4,856,227 580,778 5,760,318 (1,319,293) 571,995 4,745,905 6,171,542 3,591,973 Total primary government changes in net position………………………………………. 21,470,500$ 11,782,298$ 8,421,767$ 6,743,202$ 7,266,763$ 7,263,727$ 4,947,532$ 10,384,926$ 11,274,420$ 2,338,756$ (concluded) Town of Nantucket, Massachusetts Page 130 of 143 Comprehensive Annual Financial Report 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General Fund: Nonspendable………………………………. -$ -$ -$ -$ -$ -$ -$ 11,406$ -$ -$ Restricted………………………………. 931,390 - 250,000 - 1,485,147 1,577,323 650,518 488,344 414,514 346,780 Committed…………………………….. 364,200 3,236,873 2,471,550 2,136,060 1,941,738 2,114,218 8,061,318 4,013,474 2,267,807 13,140,419 Assigned…………………………….. 2,142,523 2,906,103 3,136,435 4,488,570 2,182,323 5,146,635 2,047,757 6,323,207 3,028,651 7,295,378 Unassigned…………………………… 9,894,585 7,963,323 11,047,142 12,186,769 14,373,770 13,881,601 14,745,606 15,470,669 17,571,873 17,942,453 Total general fund…………………………….. 13,332,698$ 14,106,299$ 16,905,127$ 18,811,399$ 19,982,978$ 22,719,777$ 25,505,199$ 26,307,100$ 23,282,845$ 38,725,030$ All Other Governmental Funds: Nonspendable……………………………….308,153$ 308,153$ 308,153$ 288,280$ 44,305$ 44,305$ 114,762$ 44,805$ 44,805$ 44,805$ Restricted………………………………. 20,851,574 19,796,252 19,427,291 16,039,900 18,987,991 17,267,229 18,709,640 20,950,707 27,086,357 23,331,672 Unassigned…………………………… - - - (138,806) (104,106) - - (1,109,351) (17,737,453) (9,779,936) Total all other governmental funds…………….. 21,159,727$ 20,104,405$ 19,735,444$ 16,189,374$ 18,928,190$ 17,311,534$ 18,824,402$ 19,886,161$ 9,393,709$ 13,596,541$ Note: The Town implemented GASB 54 in fiscal year 2011. All previous years (2008 - 2010) data presented were restated to conform to GASB 54 presentation. Note: The Town consolidated Our Island Home and Solid Waste activities into the General Fund in fiscal year 2017; none of the previous years were restated for this change. FUND BALANCES - GOVERNMENTAL FUNDS LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 131 of 143 Comprehensive Annual Financial Report 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Revenues: Real estate and personal property taxes, net of tax refunds……………………………………………………. 55,204,590$ 56,947,358$ 59,769,412$ 62,486,485$ 62,120,715$ 63,517,709$ 63,434,664$ 66,805,456$ 69,040,526$ 73,938,122$ Motor vehicle and boat excise………………………………………… 2,332,743 2,210,996 1,757,392 2,090,373 1,986,900 1,913,789 2,512,609 2,592,035 2,747,276 2,823,655 Hotel and meals excise………………………………………………. 1,343,140 1,237,233 1,035,291 2,726,360 2,745,571 3,092,446 3,558,082 4,026,389 4,486,662 4,535,824 User charges………………………………………………. - - - - - - - - - 9,229,547 Departmental and other……………………………………….. 8,649,333 8,970,419 7,834,515 4,032,108 6,414,807 4,910,252 4,641,243 4,606,897 5,218,934 5,844,352 Communities Preservation surcharges……………………………………… 1,535,337 1,616,989 1,669,975 1,666,540 1,724,556 1,739,157 1,773,519 1,844,628 1,930,955 2,072,835 Penalties and interest on taxes………………………………………………………..410,785 473,701 659,062 633,008 687,221 677,906 598,411 882,916 657,303 687,316 Licenses and permits………………………………………………………..1,321,794 919,644 932,004 1,015,424 1,058,052 1,075,074 1,405,911 1,455,080 1,712,506 1,698,765 Fines and forfeitures…………………………………………………………….266,693 240,648 248,231 254,285 223,054 208,503 296,917 283,179 269,441 334,451 Intergovernmental………………………………………………………..7,178,707 7,066,988 6,946,282 7,131,244 7,280,969 7,148,723 8,119,346 8,728,025 10,894,441 11,007,339 Contributions………………………………………………………..1,300 96,821 83,320 1,249,415 - 258,425 372,331 107,578 408,337 687,574 Investment income……………………………………………………….. 