HomeMy WebLinkAboutCOM 0259.001 2016-2018 Valerie T. Poindexter Bonnie S.Nims,CGAP
iv.oF lit,'''.. Legislative Auditor
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Council District 1
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Business Address
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Hilo,Hawai`i 96720
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OFFICE OF THE LEGISLATIVE AUDITOR
25 Aupuni Street Hilo, Hawaii 96720 * (808)961-8386 * Fax(808)961-8905
website:http://hawaiicountv.gov e-mail:publiclao(a�co.hawaii.hi.us
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April 19, 2017 =+ on
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TO: Valerie T. Poindexter, Chairman `o o-<
And Members of the County Council _�
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FROM: Bonnie S. Nims WOc3 )>x
Legislative Auditor w
RE: Post-Audit Reports for Fiscal Year Ending June 30, 2016
This letter transmits for your review, deliberation, and acceptance, the Comprehensive Annual
Financial Report for the Fiscal Year Ended June 30, 2016, as prepared by the County of Hawai`i
Department of Finance.
Pursuant to the 2012 Hawai`i County Charter, Section 10-13,Post-audit, which requires the
county council to provide at least once every year for an independent audit of the accounts and
other evidences of financial transactions of the county and of every county agency and executive
agency and performed by a certified public accountant or firm of certified public accountants
who have no personal interest, direct or indirect, in the fiscal affairs of the county or of any of its
agencies or executive agencies.
N&K CPAs Inc. will be present at the Hawai`i County Council Finance Committee meeting on
May 16, 2017 for a short presentation and to answer any questions you may have. Appropriate
department head(s) or their representative(s) will also be asked to attend the meeting.
In the meantime, please feel free to contact me at 961-8490 should you require further
information.
Enclosures
cc w/o enclosures: N&K CPAs Inc. s9
Comm. No.
Department of Finance Ref. To: FC.
Rif. Date APR 2 0 2017
BSN/so
Hawaii County is an Equal Opportunity Provider and Employer
&411 IF4 AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS 1 CONSULTANTS T(808) 524-2255 F (808) 523-2090
To the Members of the County Council
County of Hawaii
We have audited the financial statements of the governmental activities, the business-type activities,the
discreetly presented component unit, each major fund, the aggregate remaining fund information, and
the budgetary comparison statement of the general fund, of the County of Hawaii, State of Hawaii
(County), as of and for the fiscal year ended June 30, 2016. Professional standards require that we
provide you with information about our responsibilities under generally accepted auditing standards,
Government Auditing Standards and the Uniform Guidance, as well as certain information related to the
planned scope and timing of our audit. We have communicated such information in our letter to you
dated August 8, 2016. Professional standards also require that we communicate to you the following
information related to our audit.
Significant Audit Findings
Qualitative Aspects of Accounting Practices
Management is responsible for the selection and use of appropriate accounting policies. The significant
accounting policies used by the County are described in Note 1 to the financial statements.The County
adopted the provisions of Governmental Accounting Standings Board (GASB) Statement No.
72, Fair Value Measurement and Application, GASB Statement No. 73, Accounting and Financial
Reporting for Pensions and Related Assets that are not within the Scope of GASB Statement 68, and
Amendments to Certain Provisions of GASB Statements 67 and 68, GASB Statement No. 76, The
Hierarchy of Generally Accepted Accounting Principles for State and Local Governments, and GASB
Statement No. 77, Tax Abatement Disclosures. We noted no transactions entered into by the County
during the year for which there is a lack of authoritative guidance or consensus. All significant
transactions have been recognized in the financial statements in the proper period.
Accounting estimates are an integral part of the financial statements prepared by management and are
based on management's knowledge and experience about past and current events and assumptions
about future events. Certain accounting estimates are particularly sensitive because of their significance
to the financial statements and because of the possibility that future events affecting them may differ
significantly from those expected. The most sensitive estimates affecting the County's financial
statements were:
• Estimate of the useful lives of the County's capital assets used to compute depreciation expense
• Estimate of the liability for postretirement benefits other than pensions
• Estimate of the net pension liability
• Estimate of the loss reserves for workers' compensation
• Estimate of the landfill closure and postclosure cost liability
Management's estimate of the depreciation recorded on capital assets is based in part on the estimated
useful lives of those capital assets. We evaluated the key factors and assumptions used to develop the
estimated useful lives used to depreciate the County's capital assets in determining that it is reasonable
in relation to the financial statements taken as a whole.
Management's estimate of the liability for postretirement benefits other than pensions was determined
using an actuarial valuation study performed by a third-party specialist. We evaluated the key factors
• N&K CPAs, Inc.
ACCOUNTANTSCONSULTANTS
and assumptions used to compute the liability for postretirement benefits other than pensions in
determining that it is reasonable in relation to the financial statements taken as a whole.
The collective net pension liability, deferred inflows of resources, and deferred outflows of resources of
the cost-sharing multiple employer defined pension plan administered by the State of Hawai`i's
Employee Retirement System was determined by an actuarial valuation. The County's proportionate
share of the collective net pension liability, deferred inflows of resources, deferred outflow of resources
was based on the County's contributions to the pension plan relative to the contributions of all
participating employers during the measurement period.We evaluated the key factors and assumptions
used to compute the County's proportionate share of the collective net pension liability, deferred inflows
of resources, deferred outflow of resources in determining that it is reasonable in relation to the financial
statements taken as a whole.
Management's estimate of the loss reserve for workers' compensation was determined by senior
adjusters and adjusted as necessary based on historical costs for similar incidents. We evaluated the
key factors and assumptions used to compute the loss reserve in determining that it is reasonable in
relation to the financial statements taken as a whole.
Management's estimate of the landfill closure and postclosure cost liability was determined by the
County's engineers based on analysis performed by a third party contractor. We evaluated the key
factors and assumptions used to develop the liability in determining that it is reasonable in relation to the
financial statements taken as a whole.
The financial statement disclosures are neutral, consistent, and clear.
Difficulties Encountered in Performing the Audit
We encountered no significant difficulties in dealing with management in performing and completing our
audit.
Corrected and Uncorrected Misstatements
Professional standards require us to accumulate all known and likely misstatements identified during the
audit, other than those that are trivial, and communicate them to the appropriate level of management.
The attached schedule summarizes uncorrected misstatements of the financial statements.
Management has determined that their effects are immaterial, both individually and in the aggregate, to
the financial statements taken as a whole.
Disagreements with Management
For purposes of this letter,professional standards define a disagreement with management as a financial
accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be
significant to the financial statements or the auditors' report. We are pleased to report that no such
disagreements arose during the course of our audit.
Management Representations
We have requested certain representations from management that are included in the management
representation letter dated December 28, 2016.
Management Consultations with Other Independent Accountants
In some cases, management may decide to consult with other accountants about auditing and
accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation
involves application of an accounting principle to the County's financial statements or a determination of
the type of auditor's opinion that may be expressed on those statements, our professional standards
require the consulting accountant to check with us to determine that the consultant has all the relevant
facts. To our knowledge, there were no such consultations with other accountants.
• N&K CPAs, Inc.
ACCOUNTANTS CONSULTANTS
Other Audit Findings or Issues
We generally discuss a variety of matters, including the application of accounting principles and auditing
standards, with management each year prior to retention as the County's auditors. However, these
discussions occurred in the normal course of our professional relationship and our responses were not
a condition to our retention.
Other Matters
We applied certain limited procedures to 1) management's discussion and analysis, 2) schedule of
funding progress for the EUTF Health Plan, 3) schedule of the County's proportionate share of the net
pension liability, and 4) schedule of the employer pension contributions, which are required
supplementary information (RSI) that supplements the basic financial statements. Our procedures
consisted of inquiries of management regarding 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 did
not audit the RSI and do not express an opinion or provide any assurance on the RSI.
We were engaged to report on the combining and individual nonmajor fund financial statements and
budgetary comparison schedules, which accompany the financial statements but are not RSI. With
respect to this supplementary information, we made certain inquiries of management and evaluated the
form, content, and methods of preparing the information to determine that the information complies with
accounting principles generally accepted in the United States of America, the method of preparing it has
not changed from the prior period, and the information is appropriate and complete in relation to our
audit of the financial statements. We compared and reconciled the supplementary information to the
underlying accounting records used to prepare the financial statements or to the financial statements
themselves.
We were not engaged to report on the introductory section and statistical section,which accompany the
financial statements but are not RSI. We did not audit or perform other procedures on this other
information and we do not express an opinion or provide any assurance on it.
Restriction on Use
This information is intended solely for the use of the County Council and management of the County of
Hawaii, and is not intended to be and should not be used by anyone other than these specified parties.
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Honolulu, Hawaii
December 28, 2016
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Photo by Alexandra Kelepolo
Comprehensive Annual Financial Report
For the Fiscal Year
July 1 , 2015 to June 30, 2016
1
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Harry Kim Collins Tomei
Mayor Director
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*i��. ,-,.0:•: Deanna S. Sako
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Deputy Director
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County of Hawaii
Finance Department
25 Aupuni Street,Suite 2103 • Hilo,Hawai`i 96720
(808)961-8234 • Fax(808)961-8569
February 6, 2017
To Whom It May Concern:
Subsequent to the recent release of the Comprehensive Annual Financial Report (CAFR) for the
County of Hawai'i, State of Hawai'i for the fiscal year ended June 30, 2016, we noted that the
negative unassigned fund balance in the General Fund was not in compliance with Governmental
Accounting Standards Board Statement No. 54,Fund Balance Reporting and Governmental Fund
Type Definitions(GASB Statement No. 54) and the CAFR was amended as follows:
• Page 20, Governmental funds, second paragraph — Assigned fund balance changed
from$34.6 million to$29.5 million.Reference to unassigned fund balance was deleted.
• Page 24 —Added explanation that County appropriated $26.4 million for spending in
the 2017 fiscal year budget but this amount differs from the amount shown on the
Governmental Funds Balance Sheet as assigned to subsequent year's budget due to
reclassification of a negative $5.1 million in the unassigned fund balance. Additional
information also explains the reason for the difference in the amounts.
• Page 30,Governmental Funds Balance Sheet—Unassigned fund balance in the general
fund was changed from $(5,083,767) to $-0- and therefore deleted. Fund balance
assigned to subsequent year's budget in the general fund was decreased by$5,083,767
to $21,309,233. There was no effect on total fund balances.
• Page 134, Table 3 - Unassigned fund balance in the general fund was changed from
$(5,083,767)to $-0-. Assigned fund balance decreased by$5,083,767 to $25,518,510.
There was no effect on total fund balances.
Enclosed is a replacement copy of the CAFR which reflects the changes noted above. The initial
copy of the CAFR you received should be discarded and no longer be relied upon.
We apologize for any inconvenience this may have caused you. Should you have any questions,
please contact our county controller, Kay Oshiro, at(808) 961-8425.
4111111. Ts
COLLINS TOMEI
Director of Finance
Hawai'i County is an Equal Opportunity Employer and Provider
COMPREHENSIVE
ANNUAL FINANCIAL REPORT
Fiscal Year Ended June 30, 2016
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NA $ i
OF gip .
COUNTY OF HAWAII
Hilo, Hawaii
William P. Kenoi
Mayor
Randall Kurohara
Managing Director
Prepared by
The Department of Finance
Deanna Sako
Director of Finance
COUNTY OF HAWAII
Comprehensive Annual Financial Report
For the Fiscal Year Ended June 30, 2016
Table of Contents
Page
INTRODUCTORY SECTION
Letter of Transmittal 1
GFOA Certificate of Achievement 7
Organization Chart 8
List of Elected Officials 9
List of Principal Officials 10
FINANCIAL SECTION
Report of Independent Auditors 11
Management's Discussion and Analysis 14
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position 26
Statement of Activities 28
Fund Financial Statements:
Balance Sheet- Governmental Funds 30
Reconciliation of the Governmental Funds Balance Sheet to the
Statement of Net Position 31
Statement of Revenues, Expenditures, and Changes in Fund Balances-
Governmental Funds 32
Reconciliation of the Change in Fund Balances of Governmental
Funds to the Statement of Activities 34
Statement of Revenues, Expenditures, and Changes in Fund Balance-
Budget and Actual(Budgetary Basis) -General Fund 36
Statement of Net Position-Proprietary Funds 40
Statement of Revenues, Expenses, and Changes in Fund Net Position-
Proprietary Funds 41
Statement of Cash Flows-Proprietary Funds 42
Statement of Fiduciary Net Position-Fiduciary Funds 43
Statement of Changes in Fiduciary Net Position-Fiduciary Funds 44
Notes to the Basic Financial Statements 45
Required Supplementary Information 98
116
AP
FINANCIAL SECTION (Continued) rrY
Page
Combining and Individual Nonmajor Fund Statements and Schedules:
Combining Balance Sheet-Nonmajor Governmental Funds 102
Combining Statement of Revenues, Expenditures,and Changes in Fund
Balances-Nonmajor Governmental Funds 106
Schedules of Revenues, Expenditures,and Changes in Fund Balances -
Budget and Actual (Budgetary Basis):
Highway Fund 109
Sewer Fund 110 aii
Solid Waste Fund 111
Cemetery Fund 112
Parking Meter Fund 113
Vehicle Disposal Fund 114
Bikeway Fund 115
Workforce Investment Act Fund 116 "!
Golf Course Fund 117
Geothermal Relocation and Community Benefits Fund 118
Beautification Fund 119
Hawaii County Housing Agency 120
Park Dedication Fund 121 '
40
Combining Statement of Agency Funds Net Position-Agency Funds 122
Combining Statement of Changes in Assets and Liabilities-Agency Funds 124
Combining Statement of Private Purpose Trust Net Position-Private Purpose Trusts 128
Combining Statement of Changes in Net Position-Private Purpose Trusts 129as
STATISTICAL SECTION
Table 1 -Net Position by Component 131
Table 2-Changes in Net Position 132 •11
Table 3 -Fund Balances,Governmental Funds 134 „
ri
Table 4-Changes in Fund Balance, Governmental Funds 135
Table 5 -Real Property Assessed Values by Classification and Tax Rates 136 14!
Table 6-Principal Taxpayers 140
Table 7-Property Tax Levies and Collections 141
Table 8 -Ratios of Outstanding Debt by Type 142
Table 9 -Ratios of General Bonded Debt Outstanding 143
Table 10-Legal Debt Margin Information 144
Table 11 -Demographic and Economic Statistics 145
Table 12-Principal Employers, County of Hawaii 146
Table 13 -Full-Time Equivalent County Government Employees by Function 147
Table 14-Operating Indicators by Function 148
Table 15 -Capital Asset Statistics by Functions 149 sik
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11,
a
INTRODUCTORY SECTION
Harry Kim ',?V OF OF , Collins Tomei
Mayor ;'c i ce
.� Director
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•i��.'!',.#'. > Deanna S. Sako
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--_—___- Deputy Director
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County of Hawaii
Finance Department
25 Aupuni Street,Suite 2103 • Hilo,Hawai`i 96720
(808)961-8234 • Fax(808)961-8569
December 28, 2016
The Honorable Mayor and Members of the Council
County of Hawai`i
25 Aupuni Street
Hilo, Hawai`i 96720
We transmit herewith the Comprehensive Annual Financial Report for the County of
Hawai`i, State of Hawai`i (the County), for the fiscal year July 1, 2015 to June 30, 2016.
This report was prepared by the County's Department of Finance. The accuracy of the
financial statements and the completeness and fairness of their presentation are the
responsibility of the County government. We believe the enclosed data are complete and
accurate in all material respects and are reported in a manner designed to present fairly
the financial position and results of operations of the various funds of the County. All
disclosures necessary to convey the maximum understanding of the County's financial
activities have been included. Management's discussion and analysis is also included to
aid users of the financial statements.
This report presents the financial position of the County of Hawai`i at June 30, 2016 and
results of operations for the fiscal year then ended. The report is divided into three
sections:
• The Introductory Section includes this transmittal letter, a Certificate of Achievement
for Excellence in Financial Reporting, the County of Hawai`i's organization chart and
lists of elected and principal officials.
• The Financial Section contains management's discussion and analysis, the basic
financial statements, related notes, the combining and individual fund budgetary
financial statements, and the independent auditors' report.
• The Statistical Section includes selected financial and demographic information,
generally presented on a multi-year basis.
Hawaii County is an equal opportunity provider and employer.
- 1 -
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This report includes all funds of the County of Hawai`i, including its component unit,the """
Department of Water Supply, established by the County Charter as a semi-autonomous
body of the County government. This component unit is included in the County's
reporting entity because of its financial relationship with the County.
The County provides a full range of municipal services. These include police and fire
protection; emergency medical care; public prosecutor; culture and recreation; sanitation; 411110
social services; water; planning and zoning; construction and maintenance of highways,
streets and infrastructure; real property assessment and tax collection; and general
administrative services. However, the County does not provide such other traditional
services as public education, hospitals and courts. These services are provided by the
State government.
The County consists of the island of Hawai`i, 4,028 square miles in size. It is twice as
large as the combined area of all the other inhabited islands in the Hawaiian Archipelago.
Since there is no other local or municipal government within the County, there are no
overlapping taxes and no overlapping debt. The County has an elected mayor and a nine-
member council.
Economic Condition and Outlook
The island of Hawaii, commonly known as the Big Island, is located 214 miles from
Honolulu, the state capital; 2,200 miles from the west coast of the continental United
States; and 4,000 miles from Japan. The city of Hilo on the east side of the island serves tit
as the county seat as well as the transportation and financial center for the Big Island. ..
Hilo's infrastructure includes Hilo Harbor, a deep-water port, and Hilo International
Airport, which is capable of handling fully-loaded wide-bodied aircraft. Kailua-Kona *�
and South Kohala, major tourist destination areas on the west side of the Big Island, are ..
served by flights from the United States mainland, and Canada through the Kona
International Airport. Scheduled freight services are available between the islands by air '*
and sea transport. Communities on the island are linked by a network of State and 4111
County maintained streets and highways.
The Big Island is the most diversified of the neighbor island economies. As a result it is r,
buffered to some extent when any one industry lags. Although the past few years proved
challenging to the island's economy, it appears that the County will continue on its steady tit
but slow road to improved financial health. This favorable outlook is supported by
positive trends in the following key areas of the island's economy.
wai
The unemployment rate for the County for the current fiscal year is at approximately 4%,
which represents a percentage point decline from last year's rate for the same period of
5% and an even larger decline from the high of 11% in 2011.
Tourism—Tourism has always been one of the major industries on the island. In
addition to the mild climate and natural beauty it shares with other areas in the state, the
County features the Hawai`i Volcanoes National Park. A popular attraction, the park is
the most visited site in the state, with over 1.7 million visitors each year. The number of
domestic and international visitors to the County for the current fiscal year was
all
- 2 -
approximately 1.51 million, with an approximately 4.3 percent increase from the previous
year's count of 1.45 million. For the most part, the County is less dependent on tourism
than the other islands in the State, but the Kona airport terminal modernization project is
budgeted at $60-70 million.
Construction —According to the May 20, 2016 forecast from The Economic Research
Organization at the University of Hawai`i, the neighbor islands are seeing resort
development and the beginning of an increase in residential activity, though it will be to a
lesser extent than in the past. The organization anticipates that all islands in the state
will experience "high single-digit or low double-digit construction job growth this year.
Several large construction projects and exciting changes are in store for the citizens on
each side of the island. In addition to the Kona airport construction, a new airport fire
station of about $20 million is slated for Hilo, and there is also much single-family
residential construction activity planned for the Hilo side including the 56 lots of Hilo
Hillside Estates, 37 lots of Punahou Mauka Estates, 19 lots of Lake View Estates and a
49 lot subdivision being developed on land below the Hilo Municipal Golf Course.
Major Initiatives
For the Year
Public Safety—One of the top priorities for the Police Department remains the securing
of funding for the South Kona Police Station along with planning for a new station in the
Puna District. The Police Department has begun the process of testing the recently
procured Records Management System (RMS) to better serve the community and hopes
to begin testing the integrated Computer Aided Dispatch (CAD) system.
The Fire Department pioneered the establishment of the Community Paramedicine (CP)
Program in the State of Hawai`i, with the objective of identifying senior citizens (60+
years of age) on Hawai`i Island who are vulnerable, at risk, and in need of improved
health care and overall support. Once identified from a preventative health care
approach, the Department's CPs ensure that their home environment is safe and attempt
to connect these individuals with health care services and support to improve their overall
quality of life.
Public Works—A few of the major construction projects for the Department of Public
Works included a $14.1 million project to extend Kapi`olani Street, with the inclusion of
marked bicycle and pedestrian routes including ADA compliant sidewalks spanning over
a mile long; a $30 million Mamalahoa Highway Bypass Road and Napo`opo`o Road
Intersection Improvement project, which included two travel lanes, paved shoulders,
traffic signals, driveway tie-ins, water utilities and drainage improvements; and a $17
million Ka`iminani Drive Improvement Project, which included driveway tie-ins, the
building of retaining walls, and the adjustment of underground utilities, drainage, new
signage and safety improvements.
- 3 -
For the Future " '
Public Safety—The Fire Department looks forward to the opening of the new Haihai Fire IP
Station in Hilo in 2017.
444,
Culture and Recreation —The Department of Parks and Recreation will open various
new and improved facilities in 2016 and 2017 including new District Parks in Pahoa and
Waimea, a new Gymnasium in Ka'u, and a new Clubhouse for Hilo Municipal Golf
Course, providing greater recreational opportunity for our communities. The Department
also looks forward to expanding outdoor recreational opportunities with the near
completion of projects such as Mauna Kea Recreational Area Improvements, Hilo
Bayfront Trail Phase I and Honaunau Rodeo Arena Improvements. These are several of
many ongoing projects expected to be completed in 2016 and 2017. The Department will
continue with ongoing repairs, maintenance and improvement projects to ensure safe
facilities for park patrons and staff.
Other Financial Information
Internal Control giko
The management of the County is responsible for establishing and maintaining an
internal control structure designed to ensure that the assets of the County are protected ,.
from loss, theft or misuse and to ensure that adequate accounting data are compiled to
allow for preparation of financial statements in conformity with generally accepted Nit
accounting principles. The internal control structure is designed to provide reasonable,
but not absolute, assurance that these objectives are met. The concept of reasonable
assurance recognizes that(1)the cost of a control should not exceed the benefits likely to
be derived; and (2) the valuation of costs and benefits requires estimates and judgments .�.
by management.
Budgetary Control .�
The County maintains budgetary controls to ensure that legal provisions of the annual
budget are complied with and that those expenditures do not exceed budgeted amounts.
Activities of the general fund and special revenue funds are included in the annual
appropriated operating budget. Project-length financial plans are adopted for the capital
projects fund. Budgetary control is established at the department level.
Formal budgetary integration is employed as a management control device for the general
fund, special revenue funds, and the capital projects fund. Budgetary control for the debt
service fund is achieved through general obligation bond indenture provisions.
The basis of accounting used for the budgets of the general and special revenue funds IOW
differs from generally accepted accounting principles. Intergovernmental revenues are ..r
recognized when awarded by the granting agency, encumbrances and unexpended
allotments are treated as expenditures for purposes of determining legal compliance with sig
the annual budget, all leases are treated as operating leases, and accounts payable are not ..0
accrued.
- 4 -
The County also maintains an encumbrance accounting system as one technique of
accomplishing budgetary control. Encumbrances outstanding at fiscal year end are
included in the various fund balance categories based on whether the resources are
restricted, committed or assigned and do not constitute expenditures or liabilities because
they will be honored during the following year. As demonstrated by the statements and
schedules included in the financial section of this report, the County continues to meet its
responsibility for sound financial management.