758,901 440,459 278,439 159,602 164,936 63,751 147,521 252,185 375,220 228,864 Total Revenue………………………………………………… 79,003,323 80,221,256 81,213,923 83,444,844 84,406,781 84,605,735 86,860,554 91,584,368 97,741,601 113,088,644 Expenditures: General government……………………………………………………………. 5,327,955 5,090,318 5,837,165 6,209,441 7,179,875 7,114,409 7,596,379 8,658,027 8,946,404 8,960,868 Public safety……………………………………………………………… 8,416,870 8,997,534 10,513,956 10,437,125 10,041,235 9,018,372 9,284,157 9,444,096 10,698,049 10,711,350 Education………………………………………………………………… 22,044,432 23,209,204 23,175,994 23,764,115 23,829,685 23,139,532 24,585,011 25,775,358 25,329,925 29,017,484 Public works…………………………………………………………….. 3,997,185 3,031,636 2,323,502 2,406,506 2,582,349 2,242,399 2,700,144 2,977,129 2,981,431 11,974,875 Health and human services………………………………………………… 6,152,000 5,917,474 5,845,124 889,848 1,305,274 1,899,449 1,236,079 1,080,864 1,051,897 6,830,966 Culture and recreation……………………………………………….. 2,649,053 2,236,031 2,312,808 2,037,840 1,492,926 1,842,298 5,083,442 4,875,189 4,128,951 4,335,613 Pension and fringe benefits………………………………………………………… 13,303,787 12,143,139 12,698,735 11,662,320 11,479,906 14,831,570 15,661,255 16,212,172 18,393,297 23,325,610 State and county charges………………………………………… 462,130 449,457 458,657 461,358 531,772 546,250 566,814 574,275 591,536 606,206 Capital outlay and other………………………………………………………………. 7,508,083 9,254,440 16,296,496 8,912,763 5,047,157 7,481,872 5,202,852 8,504,352 26,106,919 37,467,736 Debt service: Principal……………………………………………………………… 4,728,096 6,338,863 7,778,503 7,558,823 6,657,855 5,496,332 5,405,944 5,478,306 5,511,741 5,785,385 Interest……………………………………………………………………. 2,343,057 2,952,425 2,501,019 2,401,588 2,171,097 2,260,152 2,186,325 1,746,458 1,550,529 1,599,106 Total Expenditures……………………………………………………….. 76,932,648 79,620,521 89,741,959 76,741,727 72,319,131 75,872,635 79,508,402 85,326,226 105,290,679 140,615,199 Excess of revenues over (under) expenditures………………………………………………… 2,070,675 600,735 (8,528,036) 6,703,117 12,087,650 8,733,100 7,352,152 6,258,142 (7,549,078) (27,526,555) Other Financing Sources (Uses): Issuances from bonds and notes………………...………………………………………… 19,551,578 5,990,490 13,070,000 - 3,200,000 478,449 - 993,000 1,188,709 35,735,550 Issuances from refunding bonds………………...…………………………………………- - - - 1,329,900 8,685,000 - 758,200 3,935,000 3,515,450 Premiums from debt issuances………………………….- - 279,138 - 212,513 808,509 - 51,600 123,130 1,700,430 Payments to refunded bond escrow agent………………………….- - - - (1,519,037) (9,505,125) - (790,820) (3,995,000) (3,976,820) Sale of capital assets………………………………………………… - - 1,143,075 73,530 - 865,210 3,888,758 2,474,833 1,439,916 208,199 Transfers in……………………………………………………………………………… 4,852,464 1,345,000 4,008,898 1,554,704 1,008,975 919,323 2,101,972 1,631,000 15,779,728 2,448,154 Transfers out…………………………………………………………………………… (19,664,442) (8,217,946) (7,543,208) (9,971,149) (12,409,606) (9,864,323) (9,044,592) (9,512,295) (24,439,112) (2,448,154) Total other financing sources (uses)………………………………………………………………….. 4,739,600 (882,456) 10,957,903 (8,342,915) (8,177,255) (7,612,957) (3,053,862) (4,394,482) (5,967,629) 37,182,809 Net change in fund balance…………………………………………………………………. 6,810,275$ (281,721)$ 2,429,867$ (1,639,798)$ 3,910,395$ 1,120,143$ 4,298,290$ 1,863,660$ (13,516,707)$ 9,656,254$ Debt service as a percentage of noncapital expenditures………………………………………………. 10.19% 13.20%14.00%14.68%13.12%11.34%10.22%9.40%8.92%7.16% LAST TEN FISCAL YEARS CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS Town of Nantucket, Massachusetts Page 132 of 143 Comprehensive Annual Financial Report Ratio of Total Total State Assessed to Fiscal Residential Open Space Commercial Industrial Personal Commercial Town Equalized Equalized Residential Commercial Average Year Value Value Value Value Property Value Value Value Value Tax Rate Tax Rate Tax Rate 2008 19,075,765,006 28,148,400 1,248,404,516 71,831,978 199,459,060 1,519,695,554 20,623,608,960 22,498,040,300 91.67%2.67 4.77 2.73 2009 19,297,012,011 28,148,400 1,212,268,373 73,994,478 207,661,750 1,493,924,601 20,819,085,012 22,498,040,300 92.54%2.76 4.92 2.81 2010 18,609,952,032 15,300,200 1,171,917,524 61,207,044 204,631,215 1,437,755,783 20,063,008,015 21,914,393,400 91.55%3.01 5.35 3.06 2011 15,812,302,942 12,152,700 1,118,103,719 56,154,439 209,716,105 1,383,974,263 17,208,429,905 21,914,393,400 78.53%3.58 6.41 3.66 2012 15,502,597,155 21,974,500 1,056,502,692 53,625,153 209,470,691 1,319,598,536 16,844,170,191 18,041,019,200 93.37%3.62 6.47 3.70 2013 15,890,745,965 22,428,100 932,271,034 50,373,351 205,311,229 1,187,955,614 17,101,129,679 18,041,019,200 94.79%3.67 6.51 3.72 2014 15,734,218,626 11,460,900 939,061,724 48,571,000 206,415,205 1,194,047,929 16,939,727,455 17,816,255,100 95.08%3.76 6.68 3.82 2015 16,946,921,756 11,664,300 944,004,094 49,617,300 229,217,719 1,222,839,113 18,181,425,169 17,816,255,100 102.05%3.61 6.38 3.65 2016 19,250,070,530 11,465,100 998,753,099 51,031,421 232,693,446 1,282,477,966 20,544,013,596 21,682,664,300 94.75%3.36 5.93 3.38 2017 20,458,398,100 1,862,400 1,032,434,600 51,432,021 242,474,296 1,326,340,917 21,786,601,417 21,682,664,300 100.48%3.39 5.99 3.42 Source: Official Statements, State Division of Local Services Note: All property in the Commonwealth of Massachusetts is assessed at 100% of full and fair cash value. The State estimates this "equalized valuation" for all municipalities every two years. Chapter 59, Section 21C of the Massachusetts General Laws, known as "Proposition 2 1/2", imposes 2 separate limits on the annual tax levy of the Town. The primary limitation is that the tax levy cannot exceed 2 1/2% of the full and fair cash value. The secondary limitation is that the tax levy cannot exceed the maximum levy limit for the preceding fiscal year as determined by the State Commissioner of Revenue by more than 2 1/2%, subject to an exception for property added to the tax rolls and for certain valuation increases. This secondary limit may be exceeded in any fiscal year by majority approval of the