Significant Accounting Policies
The County has implemented Governmental Accounting Standards Board Statement
No. 14, The Financial Reporting Entity(GASB Statement No. 14), Statement No. 39,
Determining Whether Certain Organizations Are Component Units (GASB Statement
No. 39) and Statement No. 61, The Financial Reporting Entity: Omnibus an amendment
of GASB Statements No. 14 and 34 (GASB Statement No. 61). All organizations,
activities or functions that meet the criteria in GASB Statement No. 14, No. 39 and No.
61 for inclusion in the reporting entity are included in the County's basic financial
statements. For further discussion on other significant accounting policies, refer to the
notes to the basic financial statements.
Financial Highlights
Total revenues increased by $44.9 million from the prior year, with an increase in the
area of capital grants and contributions accounting for $30.6 million of the increase.
With a 10.8 percent increase in revenues and only a 2.9 percent increase in expenses, the
County was able to experience an increase in net position of$37.9 million, which
represented a 649% increase over the prior year's increase in net position prior to the
impact of the prior year's cumulative effect of an accounting change related to the
reporting of the County's net pension liability.
The County's investment in capital assets increased by $142.7 million from the prior
year, which represented a 13 percent increase. New and continued construction projects
in the areas of highways and streets and culture and recreation accounted for the majority
of the increase.
Other Information
Independent Audit
The County Charter requires an annual audit by independent certified public accountants.
N&K CPAs Inc. was selected in accordance with the County Charter and the
procurement provisions of the Hawaii Revised Statutes (HRS) and Hawaii Administrative
Rules (HAR) to perform the audit.
Employee Union Contracts
County employees are members of eight different bargaining units, all of which have
contracts that expire on June 30, 2017.
- 5 -
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Certificate of Achievement
The Government Finance Officers Association of the United States and Canada(GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the
County of Hawai`i for its Comprehensive Annual Financial Report for the fiscal year
ended June 30, 2015. This was the twenty-eighth consecutive year that the government
has received this prestigious award. In order to be awarded a Certificate of Achievement,
a government must publish an easily readable and efficiently organized comprehensive
annual financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements. ""'
A Certificate of Achievement is valid for a period of one year only. We believe our so
current Comprehensive Annual Financial Report continues to meet the Certificate of
Achievement Program's requirements, and we are submitting it to the GFOA to
determine its eligibility for another certificate. um
Acknowledgments
The preparation of this report was made possible by the efficient and dedicated services
of the entire staff of the Department of Finance and fiscal personnel in other departments.
I am grateful for their help in preparing this report. I also thank the Mayor and the
members of the County Council for their interest and support in assuring the continuing
sound financial condition of the County of Hawai`i.
001
Collins Tomei
Director of Finance ,.
S
010
tip
141
*
i
- 6 -
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
p g
Presented to
County of Hawaii
Hawaii
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
June 30, 2015
*447°,:04*-0
Executive Director/CEO
- 7 -
A
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County of Hawaii
Organization Chart
County Electorate
County Council Mayor Prosecuting Attorney . ,
rolk
County Legislative Office of Management:
Clerk Auditor Managing Director
.r
Departments under Agencies under Departments under
r+
direct supervision of the direct supervision of the commissions and
Managing Director: Managing Director: administrative supervision
of the Mayor:
Corporation Counsel Civil Defense Human Resources
Finance Office of Aging Police +•
Planning Mass Transit Liquor Control
en
Environmental Management Office of Housing& Fire
Research&Development Community Development Water Supply wit
Public Works (semi-autonomous)
Parks&Recreation
Information Technology
MI
IP
ei
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- 8 - w
County of Hawaii
Elected Officials
June 30, 2016
Administrative Officers (Term: 2012-2016)
William P. Kenoi Mayor
Mitchell Roth Prosecuting Attorney
County Council (Term: 2014-2016)
Dru Mamo Kanuha Chair
Valerie Poindexter Vice Chair
Aaron S.Y. Chung Member
Maile "Medeiros" David Member
Karen Eoff Member
Greggor Ilagan Member
Dennis "Fresh" Onishi Member
Danny Paleka Member
Margaret Wille Member
- 9 -
S
.ir
Principal Officialstido
June 30, 2016
County Clerk Stewart Maeda
Legislative Auditor Bonnie Nims
400
Managing Director Randall Kurohara
Deputy Managing Director Robert Command
Corporation Counsel Molly Stebbins
Director of Finance Deanna S. Sako 111
Planning Director Duane Kanuha
Director of Personnel Sharon Kamahele-Toriano 1.14
Director of Research and Development John De Fries III
Chief of Police Harry S. Kubojiri
Fire Chief Darren Rosario
Director of Public Works Warren Lee
Director of Environmental Management Bobby Jean Leithead-Todd
Parks and Recreation Director Clayton Honma
Manager-Chief Engineer, Department of Water Supply Keith Okamoto **
Civil Defense Administrator Edward Teixeira
Director of Liquor Control Gerald Takase
Mass Transit Administrator Tiffany Kai
Executive on Aging Christian Alameda
Administrator, Office of Housing and
ma
Community Development Susan Akiyama
Director of Information Technology Donald F. Jacobs, Jr.
lot
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- 10 -
FINANCIAL SECTION
AMERICAN SAVINGS BANK TOWER
1001 BISHOP STREET,SUITE 1700
N&K CPAs, Inc. HONOLULU, HAWAII 96813-3696
ACCOUNTANTS I CONSULTANTS T(808) 524-2255 F (808) 523-2090
INDEPENDENT AUDITOR'S REPORT
To the Chair and Members of the County Council
County of Hawaii
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, the discretely presented component unit, each major fund, and the
aggregate remaining fund information of the County of Hawaii, State of Hawaii (County), as of
and for the fiscal year ended June 30, 2016, and the related notes to the financial statements,
which collectively comprise the County's basic financial statements as listed in the table of
contents.
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial
statements in accordance with accounting principles generally accepted in the United States of
America; this includes the design, implementation, and maintenance of internal control relevant
to the preparation and fair presentation of financial statements that are free from material
misstatement, whether due to fraud or error.
Auditor's Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We
conducted our audit in accordance with auditing standards generally accepted in the United States
of America and the standards applicable to financial audits contained in Government Auditing
Standards, issued by the Comptroller General of the United States. Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of
significant accounting estimates made by management, as well as evaluating the overall
financial statement presentation of the financial statements.
- 11 -
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so
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N&K CPAs, Inc.
ACCOUNTANTS I CONSULTANTS ++r
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a �r
basis for our audit opinions.
Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects,
the respective financial position of the governmental activities, the business-type activities, the
000
discretely presented component unit, each major fund, and the aggregate remaining fund
information of the County of Hawaii, State of Hawaii, as of June 30, 2016, and the respective
changes in financial position and, where applicable, cash flows thereof and the budgetary
comparison for the general fund for the fiscal year then ended in accordance with accounting
principles generally accepted in the United States of America.
Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the
management's discussion and analysis (pages 14 through 24), schedule of funding progress for Ugh
the Hawaii Employer Union Health Benefit Trust Fund (page 98) the schedule of the County's
proportionate share of the net pension liability (page 99), and the schedule of the employer
pension contributions (page 100), be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the
Governmental Accounting Standards Board who considers it to be an essential part of financial
reporting for placing the basic financial statements in an appropriate operational, economic, or
historical context. We have applied certain limited procedures to the required supplementary
information in accordance with auditing standards generally accepted in the United States of
America, which consisted of inquiries of management about the methods of preparing the
information and comparing the information for consistency with management's responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of •.r
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. sit
Other Information
.r
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the County's basic financial statements. The introductory section,
combining and individual nonmajor fund financial statements and budgetary comparison
schedules, and statistical section are presented for purposes of additional analysis and are not
a required part of the basic financial statements. „i,
The combining and individual nonmajor fund financial statements and budgetary comparison
schedules are the responsibility of management and were derived from and relate directly to the
underlying accounting and other records used to prepare the basic financial statements. Such
information has been subjected to the auditing procedures applied in the audit of the basic
financial statements and certain additional procedures, including comparing and reconciling
such information directly to the underlying accounting and other records used to prepare the
ren
- 12 - 11
N&K CPAs, Inc.
ACCOUNTANTS CONSULTANTS
basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of
America. In our opinion, the combining and individual nonmajor fund financial statements and
budgetary comparison schedules 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 our report dated
December 28, 2016, on our consideration of the County's internal control over financial
reporting and on our tests of its compliance with certain provisions of laws, regulations,
contracts and grant agreements and other matters. The purpose of that report is to describe the
scope of our testing of internal control over financial reporting and compliance and the results of
that testing, and not to provide an opinion on internal control over financial reporting or on
compliance. That report is an integral part of an audit performed in accordance with
Government Auditing Standards in considering the County's internal control over financial
reporting and compliance.
Atit• -1Z/C.
Honolulu, Hawaii
December 28, 2016
- 13 -
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MANAGEMENT'S DISCUSSION AND ANALYSIS 1116
This section of the County of Hawai`i's(the County)Comprehensive Annual Financial Report
OP
presents a narrative overview and analysis of the financial activities of the County for the fiscal
year ended June 30, 2016. We encourage readers to consider the information presented here in "
conjunction with additional information that we have furnished in our letter of transmittal.
-Ir
FINANCIAL HIGHLIGHTS
• The assets of the County exceeded its liabilities at the end of the fiscal year by$511.6 million
(net position). This amount includes a negative balance of$388.5 million in unrestricted net
position, a decrease of$38.1 million from the prior year, which is explained in the sections
below.
• As of the close of the current fiscal year,the County's governmental funds reported combined dt
ending fund balances of$191.8 million, an increase of$31.3 million from the prior year.
Approximately 44 percent of this total amount, $84.3 million, is available for spending at the
County's discretion(unrestricted fund balance).
• At the end of the current fiscal year,unrestricted fund balance for the general fund was $39.1
million, or 14 percent of total general fund expenditures.
OVERVIEW OF THE FINANCIAL STATEMENTS
This discussion and analysis is intended to serve as an introduction to the County's basic financial
use
statements. The County's basic financial statements comprise three components: (1)
Government-wide financial statements,(2)Fund financial statements,and(3)Notes to the basic +m
financial statements. This report also contains both required and other supplementary
information in addition to the basic financial statements themselves.
Government-wide Financial Statements
The government-wide financial statements are designed to provide readers with a broad overview
of the County's finances, in a manner similar to a private-sector business.
The statement of net position presents information on all of the County's assets and liabilities, �+
with the difference between the two reported as net position. Over time, increases or decreases in
ri
net position may serve as a useful indicator of whether or not the financial position of the County "'
is improving or deteriorating. .r
The statement of activities presents information showing how the County'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. vis
Thus,revenues and expenses are reported in this statement for some items that will only result in
cash flows in future fiscal periods, such as revenues pertaining to uncollected taxes and expenses
pertaining to earned but unused vacation and sick leave.
Both of the government-wide financial statements distinguish functions of the County that are
principally supported by taxes and intergovernmental revenues(governmental activities)from
other functions that are intended to recover all or a significant portion of their costs through user
fees and charges(business-type activities). The governmental activities of the County include
public safety,highways and streets, health,education and welfare,culture and recreation,
esi
sanitation and general government. The business-type activities of the County include rental
housing for senior citizens and families.
- 14 - 1
The government-wide financial statements include not only the County itself(known as the
primary government), but also the Department of Water Supply, a legally separate entity that the
County is financially accountable for. Financial information for this component unit is reported
separately from the financial information presented for the primary government itself.
Fund Financial Statements
The fund financial statements are designed to report information about groupings of related
accounts which are used to maintain control over resources that have been segregated for specific
activities or objectives. The County, 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 County can be divided into the following three categories: governmental funds,
proprietary funds, and fiduciary funds.
Governmental funds. Governmental funds are used to account for essentially the same
functions reported as governmental activities in the government-wide financial statements—
i.e., most of the County's basic services are reported in governmental funds. These
statements, however, focus on (1) how cash and other financial assets can readily be
converted to available resources and(2)the balances left at year-end that are available for
spending. Such information may be useful in determining what financial resources are
available in the near future to finance the County's programs.
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. Both the governmental funds balance sheet
and the governmental funds statement of revenues, expenditures, and changes in fund
balances provide a reconciliation to facilitate this comparison between governmental funds
and governmental activities.
The County maintains several individual governmental funds organized according to their
type(general, special revenue, debt service, and capital projects). Information is presented
separately in the governmental funds balance sheet and in the governmental funds statement
of revenues, expenditures, and changes in fund balances for the general fund and capital
projects fund, which are considered to be major funds. Data from the remaining
governmental funds are combined into a single, aggregated presentation. Individual fund
data for each of the non-major governmental funds is provided in the form of combining
statements elsewhere in this report.
The County adopts an annual appropriated budget for its general fund and special revenue
funds. A budgetary comparison statement has been provided for these funds to demonstrate
compliance with this budget. The budgetary comparison statement for the general fund is
located in the basic financial statements, whereas the budgetary comparison schedules for
the nonmajor special revenue funds are presented elsewhere in this report.
Proprietary funds. Proprietary funds are generally used to account for services for which
the County charges outside customers. Proprietary funds provide the same type of
information as shown in the government-wide financial statements, only in more detail. The
County maintains only one type of proprietary funds, enterprise funds. Enterprise funds
are used to report the same functions presented as business-type activities in the government-
wide financial statements. The County uses enterprise funds to account for the operations of
the Kulaimano Elderly Housing Project and the Ouli Ekahi Affordable Housing Project.
- 15 -
■Il
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Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of
parties outside the County. The private-purpose trusts and the agency funds are reported
under the fiduciary funds. Since the resources of these funds are not available to support the
County's own programs,they are not reflected in the government-wide financial statements.
The accounting used for fiduciary funds is much like that used for proprietary funds.
Notes to the Basic Financial Statements
The notes to the basic financial statements provide additional information that is essential to a full
understanding of the data provided in the government-wide and fund financial statements.
Other Supplementary Information
In addition to the basic financial statements and accompanying notes,this report also presents
certain required supplementary information,which is presented immediately following the notes
to the basic financial statements. The combining statements referred to earlier in connection with
nonmajor governmental funds and budgetary comparison schedules for the nonmajor special �l1
revenue funds are presented immediately following the required supplementary information.
GOVERNMENT-WIDE FINANCIAL ANALYSIS w!
Condensed Statement of Net Position
June 30,2016 and 2015
sib
Primary Government vsrl
Governmental Activities Business-type Activities Total
2016 2015 2016 2015 2016 2015
NIP
Assets:
Current and other assets $ 263,573,114 $ 259,051,873 $ 1,093,403 $ 1,108,940 $ 264,666,517 $ 260,160,813 aid
Capital assets,net 1,233,637,293 1,090,847,071 1,495,053 1,540,209 1,235,132,346 1,092,387,280
Total assets 1,497,210,407 1,349,898,944 2,588,456 2,649,149 1,499,798,863 1,352,548,093
Deferred Outflows
Of Resources: 88,336,668 46,999,950 -- -- 88,336,668 46,999,950
Total Assets and Deferred
Outflows of Resources 1,585,547,075 1,396,898,894 2,588,456 2,649,149 1,588,135,531 1,399,548,043
.,r
Liabilities:
Long-term liabilities
outstanding 993,610,823 828,038,814 1,014,014 1,111,394 994,624,837 829,150,208
Other liabilities 53,737,158 41,428,479 56,533 68,724 53,793,691 41,497,203
Total liabilities 1,047,347,981 869,467,293 1,070,547 1,180,118 1,048,418,528 870,647,411
SIN
Deferred Inflows
Of Resources: 28,166,919 55,249,689 -- -- 28,166,919 55,249,689
Total Liabilities and
Deferred Inflows
Of Resources 1,069,690,790 924,716,982 1,070,547 1,180,118 1,070,761,337 925,897,100
Net position:
Net investment in sot
capital assets 824,846,090 748,754,727 481,039 428,815 825,327,129 749,183,542
Restricted 74,694,901 74,813,856 -- -- 74,694,901 74,813,856
Unrestricted (389,508,816) (351,386,671) 1,036,870 1,040,216 (388,471,946) (350,346,455)
Total net position $ 510,032,175 $ 472,181,912 $1,517,909 $1,469,031 $511,550,084 $473,650,943 tar
rr►
- 16 - I!
Analysis of Net Position
As noted earlier, net position may serve over time as a useful indicator of a government's
financial position. In the case of the County, assets exceeded liabilities by 511.6 million at the
close of the most recent fiscal year.
By far the largest portion of the County's net position reflects its investment in capital assets
(e.g., land, buildings, infrastructure, and equipment) less any related debt used to acquire those
assets that is still outstanding. The County uses these capital assets to provide services to
citizens; consequently,these assets are not available for future spending. Although the County's
investment in its capital assets is reported net of related debt, it should be noted that the resources
needed to repay this debt must be provided from other sources, since the capital assets themselves
cannot be used to liquidate these liabilities.
An additional portion of the County's net position represents resources that are subject to external
restrictions on how they may be used.
At the end of the current fiscal year,the County is able to report positive balances in two of its
three categories of net position, both for the government as a whole, as well as for its separate
governmental activities. All three categories of net position are positive for its business-type
activities.
The County's net position increased by $37.9 million from the prior year,which was an increase
of$372.2 million (111%)from the decrease that was experienced last fiscal year. One of the
main reasons for the large increase in the current year over last year's decrease was the negative
prior period adjustment of$339.0 million in the prior year. The prior period adjustment was a
result of the County's implementation of GASB Statement No. 68,Accounting and Financial
Reporting for Pensions—an amendment of GASB Statement No. 27 and GASB Statement No. 71,
Pension Transition for Contributions Made Subsequent to the Measurement Date—an
amendment of GASB Statement No. 68, in the current fiscal year. Under these two new
accounting standards,the County's financials at the government-wide level now include their
proportionate share of the net pension liability, expense, deferred inflows and outflows of the
retirement plan that covers its employees.
The County's net capital assets increased by$142.7million (13 percent)due to the large amount
of capital improvement projects done by the County during the current fiscal year and
infrastructure related assets that were contributed. See further discussion of the increase in
capital assets on page 22.
The County's long-term liabilities outstanding increased by$165.5 million(20 percent)due
primarily to the issuance of$223.2 million in general obligation bonds and State Revolving Fund
(SRF) loans,which were offset by$174.1 in retirements of bonds, SRF loans and Bond
Anticipation Notes (BANS); a net increase in unamortized premiums related to the issuance of
bonds of$37.8 million; a$11.3 million increase in the County's liability relating to the pre-
funding of its postemployment benefits other than pensions; and a$59.4 million increase in the
County's net pension liability. See further discussion of the increase in long-term debt
outstanding on page 23.
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viii
Condensed Statements of Activities
ea
For the Fiscal Years Ended June 30,2016 and 2015
1.01
Primary Government
Governmental Activities Business-type Activities Total WW
2016 2015 2016 2015 2016 2015
Revenues: 04
Program revenues:
eil
Charges for services $ 46,706,482 $ 44,731,966 $ 457,842 $ 453,304 $ 47,164,324 $ 45,185,270
Operating grants and contributions 47,234,458 47,406,704 133,932 113,642 47,368,390 47,520,346
Capital grants and contributions 60,230,846 29,621,907 - - 60,230,846 29,621,907III
General revenues:
iiiile
Property taxes 248,353,113 237,217,225 - - 248,353,113 237,217,225
Other taxes 26,739,088 28,842,905 - - 26,739,088 28,842,905
14
Grants and contributions,unrestricted 19,557,513 19,506,423 - - 19,557,513 19,506,423
Investment earnings 316,593 671,363 1,912 1,299 318,505 672,662 ow
Other 12,081,055 8,364,894 - - 12,081,055 8,364,894
Total revenues 461,219,148 416,363,387 593,686 568,245 461,812,834 416,931,632
.r
Expenses:
General government 64,958,287 69,859,089 - - 64,958,287 69,859,089
iiis
Public safety 186,591,443 175,104,223 - - 186,591,443 175,104,223
Highways and streets 45,224,201 45,989,038 - - 45,224,201 45,989,038 ,
iii
Health,education and welfare 39,696,963 34,304,166 544,808 561,813 40,241,771 34,865,979
Culture and recreation 27,261,082 32,225,574 - - 27,261,082 32,225,574 X11
Sanitation 48,474,153 41,467,081 - - 48,474,153 41,467,081
Interest on long-term debt 11,162,756 12,362,411 - - 11,162,756 12,362,411 .rr
Total expenses 423,368,885 411,311,582 544,808 561,813 423,913,693 411,873,395
A
Increase in net position 37,850,263 5,051,805 48,878 6,432 37,899,141 5,058,237 ,,,r
Net position at beginning of year 472,181,912 806,502,335 1,469,031 1,462,599 473,650,943 807,964,934
Cumulative effect of accounting change - (339,372,228) - - - (339,372,228)
Oil
Net position at beginning of year,
as adjusted 472,181,912 467,130,107 1,469,031 1,462,599 473,650,943 468,592,706 `iri
Net position at end of year $510,032,175 $472,181,912 $ 1,517,909 $ 1,469,031 $511,550,084 $473,650,943
1111
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Analysis of Changes in Net Position
04
Governmental activities. Governmental activities increased the County's net position by$37.9 oil
million or basically all of the total increase in net position of the County.
IIIII
The primary reasons for the $44.9 million(11 percent) increase in total revenues was due to
wit
capital grants and contributions increasing by approximately$30.6 million, which related mostly
to increases in highways and streets projects, and by an$11.1 million increase in property taxes.
The increase in property taxes was due to increases in the value of net taxable real property, of
go
which the most notable were $704.1 million in the residential classes and $239.5 million in the
apartment classes and represented increase from the prior year of 10 percent and 6 percent,
et
respectively.
ad
Total expenses increased by$12.1 million,which represented a 3 percent change from the prior
ili
year. There were the typical increases in salaries and wages and related employment benefit costs
across all functions in the current fiscal year but to a much lesser degree than in the prior year. rw
l
lib
- 18 - OR
The charts below illustrate the County's governmental expenses and revenues by function, and its
revenues by source. As shown, public safety is the largest function in expense (44 percent),
followed by general government(15 percent) and sanitation (11 percent). General revenues such
as property and other taxes are not shown by program, but are effectively used to support
program activities countywide. For governmental activities overall, without regard to programs,
property taxes are the largest single source of funds (54 percent), followed by capital grants and
contributions (13 percent) and operating grants and contributions (10 percent).
Expenses and Program Revenues—Governmental Activities
Year Ended June 30,2016
$200,000,000
$180,000,000
$160,000,000 tzpenses ?Program revenues
$140,000,000
$120,000,000
$100,000,000
$80,000,000
$60,000,000
$40,000,000
$20,000,000 �— �—
$o ,
o �¢cs o\`a¢�� aca i¢¢�0 �¢as¢ t a�oc a~oc so'"
5 5� ¢ ti cca
aca ac
ca ¢
¢`a\� Q e aoc ¢ac c oc
(.4¢c �\�r arca J\��c ¢4co
¢ L c
Revenue by Source—Governmental Activities
Year Ended June 30,2016
Other, $12,081,055
Investment earnings, Charges for services,
$316,593 $46,706,482
Grants and contributions
not restricted to specific i a
programs, $19,557,513n
Operating grants and
t contributions,
Other taxes, $26,739,088
;-E ; $47,234,458
ry
i
r,
fx ,' Capital grants and
¢ f contributions,
$60,230,846
Property taxes,
$248,353,113
- 19 -
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Business-type activities. Business-type activities increased the County's net position by$48,878
versus an increase of$6,432 in the prior year. Expenses for health, education and welfare account
for all of the$544,808 of expenses which represents a 3 percent decrease from the prior year.
Charges for services were$457,842, operating grants and contributions were$133,932 and
investment earnings were$1,912, which were all comparable to the prior year.