voters, however, it cannot exceed the primary limitation. Assessed Value Tax Rates LAST TEN FISCAL YEARS ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY BY CLASSIFICATION AND TAX RATES Town of Nantucket, Massachusetts Page 133 of 143 Comprehensive Annual Financial Report PRINCIPAL TAXPAYERS CURRENT YEAR AND NINE YEARS AGO Percentage of Percentage of Total Taxable Total Taxable Nature of Assessed Assessed Assessed Assessed Taxpayer Business Valuation Rank Value Valuation Rank Value NIR Retail LLC Resort 99,231,500$ 1 0.46%137,747,733$ 1 0.67% Nantucket Electric Company Private Utility 56,960,122 2 0.26%55,656,208 4 0.27% Penant Realty LLC Residential 51,487,445 3 0.24% Nantucket Yacht Club Recreation 44,966,708 4 0.21%49,975,898 5 0.24% Nantucket Island Resort LLC Resort 39,773,749 5 0.18%71,330,224 2 0.35% Richmond Great Point Development LLC Private 36,119,934 6 0.17% Great Harbor Yacht Club Inc.Recreation 35,565,030 7 0.16% Sankaty Head Golf Club, Inc.Recreation 24,698,306 8 0.11%18,572,899 8 0.09% White Elephant Hotel LLC Resort 22,205,603 9 0.10% US REIF Marine Nantucket FEE LLC Retail 20,387,200 10 0.09% Walter Glowacki Private 70,597,200 3 0.34% NIR Retail III LLC Resort 27,206,500 6 0.13% Nantucket Golf Course Recreation 21,232,582 7 0.10% Wauwinet Inn, LLC Resort 16,718,775 9 0.08% Westmoor Club Resort 15,078,258 10 0.07% Totals 431,395,597$ 1.98%484,116,277$ 2.35% Source: Official Statements 2017 2008 Town of Nantucket, Massachusetts Page 134 of 143 Comprehensive Annual Financial Report Percent of First Year Delinquent Total Total Tax Fiscal Total Current Percent of Tax Tax Collections to Year Tax Levy Tax Collections Collected Collections Collections Net Tax Levy 2008 56,220,005$ 54,162,568$ 96.34%1,896,654$ 56,059,222$ 99.71% 2009 58,510,142 54,375,139 92.93%2,643,997 57,019,136 97.45% 2010 61,333,595 57,209,185 93.28%2,496,207 59,705,392 97.35% 2011 63,040,150 59,526,709 94.43%2,437,628 61,964,337 98.29% 2012 62,274,744 59,645,473 95.78%1,799,984 61,445,457 98.67% 2013 63,618,273 60,028,036 94.36%2,634,374 62,662,410 98.50% 2014 64,647,039 60,979,366 94.33%3,012,522 63,991,888 98.99% 2015 66,329,953 63,876,955 96.30%1,606,801 65,483,756 98.72% 2016 69,636,373 67,228,059 96.54%1,216,732 68,444,791 98.29% 2017 74,553,632 72,289,087 96.96%- 72,289,087 96.96% Source: Accounting Records and Official Statements PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS Collections Town of Nantucket, Massachusetts Page 135 of 143 Comprehensive Annual Financial Report RATIOS OF OUTSTANDING DEBT AND GENERAL OBLIGATION DEBT General Obligation Percentage Percentage Fiscal U. S. Census Personal Assessed Bonds and Per of Personal of Assessed Year Population Income Value Other Notes Capita Income Value 2008 11,215 549,422,850 20,623,608,960 71,673,170 6,391 13.05%0.35% 2009 11,322 579,686,400 20,819,085,012 71,324,797 6,300 12.30%0.34% 2010 10,172 543,286,520 20,063,008,015 76,773,603 7,548 14.13%0.38% 2011 10,130 541,043,300 17,208,429,905 69,057,471 6,817 12.76%0.40% 2012 10,298 550,016,180 16,844,170,191 65,559,307 6,366 11.92%0.39% 2013 10,298 550,016,180 17,101,129,679 60,299,542 5,855 10.96%0.35% 2014 10,298 550,016,180 16,939,727,455 54,871,053 5,328 9.98%0.32% 2015 10,298 550,016,180 18,181,425,169 50,350,913 4,889 