FINANCIAL ANALYSIS OF THE COUNTY'S FUNDS
rug
As noted earlier,the County uses fund accounting to ensure and demonstrate compliance with
finance-related legal requirements.
Governmental funds. The focus of the County's governmental funds is to provide information
on near-term inflows,outflows, and balances of spendable resources. Such information is useful
in assessing the County's financing requirements. In particular, unrestricted fund balance may
serve as a useful measure of a government's net resources available for spending at the end of the
fiscal year. 1111
As of the end of the current fiscal year,the County's governmental funds reported combined
ending fund balances of$191.8 million, an increase of$31.3 million(19 percent)in comparison 1110
with prior year. Approximately 44 percent of this total amount($84.3 million)constitutes
unrestricted fund balance. The unrestricted portion of the fund balance is comprised of(1)$54.8 "'
million in committed fund balance,and(2) $29.5 million in assigned fund balance. The
oft
remainder of the fund balance is divided between$5.8 million in nonspendable fund balance for
inventory and$101.8 million in restricted fund balance. Approximately 66 percent of the total ind
restricted fund balance is due to restrictions relating to highways, streets and abandoned vehicles
($43.4 million)and debt service($23.5 million). "",
The general fund is the chief operating fund of the County. At the end of the current fiscal year,
unrestricted fund balance of the general fund was $39.1 million,while total fund balance MIR
increased to $53.9 million. As a measure of the general fund's liquidity, it may be useful to
compare both unrestricted fund balance and total fund balance to total fund expenditures.
Unrestricted fund balance represents 14 percent of total general fund expenditures,while total
fund balance represents 20 percent of that same amount.
,.r
The fund balance of the County's general fund increased by$1.7 million during the current fiscal
year as compared to a decrease of$3.4 million in the prior year. Key factors in this increase($5.1
million)over last year's decrease are as follows:
• A positive increase of$12.9 million(5 percent)in real property tax revenues,which was
offset by decreases in almost all other revenue categories. As explained previously,the
increase in real property tax revenues is due to a slight increase in the value of net taxable real
property as evidenced in the accompanying statistical tables. ft
• The positive impact of the increase in revenues was offset by increases of$11.1 million(4
percent) in expenditures. $6.5 million of the total increase in expenditures is due to increases
in salaries and wages from the prior year and $9.0 million in associated employee benefits.
uw
The fund balance of the County's capital projects fund increased by$28.9 million(69 percent)
during the current fiscal year. The increase is primarily due to the issuance of approximately
$130.1 million in bonds that were recognized as an other financing source, and of which $35.0 �+
million was used to pay bond anticipation notes(BANs)that were issued in the prior year and
recognized as a current liability because the legal steps regarding the issuance of the bonds to pay lit
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off these notes had not been completed at the time the audited financial statements were being
issued. Expenditure related to various construction projects also increased by$66.5 million from
the prior year, which used most of the bond money that was received.
The debt service funds consist of the Bond Redemption Fund and the Interest Fund. These funds
have combined total fund balances of$23.5 million, all of which is restricted for the payment of
debt service. The net decrease in the combined fund balances during the current year in the debt
service funds was $0.5 million (2 percent).
Proprietary funds. The County's proprietary funds provide the same type of information found
in the government-wide financial statements, but in more detail.
Unrestricted net position of the Kulaimano Elderly Housing Project(Kulaimano)at the end of the
year amounted to $628,052, and $408,818 for the Ouli Ekahi Affordable Housing Project(Ouli
Ekahi). The total net position for Kulaimano decreased by$26,847 and the net position for Ouli
Ekahi increased by$75,725. Other factors concerning the finances of these two funds have
already been addressed in the discussion of the County's business-type activities.
GENERAL FUND BUDGETARY HIGHLIGHTS
Differences between the original budget and the final amended budget were primarily the result
of a$43.4 million increase in appropriations,the most significant single reason(31 percent)due
to an increase in the appropriations for capital outlays.
Differences between the final budget and the actual(budgetary basis)resulted in approximately
$9.2 million less revenues than expected and $30.8 million less expenditures than appropriated.
This is primarily due to the following factors:
• The positive variances in real property and public service company taxes of$2.9 million was
negated by a larger negative variance in intergovernmental revenues for both the federal and
state grants of$8.7 million and in total charges for services of$1.2 million.
• $8.1 million of the unspent appropriations is related to salaries and wages and the various
countywide expenditure accounts relating to salaries and wages. The variance is due
primarily to unfilled vacancies and continued efforts by each department to control payroll
costs during the budget year due to the tough economic conditions facing the County. The
following functions are responsible for the majority of the variance: public safety($3.9
million) and general government($1.9 million).
• $2.1 million is due to lower than anticipated payments needing to be made in retirement
related payments. With each department increasing efforts to control costs, overtime was
also closely monitored and the corresponding pension expenditures were not incurred.
• $1.4 million is due to the fact that the increase in health premiums for employees' was lower
than originally anticipated.
CAPITAL ASSET AND DEBT ADMINISTRATION
Capital assets. The County's investment in capital assets for its governmental and business-type
activities as of June 30, 2016 amounts to $1.2 billion (net of accumulated depreciation). This
investment in capital assets includes land and improvements, buildings and improvements,
equipment,easements, and infrastructure assets, which consists of primarily roads and bridges.
The total increase in the County's investment in capital assets for the current fiscal year was 13
percent.
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err
Major capital asset events during the current fiscal year included the following:
• Construction continued on the Kaiminani Drive Roadway Improvements Phase II;
construction in progress as of the end of the current fiscal year had reached$14.9 million
with$10.7 million coming from the current fiscal year;the project was transferred to
Infrastructure.
• Construction continued on the Kamehameha Avenue Reconstruction(Wailoa Bridge to
Ponahawai)project; construction in progress as of the end of the current fiscal year had
reached$12.8 million with$2.8 million coming from the current fiscal year;the project was
transferred to Infrastructure.
ego
• Construction continued on the Kapi`olani Street extension(Lanikaula Street to Mohouli
Street)project; construction in progress as of the end of the current fiscal year had reached
$12.9 million with $11.3 coming from the current fiscal year.
• Construction continued on the Kealakehe Wastewater Treatment facility; construction in
progress as of the end of the current fiscal year had increased by$6.4 million to reach $10.7
million at the end of the fiscal year.
• Construction continued on the Hokulia Bypass; construction in progress as of the end of the gni
current fiscal year had reached $17.9 million with$12.2 million coming from the current
fiscal year.
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• Construction continued on the Mass Transit agency baseyard and maintenance facility; oft
construction in progress as of the end of the current fiscal year had reached $4.0 million with
$3.6 million coming from the current fiscal year. .�
• Construction continued on the Pahoa Park expansion project; construction in progress as of
the end of the current fiscal year had reached$20.1 million with almost all of it coming from .r
the current fiscal year.
• Construction continued on the Hilo Municipal Golf Course new clubhouse project;
construction in progress as of the end of the current fiscal year had reached$9.7 million with
$8.6 coming from the current fiscal year.
• Construction continued on the Waimea District Park phase I; construction in progress as of
the end of the current fiscal year had reached$7.8 million with$7.1 coming from the current
fiscal year.
• $37.6 million of dedicated roads were received by the County in the current fiscal year.
• $4.1 million of various other equipment and real property were dedicated and donated to the
County in the current fiscal year.
141111
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- 22 -
Capital Assets
(net of depreciation)
June 30,2016 and 2015
Primary Government
Governmental Activities Business-type Activities Total
2016 2015 2016 2015 2016 2015
Land and improvements $233,498,340 $201,363,687 $ 753,877 $ 753,877 $234,252,217 $202,117,564
Infrastructure assets 307,227,977 278,990,393 - - 307,227,977 278,990,393
Ground and site improvements - - 62,240 66,585 62,240 66,585
Buildings and improvements 504,617,544 495,445,600 646,540 682,586 505,264,084 496,128,186
Easements 4,170,517 3,830,410 - - 4,170,517 3,830,410
Equipment 59,910,752 50,250,220 32,396 37,161 59,943,148 50,287,381
Construction work in progress 124,212,163 60,966,761 - - 124,212,163 60,966,761
Total $1,233,637,293 $1,090,847,071 $1,495,053 $ 1,540,209 $1,235,132,346 $1,092,387,280
Additional information on the County's capital assets can be found in note 6 to the basic financial
statements.
Long-term debt. Long-term debt is primarily comprised of bonds of$356.6 million and State
Revolving Fund loans of$27.5 million. At the end of the current fiscal year,the County had total
bonded debt outstanding of$356.6 million. This entire amount was comprised of general
obligation bonds which are backed by the full faith and credit of the County.
The County's total bonded debt increased by$43.2million (14 percent) during the current fiscal
year due to the issuance of$215.9 in bonds which were offset by the retirement of$172.7 of
bonds and bond anticipation notes.
At the end of the fiscal year,the County maintained its"AA-" rating from Standard &Poor's and
Fitch and"Aa2"rating from Moody's for general obligation debt.
State statutes limit the amount of general obligation debt the County may issue up to 15 percent
of the total assessed value of all county real property as established for tax purposes on the last
tax assessment rolls. The current debt limitation for the County is $4.0 billion, which is in excess
of the County's outstanding general obligation debt. Currently the County's outstanding debt
represents 9 percent of our debt limitation.
Additional information on the County's long-term debt can be found in note 10 to the basic
financial statements.
ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES
• The unemployment rate for the County for the current fiscal year is at approximately 4.0
percent, which represents a percentage point decline from last year's rate for the same
period of 5.0 percent, a two percent decline from two years ago and an even larger
decline from the high of 11.0 percent in 2011.
• The number of domestic and international visitors to the County for the current fiscal
year was approximately 1.51 million,with an approximately 4.3 percent increase from
the previous year's count of 1.45 million. For the most part,the County is less dependent
on tourism than the other islands in the State, but the Kona airport terminal
modernization project is budgeted at$60-70 million.
• According to the May 20, 2016 forecast from The Economic Research Organization at
the University of Hawai`i, the neighbor islands are seeing resort development and the
beginning of an increase in residential activity,though it will be to a lesser extent than in
- 23 -
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the past. The organization anticipates that all islands in the state will experience"high ,r,,,
single-digit or low double-digit construction job growth this year.
These factors were considered in preparing the County's budget for the 2017 fiscal year.
At the end of the current fiscal year, unrestricted fund balance in the general fund was $39.1
million. The County has appropriated $26.4 million of this amount for spending in the 2017
tit
fiscal year budget and the majority is included in the assigned portion of the fund balance.
This amount differs from the amount shown on the Governmental Funds Balance Sheet as
assigned to subsequent year's budget due to a reclassification of a negative $5.1 million in the
unassigned fund balance. The amount appropriated in the 2017 fiscal year budget is based on a "' '
different accounting basis and different set of accounting principles than those used in preparing
the Governmental Funds Balance Sheet.
emo
REQUESTS FOR INFORMATION
This financial report is designed to provide a general overview of the County's finances for all
those with an interest in the government's finances. Questions concerning any of the information
provided in this report or requests for additional information should be addressed to the Director
of Finance, County of Hawai`i, 25 Aupuni Street, Suite 2103, Hilo,Hawai`i 96720.
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- 24 - ""'
BASIC FINANCIAL STATEMENTS
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COUNTY OF HAWAII
Statement of Net Position ilii
June 30,2016
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Primary Government lit
Governmental Business-type Component
Activities Activities Total Unit lit
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Assets
Current assets:
Cash and cash equivalents(notes 3 and 14) $ 81,324,687 $ 788,247 $ 82,112,934 $ 32,376,201 illt
Restricted cash and cash equivalents(note 3) 26,608,854 40,723 26,649,577 - tali
Investments(note 3) 7,307,537 200,036 7,507,573 2,000,000
Restricted investments(note 3) 72,243,110 - 72,243,110 - silt
Receivables,net(note 4) 39,454,166 2,952 39,457,118 14,508,472
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Receivable from improvement district
(notes 4 and 10) 95,174 - 95,174 -
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Internal balances(note 5) 1,350 (1,350) - -
Inventories 5,774,378 - 5,774,378 1,452,129 Iwo
Prepaid expenses - 1,714 1,714 188,212
Real estate held for sale 1,316,686 - 1,316,686 - 04
Other 697,108 - 697,108 - woo
Total current assets 234,823,050 1,032,322 235,855,372 50,525,014
0111
Investments(note 3) 19,441,489 - 19,441,489 8,000,000
orii
Restricted investments(note 3) 7,111,139 - 7,111,139 -
Restricted cash and cash equivalents(note 3 and 14) - 61,081 61,081 908,852
an
Receivable from improvement district,excluding
current portion(notes 4 and 10) 2,197,436 - 2,197,436 - via
Capital assets(notes 6,8 and 14):
Utility plant in service,net - - - 266,411,526 01
Infrastructure assets,net 307,227,977 - 307,227,977 -
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Ground and site improvements,net - 62,240 62,240 -
Buildings and improvements,net 504,617,544 646,540 505,264,084 - +M
Equipment,net 59,910,752 32,396 59,943,148 -
Easements,net 4,170,517 - 4,170,517 - 'g
Preliminary survey and investigation charges - - - 4,820,471
Construction work in progress 124,212,163 - 124,212,163 16,984,349 Olt
Land and improvements 233,498,340 753,877 234,252,217 4,869,383 rid
Total capital assets,net 1,233,637,293 1,495,053 1,235,132,346 293,085,729
Total noncurrent assets 1,262,387,357 1,556,134 1,263,943,491 301,994,581 on
Total assets 1,497,210,407 2,588,456 1,499,798,863 352,519,595 mil
Deferred Outflows of Resources
Deferred loss on refunding 8,207,849 - 8,207,849
Deferred outflow related to pensions(notes 13 and 14) 80,128,819 - 80,128,819 5,268,426
Total deferred outflows of resources 88,336,668 - 88,336,668 5,268,426
Total Assets and Deferred Outflows of Resources 1,585,547,075 2,588,456 1,588,135,531 357,788,021 lit
(Continued) on
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COUNTY OF HAWAII
Statement of Net Position
June 30,2016
(Concluded)
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
Liabilities
Current liabilities:
Accounts payable and accrued liabilities $ 29,162,620 $ 43,246 $ 29,205,866 $ 4,051,514
Accrued payroll 9,641,603 - 9,641,603 1,217,821
Advance collections-intergovernmental 1,995,021 1,096 1,996,117 -
Interest due on long-term debt 6,040,712 12,191 6,052,903 757,573
Bonds and loans payable,current portion net
(notes 10 and 14) 24,165,312 77,522 24,242,834 3,939,842
Compensated absences,current portion(note 10) 9,416,266 - 9,416,266 486,063
Claims and judgments,current portion
(notes 10, 12 and 14) 2,781,369 - 2,781,369 80,979
Capital leases,current portion(notes 8 and 10) 1,533,136 - 1,533,136 -
Landfill costs payable,current portion
(notes 9 and 10) 169,067 - 169,067 -
Customers'deposits - - - 610,720
Other 6,897,202 - 6,897,202 -
Total current liabilities 91,802,308 134,055 91,936,363 11,144,512
Noncurrent liabilities:
Bonds and loans payable,net
(notes 10 and 14) 417,284,252 936,492 418,220,744 55,995,634
Compensated absences(note 10) 28,491,539 - 28,491,539 1,190,018
Claims and judgments(notes 10, 12 and 14) 11,078,127 - 11,078,127 281,021
Capital leases(notes 8 and 10) 3,383,042 - 3,383,042 -
Landfill costs payable(notes 9 and 10) 22,463,933 - 22,463,933 -
Unearned revenue,noncurrent - - - 1,583,953
Customers'deposits - - - 17,008,700
Net pension liability(notes 13 and 14) 382,070,813 - 382,070,813 18,940,065
Other(note 13) 90,773,967 - 90,773,967 -
Total noncurrent liabilities 955,545,673 936,492 956,482,165 94,999,391
Total liabilities 1,047,347,981 1,070,547 1,048,418,528 106,143,903
Deferred Inflows of Resources
Deferred inflows related to pensions(notes 13 and 14) 26,847,066 - 26,847,066 3,770,461
Deferred inflows-other 1,319,853 - 1,319,853 90,027
Total Deferred Inflows of Resources 28,166,919 - 28,166,919 3,860,488
Total Liabilities and Deferred
Inflows of Resources 1,075,514,900 1,070,547 1,076,585,447 110,004,391
Net Position
Net investment in capital assets 824,846,090 481,039 825,327,129 234,059,105
Restricted for:
Capital projects 29,360,604 - 29,360,604 -
Debt service(note 10) 23,478,132 - 23,478,132 -
Highways,streets and abandoned vehicles 11,468,209 - 11,468,209 -
Public access open space 8,906,278 - 8,906,278
-
Other 1,481,678 - 1,481,678
-
Unrestricted (389,508,816) 1,036,870 (388,471,946) 13,724,525
Total net position $ 510,032,175 $ 1,517,909 $ 511,550,084 $247,783,630
See accompanying notes to the basic financial statements.
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COUNTY OF HAWAII ,
Statement of Activities Iri
For the Fiscal Year Ended June 30,2016
Program Revenues
Operating Capital
Charges for Grants and Grants and
Functions/Programs Expenses Services Contributions Contributions
Primary government:
Governmental activities: 11111
General government $ 64,958,287 $ 2,659,984 $ 2,022,114 $ 4,068,400
Public safety 186,591,443 5,594,344 22,493,858 -
Highways and streets 45,224,201 16,965,449 1,510,767 52,508,048
Health,education and welfare 39,696,963 523,824 20,200,434 -
Culture and recreation 27,261,082 1,951,553 224,696 281,891
Sanitation 48,474,153 19,011,328 782,589 3,372,507
Interest on long-term debt 11,162,756 _ - -
+�i
Total governmental activities 423,368,885 46,706,482 47,234,458 60,230,846
Business-type activities: I
Health,education and welfare 544,808 457,842 133,932 - W
Total primary government $ 423,913,693 $ 47,164,324 $ 47,368,390 $ 60,230,846
4,1
Component unit:
Water(note 14) $ 51,316,651 $ 48,046,768 $ - $ 17,008,622
General revenues:
a.�
Taxes:
Property taxes,levied for general purposes
Public service company taxes
Public utility franchise taxes
Fuel taxes
Grants and contributions not restricted to specific programs I
Investment earnings
Other
Total general revenues111/
Change in net position
ail
Net position,beginning of year
Net position,end of year
See accompanying notes to the basic financial statements.
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-28-
Net(Expense)Revenue and Changes in Net Position
Primary Government
Governmental Business-type Component
Activities Activities Total Unit
$ (56,207,789) $ - $(56,207,789) $ -
(158,503,241) - (158,503,241) -
25,760,063 - 25,760,063 -
(18,972,705) - (18,972,705) -
(24,802,942) - (24,802,942) -
(25,307,729) - (25,307,729) -
(11,162,756) - (11,162,756) -
(269,197,099) - (269,197,099) -
- 46,966 46,966 -
(269,197,099) 46,966 (269,150,133) -
- - - 13,738,739
248,353,113 - 248,353,113 -
9,800,948 - 9,800,948 -
9,004,330 - 9,004,330 -
7,933,810 - 7,933,810 -
19,557,513 - 19,557,513 -
316,593 1,912 318,505 247,434
12,081,055 - 12,081,055 -
307,047,362 1,912 307,049,274 247,434
37,850,263 48,878 37,899,141 13,986,173
472,181,912 1,469,031 473,650,943 233,797,457
$ 510,032,175 $ 1,517,909 $511,550,084 $ 247,783,630
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COUNTY OF HAWAII lam,
Governmental Funds iii
Balance Sheet
June 30,2016 IP
Other Total '
Capital Governmental Governmental
General Projects Funds Funds 411
Assets
ilit
Cash and cash equivalents(note 3) $25,615,400 $24,397,706 $ 57,920,435 $107,933,541
Investments(note 3) 31,284,972 61,756,900 13,061,403 106,103,275
Receivables,net(note 4) 20,861,067 790,666 2,204,372 23,856,105 IR
Due from other governmental funds(note 5) 1,746,518 796,177 90,561 2,633,256 e'
Due from other nongovernmental funds(note 5) - - 1,350 1,350
Receivables from other governments(note 4) 9,281,381 4,699,586 1,617,094 15,598,061 III
Inventories 5,774,378 - - 5,774,378 r
it
Real estate held for sale - 595,416 721,270 1,316,686
Other 306,328 - 390,780 697,108
ilit
Total assets $ 94,871044 $93,036,451 $.._211,1)1112(25, $263,913,760_
Liabilities,Deferred Inflows and Fund Balances a'
Liabilities:
Accounts payable $ 4,655,918 $ 21,256,607 $ 3,250,095 $ 29,162,620 IR
Accrued payroll 8,430,882 - 1,210,721 9,641,603 Iii,
Due to other governmental funds(note 5) 770,049 389,603 1,473,604 2,633,256
Advance collections-intergovernmental (note 7) 1,206,542 553,789 234,690 1,995,021
111
Other 3,773,475 19,954 453,773 4,247,202
Total liabilities 18,836,866 22,219,953 6,622,883 47,679,702 a
Deferred Inflows of Resources:
Unavailable revenue 22,180,920 - 2,227,034 24,407,954 -I
Fund balances: III
Nonspendable: Inventory 5,774,378 - - 5,774,378
Restricted for:
Ill
Debt service(note 10) - - 23,478,132 23,478,132
NI
Highways,streets and abandoned vehicles - 31,883,833 11,468,209 43,352,042
Public access open space 8,906,278 - - 8,906,278
Other 116,025 24,550,851 1,365,653 26,032,529 oil
Committed to: N
Budget stabilization 5,980,141 - - 5,980,141
Disaster and emergencies 5,526,507 - - 5,526,507
lit
Lower Puna area - - 4,115,291 4,115,291
II
Rental assistance and subsidy - - 2,531,750 2,531,750
Sanitation - - 15,600,624 15,600,624
Self insurance 1,311,675 - - 1,311,675 UI
Highways,streets and abandoned vehicles - 2,030,102 8,148,088 10,178,190 tri
Parks and recreational projects - 2,215,980 88,411 2,304,391
Zoning change impact mitigation(fair share) - 4,700,855 - 4,700,855 MI
Other 718,744 1,466,353 361,190 2,546,287
Assigned to: M
Subsequent year's budget 21,309,233 - - 21,309,233
Other 4,209,277 3,968,524 - 8,177,801 111
Total fund balances 53,852,258 70,816,498 67,157,348 191,826,104 we
Total liabilities and fund balances $ 94,870.044 1_21.031-451 $ 76.007.265 $263.913.760
See accompanying notes to the basic financial statements. M!
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-30- II
COUNTY OF HAWAII
Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position
June 30,2016
Total fund balances-governmental funds $ 191,826,104
Amounts reported for governmental activities in the statement of
net position are different because:
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds. These assets
consist of:
Land and improvements 233,498,340
Infrastructure assets,net 307,227,977
Buildings and improvements,net 504,617,544
Equipment,net 59,910,752
Easements,net 4,170,517
Construction work in progress 124,212,163
Total capital assets,net 1,233,637,293
Deferred amounts on refunding and pension are reported as deferred
outflows of resources in the government-wide financial statements but are not
are not reported in the governmental fund statements 88,336,668
Some of the County's revenues will be collected after year-end but are
not available soon enough to pay for the current period's expenditures
and therefore are deferred(unearned)in the funds.(note 7) 23,088,101
Some liabilities are not due and payable in the current period and
therefore are not reported in the funds. Those liabilities consist of:
Bonds and loans payable,net of receivable
from improvement district (439,156,954)
Interest due on long-term debt (6,040,712)
Capital leases (4,916,178)
Compensated absences (37,907,805)
Claims and judgments (13,859,496)
Landfill costs payable (22,633,000)
Pollution remediation (16,414,110)
Other Postemployment Benefit Obligation(OPEB) (77,009,857)
Net pension obligation (382,070,813)
Total long-term liabilities (1,000,008,925)
Deferred amounts related to pension are reported as deferred
inflows of resources in the government-wide financial statements but are not
are not reported in the governmental fund statements (26,847,066)
Net position of governmental activities $ 510,032,175
See accompanying notes to the basic financial statements.
-31 -
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to
COUNTY OF HAWAII a
Governmental Funds to
Statement of Revenues,Expenditures,and Changes in Fund Balances
Ili
For the Fiscal Year Ended June 30,2016
I.
Other Total
Capital Governmental Governmental
General Projects Funds Funds lV
Revenues
Property taxes $249,054,313 $ - $ - $249,054,313 41
Public service company taxes 9,800,948 - - 9,800,948 .Y+
Fuel taxes - - 7,933,810 7,933,810
Public utility franchise taxes - - 9,004,330 9,004,330 all
Licenses and permits 8,294,444 - 14,137,520 22,431,964
Intergovernmental 50,107,813 14,885,339 20,179,508 85,172,660 ..r
Charges for services 4,198,036 - 17,474,023 21,672,059
Investment earnings 492,025 117,429 4,278 613,732
Other 1,998,370 12,030,517 2,103,323 16,132,210 war
Total revenues 323,945,949 27,033,285 70,836,792 421,816,026
Expenditures A
Current:
General government 39,120,524 - 1,367,183 40,487,707
Public safety 120,498,217 - 6,952,911 127,451,128 sip
Highways and streets 3,444,465 - 19,034,331 22,478,796
sei
Health,education and welfare 7,236,493 - 18,142,997 25,379,490
Culture and recreation 20,307,390 - 1,254,010 21,561,400 a
Sanitation 1,024,490 - 32,990,730 34,015,220
Pension and retirement r
contributions(note 13) 36,344,070 - 5,015,227 41,359,297
Employees'health insurance 27,787,086 - 2,324,973 30,112,059 wit
Other postemployment benefits 7,180,400 - 7,180,400
.iii
Other 2,916,382 - 1,014,915 3,931,297
Debt service:
moil
Principal 987,564 - 21,444,168 22,431,732
Interest 62,949 - 12,910,788 12,973,737 .rd
Capital outlay 5,235,902 139,052,347 - 144,288,249
Total expenditures 272,145,932 139,052,347 122,452,233 533,650,512 •
Excess(deficiency)of revenues ,,,,ti
over(under)expenditures 51,800,017 (112,019,062) (51,615,441) (111,834,486)
MI
(Continued) no
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-32- I
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COUNTY OF HAWAII
Governmental Funds
Statement of Revenues,Expenditures,and Changes in Fund Balances
For the Fiscal Year Ended June 30,2016
(Concluded)
Other Total
Capital Governmental Governmental
General Projects Funds Funds
Other Financing Sources(Uses)
Sale of assets $ 66,584 $ - $ - $ 66,584
Increase in capital leases(notes 8 and 10) 1,709,513 - 1,679,479 3,388,992
State Revolving Fund loans(note 10) - 7,317,504 - 7,317,504
Issuance of bonds(note 10) - 130,135,704 - 130,135,704
Premium on bonds(note 10) 23,174,000 - - 23,174,000
Refunding bonds(note 10) 106,253,750 - - 106,253,750
Payment to refunded bond escrow
agent(note 10) (128,919,924) - - (128,919,924)
Bond issuance costs (507,826) - - (507,826)
Transfers in(note 5) - 3,467,537 53,944,400 57,411,937
Transfers out(note 5) (54,075,881) - (3,336,056) (57,411,937)
Total other financing sources(uses) (52,299,784) 140,920,745 52,287,823 140,908,784
Net change in fund balances (499,767) 28,901,683 672,382 29,074,298
Fund balances at beginning of year 52,151,392 41,914,815 66,484,966 160,551,173
Increase in reserve for inventories 2,200,633 - - 2,200,633
Fund balances at end of year $ 53,852,258 $ 70,816,498 $67,157,348 $191,826,104
See accompanying notes to the basic financial statements.
-33-
U
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
I
For the Fiscal Year Ended June 30,2016
Net change in fund balances-total governmental funds $ 29,074,298
Amounts reported for governmental activities in the statement of activities are
different because:
S
Capital outlays are reported as expenditures in governmental funds.
However,in the statement of activities,the cost of capital assets is
allocated over their estimated useful lives as depreciation expense. In
the current period,these amounts are:
..r
Capital outlay 143,350,146
Dedicated and contributed property 41,728,977
Depreciation expense and loss on disposals (42,288,901) mai
Excess of capital outlay over depreciation expense 142,790,222
Borrowings provide current financial resources to governmental funds;
rr
however,issuing debt increases long-term liabilities in the statement
of net position. In the current period,assets financed through:
General obligation bonds,net of refunding (94,629,890) di
Premium on bond issuance (43,970,426)
Deferred amount on refunding of bonds 7,636,064 wll
State Revolving Fund loans (7,317,504) .r
Capital leases (3,388,992)
Total debt proceeds (141,670,748)
Repayment of long-term debt is reported as an expenditure in governmental "r
funds,but the repayment reduces long-term liabilities in the statement of
net position. In the current year,these amounts consist of:
vow
Bond principal retirement 19,570,743
State Revolving Fund loan repayments 1,406,466
Capital lease payments 1,454,523
Total long-term debt repayment 22,431,732
Because some revenues will not be collected for several months after the
County's fiscal year end,they are not considered"available"revenues and +++�
are"deferred"in the governmental funds. Unearned revenues decreased by
this amount this year. (2,292,007) 5
(Continued)
S
I
-34- I
rMi
COUNTY OF HAWAII
Reconciliation of the Change in Fund Balances of Governmental Funds
to the Statement of Activities
For the Fiscal Year Ended June 30,2016
(Concluded)
Cost of real estate sales that were recognized in prior year in the statement
of activities but deferred in the funds. 1,058,271
Some items reported in the statement of activities do not involve current
financial resources and therefore are not reported as expenditures in
governmental funds. These activities are:
Increase in inventories $ 2,200,633
Increase in Other Postemployment Benefit Obligation(OPEB) (11,254,660)
Increase in compensated absences (2,282,530)
Increase in claims and judgments (572,589)
Decrease in landfill closure/postclosure care costs 31,000
Increase in pollution remediation costs (5,824,110)
Amortization of premium from bond issuance 2,909,184
Amortization of deferred loss on refunding (469,934)
Net increase in accrued interest (628,269)
Decrease to expenses related to pension and salaries and wages 2,349,770
Net additional expenses (13,541,505)
Change in net position of governmental activities $ 37,850,263
See accompanying notes to the basic financial statements.
-35 -
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rw
COUNTY OF HAWAII Po
General Fund "
Statement of Revenues,Expenditures,and Changes in Fund Balance- PI
Budget and Actual(Budgetary Basis) Ili
For the Fiscal Year Ended June 30,2016
Actual Variance Oil
Original Final (Budgetary Positive W
Budget Budget Basis) (Negative)
Revenues: i
Taxes and assessments:
arti
Property taxes $ 245,500,000 $ 245,590,000 $249,054,313 $ 3,464,313
Public service company taxes 10,340,000 10,340,000 9,800,948 (539,052)
mill
Total taxes and assessments 255,840,000 255,930,000 258,855,261 2,925,261
.r
Licenses and permits:
Nonbusiness licenses and permits 3,661,194 3,661,194 3,461,925 (199,269)
NI
Business licenses 2,021,413 2,021,413 1,822,329 (199,084)
Street use 2,691,882 2,691,882 3,010,190 318,308 'i'i
Total licenses and permits 8,374,489 8,374,489 8,294,444 (80,045)
.1111
Intergovernmental:
.r
Federal:
Programs for the aged 2,163,981 2,163,981 1,543,795 (620,186)
Community development block grants - 2,491,306 2,491,306 - 1111
HOME program grant - 452,684 452,684lsri
opment block gran2,954,444 4,637,835 3,555,637 (1,082,198)
Other 2,949,500 3,493,706 (253,799) (3,747,505) ili
Total federal 8,067,925 13,239,512 7,789,623 (5,449,889) ,r
State:
State General Fund-Act 185, O1
SLH 1990 19,158,000 19,158,000 19,127,310 (30,690) .r
Emergency medical services 14,358,592 14,358,592 15,842,705 1,484,113
Other 6,782,551 7,138,758 2,475,569 (4,663,189)
xi
Total State 40,299,143 40,655,350 37,445,584 (3,209,766) .W
Total intergovernmental revenue 48,367,068 53,894,862 45,235,207 (8,659,655)
Charges for services:
General government 5,775,151 5,775,151 4,606,112 (1,169,039)
NI
Culture and recreation 1,434,000 1,454,000 1,299,992 (154,008)
Highways and streets 1,265,000 1,265,000 1,238,035 (26,965)
ill
Public safety 111,368 111,368 114,357 2,989
Total charges for services 8,585,519 8,605,519 7,258,496 (1,347,023) "r
Fines and forfeitures 1,869,500 2,069,500 902,710 (1,166,790)
Ali
Rents 166,000 166,000 215,724 49,724
at
(Continued)
IP
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-36- al
to
COUNTY OF HAWAII
General Fund
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues(continued):
Interest and penalties $ 800,000 $ 800,000 $ 304,829 $ (495,171)
Miscellaneous 5,079,770 5,214,362 4,755,367 (458,995)
Total revenues 329,082,346 335,054,732 325,822,038 (9,232,694)
Expenditures:
Current:
General government:
Finance 12,204,184 12,204,184 10,375,542 1,828,642
General government building 5,175,873 5,127,924 4,614,938 512,986
Legislative 4,364,134 3,464,135 3,005,543 458,592
Automotive equipment 5,238,122 5,288,122 4,135,457 1,152,665
Law 2,762,113 2,762,113 2,443,165 318,948
Research and development 3,937,194 4,295,953 3,885,878 410,075
Planning and zoning 3,898,728 3,957,486 3,662,795 294,691
Mayor's office 1,559,766 1,613,352 1,508,372 104,980
Engineering 1,818,084 1,834,177 1,297,718 536,459
Information technology 2,723,079 2,723,079 2,386,118 336,961
Human resources 2,044,371 2,090,371 1,984,391 105,980
Public works administration 1,409,847 1,424,847 1,367,267 57,580
Elections 969,575 969,575 773,065 196,510
Legislative auditor 755,931 755,931 611,862 144,069
Total general government 48,861,001 48,511,249 42,052,111 6,459,138
Public safety:
Police department 62,475,345 63,156,134 55,988,894 7,167,240
Fire department 45,453,893 45,766,176 44,109,242 1,656,934
Prosecuting attorney 9,344,243 10,618,146 9,130,708 1,487,438
Protective inspection 3,354,758 3,336,613 3,044,326 292,287
Liquor control 1,990,913 2,064,205 1,797,248 266,957
Flood control 330,000 330,000 330,000 -
Civil defense agency 1,391,724 1,832,030 1,623,450 208,580
Animal control 2,081,625 2,081,625 1,982,500 99,125
Total public safety 126,422,501 129,184,929 118,006,368 11,178,561
Highways and streets:
Mass transit 6,254,404 6,267,204 872,013 5,395,191
(Continued)
-37-
NI
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COUNTY OF HAWAII CF
General Fund Oil
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
Illiii
For the Fiscal Year Ended June 30,2016
Actual Variance lit
Original Final (Budgetary Positive Il
Budget Budget Basis) (Negative)
Illi
Expenditures(continued):
Current(continued): tri
Health,education and welfare:
Elderly activities $ 3,776,420 $ 3,776,420 $ 3,199,293 $ 577,127 '1
Office of aging 2,852,841 2,869,591 2,644,455 225,136 migil
Education 58,500 58,500 47,362 11,138
Social programs 1,500,000 1,500,000 1,468,250 31,750
11.
Cemeteries 391,863 400,263 392,983 7,280
Physical examination 133,825 133,825 133,825 - 'r
Total health,education and welfare 8,713,449 8,738,599 7,886,168 852,431
141
Culture and recreation:
Community music 257,276 218,576 199,391 19,185 ""'
Organized recreation:
Maintenance 9,276,900 9,238,490 9,062,813 175,677 +A
Recreation 2,877,288 2,904,348 2,608,304 296,044 rj
Aquatics 2,467,216 2,487,216 2,376,190 111,026
Hoolulu park complex 1,039,613 969,613 935,950 33,663 mi
Administration 2,336,847 2,627,068 2,128,117 498,951
Children's zoo 759,308 764,708 725,599 39,109 'r
Summer/Intersession 542,185 548,185 380,045 168,140
101
Culture and arts 291,317 319,117 298,006 21,111
Elderly activities administration 592,972 661,000 644,792 16,208 ..r
Total culture and recreation 20,440,922 20,738,321 19,359,207 1,379,114
III
Sanitation:
wog
Environmental management 1,176,318 1,176,318 1,055,234 121,084
Pension and retirement contributions 38,040,512 38,040,512 35,924,140 2,116,372 ",
Employees'health insurance 28,709,974 28,709,974 27,756,663 953,311 ni
Other postemployment benefits 7,328,000 7,328,000 7,191,114 136,886
Other 5,332,500 5,020,991 3,027,819 1,993,172 011
Total current 291,279,581 293,716,097 263,130,837 30,585,260 'r
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(Continued) rr
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-38- !
COUNTY OF HAWAII
General Fund
Statement of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
(Concluded)
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Expenditures(continued):
Capital Outlay:
Community Development Block
grants(HUD) $ 100,000 $ 2,724,898 $ 2,599,898 $ 125,000
HOME Program $ 50,000 502,684 452,684 50,000
Other - 150,000 150,000 -
Total capital outlay 150,000 3,377,582 3,202,582 175,000
Total expenditures 291,429,581 297,093,679 266,333,419 30,760,260
Excess of revenues over expenditures 37,652,765 37,961,053 59,488,619 21,527,566
Other financing sources(uses):
Transfers out:
Housing Fund (1,571,796) (1,611,502) (1,611,502) -
Solid Waste Fund (16,608,221) (16,608,221) (16,608,221) -
Sewer Fund (2,280,878) (2,280,878) (2,280,878) -
Golf Course Fund (462,856) (462,856) (462,856) -
CapitalProjectFund - (131,481) (131,481) -
Highway Fund - (47,100) (47,100) -
Disaster/Emergency Fund (250,000) (250,000) (250,000) -
Public Access,Open Space,and Natural
Resources Preservation Fund (4,910,000) (4,990,000) (4,980,901) 9,099
Public Access,Open Space,and Natural
Resources Preservation Maintenance Fund (613,750) (623,750) (622,613) 1,137
Budget Stabilization Fund (250,000) (250,000) (250,000) -
Debt Service Fund (36,742,688) (36,742,688) (36,742,688) -
Total transfers out (63,690,189) (63,998,476) (63,988,240) 10,236
Total other financing uses (63,690,189) (63,998,476) (63,988,240) 10,236
Excess(deficiency)of revenues and other
sources over(under)expenditures and other uses (26,037,424) (26,037,423) (4,499,621) 21,537,802
Fund balance at beginning of year 52,151,392 52,151,392 52,151,392 -
Fund balance at end of year $ 26,113,968 $ 26,113,969 $ 47,651,771 $21,537,802
See accompanying notes to the basic financial statements.
-39-
MR
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COUNTY OF HAWAII up
Proprietary Funds NM
Statement of Net Position
June 30,20161
Business-type Activities- til
Enterprise Funds
Kulaimano Ouli Ekahi IN
Elderly Affordable ill
Housing Housing
Project Project Total 1114
Assets
via
Current assets:
Cash and cash equivalents(note 3) $ 443,891 $ 344,206 $ 788,097
Restricted cash and cash equivalents(note 3) 12,091 28,632 40,723 soi
Investments(note 3) 200,036 - 200,036
iiiii
Imprest fund(note 3) 50 100 150
Receivables,net(note 4) 11 2,941 2,952
Prepaid expenses 1,714 - 1,714 1111
Total current assets 657,793 375,879 1,033,672 ..r
Noncurrent assets:
Restricted cash and cash equivalents(note 3) - 61,081 61,081 ma
Capital assets(note 6):
Land and site improvements 511,000 515,727 1,026,727 "'
Buildings and equipment 1,241,577 486,386 1,727,963
Less accumulated depreciation (1,200,860) (58,777) (1,259,637) w'
Total capital assets 551,717 943,336 1,495,053 r
Total noncurrent assets 551,717 1,004,417 1,556,134
Total assets 1,209,510 1,380,296 2,589,806 w
Liabilities
.r
Current liabilities:
Accounts payable 3,955 - 3,955 011
Internal Balances(note 5) 1,350 - 1,350
Security deposits payable from restricted assets 12,091 27,200 39,291 ow
Deferred revenue(note 7) 154 942 1,096
Interest payable 12,191 - 12,191 Ng
Notes payable,current portion(note 10) 56,061 21,461 77,522
Total current liabilities 85,802 49,603 135,405 ...
Noncurrent liabilities:
Ali
Notes payable(note 10) 651,747 284,745 936,492
Total liabilities 737,549 334,348 1,071,897 +o
Net Position
Net investment in capital assets (156,091) 637,130 481,039 AI
Unrestricted 628,052 408,818 1,036,870
Mir
Total net position $ 471,961 $ 1,045,948 $ 1,517,909
See accompanying notes to the basic financial statements. 111
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-40- 1
Mi
COUNTY OF HAWAII
Proprietary Funds
Statement of Revenues,Expenses,and Changes in Fund Net Position
For the Fiscal Year Ended June 30,2016
Business-type Activities-
Enterprise Funds
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing
Project Project Total
Operating revenues:
Rental receipts from tenants $ 119,667 $ 329,033 $ 448,700
Rental subsidy from federal government-HUD 133,932 - 133,932
Laundry receipts 3,406 - 3,406
Other 376 5,360 5,736
Total operating revenues 257,381 334,393 591,774
Operating expenses:
Utilities 34,678 55,195 89,873
General and administration 128,421 93,137 221,558
Maintenance and repairs 48,523 92,151 140,674
Depreciation(note 6) 36,126 17,744 53,870
Total operating expenses 247,748 258,227 505,975
Operating income 9,633 76,166 85,799
Nonoperating revenues(expenses):
Investment income 1,896 16 1,912
Interest expense (38,375) - (38,375)
Loss on disposal of fixed assets - (458) (458)
Total nonoperating revenues(expenses) (36,479) (442) (36,921)
Change in net position (26,846) 75,724 48,878
Net position,beginning of year 498,807 970,224 1,469,031
Net position,end of year $ 471,961 $ 1,045,948 $ 1,517,909
See accompanying notes to the basic financial statements.
-41 -
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COUNTY OF HAWAIIill
Proprietary Funds WY
Statement of Cash Flows
For the Fiscal Year Ended June 30,2016
II
Business-type Activities-
Enterprise Funds
id
Kulaimano Ouli Ekahi
Elderly Affordable
Housing Housing 1
Project Project Totals
Cash Flows from Operating Activities
Receipts from tenants $ 123,059 $ 333,930 $ 456,989 al,
Receipts from federal government-HUD 133,932 - 133,932 tad
Payments to suppliers for goods and services (221,552) (240,080) (461,632)
Net cash provided by operating activities 35,439 93,850 129,289 'N!
Cash Flows from Capital and Related Financing Activities
mil
Principal paid on notes payable (53,043) (44,337) (97,380)
Interest paid on notes payable (39,381) - (39,381)
1111
Purchase of capital assets (2,692) (6,481) (9,173)
Net cash used in capital and related financing activities (95,116) (50,818) (145,934) "'i
Cash Flows from Investing Activities
iim
Proceeds from maturities of investments 200,000 - 200,000
Interest on investments 2,120 16 2,136 um
Net cash provided by investing activities 202,120 16 202,136
Net increase in cash and cash equivalents 142,443 43,048 185,491 al
Cash and cash equivalents at beginning of year(including all
restricted cash and cash equivalents) 313,589 390,971 704,560
Cash and cash equivalents at end of year(including mg
restricted cash and cash equivalents) $ 456,032 $ 434,019 $ 890,051
um
Reconciliation of Operating Income to Net Cash
1111
Provided by Operating Activities
Operating income $ 9,633 $ 76,166 $ 85,799 .+i
Adjustments to reconcile operating income to net cash
provided by operating activities: all
Depreciation expense 36,126 17,744 53,870
ri
Change in assets and liabilities:
Receivables,net 655 823 1,478
mg
Prepaid expenses (180) - (180)
Accounts and other payables (9,602) (1,558) (11,160) •ta
Deferred revenue (701) 676 (25)
Net cash provided by operating activities $ 35,931 $ 93,851 $ 129,782 al
raii
Supplemental disclosure of cash flow information-Interest paid $ 35,931 $ - $ 35,931
Noncash investing,capital and financing activities: a!
Net decrease in fair value of investments $ 206 $ - $ 206
no
See accompanying notes to the basic financial statements.
li
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-42III
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COUNTY OF HAWAII
Fiduciary Funds
Statement of Fiduciary Net Position
June 30,2016
Private-
Purpose Agency
Trusts Funds
Assets
Cash and cash equivalents(note 3) $ 1,764,487 $ 3,962,191
Investments(note 3) 2,990,820 428,261
Receivables:
Due from other agency funds - 5,855
Other receivables - 40,006
Total receivables - 45,861
Total assets 4,755,307 $ 4,436,313
Liabilities
Due to other agency funds - 5,855
Accrued liabilities - 3,101,450
Advances payable - 275,896
Assets held for the benefit of improvement districts - 1,053,112
Total liabilities - $ 4,436,313
Net Position
Held in trust for other parties 4,755,307
Total net position $ 4,755,307
See accompanying notes to the basic financial statements.
-43-
COUNTY OF HAWAII O
Fiduciary Funds
Statement of Changes in Fiduciary Net Position
For the Fiscal Year Ended June 30,2016
Private-
Purpose
Trusts
Additions
Contributions:
Puna Geothermal Venture $ 50,000 ,,,i
Investment earnings:
Net increase in fair value of investments 197,343
Dividends and interest 91,517
Total additions 338,860
Deductions
Claims Consultant 22,846
Grant payments 128,070
Total deductions 150,916
Change in net position 187,944
Net position,beginning of year 4,567,363 aro
Net position,end of year $ 4,755,307
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See accompanying notes to the basic financial statements. um
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-44-
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
The accounting policies of the County of Hawai`i (the County)conform to U.S. generally accepted
accounting principles (GAAP) as applicable to local governmental units. The following notes to
the basic financial statements are an integral part of the County's Comprehensive Annual Financial
Report(CAFR).
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Financial Reporting Entity
The County has implemented Governmental Accounting Standards Board Statement No. 14,
The Financial Reporting Entity(GASB Statement No. 14), Statement No. 39,Determining
Whether Certain Organizations Are Component Units(GASB Statement No. 39)and
Statement No. 61, The Financial Reporting Entity: Omnibus an amendment of GASB
Statements No. 14 and 34(GASB Statement No. 61). All organizations, activities or functions
that meet the criteria in GASB Statement No. 14,No. 39 and No. 61 for inclusion in the
reporting entity are included in the County's basic financial statements.
Primary Government The County operates under the Mayor-Council form of government
under a charter that became effective on January 2, 1969, and was amended in 1979, 1982,
1990 and 2000. The County's operations are organized by the following functions: general
government; public safety; highways and streets; sanitation; health, education and welfare;
culture and recreation; pension and retirement contributions; health fund; miscellaneous;
capital outlay; and debt service. The State of Hawai`i (the State) assumes full responsibility
for several major functions usually performed by local governments, including education,
welfare,health and judicial functions. There are no separate city, county or township
governments nor any school districts, special districts, authorities or public corporations with
overlapping authority.