9.15%0.28% 2016 10,298 550,016,180 20,544,013,596 46,068,679 4,474 8.38%0.22% 2017 10,298 550,016,180 21,786,601,417 78,299,239 7,603 14.24%0.36% General Percentage Percentage Total Percentage Percentage Fiscal Obligation Per of Personal of Assessed Debt Per of Personal of Assessed Year Bonds Capita Income Value Outstanding Capita Income Value 2008 74,856,609 6,675 13.62%0.36%146,529,779 13,066 26.7%0.71% 2009 79,373,441 7,011 13.69%0.38%150,698,238 13,310 26.0%0.72% 2010 80,467,247 7,911 14.81%0.40%157,240,850 15,458 28.9%0.78% 2011 80,983,395 7,994 14.97%0.47%150,040,866 14,812 27.7%0.87% 2012 87,513,595 8,498 15.91%0.52%153,072,902 14,864 27.8%0.91% 2013 83,901,285 8,147 15.25%0.49%144,200,827 14,003 26.2%0.84% 2014 82,305,570 7,992 14.96%0.49%137,176,623 13,321 24.9%0.81% 2015 83,147,112 8,074 15.12%0.46%133,498,025 12,963 24.3%0.73% 2016 78,182,138 7,592 14.21%0.38%124,250,817 12,066 22.6%0.60% 2017 75,230,489 7,305 13.68%0.35%153,529,728 14,909 27.9%0.70% Source: U. S. Census, State Division of Local Services LAST TEN FISCAL YEARS Governmental Activities Debt Business Type Activities Debt Total Primary Government Town of Nantucket, Massachusetts Page 136 of 143 Comprehensive Annual Financial Report 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Equalized Valuation………………………………….. 20,623,608,960$ 20,819,085,012$ 20,063,008,015$ 17,208,429,905$ 16,844,170,191$ 17,101,129,679$ 16,939,727,455$ 18,181,425,169$ 21,682,664,300$ 21,786,601,417$ Debt Limit…………………………..…………………. 1,031,180,448 1,040,954,251 1,003,150,401 860,421,495 842,208,510 855,056,484 846,986,373 909,071,258 1,084,133,215 1,089,330,071 Outstanding general obligation bonds………………. 146,529,779 150,698,238 157,240,850 150,040,866 153,072,902 144,200,827 137,176,623 133,498,025 124,250,817 153,529,728 Authorized and unissued debt…………………………. 95,034,114 81,093,282 68,310,085 72,315,737 48,369,825 51,318,862 24,976,578 87,611,526 166,096,099 124,200,429 Debt not applicable to debt limit…………………………. (30,913,035) (43,482,004) (51,917,004) (42,042,147) (47,042,147) (43,393,647) (42,671,460) (38,186,867) (48,673,610) (35,291,063) Legal debt margin………………………………………….. 758,703,520$ 765,680,727$ 725,682,462$ 596,022,745$ 593,723,636$ 616,143,148$ 642,161,712$ 649,774,840$ 745,112,689$ 776,308,851$ Total debt applicable to the limit as a percentage of debt limit………………………………….. 20.43%18.09%17.31%20.96%18.33%17.79%14.11%20.12%22.29%22.26% Source: State Division of Local Services, Accounting Records LAST TEN FISCAL YEARS COMPUTATION OF LEGAL DEBT MARGIN Town of Nantucket, Massachusetts Page 137 of 143 Comprehensive Annual Financial Report Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable*Debt Debt repaid with property taxes: Nantucket Regional Transit Authority……………………….-$ 100%-$ Nantucket County……………………………………………- 100%- Subtotal, overlapping debt………………………………………………………………………….. - Town direct debt……………………………………………………………. 