GASB Statement No. 14, as amended, defines component units as legally separate
organizations for which the elected officials of the primary government are financially
accountable or for which the primary government may determine,through exercise of
management's professional judgment,that the inclusion of an organization that does not meet
the financial accountability criteria is necessary in order to prevent the reporting entity's
financial statements from being misleading. "Financial accountability" is the level of
accountability that exists if a primary government appoints a voting majority of an
organization's governing board or if the organization is fiscally dependent on the primary
government and is either able to impose its will on that organization or there is a potential for
the organization to provide specific financial benefits to, or impose specific financial burdens
on,the primary government. A primary government has the ability to impose its will on an
organization if it can significantly influence the programs, projects, activities or level of
services performed or provided by the organization. An organization has a financial benefit or
burden relationship with the primary government if any one of three conditions exist: (1)The
primary government is legally entitled to or can otherwise access the organization's resources;
(2)The primary government is legally obligated or has otherwise assumed the obligation to
- 45 -
COUNTY OF HAWAII IR
Notes to the Basic Financial Statements
June 30,2016
finance the deficits of,or provide financial support to,the organization; or(3)The primary
government is obligated in some manner for the debt of the organization.
{
As required by GAAP as set forth in GASB Statement No. 14,No. 39 and No. 61,these basic
financial statements present the County of Hawai`i (the primary government) and its
component unit,the Department of Water Supply(the Department). This component unit is
included in the County's reporting entity because of its financial relationship with the County. .�
Discretely Presented Component Unit The component unit column in the basic financial
statements includes the financial data of the Department, a legally independent agency of the ..r
County that is accounted for as an enterprise fund. It is reported in a separate column to
emphasize that it is legally separate from the County. The members of the Water Board,the
governing body of the Department, are appointed by the Mayor of the County and confirmed
by the County Council. The Department is granted corporate powers by state statute and the
County Charter. Although the County does not have the authority to approve or modify the .o
Department's operational and capital budgets,the County has issued bonds on the
Department's behalf that are general obligations of the County. Because the County is
obligated to repay these bonds in the event of default by the Department,the County is 1111
financially accountable for the debts of the Department. See Note 14 for component unit
disclosures for the Department. Complete financial statements of the Department can be
obtained from the Department of Water Supply, 345 Kekuanao`a Street, Suite 20,Hilo,
Hawaii 96720.
Basic Financial Statements
The basic financial statements include both government-wide(based on the County as a
whole)and fund financial statements. Both the government-wide and fund financial
statements(within the basic financial statements)categorize primary activities as either
governmental or business-type. In the government-wide statement of net position, both the
governmental and business-type activities columns(a)are presented on a consolidated basis
by column, (b)and are reflected, on a full accrual, economic resource basis,which
incorporates long-term assets and receivables as well as long-term debt and obligations.
The government-wide statement of activities reflects both the gross and net costs per
101
functional category(general government,public safety,highways and streets, etc.)which are
otherwise being supported by general government revenues(property taxes, certain
intergovernmental revenues, etc.). The statement of activities reduces gross expenses
(including depreciation)by related program revenues, operating and capital grants. The
program revenues must be directly associated with the function(general government,public did
safety,highways and streets,etc.)or a business-type activity. The operating grants include
operating-specific and discretionary(either operating or capital)grants while the capital grants 011
column reflects capital-specific grants. The net cost(by function or business-type activity) is .r
normally covered by general revenues.
us
- 46 - U'
rri
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
The government-wide focus is more on the sustainability of the County as an entity and the
change in aggregate financial position resulting from the activities of the fiscal period.
The fund financial statements' emphasis is on the major funds in either the governmental or
business-type categories. Nonmajor funds (by category) are summarized into a single column.
The governmental funds in the fund financial statements are presented using the current
financial resource focus and modified accrual basis of accounting. This is the manner in
which these funds are normally budgeted. This presentation is deemed most appropriate to(a)
demonstrate legal and covenant compliance, (b) demonstrate the source and use of liquid
resources, and (c) demonstrate how the County's actual experience conforms to the budget
fiscal plan. Since the governmental fund statements are presented using a different
measurement focus and basis of accounting than the government-wide statements'
governmental activities column, a reconciliation is presented on the page following each
statement,which briefly explains the adjustments necessary to transform the fund based
financial statements into the governmental activities column of the government-wide
presentation.
The County's fiduciary funds are presented in the fund financial statements by type (private
purpose and agency). Since by definition these assets are being held for the benefit of a third
party(private parties, state government, etc.) and cannot be used to address activities or
obligations of the government,these funds are not incorporated into the government-wide
statements.
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 nonfiduciary activities of the primary government and its component
unit. The effect of interfund activity has been removed from these statements during the
process of incorporating fund data but interfund services provided and used have not been
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 certain legally separate component units
for which the primary government is financially accountable.
The statement of activities demonstrates the degree to which the direct expenses of a given
function or segment are offset by program revenues. Direct expenses are those that are clearly
identifiable with a specific function or segment. Program revenues include(a) charges to
customers or applicants who purchase, use, or directly benefit from goods, services, or
privileges provided by a given function or segment and (b) grants and contributions that are
restricted to meeting the operational or capital requirements of a particular function or
segment. Taxes and other items not included among program revenues are reported instead as
general revenues.
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OP
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Separate financial statements are provided for governmental funds,proprietary funds, and
fiduciary funds, even though the latter are excluded from the government-wide financial
statements. Major individual governmental funds and major individual enterprise funds are
reported as separate columns in the fund financial statements.
41
Activities in funds—The financial transactions of the County are recorded in individual funds.
Each fund is accounted for by providing a separate set of self-balancing accounts that mai
comprises its assets, deferred outflows of resources, liabilities,deferred inflows of resources,
reserves, fund equity, revenues and expenditures/expenses. The various funds are reported by °al
generic classification within the financial statements. .r
GASB Statement No. 34,Basic Financial Statements—and Management's Discussion and
Analysis—for State and Local Governments, sets forth minimum criteria(percentage of the
assets,deferred outflows of resources, liabilities, deferred inflows of resources,revenues or
expenditures/expenses of either fund category or the governmental and enterprise combined) ,y
for the determination of major funds. The nonmajor funds are combined in a column in the
fund financial statements and detailed in the combining section.
The County reports the following major governmental funds:
General Fund—The general fund is the general operating fund of the County. It is used
to account for all activities of the general government,except those required to be
accounted for in other funds. •i+
Capital Projects Fund—Used to account for the costs of constructing County capital
improvements financed with general obligation bond proceeds, federal and state grants, .,r
and general and special revenue fund revenues. The capital projects fund is used to
account for financial resources to be used for the acquisition or construction of major
general government capital facilities and infrastructure(other than those financed by
proprietary funds and trust funds)when separate project centers are needed to control
costs.
The County reports the following major proprietary funds:
Kula`imano Elderly Housing Project—Used to account for the operation of a rental
housing project for low-income senior citizens located north of Hilo. "'
Ouli Ekahi Affordable Housing Project—Used to account for the operation of a 33-unit
single-family affordable rental housing project located in Waimea. •+
Pik
I
I
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COUNTY OF HAWAII •
Notes to the Basic Financial Statements
June 30, 2016
The County reports the following fiduciary funds:
Private-Purpose Trust Funds—Used to account for funds received from geothermal
developers to mitigate the effects of geothermal energy development. Also used to
account for investment income on funds received from import businesses at the port of
Hilo and the related expenditures to promote health and safety on the Island of Hawai`i.
Agency Funds—Used to account for assets held by the County for other governmental
units and individuals. The agency funds are custodial in nature and do not involve
measurement of results of operations. The County has the following agency funds:
• State Weight Tax Fund
• Improvement District No. 18 Fund
• Improvement District No. 19 Fund
• Improvement District Revolving Fund
• Performance and Refundable Deposits Fund
• Payroll Clearance Fund
• Flexible Spending Account
• Lapsed Warrants Fund
• Non-Profit License Plates Fund
• Organ and Tissue Education Fund
• Business Improvement District 1-Kailua
Basis of Accounting
Basis of accounting refers to the period in which revenues and expenditures(or expenses)are
recognized in the accounts and reported in the basic financial statements. Basis of accounting
relates to the timing of the measurements made, regardless of the measurement focus applied.
The government-wide financial statements and the proprietary, fiduciary and component unit
fund financial statements are presented on an accrual basis of accounting. The governmental
funds in the fund financial statements are presented on a modified accrual basis.
Accrual Basis-Revenues are recognized when earned and expenses are recognized when the
related obligation is incurred.
Modified Accrual Basis-Revenues are recorded when susceptible to accrual(that is, both
measurable and available). "Measurable" means the amounts are determinable. "Available"
means the amounts are collectible within the current period or soon enough thereafter(one
year for intergovernmental revenues)to be used to pay liabilities of the current period.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Licenses and permits,charges for current services, fines and forfeitures,penalties and
miscellaneous revenues are recorded as revenues when received in cash because they are ,"R
generally not measurable until actually received. Real property taxes and State Revolving
Fund loan proceeds are considered available when collected. ""i
In applying the susceptible to accrual concept to intergovernmental revenues,the legal and
contractual requirements of the numerous individual programs are used as guidance. There
are essentially two types of these revenues. In one,monies must be expended on the specific
purpose or project before any amounts will be paid to the County;therefore,revenues are
recognized based upon the expenditures recorded. Most construction grants and many .r
operating grants fall into this category. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed " I
compliance requirements. These resources are reflected as revenues at the time of receipt or sae
earlier if the susceptible to accrual criteria are met.
The County reports deferred inflow of resources in its fund financial statements(see Note 7).
Deferred inflows of resources arise when potential revenue does not meet both the
"measurable" and "available" criteria for recognition in the current period. In subsequent
periods,when both revenue recognition criteria are met,the deferred inflow is removed from
the fund financial statements and revenue is recognized.
Expenditures are recognized under the modified accrual basis of accounting in the accounting
period in which the fund liability is incurred. Exceptions to this general rule include:
(a)accumulated compensated absences and claims and judgments which are recognized as
expenditures when paid; (b) liabilities related to municipal solid waste landfill closure and
postclosure care costs; (c)principal and interest on general long-term debt which are .r
recognized as expenditures when due; and(d) liabilities relating to pollution remediation .
The County applies all applicable GASB pronouncements, including the adoption of GASB
Statement No. 62, Codification of Accounting and Financial Reporting Guidance Contained
in Pre-November 30, 1989 FASB (Financial Accounting Standards Board)and AICPA „i
(American Institute of Certified Public Accountants)Pronouncements.
Encumbrances
The general, special revenue, and capital projects funds follow encumbrance accounting under
which purchase orders, contracts and other commitments are recorded as an obligation of fund
balance and provide authority for the carryover of appropriations to the subsequent year in fli
order to complete these transactions. Encumbrances outstanding at year-end are included in
the respective fund balance categories as appropriate and do not constitute expenditures or
liabilities because the commitments will be honored during the subsequent year.
ii
- 50 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Cash and Investments
Cash and cash equivalents include cash on hand, amounts in demand deposits and savings
accounts, and short-term investments with a maturity date of three months or less from the
date acquired by the County.
Investments consist of certificates of deposit, repurchase agreements, and securities with
original maturities exceeding three months. These include participating investment contracts
(U.S. government sponsored agency issues and negotiable certificates of deposit)as well as
nonparticipating investment contracts (time certificates of deposit and repurchase agreements).
Both categories of investments are stated at fair value(see Note 3). Valuations of investments
in government sponsored enterprises such as Federal National Mortgage Association(Fannie
Mae) and Federal Home Loan Mortgage Corporation(Freddie Mac)are based on quoted
market rates. Valuations of certificates of deposits are based on cost, which approximate fair
value, as they almost invariably are held to maturity. Investments also consist of equity
securities in the fiduciary fund financial statements. These investments are stated at fair value
based on closing quoted prices.
Real Property Taxes
The County's real property taxes are levied on July 1 each year on assessed valuation as of
January 1. The taxes become a lien on the property assessed as of the levy date. Taxes are
due and payable in two equal annual installments on August 20 and February 20. Accordingly,
real property taxes receivable as of June 30 are delinquent. Each delinquent installment bears
interest at 1%per month and penalties of up to 10%of the amount due. Assessments are
based on 100% of estimated fair market values prior to the application of exemptions or
preferential assessments.
The County of Hawai`i has an Enterprise Zone program, defined in the Hawai`i County Code
Section 19-89.3 and chapter 31 as well as the Hawai`i Revised Statues, as amended Section
209E. The purpose of this program is to stimulate business and industrial growth. Pursuant to
the chapter and rules, in addition to the state general excise tax abatement, a qualified business
in an enterprise zones is entitled to the following county real property tax exemption:
buildings or other like structures which are built as a result of new construction by a qualified
business within an enterprise zone shall be exempt except for the minimum tax from real
property taxes for a period of three years.
For the fiscal year 2015-2016 (period between July 1, 2015 through June 30, 2016)the County
of Hawai`i had only one parcel in this program. Parcel id#3-9-002-008-0000, a dairy
operation received a reduction of$5,209.92 on their real property taxes which was a result of a
value reduction of$518,400 for this specific period.
- 51 -
COUNTY OF HAWAI`I
Notes to the Basic Financial Statements
June 30,2016
*14
Inventories
Inventories consist of materials and supplies and are reported as expenditures at the time of
rid
purchase(purchase method). Police and fire department inventories are stated using the first
in, first out(FIFO)method. Other inventories are stated at average cost.
Liquor Control
Section 281 of the Hawai`i Revised Statutes requires that liquor license revenues collected be "
af
used only for costs and expenses directly relating to operational and administrative costs •+
actually incurred by the liquor commission collecting such fees. The unexpended fees at
June 30,2016 of$116,025 are reflected as a restriction of general fund balance. "!
Capital Assets
los
Capital assets, which include property, plant, equipment, and infrastructure assets(e.g.,roads,
- bridges,curbs and gutters, streets and sidewalks, drainage systems, lighting systems, and
similar items), are reported in the applicable governmental or business-type activities columns ,,,IP
in the government-wide financial statements. Capital assets are defined by the County as
assets with an initial, individual cost of more than $1,000 and an estimated useful life in
excess of one year. Such assets are recorded at historical cost or estimated historical cost if
purchased or constructed. Donated capital assets are recorded at estimated fair market value at
the date of donation. r
The costs of normal maintenance and repairs that do not add to the value of the asset or
materially extend the life of the asset are not capitalized. .r
Major outlays for capital assets and improvements are capitalized as projects are constructed. 'PN
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.
411
Capital assets of the primary government and enterprise fund are depreciated using the .g
straight-line method over the following estimated useful lives of the assets:
Assets Years
Infrastructure 20 to 100 years
Buildings and improvements 50 to 100 years
Ground and site improvements 20 to 50 years
Equipment 5 to 40 years
Easements Dependent on terms of easement agreement
0
- 52 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Deferred Outflows of Resources and Deferred Inflows of Resources
Deferred outflows of resources represent a consumption of net position that applies to a future
period and will not be recognized as an outflow of resources (expense or expenditure) until
that time. The County has two items that qualifies for reporting in this category. The County
reports the deferred loss on refunding and deferred outflow related to pensions as a deferred
outflow of resources in its statement of net position.
Deferred inflows of resources represent an acquisition of net position that applies to a future
period and will not be recognized as an inflow of resources (revenue)until that time. Property
taxes, fees and other non-exchange transactions received in the current fiscal year for the
ensuing fiscal year are reported as deferred inflows of resources. These amounts are deferred
and recognized as an inflow of resources in the period that the amounts become available.
The County also reports deferred inflows of resources related to pensions.
Long-term Obligations
The County reports long-term debt of governmental funds at face value on the government-
wide statement of net position. Certain other governmental fund obligations not expected to
be financed with current available resources are also reported on the government-wide
statement of net position. Long-term debt and other obligations financed by the proprietary
funds are reported as liabilities in those funds.
Compensated Absences
Employees earn vacation credit at the rate of one and three-quarter working days for each
month of service. Up to ninety days of vacation leave credits can be accumulated per
employee. In addition,employees who work overtime can elect to take compensatory time off
instead of overtime pay. The time off is earned at the rate of one-and-a-half hours for each
hour of overtime worked. There is no statutory limit to the amount of compensatory time off
an employee can accumulate. Both compensatory time off and vacation credits are converted
to pay upon termination of employment.
A liability for these amounts is reported in the governmental funds only if they have matured,
for example, as a result of employee resignations and retirements. All vacation and
compensatory time off pay is accrued in the government-wide statement of net position along
with the estimated liability for social security and Medicare taxes and employers' retirement
contributions on those amounts.
Sick leave accumulates without limit. Sick leave can be taken only in the event of illness and
is not convertible to pay upon termination of employment; therefore there is no related
liability. However, a County employee who retires or leaves government service in good
standing with 60 days or more of unused sick leave is entitled to additional service credit in
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1111
+rw
COUNTY OF HAWAII
Notes to the Basic Financial Statements ""ii
June 30,2016 mod
119
.mi
the Employees' Retirement System of the State of Hawai`i. Accumulated sick leave at
June 30,2016 totaled $76,356,000 for the primary government.
Leases "'
111
Leases transferring substantially all of the risks and benefits of ownership are recorded as
capital leases; other leases are operating leases(see Note 8). Capital leases are recorded as
capital asset additions at their estimated fair value at the inception of the lease and the related
or
present value of the future minimum lease obligations is recorded as long-term debt. "'
Operating lease expenditures and expenses are recognized when the lease obligation is paid.
Retirement Plan Contributions ",l
.r
For purposes of measuring the net pension liability, deferred outflows of resources and
deferred inflows of resources related to pensions, and pension expense, information about the
fiduciary net position of the Employees' Retirement System of the State of Hawaii(ERS)and
additions to and deductions from ERS's fiduciary net position have been determined on the
same basis as they are reported by ERS. The County's contribution to the ERS includes the
normal cost plus the level annual payment required to amortize the unfunded actuarial accrued
liability. The County's policy is to fund its required contribution annually(see Note 13).
Operating Revenues and Expenses
Revenues and expenses are distinguished between operating and nonoperating items for the
proprietary funds. Operating revenues generally result from providing services in connection
with the proprietary funds' principal ongoing operations. The principal operating revenues of .r
the proprietary funds are fees charged to residents for rent and rental subsidies received from
the federal government.
rr
Operating expenses include the costs associated with providing housing for tenants, such as
utilities, lease rent,and maintenance and repairs;administrative expenses; and depreciation on 01
capital assets. All revenues and expenses not meeting these definitions are reported as
rim
nonoperating revenues and expenses.
Use of Estimates
The preparation of the basic financial statements in conformity with GAAP requires
111,
management to make estimates and assumptions that affect the reported amounts of assets,
deferred outflows of resources, liabilities, and deferred inflows of resources, as well as �=
disclosure of contingent assets and liabilities at the date of the financial statements,and the
reported amounts of revenues, expenditures,and other financing sources and uses during the 0011
reporting period. Actual results could differ from those estimates. gel
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Fund Balances
When both restricted and unrestricted fund balances are available for use, it is the County's
policy to use restricted fund balance first,then unrestricted fund balance. Furthermore,
committed fund balances are reduced first, followed by assigned amounts, and then
unassigned amounts when expenditures are incurred for purposes for which amounts in any of
those unrestricted fund balance classifications can be used.
The County reports the following classifications:
Nonspendable Fund Balance—Nonspendable fund balances are amounts that cannot be
spent because they are either not in spendable form, or, for legal or contractual reasons,
must be kept intact. The County has inventory included in their nonspendable fund
balance.
Restricted Fund Balance—Constraints placed on the use of these resources are either
externally imposed by creditors(such as through debt covenants), grantors, contributors
or other governments or are imposed by law(under the Hawai`i Revised Statutes or
County of Hawai`i Charter).
Committed Fund Balance—Committed Fund Balances are amounts that can only be used
for specific purposes as a result of constraints imposed by the County Council via
ordinances and the County Code and can only be undone via the same manner. The
committed fund balance of the General Fund includes the portion of fund balance
committed to budget stabilization. The budget stabilization portion is authorized under
County Code §2-219 to §2-223 and additions are made via the County budget or
subsequent budget amendments. The fund balance may only be used when there is a
reduction in budgeted revenue and the director of finance determines that such use is
necessary to prevent a reduction in the level of public services.
Assigned Fund Balance—Assigned fund balances are amounts that are constrained by the
County's intent as determined by the Mayor but are neither restricted nor committed.
The County's only assigned fund balances are in the General Fund and Capital Projects
Fund and the majority consists of the portion of fund balance that is intended to balance
the subsequent year's budget, which is conveyed by the Mayor via his approval of
allotment requests and his approval of the current year's fund balance amount to be
included in the submittal for next year's annual budget ordinance.
Unassigned Fund Balance—This is the residual classification of the General Fund. The
General Fund is the only fund that could potentially report a positive unassigned fund
balance.
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wi
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,20161
' I
Net Position
When both restricted and unrestricted net position are available for use, it is the County's
policy to use restricted net position first, and then unrestricted net position.
New Accounting Pronouncements
oth
In February 2015, GASB issued Statement No. 72,Fair Value Measurement and Application.
The objective of this Statement is to improve financial reporting by clarifying the definition of ea
fair value for financial reporting purposes, establishing general principles for measuring fair m
value,providing additional fair value application guidance, and enhancing disclosures about
fair value measurements. The requirements of this Statement are effective for the County for "g
periods beginning after June 15, 2015. The County implemented this Statement as of and for
the fiscal year ended June 30, 2016.
In June 2015, GASB issued Statement No. 73,Accounting and Financial Reporting for
me
Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and
Amendments to Certain Provisions of GASB Statements 67 and 68. The objectives of this
114
Statement include improving the usefulness of information for decisions made by the various
users of the general purpose external financial reports of governments whose employees— ""i
both active and inactive employees—are provided with pensions that are not within the scope
of Statement No. 68,Accounting and Financial Reporting for Pensions, as amended and
clarifying the application of certain provisions of Statement No. 67,Financial Reporting for
Pension Plans, and Statement No. 68. Requirements of this Statement which are effective for
the periods beginning after June 15,2015 have either been implemented or have no impact on
the County's financial statements as of and for the year ended June 30, 2016. For
requirements of this Statement which are effective for periods beginning after June 15, 2016,
the County has not yet determined the effect it will have on its financial statements.
Irk
In June 2015, GASB issued Statement No. 74,Financial Reporting for Postemployment
Benefit Plans Other Than Pension Plans. The objective of this Statement is to improve the
usefulness of information about postemployment benefits other than pensions (other
postemployment benefits or OPEB) included in the general purpose external financial reports
of state and local governmental OPEB plans for making decisions and assessing
1114
accountability. The requirements of this Statement are effective for the County for periods
beginning after June 15,2016. The County has not yet determined the effect this Statement "'i
will have on its financial statements.
111
In June 2015,GASB issued Statement No. 75,Accounting and Financial Reporting for +�+�
Postemployment Benefits Other Than Pensions. The primary objective of this Statement is to
improve accounting and financial reporting by state and local governments for 44
postemployment benefits other than pensions(other postemployment benefits or OPEB). The
requirements of this Statement are effective for the County for periods beginning after June
ri
- 56 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
15, 2017. The County has not yet determined the effect this Statement will have on its
financial statements.
In June 2015, GASB issued Statement No. 76, The Hierarchy of Generally Accepted
Accounting Principles for State and Local Governments. The objective of this Statement is to
identify the sources of accounting principles used to prepare financial statements of state and
local governmental entities in conformity with generally accepted accounting principles
(GAAP) and the framework for selecting those principles. The requirements of this Statement
are effective for the County for periods beginning after June 15, 2015. The County adopted
this Statement for the year ending June 30, 2016 but determined that it did not have an impact
on its financial statements.
In August 2015, GASB issued Statement No. 77, Tax Abatement Disclosures. The objective
of this Statement is to provide financial statement users with essential information about the
nature and magnitude of the reduction in tax revenues through abatement programs. The
requirements of this Statement are effective for the County for financial statements for periods
beginning after December 1, 2015 but the County implemented as of and for the fiscal year
ended June 30, 2016.
In December 2015, GASB issued Statement No. 78,Pensions Provided through Certain
Multiple-Employer Defined Benefit Pension Plans. The objective of this Statement is to
address a practice issue regarding the scope and applicability of Statement No. 68,Accounting
and Financial Reporting for Pensions. The requirements of this Statement are effective for
reporting periods beginning after December 15,2015. The County has not yet determined the
effect this Statement will have on its financial statements.
In December 2015, GASB issued Statement No. 79, Certain External Investment Pools and
Pool Participants. The objective of this Statement is to address for certain external
investment pools and their participants the accounting and financial reporting implications that
result from changes in the regulatory provisions referenced by previous accounting and
financial reporting standards. The requirements of this Statement are effective for reporting
periods beginning after June 15, 2015 and did not have an impact on the County's financials
for the year ending June 30, 2016.
In January 2016, GASB issued Statement No. 80,Blending Requirements for Certain
Component Units. The objective of this Statement is to improve financial reporting by
clarifying the financial statement presentation requirements for certain component units. The
requirements of this Statement are effective for reporting periods beginning after June 15,
2016. The County has not yet determined the effect this Statement will have on its financial
statements.
In March 2016, GASB issued Statement No. 81,Irrevocable Split-Interest Agreements. The
objective of this Statement is to improve accounting and financial reporting for irrevocable
split-interest agreement by providing recognition and measurement guidance for situations in
- 57 -
um
COUNTY OF HAWAII vim
Notes to the Basic Financial Statements
I
June 30, 2016
1410
which a government is a beneficiary of the agreement. The requirements of this Statement are
effective for financial statements for periods beginning after December 15, 2016 and should
be applied retroactively. The County has not yet determined the effect this Statement will
have on its financial statements. "'e
In March 2016, GASB issued Statement No. 82,Pension Issues. The objective of this
Statement is to improve consistency in the application of pension accounting and financial
reporting requirements by addressing certain issues that have been raised with respect to
previously issued Statements. The requirements of this Statement are effective for reporting
periods beginning after June 15, 2016 except that the requirements for the selection of .r
assumptions in which an employer's pension liability is measured as of a date other than the
employer's most recent fiscal year-end is effective in the first reporting period in which the
measurement date of the pension liability is on or after June 15,2017. The County has not
yet determined the effect this Statement will have on its financial statements.
2. STEWARDSHIP,COMPLIANCE AND ACCOUNTABILITY
Annual Budget
The County follows these procedures in establishing its operating and capital budgets:
• On or before March 1,the Mayor submits to the County Council proposed operating and
capital projects budgets for the fiscal year commencing the following July 1. The
operating budget includes proposed expenditures for the general fund and special revenue
funds,and the means of financing them. A project-length budget is submitted to the
County Council for the capital projects fund. ..
• The Mayor submits to the County Council amendments to the proposed operating and w
capital budgets within ten working days after the close of the state legislature, but not
later than May 5.
• The County Council conducts public hearings on the proposed operating and capital
budgets after March 1 but prior to the first reading on the budget bills, which must be
after May 5.
• On or before June 30,the County Council adopts the budgets. The legal level of
budgetary control is the department level because the Mayor can transfer funds from any
unencumbered appropriation to another within a department or agency without County
Council approval. During the year,the budget may be amended by action of the County
Council, except for appropriations required by law and appropriations for debt service,
which may not be decreased or deleted. Supplemental appropriations were made during
the 2013-2014 fiscal year to recognize revenue from sources not anticipated at the time of
the original budget and to establish the authorization for such funds to be expended.
Such supplemental appropriations totaled$7.3 million in the general fund and $4.7
- 58 - 4
a
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
million in the special revenue funds. Legally adopted budgets include the General Fund,
Highway Fund, Sewer Fund, Solid Waste Fund,Cemetery Fund, Parking Meter Fund,
Vehicle Disposal Fund, Bikeway Fund, Workforce Investment Act Fund, Golf Course
Fund, Geothermal Relocation and Community Benefits Fund, Beautification Fund,
Hawai`i County Housing Agency Fund and Park Dedication Fund.
• Appropriations for the operating budget lapse at the end of the fiscal year to the extent
that they have not been expended or encumbered. Appropriations for capital
expenditures that are not encumbered lapse at the end of two fiscal years following the
fiscal year that the appropriation was made.
• Formal budgetary integration is employed as a management control device during the
year for the General Fund, special revenue funds, and Capital Projects Fund. Formal
budgetary integration is not employed for debt service funds because effective budgetary
control is alternatively achieved through general obligation bond indenture provisions.
• The accompanying statement of revenues, expenditures and changes in fund balances—
budget and actual(budgetary basis)for the General Fund presents a comparison of the
legally adopted budget with actual data on a budgetary basis. Accounting principles
applied for purposes of developing data on a budgetary basis differ significantly from
those used to present financial statements in conformity with GAAP. On the budgetary
basis, intergovernmental revenues are recognized when awarded by the granting agency,
encumbrances and unexpended allotments are treated as expenditures, accounts payable
are not accrued, and all leases are treated as operating leases. In preparing the financial
statements on a GAAP basis, accounts payable are accrued and treated as a reduction of
encumbrances for balance sheet presentation.
Budget to GAAP Reconciliation
The following is a summary of the adjustments necessary to convert fund balances of the
County's General Fund from a GAAP basis to a budgetary basis at June 30, 2016:
Ending fund balance—GAAP basis $53,852,258
Encumbrance adjustments:
Beginning encumbrances and unexpended allotments 3,429,363
Ending encumbrances and unexpended allotments (3,291,302)
Other adjustments (6,338,548)
Ending fund balance—Non-GAAP budgetary basis $47,651,771
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IMP
COUNTY OF HAWAII 111.
Notes to the Basic Financial Statements obi
June 30,2016
114
orid
3. CASH AND INVESTMENTS
The Director of Finance is responsible for the safekeeping of all monies paid to the County.
The Director of Finance invests any monies of the County which in the Director's judgment
are in excess of the amounts necessary for meeting the day-to-day operating needs of the
County. Under Section 46-50 of the Hawai`i Revised Statutes, legally authorized investments
include obligations of or guaranteed by the U.S. government, obligations of the State,
federally insured savings and checking accounts,time certificates of deposit, and repurchase
agreements with federally insured financial institutions. U
Cash
The County maintains a number of checking and savings accounts for various funds and with
various financial institutions. Bank deposits are under the custody of the Director of Finance.
For financial statement reporting purposes,cash and short-term investments consist of cash 41114
and money market accounts. Cash and short-term investments also include repurchase
agreements, certificates of deposit,and government sponsored securities with original
maturities of three months or less.
141
The carrying amount of the County's deposits(cash,time certificates of deposit, and money
market accounts)as of June 30, 2016 was $197,315,363 for the primary government and
$5,984,883 for the fiduciary funds.
Information relating to bank balance, insurance and collateral of cash deposits is determined
on a county-wide basis. Total bank balances of deposits for the primary government and owl
fiduciary funds amounted to $217,739,966 at June 30,2016. Of that amount, $217,385,589
represents bank balances covered by federal deposit insurance or by collateral held by the
County's fiscal agents in the name of the County. The remaining bank balances of$354,377
represent deposits held by a management agent and were uncollateralized. Accordingly,these
deposits were exposed to custodial credit risk. Custodial credit risk is the risk that in the event
of a bank failure,the County's deposits may not be returned to it. For checking and savings
Nit
accounts,time certificates of deposit, and repurchase agreements,the County requires, in
accordance with State statutes,that the depository banks pledge collateral based on the "'i
available bank balances for the protection of the funds deposited. All securities pledged as
0110
collateral are held by the County's fiscal agents in the name of the County. The County also
requires that no more than 60% of the County's total funds available for deposit may be lei
deposited in any one financial institution, in accordance with State statutes.
Ali
1141
w
rid
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a
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Investments
The County holds investments both for its own benefit and on behalf of some of the fiduciary
funds. The County's investments of funds not required for immediate payments are
predominately comprised of government sponsored securities (equivalent to the rating in U.S.
Treasuries), repurchase agreements and certificates of deposit, while the fiduciary funds also
hold equity securities.
The framework for measuring fair value provides a fair value hierarchy that prioritizes the
inputs to valuation techniques used to measure fair value. The hierarchy gives the highest
priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1)
and the lowest priority to unobservable inputs(level 3). The three levels of the fair value
hierarchy are described as follows:
Level 1 —Inputs are quoted prices(unadjusted) in active markets for identical assets or
liabilities that a government can access at the measurement date. An active market is a
market in which transactions for the asset or liability take place with sufficient frequency
and volume to provide pricing information on an ongoing basis.
Level 2—Inputs other than quoted prices included within level 1 that are observable for
an asset or liability, either directly or indirectly. If the asset or liability has a specified
(contractual)term, a level 2 input must be observable for most of the full term of the asset
or liability. Level 2 inputs include:
• Quoted prices for similar assets or liabilities in active markets,
• Quoted prices for identical assets or liabilities in markets that are not active,
• Inputs other than quoted prices that are observable for the asset or liability,
• Inputs that are derived principally from or corroborated by observable market
data by correlation or other means.
Level 3 —Inputs are observable for an asset or liability.
Following is a description of the valuation techniques used by the County to measure fair
value:
Government sponsored securities of$19,544,065 and certificates of deposits of
$88,749,976: Valued using quoted prices for identical or similar assets in markets that are
not active (Level 2).
Equity securities of$1,428,351: Valued using quoted prices in active markets for
identical assets or liabilities that a government can access at the measurement date(Level
1).
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opi
COUNTY OF HAWAII
Notes to the Basic Financial Statements
w►
June 30,2016 •W
Mia
The County's investments and maturities at June 30,2016 are as follows:
1111
Maturity(in years)
Fair Value Less than 1 1 —5
Investments—Primary Government:
Certificates of deposit $ 88,491,771 $ 81,741,413 $ 6,750,358
Government sponsored securities 17,811,540 -- 17,811,540
$106,303,311 $ 81,741,413 $24,561,898
Investments—Private-Purpose Trusts:
Government sponsored securities $ 1,562,469 $ -- $ 1,562,469
Equity securities $ 1,428,351 'O
Investments—Agency Funds:
Certificates of deposit $ 258,205 $ -- $ 258,205
Government sponsored securities 170,056 -- 170,056 urn
$ 428,261 $ -- $ 428,261
Interest Rate Risk: The County minimizes its exposure to interest rate risk by limiting the
maturities of investments to five years or less in compliance with state statute. The County's
111
policy is to hold investments until maturity and does not engage in trading for capital gains.
Credit Risk: The County's investment portfolio primarily consists of U.S. government or
agency obligations, bonds of government sponsored enterprises,time certificates of deposit
and repurchase agreements. These investments are either insured by the FDIC, secured by
collateral or carry a credit rating equivalent to U.S. Treasuries.
1 !
Custodial Risk: Custodial risk is the risk of loss from the failure of the counterparty,which is
defined as any entity that obtained an investment on behalf of the County. All of the County's
deposits including repurchase agreements are secured by collateral which is kept by a third
party custodian. Broker-dealers utilized by the County are members of the Securities Investor
Protection Corporation,and all investment securities are held in the County's name.
Concentration of Credit Risk: State law limits deposits to no more than 60% of the total in
any one depository. The County seeks to further diversify its portfolio by purchasing from ""
different issuers, by purchasing different types of investments and by purchasing investments
at different maturities. The County also purchases its investments from a number of banks
and broker-dealers both located locally and on the mainland. As of June 30, 2016, �+
investments were distributed as follows: Central Pacific Bank, 20.3%; FTN Financial,4.8%;
Multi Bank Securities, 18.1%; Stifel Nicolaus, 1.3%; First Hawaiian Bank, 2.8%;Raymond
James, 1.8%; Hawai`i National Bank, 2.6%;Territorial Savings Bank, 14.9%; Bank of Hawaii
33.4%.
a
- 62 -
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Restricted Cash and Cash Equivalents and Investments
Cash and cash equivalents and investments classified as restricted assets for the primary
government at June 30, 2016 amounted to $106,064,907.
Construction related contributions restricted to various capital improvement projects and fuel
tax funds received are recorded as restricted assets in the Capital Projects Fund. Such funds
totaled $58,354,249 at June 30, 2016.
Cash and investments in the Bond Redemption Fund and the Interest Fund are restricted to
debt service related payments and amounted to $23,753,844.
Cash in the Highway Fund, Bikeway Fund and Beautification Fund are restricted to costs
incurred relating to highways and streets and the beautification of such items and amounted to
$12,327,142.
Cash in the Hawaii County Housing Agency is restricted to providing public housing
assistance and amounted to $1,595,931.
The restricted cash and investments in the General Fund was comprised of cash restricted to
costs incurred to administer the liquor commission and cash restricted to the acquisition and
maintenance of lands or property entitlements for public outdoor recreation and education.
Such amounts totaled $116,025 and $9,815,912, respectively.
Tenant security deposits received by the County for the Kula`imano Elderly Housing Project
and the Ouli Ekahi Affordable Housing Project are recorded as restricted assets. Such funds
amounted to $12,091 and $28,632, respectively, at June 30, 2016.
An operating reserve fund was established by the Ouli Ekahi Affordable Housing Project
pursuant to an agreement with the Hawai`i Housing Finance and Development Corporation,
who are the holders of the project's note. This restricted reserve amounted to $61,081 at June
30,2016.
4. RECEIVABLES
Receivables as of June 30, 2016, for the County's individual major funds and other funds in
the aggregate, including the applicable allowances for uncollectible accounts, are as follows:
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um
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016 trio
1001
Governmental activities:
Capital Other 144
General Projects Governmental
Fund Fund Funds Total
Real property taxes $23,319,044 $ -- $ -- $23,319,044
Accounts receivable:
Sewer -- -- 2,195,864 2,195,864
Solid waste -- -- 1,203,946 1,203,946
1114
Capital projects -- 790,666 -- 790,666
Intergovernmental 9,281,381 4,699,586 1,617,094 15,598,061 r+
Gross receivables 32,600,425 5,490,252 5,016,904 43,107,581
Less: allowance for
uncollectibles (2,457,977) -- (1,195,438) (3,653,415) .r
Net total receivables $30,142,448 $ 5,490,252 $3,821,466 $39,454,166
During fiscal year 2005,the County issued$3,887,493 in general obligation bonds on behalf
wie
of Improvement District No. 18, an agency fund. On February 12, 2013 bonds were issued to
refund the outstanding principal balance of$1,345,945 for the Improvement District. During .�
fiscal year 2014 and 2015,the County also issued$448,669 and$720,331,respectively, in
general obligation bonds on behalf of Improvement District No. 19, an agency fund.At June w`
30,2016,the outstanding balance for both Improvement Districts of$2,292,610 is reflected in
the government-wide statement of net position as a receivable(see Note 10).
Business-type activities:
Enterprise
Funds .w
Accounts receivable:
Rent $12,690
Other 624
Gross receivables 13,314
Less: allowance for
uncollectibles (10,362) ari
Net total receivables $ 2,952
.iii
1110
mi
>
- 64Ol
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
5. INTERFUND RECEIVABLES AND PAYABLES
Interfund receivables and payables consist of the following at June 30, 2016:
Receivable Fund Payable Fund Amount
General fund Capital projects fund $ 346,777
Other governmental funds 1,399,741
1,746,518
Capital projects fund General fund 724,142
Other governmental funds 72,035
796,177
Other governmental funds General fund 45,907
Capital projects fund 42,826
Other governmental funds 1,828
90,561
Total $2,633,256
Other governmental funds Enterprise funds $1,350
The above interfund balances result from the time lag between the dates that interfund goods
and services are provided or reimbursable expenditures occur,transactions are recorded, and
payment between funds are made.
Transfers for the fiscal year ended June 30, 2016 consisted of the following:
Transfers out:
Other
General Governmental
Fund Funds Total
Transfers in:
Capital Projects Fund $ 131,481 $3,336,056 $ 3,467,537
Other governmental funds 53,944,400 -- 53,944,400
$54,075,881 $3,336,056 $57,411,937
The interfund transfers noted above include transfers from the General Fund to provide
support for various County programs and to provide resources for the payment of debt
services. In addition, some of the other governmental funds have made transfers to the capital
projects fund for the construction of various projects.
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so
COUNTY OF HAWAII „,i
Notes to the Basic Financial Statements .6
IR
June 30,2016 6.
ill
ow
6. CAPITAL ASSETS
sili
Capital asset activity for the year ended June 30,2016 for the County was as follows:
6.6
Balance Balance
July 1, Retirements/ June 30, 114
2015 Additions Transfers 2016 .d
Governmental activities:
al
Capital assets not being depreciated:
so
Land and
improvements $ 201,363,687 $ 32,134,653 $ -- $ 233,498,340 "M!
Easements 3,830,410 340,107 -- 4,170,517
Construction work in or
progress 60,966,761 122,707,630 (59,462,228) 124,212,163
Total capital assets not '4
being depreciated 266,160,858 155,182,390 (59,462,228) 361,881,02.0 .rr,
Capital assets being depreciated: oil
Buildings and .r
improvements 592,630,724 18,563,800 (812,925) 610,381,599
Equipment 137,988,418 19,866,109 (5,524,890) 152,329,637 'r
Easements 439,300 -- -- 439,300 or
Infrastructure 522,061,453 50,929,051 -- 572,990,504
Total capital assets NO
being depreciated 1,253,119,895 89,358,960 (6,337,815) 1,336,141,040
so
Less accumulated depreciation for:
01111
Buildings and
w
improvements (97,185,124) (8,818,312) 239,381 (105,764,055)
Equipment (87,738,198) (9,401,985) 4,721,298 (92,418,885)
Easements (439,300) -- -- (439,300)
Infrastructure (243,071,060) (22,691,467) -- (265,762,527) "r
Total accumulated
depreciation (428,433,682) (40,911,764) 4,960,679 (464,384,767) SII
or
Total capital assets
being depreciated, MI
net 824,686,213 48,447,196 (1,377,136) 871,756,273
rii
Governmental
activities capital ill
assets,net $1,090,847,071 $ 203,629,586 ($60,839,364) $1,233,637,293 ri
Of
viii
- 66111/
-
>
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Balance Balance
July 1, Retirements/ June 30,
2015 Additions Transfers 2016
Business-type activities:
Capital assets not being depreciated:
Land $ 753,877 $ -- $ -- $ 753,877
Capital assets being depreciated:
Buildings and
improvements 1,593,187 -- -- 1,593,187
Ground and site
improvements 272,850 -- -- 272,850
Equipment 130,414 9,172 (4,810) 134,776
Total capital assets
being depreciated 1,996,451 9,172 (4,810) 2,000,813
Less accumulated depreciation for:
Buildings and
improvements (910,601) (36,046) -- (946,647)
Ground and site
improvements (206,265) (4,345) -- (210,610)
Equipment (93,253) (13,479) 4,352 (102,380)
Total accumulated
depreciation (1,210,119) (53,870) 4,352 (1,259,637)
Total capital assets
being depreciated,
net 786,332 (44,698) (458) 741,176
Business-type
activities capital
assets,net $1,540,209 44 $ (458) $1,495,053
In fiscal year 2013,the County received $12.5 million as a partial settlement from a developer
that did not complete the required infrastructure for their development. The funds are to be
used by the County to construct the roadway that was initially required of the developer. As
of June 30, 2016, approximately $17.2 million was expended and capitalized.
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•
COUNTY OF HAWAII 144
Nig
Notes to the Basic Financial Statements
ON
June 30,2016
Depreciation expense was charged to functions/programs of the primary government as
follows:
Governmental activities:
General government $ 2,935,825
Public safety 4,228,049 wit
Highways and streets 24,695,318 r
Sanitation 4,932,594
Health, education and welfare 2,046,177
Culture and recreation 2,073,801 .�
Total depreciation expense—governmental activities $40,911,764
Business-type activities:
Kula`imano Elderly Housing Project $36,126 "'i
Ouli Ekahi Affordable Housing Project 17,744
Total depreciation expense—business-type activities $53,870
No
7. DEFERRED INFLOW OF RESOURCES:
Deferred inflow of resources consists of the following at June 30,2016:
.40
Governmental activities:
Capital Other Total
General Projects Governmental Governmental
Fund Fund Funds Funds
.N
Real property taxes $21,999,301 $ -- $ -- $ 21,999,301
Liquor control revenue 181,619 -- -- 181,619
Sewer revenue -- -- 1,299,081 1,299,081
law
Housing revenue -- -- 22,661 22,661
Solid waste revenue -- -- 905,292 905,292 ure
Total presented in
fund financial
statements 22,180,920 -- 2,227,034 24,407,954
Add deferred inflows
of resources related
to pensions 26,847,066 -- -- 26,847,066
Less adjustments for
accrual of revenues (20,861,067) -- (2,227,034) (23,088,101)
Total government-
wide financial
statements $28,166,919 $ -- $ -- $ 28,166,919 I
U
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
8. LEASES
The County leases machinery and equipment under noncancellable leases expiring at various
dates through March 2021. These capital leases are financed from the resources of various
funds.
The estimated value of the leased machinery and equipment at the inception of the capital
leases and accumulated depreciation,amounting to $8,598,781 and $2,461,337, respectively,
and the related present value of the remaining obligations under the capital leases amounting
to $4,916,178 at June 30, 2016 are included in capital assets and long-term debt, respectively.
The County also leases land, office facilities and other equipment under noncancellable
operating leases expiring through August 2045. Expenditures for such operating leases were
$1,816,518 for the fiscal year ended June 30, 2016.
The future minimum payments under capital and operating leases at June 30, 2016 are as
follows:
Capital Operating
Leases Leases
Year Ending June 30:
2017 $1,618,530 $1,750,411
2018 1,312,200 1,501,272
2019 1,025,443 608,017
2020 718,866 494,585
2021 433,519 369,379
2022 - 2026 -- 1,001,564
2027 - 2031 -- 47,638
2032 - 2036 -- 901
2037 -2041 -- 900
2042 -2046 -- 737
Total minimum lease payments 5,108,558 $5,775,404
Less amount representing
interest (192,3 80)
Obligations under capital leases $4,916,178
9. SOLID WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS
Hilo Landfill The County owns and operates a landfill located in the city of Hilo. State and
federal laws require the County to place covers on certain landfill sites and to monitor and
maintain the sites for thirty years after the facility is closed. Although the closure and
postclosure care costs will be paid near and after the date that the landfill stops accepting
waste,the County recognizes a portion of the closure and postclosure care costs in each
operating period. The liability for these costs is included in the government-wide statement of
net position. The amount recognized each year is based on the landfill capacity used as of the
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COUNTY OF HAWAII IPA
Notes to the Basic Financial Statements
June 30,2016
N
statement of net position date. At June 30, 2016,the County recognized a liability of
$14,431,000, based on the use of 96% of the estimated capacity of the landfill. During the
fiscal year ended June 30, 2016,there were no expenditures incurred for the closure of the
aii
landfill. The remaining$299,000 in estimated cost of closure and postclosure care will be
recognized as the remaining estimated capacity is used. The estimated remaining useful life
of the landfill is approximately one year. These amounts are based on what it would cost to3
perform the required closure and postclosure care in 2016. Actual costs at that time may be
higher due to inflation, changes in technology, or changes in regulations.
Landfill capacity estimates are based on volumes going into the landfill subsequent to the last
available engineer's calculation. The volumes going into the landfill do not account for
decomposition, settlement,and corrosion;therefore the estimates are revised when new
engineering calculations, based on aerial photos and surveys,are available.