78,299,239 Total direct and overlapping debt…………………………………………… 78,299,239$ *Outstanding debt as of June 30, 2017. Source: Official Statements, Accounting Records The estimated percentage applicable is based 100% to the Town. AS OF JUNE 30, 2017 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT Town of Nantucket, Massachusetts Page 138 of 143 Comprehensive Annual Financial Report DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Per Capita Fiscal Population Personal Personal Median School Unemployment Year Estimates Income Income Age Enrollment Rate 2008 11,215 549,422,850 48,990 36.7 1,288 6.30% 2009 11,322 579,686,400 51,200 36.7 1,294 7.40% 2010 10,172 543,286,520 53,410 39.4 1,255 7.80% 2011 10,130 541,043,300 53,410 39.4 1,230 6.80% 2012 10,298 550,016,180 53,410 39.4 1,282 6.00% 2013 10,298 550,016,180 53,410 39.4 1,322 5.90% 2014 10,298 550,016,180 53,410 39.4 1,378 6.20% 2015 10,298 550,016,180 53,410 39.4 1,535 5.50% 2016 10,298 550,016,180 53,410 39.4 1,595 4.20% 2017 10,298 550,016,180 53,410 39.4 1,588 4.20% Source: U. S. Census, Division of Local Services, Massachusetts Department of Elementary and Secondary Education Median age is based on most recent census data Town of Nantucket, Massachusetts Page 139 of 143 Comprehensive Annual Financial Report Nature Percentage Percentage of Employees of Total Town Employees of Total Town Employer Business Year-Round Rank Employment Year-Round Rank Employment Town of Nantucket Government 670 1 10.21%710 1 10.83% Nantucket Cottage Hospital Medical 180 2 2.74%90 2 1.37% Nantucket Island Resorts Hospitality 125 3 1.90%105 3 1.60% Marine Home Center Retail 90 4 1.37%95 4 1.45% Stop & Shop Retail 90 5 1.37%65 6 0.99% Blue Hills Bank Finance 60 6 0.91%0.00% Myles Reis Trucking Haulage 30 7 0.46% Steamship Authority Transportation 28 8 0.43%32 7 0.49% Don Allen Auto Dealership 25 9 0.38% Bartlett Oceanview Farm Farm/Retail 25 10 0.38% Harbor Fuel Petroleum Products 30 8 0.46% Pacific National Bank/Fleet Finance 28 9 0.43% The Brotherhood Restaurant 22 10 0.34% Nantucket Bank Finance 60 5 0.92% Source: Official Statements 2017 2008 CURRENT YEAR AND NINE YEARS AGO PRINCIPAL EMPLOYERS (INCLUDING TOWN) Town of Nantucket, Massachusetts Page 140 of 143 Comprehensive Annual Financial Report Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General government…………………………………………………………….53 58 60 60 63 60 66 68 73 75 Public safety……………………………………………..79 78 77 77 81 81 81 81 83 85 Education……………………………………………………306 293 295 292 299 299 301 301 310 315 Public works……………………………………………………………..26 27 24 26 28 27 30 30 32 31 Health and human services…………………………………………………………..74 74 74 74 74 75 75 75 75 75 Culture and recreation…………………………………………………22 18 16 17 9 10 10 10 10 10 Sub-total governmental activities ……………………………………………………….. 560 548 546 546 554 552 563 565 583 591 Nantucket Memorial Airport…………………………47 41 45 47 44 44 41 41 44 44 Siasconset Water…………………………………………………………………1 1 1 1 - - - - - - Wannacomet Water…………………………..11 11 11 11 11 11 11 11 11 11 Sewer…………………………………………………………………10 12 12 12 10 10 10 10 10 10 Sub-total business-type activities ……………………………………………………….. 69 65 69 71 65 65 62 62 65 65 Total Town employees…………….…………………...……..629 613 615 617 619 617 625 627 648 656 Source: Town personnel records LAST TEN FISCAL YEARS FULL-TIME EQUIVALENT TOWN EMPLOYEES BY FUNCTION Town of Nantucket, Massachusetts Page 141 of 143 Comprehensive Annual Financial Report OPERATING INDICATORS BY FUNCTION/PROGRAM Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General Government: Town Clerk Registered voters…………………………………….. 