The County's permit to operate the landfill expired October 9, 1998. The County filed for an
extension which was approved by the State until permitted capacity is reached. In accordance
with state statute,the County is allowed to continue operations provided that the County acts
consistently with the permit previously granted and the extension application, plans,
specifications and all other information contained therein.
Kealakehe In October 1993,the County closed its Kealakehe landfill in Kona. Under state
and federal requirements,the County would have to monitor and maintain this site for ten
years from the closure date. However,the County anticipates monitoring and maintaining the
site for thirty years because there is presently a subterranean fire which requires active
management. The estimated cost of closure and postclosure is $16,750,000, based on what it
would cost to perform the required closure and postclosure care in 2016. Actual costs may be ..W
higher due to inflation, changes in technology, or changes in regulations. Through
June 30, 2016, $8,548,000 was spent on closure and postclosure care of the landfill. The
remaining estimated liability of$8,202,000 is included in the government-wide statement of
net position. During the year ended June 30,2016, $131,000 was spent on closure of the
landfill. The County is providing financial assurance for postclosure care and remediation
through self insurance as explained below.
Pu'uanahulu In May 1993,the County contracted with a private company to construct and
operate a new landfill on County land at Pu'uanahulu in West Hawai`i. The present contract
calls for County employees to perform the daily operations of the landfill,and for the private
company to retain the overall management as well as perform all construction work on the
landfill cells. Under the terms of the contract,the County has no responsibility for
remediation,closure or postclosure care. Accordingly, no liability for this landfill is included
in the County's financial statements.
Financial Assurance For fiscal year 2016,the County has provided for financial resources .r
that will be available to provide for closure, postclosure care and remediation or containment
of environmental hazards at the above landfills, except Pu'uanahulu. The Environmental
vai
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w
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Protection Agency's financial assurance rules include a local government financial test
consisting of a financial component, a public notice component, and a recordkeeping
component. Local governments are required to satisfy each of the three components to pass
the annual test. Management believes that the County has satisfied each of the components of
the local government financial assurance requirements.
In fiscal year 2013,the County closed its two metal salvage facilities located near the Hilo and
Kealakehe Transfer Stations. The anticipated liability($16,414,110)for the remediation costs
associated with these closures is included in the County's financial statements.
10. LONG-TERM DEBT
General Obligation Bonds
The County issues general obligation bonds to provide funds for the acquisition and
construction of major capital facilities. These bonds have been issued by the County for the
primary government, component unit activities(see Note 14)and an improvement district.
The following is a summary of general obligation bond transactions reported in the
governmental activities section of the government-wide statement of net position for the
County for the fiscal year ended June 30, 2016:
Bonds Issue Bond Balance Bond Balance Due Within
Authorized Amount July 1,2015 Issues Retirements June 30,2016 One Year
2004 Ref Series B $ 19,545,000 $ 2,385,000 $ -- ($ 2,385,000) $ -- $ --
2006 Series A 25,000,000 17,730,000 -- (16,550,000) 1,180,000 1,180,000
2007 Series A 85,000,000 63,505,000 -- (55,585,000) 7,920,000 3,865,000
2007 Series B 20,820,000 9,440,000 -- (2,190,000) 7,250,000 2,300,000
2007 Series C 10,787,388 7,405,731 -- (932,646) 6,473,085 968,517
2008 Series A 50,000,000 40,935,000 -- (34,100,000) 6,835,000 2,160,000
2010 Series A 26,493,750 25,331,250 -- (19,882,500) 5,448,750 1,271,250
2010 Series B 18,506,250 17,707,500 -- (828,750) 16,878,750 858,750
2013 Series A 58,509,892 55,009,150 -- (1,916,958) 53,092,192 2,003,939
2013 Series B 21,010,000 19,295,000 -- (1,780,000) 17,515,000 1,860,000
2013 Series C 18,470,000 18,470,000 -- (1,520,000) 16,950,000 1,585,000
2013 PI Series A 1,169,000 1,169,000 -- (21,218) 1,147,782 21,801
2016 Series A 99,620,000 -- 99,620,000 -- 99,620,000 --
2016 Series B 13,497,500 -- 13,497,500 -- 13,497,500 --
2016 Series C 44,835,000 -- 44,835,000 -- 44,835,000 --
2016 Series D 28,860,000 -- 28,860,000 -- 28,860,000 --
2016 Series E 19,061,250 -- 19,061,250 -- 19,061,250 --
2016 Series F 10,040,000 -- 10,040,000 -- 10,040,000 --
571,225,030 278,382,631 215,913,750 (137,692,072) 356,604,309 18,074,257
Add unamortized
premium 68,714,005 19,574,618 43,970,426 (6,163,041) 57,382,003 4,300,347
$09-939.015 9,939,035 $297,957.249 $259.884.176 ($143.855.113) $413.986.312 $22,374.604
The 2010 Series B bonds were issued as bonds designated as"Recovery Zone Economic
Development Bonds"under the American Recovery and Reinvestment Act of 2009. The
- 71 -
S
COUNTY OF HAWAII r,,14
Notes to the Basic Financial Statements
June 30,2016
County will receive a cash subsidy payment from the United States Treasury equal to 45% of
the interest payable on the Series B bonds.
General obligation bonds payable reported in the governmental activities section on the
government-wide statement of net position at June 30,2016 are comprised of the following
individual issues:
Public improvement(PI)and/or refunding bonds:
2006 Series A at 4.0%to 5.0%, due through 2016 $ 1,180,000 6111
2007 Series A at 4.0%to 5.0%,due through 2017 7,920,000 -
2007 Series B at 3.75%to 5.0%, due through 2018 7,250,000
2007 Series C at 4.0%to 5.0%, due through 2021 6,473,085
2008 Series A at 4.0%to 6.0%, due through 2018 6,835,000 yes
2010 Series A at 4.0%to 5.0%, due through 2020 5,448,750
2010 Series B at 3.335%to 6.1%, due through 2030 16,878,750
2013 Series A at 2.0%to 5.0%, due through 2032 53,092,192
2013 Series B at 3.0%to 5.0%, due through 2023 17,515,000 "'
2013 Series C at 4.0%to 5.0%, due through 2024 16,950,000
011
2013 PI Series A at 2.75%, due through 2048 1,147,782
2016 Series A at 3.0%to 5.0%, due through 2035 99,620,000
2016 Refunding Series B at 3.0%to 5.0%, due through 2026 13,497,500
2016 Refunding Series C at 5.0%, due through 2027 44,835,000
2016 Refunding Series D at 5.0%, due through 2028 28,860,000 ..
2016 Refunding Series E at 2.0%to 5.0%, due through 2029 19,061,250
2016 Taxable Series F at 1.2%to 1.55%, due through 2019 10,040,000
Total general obligation bonds payable $356,604,309
Annual debt service requirements to maturity for the above general obligation bonds are as
follows:
Governmental Activities 1111
Fiscal year ending June 30: Principal Interest •,
2017 $ 18,074,257 $ 16,558,102
2018 22,127,049 14,769,734
2019 22,353,209 14,427,860
2020 20,409,410 13,558,569
2021 22,027,709 12,598,375
2022–2026 114,460,710 46,389,434
2027–2031 87,622,310 20,339,903
2032–2036 48,953,003 4,726,391
2037–2041 198,136 65,962 U
2042–2046 226,921 36,784 es
2047–2049 151,595 6,327
Total $356,604,309 $143,477,441 1111
- 72 1111
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r
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Refunded Bonds
2016 Series B In fiscal year 2016, the County issued $13,497,500 in refunding bonds as the
2016 Series B general obligation bond issue. The refunding bonds have a true interest cost of
1.577% and were issued to advance refund $15,425,000 of the total callable bonds outstanding
of the 2006 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 4.000%to 5.000%. The par amount of
$13,497,500 plus a premium of$2,657,181,minus $111,287 in underwriting fees, insurance
and other issuance costs resulted in net proceeds of$16,043,394. The net proceeds were used
to purchase U.S. government securities, which were deposited in an irrevocable trust
administered by an escrow agent and provided full payment on the outstanding 2006 Series A
refunded bonds on July 15, 2016. The bonds were considered defeased and are not included
in the government-wide statement of net position.
The County's total debt service requirements over the next eleven years will decrease by
$2,402,754 as a result of the refunding, and the net economic gain(difference between the
present values on the old and new debt) after taking into account all allocable costs of issuance
of the bonds was $2,180,213.
2016 Series C Also, in fiscal year 2016,the County issued $44,835,000 in refunding bonds as
the 2016 Series C general obligation bond issue. The refunding bonds have a true interest cost
of 1.752% and were issued to advance refund$51,905,000 of the total callable bonds
outstanding of the 2007 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 4.000%to 4.625%. The par amount of
$44,835,000 plus a premium of$10,141,719,minus $180,438 in underwriting fees, insurance
and other issuance costs resulted in net proceeds of$54,796,281. The net proceeds were used
to purchase U.S. government securities, which were deposited in an irrevocable trust
administered by an escrow agent and provided full payment on the outstanding 2007 Series A
refunded bonds on July 15, 2017. The bonds were considered defeased and are not included
in the government-wide statement of net position.
The County's total debt service requirements over the next twelve years will decrease by
$7,149,992 as a result of the refunding, and the net economic gain (difference between the
present values on the old and new debt) after taking into account all allocable costs of issuance
of the bonds was $6,391,188.
2016 Series D Also, in fiscal year 2016,the County issued $28,860,000 in refunding bonds as
the 2016 Series D general obligation bond issue. The refunding bonds have a true interest cost
of 1.923% and were issued to advance refund the $32,040,000 of the total callable bonds
outstanding of the 2008 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 4.500%to 6.000%. The par amount of
$28,860,000 plus a premium of$6,904,177, minus $112,118 in underwriting fees, insurance
- 73 -
01116
COUNTY OF HAWAI`I
Notes to the Basic Financial Statements
June 30,2016
sal►
and other issuance costs resulted in net proceeds of$35,652,059. The net proceeds were used
to purchase U.S. government securities,which were deposited in an irrevocable trust
administered by an escrow agent and will provide full payment on the outstanding 2008 Series
A refunded bonds on July 15,2018. The bonds were considered defeased and are not included
in the government-wide statement of net position.
The County's total debt service requirements over the next thirteen years will decrease by
$5,699,398 as a result of the refunding, and the net economic gain(difference between the
present values on the old and new debt)after taking into account all allocable costs of issuance
of the bonds was$5,045,068. �+
2016 Series E Also, in fiscal year 2016,the County issued $19,061,250 in refunding bonds as ""
the 2016 Series E general obligation bond issue. The refunding bonds have a true interest cost
of 1.981%and were issued to advance refund the$18,660,000 of the total callable bonds
outstanding of the 2010 Series A general obligation bond issue.
The bonds refunded bore interest at rates ranging from 4.000%to 5.000%. The par amount of
$19,061,250 plus a premium of$3,473,002, minus $106,063 in underwriting fees, insurance
Nig
and other issuance costs resulted in net proceeds of$22,428,189. The net proceeds were used
to purchase U.S. government securities,which were deposited in an irrevocable trust r"
administered by an escrow agent and will provide full payment on the outstanding 2010 Series
A refunded bonds on March 1,2020. The bonds were considered defeased and are not
included in the government-wide statement of net position. -
The County's total debt service requirements over the next fourteen years will decrease by
$1,798,452 as a result of the refunding, and the net economic gain(difference between the
present values on the old and new debt)after taking into account all allocable costs of issuance
of the bonds was $1,403,326.
Bond Premiums
At June 30, 2016,total unamortized bond premiums were $57,382,003, which are being
amortized over the remaining life of the respective bond issues.
Bonds Authorized and Unissued
.r
The County Council has authorized the issuance of$487.9 million in general obligation bonds
to finance both specified and unspecified capital improvement projects. At June 30,2016,
$234.4 million was not yet issued.
Subsequent Events On October 6 and December 1,2016,the County issued general
obligation bond anticipation notes(BANs) in the total amount of$30,000,000 and
$15,000,000. These notes were issued to provide funds for the acquisition and
construction of major capital facilities and bear interest ranging from 1.73%to 1.74%and
have an original maturity date of either June 28 or August 23,2017.
a
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
General Obligation Bond Anticipation Notes
The following is a summary of general obligation bond anticipation note transactions reported
in the government-wide statement of net assets for the County for the fiscal year ended June
30, 2016:
Issue Balance Balance
Note No. Amount July 1,2015 Issues Retirements June 30,2016
Series C,Note R-1 $ 10,000,000 $ 10,000,000 $ -- $(10,000,000) $ --
Series C,Note R-2 10,000,000 10,000,000 -- (10,000,000) --
Series C,Note R-3 5,000,000 5,000,000 -- (5,000,000) --
Series C,Note R-4 3,000,000 3,000,000 -- (3,000,000) --
Series C,Note R-5 3,000,000 3,000,000 -- (3,000,000) --
Series C,Note R-6 1,000,000 1,000,000 -- (1,000,000) --
Series C,Note R-7 1,000,000 1,000,000 -- (1,000,000) --
Series C,Note R-8 1,000,000 1,000,000 -- (1,000,000) --
Series C,Note R-9 250,000 250,000 -- (250,000) --
Series C,Note R-10 250,000 250,000 -- (250,000) --
Series C,Note R-I1 250,000 250,000 -- (250,000) --
Series C,Note R-12 250,000 250,000 -- (250,000) --
$35000.000 $35.000.000 $ -- $(35 000,000) $ --
State Revolving Fund Loans
The County has obtained loans to assist in financing mandated wastewater projects from the
State Water Pollution Control Revolving Fund (SRF). The purpose of this revolving fund is to
provide low-interest, long-term loans and other financial assistance to the four counties in the
state to finance construction of wastewater projects. The County has eight projects approved
for funding with these loans.
The schedule below shows the County's SRF transactions for the fiscal year ended June 30,
2016:
Loans Approved Loan Balance Loan Balance Due Within
Authorized Amount July 1,2015 Additions Retirements June 30,2016 One Year
Cesspool
Conversion $8,363,773 $ 5,105,719 $ -- $ (432,400) $ 4,673,319 $ 434,668
Honoka`aLCC 4,513,158 3,045,169 -- (177,504) 2,867,665 178,389
Queen
Lili`uokalani 9,421,732 7,472,535 -- (481,008) 6,991,527 483,407
Kalaniana`ole 8,621,409 5,928,790 -- (315,554) 5,613,236 317,126
Kealakehe 20,339,870 -- 7,317,504 -- 7,317,504 377,118
$51,259,942 $21,552,213 $7317,504 $(1,406,466) $27.463.251 $ 1,790,708
The remaining loans bear interest at 0.25%to 0.5% exclusive of a 0.25%to 0.5% loan fee,and
require payments through fiscal year 2033.
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COUNTY OF HAWAIIwit
a
Notes to the Basic Financial Statements
June 30,2016
a
Debt service to maturity for disbursements to date on these projects are as follows:
Governmental Activities
Fiscal year ending June 30: Principal Interest
2017 $ 1,790,708 $ 201,991
2018 1,798,104 189,171
2019 1,806,161 175,670 a
2020 1,814,198 162,165
2021 1,822,436 148,437 I
2022—2026 9,235,262 535,961
2027—2031 6,845,562 218,154
2032—2035 2,350,820 33,304
Total $27,463,251 $1,664,853
Other General Long-Term Obligations 110
a
The following is a summary of other general long-term obligations transactions for the fiscal
year ended June 30, 2016: IR
Balance Balance Due Within 'n
July 1,2015 Additions* Payments June 30,2016 One Year
Governmental activities:
Compensated absences $35,625,275 $14,562,270 $(12,279,740) $37,907,805 $9,416,266
Claims and judgments
(see Note 12) 13,286,907 4,008,285 (3,435,696) 13,859,496 2,781,369 1'
Capital leases
(see Note 8) 2,981,709 3,388,992 (1,454,523) 4,916,178 1,533,136
Landfill costs payables
(see Note 9) 22,664,000 99,974 (130,974) 22,633,000 169,067
Pollution remediation
(see Note 9) 10,590,000 5,824,110 -- 16,414,110 2,650,000
Other post employment .
benefit obligation
(see Note 13) 65,755,197 34,002,000 (22,747,340) 77,009,857 --
Total $150,903,088 $61,885,631 $(40,048,273) $172,740,446 $16,549,838
Ali
*Net of new claims liability and existing claims resolved at less than previous estimate.
a
Historically,the County's general fund has been used to liquidate the majority of other long-
term liabilities, including the other post employment benefit obligation and the compensated
absences since most employees are paid by the general fund.
t
a
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a
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Fund Balances-Debt Service Funds
The fund balance in the debt service funds at June 30, 2016 includes $20,386,832,which is
reserved for principal payments on general obligation bonds and $3,091,300, which is
reserved for the payment of interest on the bonds.
Enterprise Fund Notes,Bond and Loan Payable
On February 12, 2013,the County issued general obligation bonds on behalf of Kula`imano
Elderly Housing Project(Project)to pay off its two notes payable to the U.S. Department of
Agriculture, Farmers Home Administration with principal and interest balances aggregating
$835,108. The Project is responsible for the debt service payment related to their portion of
the bonds, which is also secured with the County's general obligation pledge. Because the
Project is responsible for only a portion of the total bonds issued, it was decided that the
Project would continue to make bond payments equivalent to its previous monthly installment
payments of$7,826 on the old notes at 5.547% interest. Under this payment schedule,the
Project will make contributions through 2025 of the bonds 2032 maturity date.
The following is a summary of the Project's bond payable transactions for the fiscal year
ended June 30, 2016:
Balance at July 1, 2015 $ 760,851
Deductions (53,043)
Balance at June 30, 2016 707,808
Less current portion (56,061)
Note payable, net of
current portion $_6_51,117
747
The following is a summary of the annual maturities for the enterprise fund bond payable:
Business-type Activities
Fiscal year ending June 30: Principal Interest
2017 $ 56,061 $ 36,278
2018 59,251 32,999
2019 62,622 29,533
2020 66,186 25,869
2021 69,952 21,997
2022 -2026 393,736 44,961
Total $707,808 $191,637
On October 29, 2012,the County assumed the loan of its lessee Ouli Ekahi Partnership with
the Hawai`i Housing Finance and Development Corporation in the amount of$478,430. The
loan is non-interest bearing and matures on February 27, 2041. In exchange,the County
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COUNTY OF HAWAI`I 1.0
Notes to the Basic Financial Statements .01
•
June 30,2016
a
assumed ownership of the Ouli Ekahi project which consists of a 33 single family affordable
rental housing project.
The following is a summary of enterprise fund loan payable transactions for the fiscal year
ended June 30, 2016:
Balance at July 1, 2015 $350,543 no
Deductions (44,337)
Balance at June 30,2016 306,206
Less current portion (21,461)
Loan payable,net of
current portion $ 284,745 a
The following is a summary of the annual maturities for the enterprise fund loan payable:
S
Business-type Activities
Fiscal year ending June 30: Principal
2017 $ 21,461
2018 16,500
2019 16,500 ""r
2020 16,500
114
2021 16,500
2022—2026 82,500
2027—2031 82,500
2032 -2036 53,745 a
.r
Total $306,206
Special Assessment Bonds
The County has issued general obligation bonds on behalf of Improvement District No. 18 for
mg
water improvements(see Note 4). These bonds were then refunded by a portion of the 2013
Series A Bonds that were issued. The Improvement District is responsible for the payment of
the debt service on these bonds,but the County remains liable because they are general
obligations of the County. The improvement district's share of the refunded bonds matures a
annually through 2027 and bear interest at the previous rates of 4.375%to 4.75%. Total w+
general obligation bonds payable included in the government-wide statement of net position
were$1,144,828 at June 30,2016.
The County has also issued general obligation bonds on behalf of Improvement District No. 19
for water improvements (see Note 4). The Improvement District is responsible for the payment
of the debt service on these bonds, but the County remains liable because they are general wit
obligations of the County. The improvement district's share of the refunded bonds matures
annually through 2048 and bear interest at the previous rates of 2.75%. Total general �M
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
obligation bonds payable included in the government-wide statement of net position were
$1,147,782 at June 30, 2016.
The bonds are secured by a first lien on the land benefited by the improvements, and are to be
repaid from the annual assessments levied against the owners of the land. The County acts as
an agent for the property owners within the improvement districts to collect assessments
receivable, forward payments to bond-paying agents at appropriate dates and, if required,
administer foreclosure proceedings.
The following is a summary of bond transactions for Improvement District No. 18,
Coastview/Wonderview Water Improvements, and No. 19, Kona Ocean View Properties
Subdivision for the fiscal year ended June 30, 2016:
Balance at July 1, 2015 $2,383,937
Deductions (91,327)
Balance at June 30, 2016 $2,292 10
The following is a summary of the annual maturities for the improvement district general
obligation bonds:
Fiscal year ending June 30: Principal Interest
2017 $ 95,174 $ 82,854
2018 99,189 78,752
2019 103,379 74,470
2020 107,752 70,001
2021 112,317 65,336
2022—2026 637,397 249,200
2027—2031 387,743 124,836
2032—2036 173,004 91,442
2037—2041 198,137 65,963
2042—2046 226,922 36,784
2047—2049 151,596 6,328
Total $2,292,610 $ 945,966
11. COMMITMENTS AND CONTINGENCIES
Contractual commitments—Contractual commitments for capital projects, expenses, and
supplies at June 30, 2016, except in the enterprise funds, are reflected in the balance sheets as
a part of the respective fund balance categories and are as follows:
General fund $ 3,291,302
Capital projects fund 174,047,274
Nonmajor funds 8,763,022
$186,101,598
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a
rr
COUNTY OF HAWAII
Yid
Notes to the Basic Financial Statements
N
June 30,2016
Contractual commitments for the enterprise funds were immaterial.
Intergovernmental revenues—The County has received federal and state grants for specific
purposes that are subject to review and audit by grantor agencies. Such audits could lead to
requests for reimbursement to the grantor agency for expenditures disallowed under terms of
the grants. In the opinion of management of the County,disallowed costs, if any,would not
be material. oil
Claims—Numerous claims and lawsuits have been filed against the County in the normal 1
course of its operations. A liability for probable losses is included on the government-wide
statement of net position(see Note 12). Although the outcome of the various claims and
lawsuits is not presently determinable, in the opinion of the County's Corporation Counsel,
the resolution of such matters will not have a material adverse effect on the financial condition ,,,O
of the County.
a
ADA compliance—The County entered into a stipulated agreement, filed on June 4, 1998, ern
which relates to the Department of Parks and Recreation(Parks). The agreement required
Parks to establish practices,policies and procedures regarding its programs,and prepare a a
transition plan by the middle of the year 2000. The self-evaluation and transition plan for
programs,practices and procedures has been completed and approved by the County Council. vat
The cost impact of implementation is not material because the necessary modifications are
out
primarily procedural. The second part of this stipulated agreement is the reevaluation of all
County facilities, which was completed and accepted by the County Council on June 30,
2000. Approximately 240 County facilities were surveyed as part of this effort. The tentative
completion date of all necessary repairs and renovations was 12 years from the date the
County Council accepted the self-evaluation. The initial (1997-2000)estimated cost of the
facilities repairs was $15.1 million, which would have been spent over the 12-year period.