8,164 8,164 7,907 7,907 8,394 8,394 8,546 8,618 8,618 9,100 Public Safety: Police Criminal offenses Arrests……………………………….. 551 1,309 1,169 1,062 1,160 1,531 992 584 568 887 Reported crimes…………………….. 590 587 621 716 499 479 490 501 356 345 Motor vehicle responses………………………… 4,857 3,103 2,910 2,600 2,994 3,469 3,411 3,432 3,493 4,322 Other responses………………………… 19,783 18,962 17,659 15,913 18,553 20,648 17,899 21,576 23,678 22,023 Total criminal offenses…………. 25,781 23,961 22,359 20,291 23,206 26,127 22,792 26,093 28,095 27,577 Fire Incidents Fires…………………………….. 63 56 40 66 41 52 67 82 86 66 Non-fire incidents……………………………………………………….. 3,896 4,072 3,783 3,637 3,640 3,721 4,915 3,893 3,942 4,011 Total fire calls………………… 3,959 4,128 3,823 3,703 3,681 3,773 4,982 3,975 4,028 4,077 Inspectional Services: Number of building permits…………………………………. 1,280 972 1,156 1,145 1,406 1,639 1,797 2,010 2,137 1,996 Education: Number of students…………………………………. 1,288 1,294 1,255 1,230 1,282 1,322 1,378 1,535 1,595 1,588 Public Works: Landfill Solid waste tonnage………………………….. 33,359 40,056 24,687 34,933 34,000 33,710 37,400 38,000 39,000 38,000 Health and Human Services: Board of Health Inspections Food establishments…………………. 230 228 210 205 212 230 247 262 668 675 Other………………………….. 328 355 329 302 341 358 367 380 1,373 1,563 Total inspections………………….. 558 583 539 507 553 588 614 642 2,041 2,238 Our Island Home - Nursing Home Number of beds………………… 45 45 45 45 45 45 45 45 45 45 Culture and Recreation: Beaches Beach Stickers 3,889 3,512 3,838 3,628 3,845 3,795 3,973 4,102 4,259 4,559 Transportation: Nantucket Memorial Airport Number of enplanements……… 257,755 203,786 201,638 179,410 175,420 178,303 174,129 164,290 138,752 124,321 Number of tower operations…… 144,073 127,482 127,575 120,806 125,960 126,898 119,976 109,225 106,186 104,913 Gallons of jet fuel sold……………. N/A N/A N/A 1,127,270 1,217,635 1,164,958 1,194,978 1,207,361 1,277,228 1,309,802 N/A - Information not available Source: Various Town Departments, State websites and annual Town Report. LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 142 of 143 Comprehensive Annual Financial Report CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM Function 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 General Government: Number of buildings………………………………..7 7 7 7 7 7 7 7 7 7 Public Safety: Police Number of stations…………………………….1 1 1 1 2 2 2 2 2 2 Fire Number of stations…………………………….2 2 2 2 2 2 2 2 2 2 Education: Number of elementary schools…………………………………….1 1 1 1 1 1 1 1 1 2 Number of middle schools…………………………………….1 1 1 1 1 1 1 1 1 1 Number of high schools………………………………………..1 1 1 1 1 1 1 1 1 1 Public Works: Number of cemeteries……………………..8 8 8 8 8 8 8 8 8 8 Human Services Number of nursing homes……………………..1 1 1 1 1 1 1 1 1 1 Culture and Recreation: Number of beaches…………………………….17 17 17 17 17 17 17 17 17 17 Transportation: Number of airports………………………….1 1 1 1 1 1 1 1 1 1 Source: Various Town Departments and State websites. LAST TEN FISCAL YEARS Town of Nantucket, Massachusetts Page 143 of 143 Comprehensive Annual Financial Report Some of the recent winters have been very harsh to the Island. Above: the temperatures reached levels so cold that the waves turned to slush due to the build-up of ice; an event rarely seen in salt waters.