Funding allocated initially for facilities repairs was $17.5 million,with another$4 million of I
federal funding anticipated through community development block grants over the next 2 r
years. The Department of Public Works has requested an additional $2 million a year for the
other County ADA facilities' project. Because of severe disparities that surfaced between the
original ADA projects' scoping and construction estimates and actual scopes and costs, as
well as time/delivery issues that came into play because of necessary permits and reviews,and
design professionals' costs that weren't factored into the effort,the County sought relief from
1111
the Court in the form of both a time extension and reprioritization of sites. As a result,the
County obtained approval of a modified 4-year plan wherein accessibility improvements
would be required to be completed by December 31, 2016 at 35 remaining park sites. The
balance of the inaccessible sites would be deferred indefinitely pending 5
improvement/enhancement projects that would inherently trigger accessibility improvements .li
due to the nature of scoping and applicable ADA requirements. Of the 35 remaining parks
S
rig
- 80 111
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
requiring accessibility improvements, 11 have been completed, 6 are in construction, 7 are in
design, 10 are either pending consultant selection or finalization of contract and 1 has been
deferred. The County has currently spent$17.6M on these projects. The County had spent
$42.0 million for the construction and design fees to complete 50 park facilities (some having
multiple ADA work being completed)prior to the development of the modified four year
plan. In addition,the County's ADA coordinator(Equal Opportunity Officer) has access to an
identifiable account of at least $50,000 to handle requests for reasonable accommodations for
County departments; and the procedures for these requests have been finalized and are
available on the Human Resources Department's Equal Opportunity and the ADA web page.
Also, Parks has a Recreation Specialist who reviews and investigates requests for reasonable
accommodations, and recommends specific actions on those requests.
12. RISK MANAGEMENT
The County is exposed to various risks of losses related to torts; theft of, damage to, and
destruction of assets; errors and omissions; injuries to employees; and natural disasters. The
County maintains fire and commercial multiple peril insurance on County facilities, flood
insurance on selected structures, medical malpractice insurance for emergency medical
technicians, aviation liability for helicopter operations, liability coverage on transit buses,
privately owned police vehicles and retired senior volunteers, and property damage coverage
on County Police fleet vehicles and Kohala Ranch fire truck. The County maintains fire and
property coverage on several County housing projects(Kula`imano, Ouli Ekahi, and three
model homes at Kamakoa Nui). There was no reduction in insurance coverage during the year
from coverage in the prior year. During the past three fiscal years,the amount of settlements
in cases covered by insurance has not exceeded the insurance coverage. The County is
substantially self-insured for the majority of its vehicles as well as for all other perils including
workers' compensation and general liability. The liability for claims and judgments is
reported on the government-wide statement of net position and the majority will be liquidated
from the County's general fund.
Liabilities are reported when it is probable that a loss has occurred and the amount of that loss
can be reasonably estimated. These losses include an estimate of claims that have been
incurred but not reported(IBNR). Claim liabilities, including IBNR, are based on the
estimated ultimate cost of settling the claims, and include incremental costs for the hiring of
special counsel and expert witnesses. Claims liabilities are estimated by a case-by-case
review of all claims and the application of historical experience to outstanding claims.
Estimates of IBNR are based on historical experience. The liability for claims and judgments
is reported on the government-wide statement of net position. At June 30, 2016,the amount
of this liability was $13,859,496. This is the County's best estimate based on available
information. Changes in the reported liability since July 1, 2014 are given below.
- 81 -
COUNTY OF HAWAII OR
Notes to the Basic Financial Statements
011
June 30,2016
0
General Workers' Total
Liability Compensation Liability
Balance at July 1, 2014 $ 2,633,719 $ 11,090,174 $ 13,723,893
oil
Incurred claims(including IBNR)* 1,288,406 1,779,448 3,067,854
Claim payments (1,288,406) (2,216,434) (3,504,840)
Balance at June 30, 2015 $ 2,633,719 $ 10,653,188 $ 13,286,907
Incurred claims(including IBNR)* 470,965 3,537,320 4,008,285
Claim payments (614,598) (2,821,098) (3,435,696)
Balance at June 30,2016 $ 2,490,086 $ 11,369,410 $ 13,859,496
*Net of new claims liability and existing claims resolved at less than previous estimate.
13. EMPLOYEE BENEFIT PLANS
Pensions
Pension Plan Description-All eligible employees of the State and counties are provided with
pensions through a cost-sharing multiple-employer defined benefit pension plan administered
by the Employee Retirement System (ERS). Benefit terms, eligibility, and contribution
requirements are established by HRS Chapter 88 and can be amended through legislation.The I'
ERS issues a publicly available financial report that can be obtained at ERS's website:
0,4
http://ers.ehawaii.gov/.
Benefits Provided-The ERS provides retirement, disability, and death benefits that are
covered by the provisions of the noncontributory,contributory, and hybrid retirement plans. alp
The three plans provide a monthly retirement allowance equal to the benefit multiplier
(generally 1.25% or 2%)multiplied by the average final compensation multiplied by years of
credited service. The benefit multiplier decreased by 0.25%for new hybrid and contributory •
plan members hired after June 30,2012. Average final compensation is based on the five
highest paid years of service excluding the payment of salary in lieu of vacation for members r
hired after June 30, 2012. For those hired between January 1, 1971 and June 30,2012,AFC is
based on the three highest paid years of service excluding the payment of salary in lieu of
vacation. If the employee was hired prior to January 1, 1971,the AFC is the average salary ""r
earned during the five highest paid years of service, including the payment of salary in lieu of
vacation, or three highest paid years of service, excluding the payment of salary in lieu of
vacation.
For members hired before July 1, 2012,the original retirement allowance is increased by 2.5% 111
each July 1 following the calendar year of retirement. This cumulative benefit is not r
compounded and increases each year by 2.5%of the original retirement allowance without a
ceiling(2.5% of the original retirement allowance the first year, 5.0%the second year, 7.5% 1111
the third year,etc.). For members hired after June 30, 2012 the post-retirement annuity
increase was decreased to 1.5%per year.
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Retirement benefits for certain groups, such as police officers, firefighters, some investigators,
sewer workers,judges, and elected officials, vary from general employees.
Noncontributory Plan
Retirement Benefits -General employees' retirement benefits are determined as 1.25%of
average final compensation multiplied by the years of credited service. Employees with
10 years of credited service are eligible to retire at age 62. Employees with 30 years of
credited service are eligible to retire at age 55.
Disability Benefits -Members are eligible for service-related disability benefits
regardless of length of service and receive a lifetime pension of 35% of their average
final compensation. Ten years of credited service is required for ordinary disability.
Ordinary disability benefits are determined in the same manner as retirement benefits but
are payable immediately,without an actuarial reduction, and at a minimum of 12.5% of
average final compensation.
Death Benefits-For service-connected deaths,the surviving spouse/reciprocal
beneficiary receives a monthly benefit of 30% of the average final compensation until
remarriage or re-entry into a new reciprocal beneficiary relationship. Additional benefits
are payable to surviving dependent children up to age 18. If there is no spouse/reciprocal
beneficiary or dependent children, no benefit is payable.
Ten years of credited service is required for ordinary death benefits. For ordinary death
benefits,the surviving spouse/reciprocal beneficiary(until remarriage/reentry into a new
reciprocal beneficiary relationship)and dependent children (up to age 18)receive a
benefit equal to a percentage of member's accrued maximum allowance unreduced for
age or, if the member was eligible for retirement at the time of death,the surviving
spouse/reciprocal beneficiary receives 100%joint and survivor lifetime pension.
Contributory Plan for Employees Hired Prior to July 1, 2012
Retirement Benefits -General employees' retirement benefits are determined as 2% of
average final compensation multiplied by the years of credited service. General
employees with 5 years of credited service are eligible to retire at age 55.
Police and firefighters' retirement benefits are determined as 2.25%of average final
compensation for each year of service up to a maximum of 80%. Police and firefighters
with 10 years of credited service are eligible to retire at age 55.
Disability Benefits - Members are eligible for service-related disability benefits
regardless of length of service and receive a lifetime pension of 50% of their average
final compensation. Ten years of credited service is required for ordinary disability.
Ordinary disability benefits are determined in the same manner as retirement benefits but
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wr
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
sii
are payable immediately,without an actuarial reduction, and at a minimum of 30%of
average final compensation.
•
Death Benefits-For service-connected deaths,the surviving spouse/reciprocal
beneficiary receives a lump sum payment of the member's contributions and accrued
interest plus a monthly benefit of 50%of the average final compensation until remarriage
or re-entry into a new reciprocal beneficiary relationship. If there is no surviving sod
spouse/reciprocal beneficiary, surviving children(up to age 18)or dependent parents are
eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent
children/parents,the ordinary death benefit is payable to the designated beneficiary.
Ordinary death benefits are available to employees who were active at time of death with
at least 1 year of service. Ordinary death benefits consist of a lump sum payment of the .r
member's contributions and accrued interest plus a percentage of the salary earned in the
12 months preceding death, or 50%Joint and Survivor lifetime pension if the member wl
was not eligible for retirement at the time of death but was credited with at least 10 years oil
of service and designated one beneficiary, or 100%Joint and Survivor lifetime pension if
the member was eligible for retirement at the time of death and designated one
beneficiary.
Contributory Plan for Employees Hired After June 30,2012
Retirement Benefits—General employees' retirement benefits are determined as 1.75%
of average final compensation multiplied by the years of credited service. General
employees with 10 years of credited service are eligible to retire at age 60.
Police and firefighters' retirement benefits are determined as 2.25% of average final
compensation for each year of service up to a maximum of 80%. Police and firefighters
with 10 years of credited service are eligible to retire at age 60. .rr
Disability and Death Benefits-Members are eligible for service-related disability
benefits regardless of length of service and receive a lifetime pension of 50%of their 1,10
average final compensation plus refund of contributions and accrued interest.Ten years
of credited service is required for ordinary disability. Ordinary disability benefits are
1.75% of average final compensation for each year of service for police and firefighters
and are payable immediately, without an actuarial reduction, at a minimum of 30%of
average final compensation.
Death benefits for contributory plan members hired after June 30,2012 are generally the
same as those for contributory plan members hired June 30, 2012 and prior.
U
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
Hybrid Plan for Employees Hired Prior to July 1, 2012
Retirement Benefits -General employees' retirement benefits are determined as 2% of
average final compensation multiplied by the years of credited service. General
employees with 5 years of credited service are eligible to retire at age 62. General
employees with 30 years of credited service are eligible to retire at age 55.
Disability Benefits -Members are eligible for service-related disability benefits
regardless of length of service and receive a lifetime pension of 35% of their average
final compensation plus refund of their contributions and accrued interest. Ten years of
credited service is required for ordinary disability. Ordinary disability benefits are
determined in the same manner as retirement benefits but are payable immediately,
without an actuarial reduction, and at a minimum of 25% of average final compensation.
Death Benefits- For service-connected deaths,the surviving spouse/reciprocal
beneficiary receives a lump sum payment of the member's contributions and accrued
interest plus a monthly benefit of 50% of the average final compensation until remarriage
or re-entry into a new reciprocal beneficiary relationship. If there is no surviving
spouse/reciprocal beneficiary, surviving children (up to age 18) or dependent parents are
eligible for the monthly benefit. If there is no spouse/reciprocal beneficiary or dependent
children/parents, the ordinary death benefit is payable to the designated beneficiary.
Ordinary death benefits are available to employees who were active at time of death with
at least 5 years of service. Ordinary death benefits consist of a lump sum payment of the
member's contributions and accrued interest multiplied by 150%, or 50%Joint and
Survivor lifetime pension if the member was not eligible for retirement at the time of
death but was credited with at least 10 years of service and designated one beneficiary, or
100%Joint and Survivor lifetime pension if the member was eligible for retirement at the
time of death and designated one beneficiary.
Hybrid Plan for Employees Hired After June 30, 2012
Retirement Benefits -General employees' retirement benefits are determined as 1.75% of
average final compensation multiplied by the years of credited service. General
employees with 10 years of credited service are eligible to retire at age 65. Employees
with 30 years of credited service are eligible to retire at age 60. Sewer workers, water
safety officers, and EMTs may retire with 25 years of credited service at age 55.
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Ilk
rr
COUNTY OF HAWAI`I
Notes to the Basic Financial Statements
a
June 30,2016
1,11,
Disability and Death Benefits-Provisions for disability and death benefits generally
remain the same except for ordinary death benefits. Ordinary death benefits are available
to employees who were active at time of death with at least 10 years of service. Ordinary
death benefits consist of a lump sum payment of the member's contributions and accrued
interest multiplied by 120%, or 50%Joint and Survivor lifetime pension if the member
was not eligible for retirement at the time of death and designated one beneficiary, or
100%Joint and Survivor lifetime pension if the member was eligible for retirement at the
time of death and designated one beneficiary.
NI
Contributions-Contributions are established by HRS Chapter 88 and may be amended �+
through legislation. The employer rate is set by statute based on the recommendations of the
ERS actuary resulting from an experience study conducted every five years. Since July 1, ""l
2005,the employer contribution rate is a fixed percentage of compensation, including the
normal cost plus amounts required to pay for the unfunded actuarial accrued liabilities. The
contribution rates for fiscal year 2016 were 25.00%for police and firefighters and 17.0%for
all other employees. Contributions to the pension plan from the County for June 30,2016,
2015,and 2014 were$47,314,812, $43,889,431, and $37,693,618, respectively, which equal
the required contributions for each year plus County-paid employee contributions that are also
classified as employer contributions pursuant to IRC section 414(h)(2).
The employer is required to make all contributions for members in the noncontributory plan. „ak
For contributory plan employees hired prior to July 1,2012, general employees are required to
contribute 7.8%of their salary and police and firefighters are required to contribute 12.2%of
their salary. For contributory plan employees hired after June 30, 2012, general employees are
required to contribute 9.8%of their salary and police and firefighters are required to contribute
14.2%of their salary. Hybrid plan members hired prior July 1, 2012 are required to contribute
6.0%of their salary. Hybrid plan members hired after June 30,2012 are required to contribute
8.0%of their salary. 114
Pension liabilities,pension expense, and deferred outflows of resources and deferred
inflows of resources related to pensions—At June 30,2016,the County reported a liability of
$382,070,813 for its proportionate share of the net pension liability. The net pension liability
was measured as of June 30,2015, and the total pension liability used to calculate the net
pension liability was determined by an actuarial valuation as of that date. The County's a
proportion of the net pension liability was based on the actual employer contributions to the
tat
pension plan relative to the contributions of all participating employers. At June 30, 2015,the
County's proportion was 4.38%,which was an increase of.36%from its proportion measured
as of June 30, 2014.
11
•
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
For the year ended June 30, 2016, the County recognized pension expense of$44,970,184. At
June 30, 2016,the County reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred Deferred
Outflows Inflows of
of Resources Resources
Differences between expected and actual experience $ 9,275,165 $ (8,730,253)
Net difference between projected and actual investment
earnings on pension plan investments -- (15,238,817)
Changes in assumptions 10,237,075 --
Changes in proportion and differences between employer
contributions and proportionate share of contributions 13,301,767 (2,877,996)
County contributions subsequent to the measurement date 47,314,812 --
Total $ 80,128,819 $(26,847,066)
$47,314,812 reported as deferred outflows of resources related to the County's contributions
to the pension plan subsequent to the measurement date will be recognized as a reduction of
the net pension liability in the fiscal year ended June 30, 2017.
Other amounts reported as deferred outflows of resources and deferred inflows of resources
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30, Amount
2017 $ (2,330,350)
2018 (2,330,350)
2019 (2,330,350)
2020 9,966,610
2021 2,991,381
$ 5,966,941
Actuarial assumptions—The total pension liability in the June 30, 2015 actuarial valuation
was determined using the following actuarial assumptions, applied to all periods included in
the measurement:
Inflation 3.00%
Payroll growth rate 3.50%per annum
Salary increases 4.00%- 19.00%, including inflation
Investment rate of return 7.65%per annum, including inflation
Cost of living adjustments 2.50%/ 1.50%
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�. . .. o..a .,.
eat
COUNTY OF HAWAII U
Notes to the Basic Financial Statements
1111
June 30,2016
a
Post-retirement mortality rates were based on either the Client Specific Tables, for general
employees, or the 1994 US Group Annuity Mortality Static Table, for police and firefighters.
Pre-retirement mortality rates were based on the RP-2000 Mortality Tables.
The actuarial assumptions used in the June 30,2015 valuation were based on the results of an
110
actuarial experience study for the five-year period ending June 30, 2010. ERS updates the
experience study every five years.
The long-term expected rate of return on pension plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return
(expected returns,net of pension plan investment expense and inflation)are developed for
each major asset class. These ranges are combined to produce the long-term expected rate of
return by weighting the expected future real rates of return by the target asset allocation
percentage and by adding expected inflation.
The target allocation and best estimates of arithmetic real rates of return for each major asset ,,o
class are summarized in the following table:
Long-Term
Target Expected Real
Asset Class Allocation Rate of Return +,
Domestic equity 30.00% 8.50%
International equity 26.00% 9.25%
Total fixed income 20.00% 3.10%
Real estate 7.00%* 9.20%
Private equity 7.00%* 11.85% ""
Real return 5.00%* 6.65%
Covered calls 5.00% 7.65% U
100.00% ••
*The real estate,private equity,and real return targets will be the percentage actually invested up to 7%,7%,and
5%,respectively of the total fund. Changes in the real estate,private equity,and real return targets will be offset by
rot
an equal percentage change in the large cap domestic equity target.
Discount rate—The discount rate used to measure the net pension liability was 7.65%, a
decrease from the 7.75%rate used at the prior measurement date. The projection of cash
flows used to determine the discount rate assumed that employee contributions will be made at
the current contribution rate and that contributions from the County will be made at statutorily
required rates, actuarially determined. Based on those assumptions,the pension plan's
re
fiduciary net position was projected to be available to make all projected future benefit
payments of current active and inactive employees. 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.
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s
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Sensitivity of the County's proportionate share of the net pension liability to changes in the
discount rate—The following presents the County's proportionate share of the net pension
liability calculated using the discount rate of 7.65%, as well as what the County's
proportionate share of the net pension liability would be if it were calculated using a discount
rate that is 1-percentage-point lower(6.65%)or 1-percentage-point higher(8.65%)than the
current rate:
1%Decrease Current Discount 1%Increase
(6.65%) Rate(7.65%) (8.65%)
County's proportionate share of
the net pension liability $ 490,926,627 $ 382,070,813 $ 273,214,999
Pension plan fiduciary net position—Detailed information about the pension plan's fiduciary
net position is available in the separately issued ERS Comprehensive Annual Financial Report
that includes financial statements and required supplementary information.
Payables to the pension plan—At June 30,2016,the annual amount payable to the ERS
totaled$3,961,547, which represents the employer contribution for the second half of the
month of June 2016, as required by HRS, and the excess pension cost under Act 153/SLH 2-
12 REFER HRS Section 88-100 for fiscal year ended June 30, 2016.
Post-Retirement Benefits
In addition to providing pension benefits,the County is required by state statute (HRS Chapter
87A)to contribute to the Hawai`i Employer-Union Health Benefits Trust Fund(the EUTF).
The EUTF is an agent,multiple-employer defined benefit plan providing certain healthcare
and life insurance benefits to all qualified retirees, active employees, their dependents and
their beneficiaries.The EUTF was established on July 1, 2003 to design, provide, and
administer medical, prescription drug, dental, vision, chiropractic, dual-coverage medical and
prescription drug, and group life benefits.
For employees hired prior to July 1, 1996,the County pays the entire monthly healthcare
premium for employees retiring with 10 or more years of credited service, and 50% of the
monthly premium for employees retiring with fewer than 10 years of credited service. The
current(pay-as-you-go)premium costs are paid by the respective funds but the net other
postemployment benefit obligation is paid by the General Fund.
For employees hired after June 30, 1996, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service,the County pays 50% of the retired employees' monthly Medicare or non-
Medicare premium. For employees hired after June 30, 1996, and who retire with at least 15
years but fewer than 25 years of service,the County pays 75% of the retired employees'
monthly Medicare or non-Medicare premium. For those retiring with over 25 years of service,
the County pays the entire healthcare premium.
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a
wr
COUNTY OF HAWAII
.J
Notes to the Basic Financial Statements
June 30, 2016
For employees hired after June 30, 2001, and who retire with fewer than 10 years of service,
the County makes no contributions. For those retiring with at least 10 years but fewer than 15
years of service,the County pays 50%of the retired employees' monthly Medicare or non-
Medicare premium based on the self-plan. For employees hired after June 30, 2001, and who
retire with at least 15 years but fewer than 25 years of service,the County pays 75% of the
retired employees' monthly Medicare or non-Medicare premium; for those retiring with over
mil
25 years of service,the County pays the entire healthcare premium.
For active employees,the employee's contributions are based upon negotiated collective
bargaining agreements. Employer contributions for employees not covered by collective
bargaining agreements and for retirees are prescribed by the HRS.
The County's annual other postemployment benefit(OPEB)cost is calculated based on the
annual required contribution(ARC)of the employer,which is an amount actuarially
determined in accordance with the parameters of Governmental Accounting Standards Board 011
Statement No. 45,Accounting and Financial Reporting by Employers for Postemployment
Benefits Other than Pensions(GASB Statement No. 45). GASB Statement No.45 addresses
the failure of previous financial reporting practices to measure and recognize the cost of
OPEB during the periods when employees render the services or to provide relevant
information about OPEB obligations and the extent to which progress is being made in .r
funding those obligations. The ARC represents a level of funding that, if paid on an ongoing
basis, is projected to cover normal cost each year and amortize any unfunded actuarial
liabilities (or funding excess)over a period not to exceed thirty(30)years. The current ARC ""
rate is 22.1%of annual covered payroll.
mi
The following section shows the County's Annual OPEB cost for the year ended June 30, •+�
2016,the amount actually contributed to the plan,and changes in the net OPEB liability:
Annual required contribution $33,614,000
rri
Interest on net OPEB obligation 4,603,000
Adjustment to annual required contribution (4,215,000)
Annual OPEB Cost 34,002,000
Contributions made (22,747,340)
Increase in net OPEB liability 11,254,660
gig
Net OPEB liability-beginning of year 65,755,197
Net OPEB liability-end of year $77,009,857011
The above net OPEB liability at the end of the year is included in the Statement of Net
Position in the noncurrent other liability amount of$77,009,857.
a
se
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30, 2016
The annual OPEB cost,the percentage of annual OPEB cost contributed to the plan, and the
net OPEB (asset) liability for the year ended June 30, 2016 and the preceding two years were
as follows:
Percentage of Annual
Fiscal Year OPEB Cost Net OPEB
Ended Annual OPEB Cost Contributed Obligation
June 30, 2014 $30,841,000 56.6% $51,548,596
June 30, 2015 $32,864,000 56.8% $65,755,197
June 30, 2016 $34,002,000 66.9% $77,009,857
The schedule of funding progress based on the actuarial valuation date of July 1, 2015, is as
follows:
Actuarial accrued liability $466,874,000
Actuarial value of plan assets 91,579,000
Unfunded actuarial accrued liability(UAAL) $375,295,000
Funded ratio 19.6%
Covered payroll (active plan members) $159,255,000
UAAL as a percentage of covered payroll 235.7%
Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts
and assumptions about the probability of occurrence of events far into the future. Examples
include assumptions about future employment, mortality, and the healthcare cost trend.
Amounts determined regarding the funded status of the plan and the annual required
contributions of the employer are subject to continual revision as actual results are compared
with past expectations and new estimates are made about the future.
The schedule of funding progress,presented as required supplementary information following
the notes to the financial statements, presents multiyear trend information that shows whether
the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial
accrued liabilities for benefits.
Projections of benefits for financial reporting purposes are based on the substantive plan(the
plan as understood by the employer and plan members) and include the types of benefits
provided at the time of each valuation and the historical pattern of sharing of benefit costs
between the employer and 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.
In the July 1, 2015 actuarial valuation,the entry age normal cost actuarial cost method was
used. The actuarial assumptions included a 7.0% discount rate, which is based on the
County's anticipated funding level, and an annual healthcare cost trend rate of 7.0-9.0%
initially, reduced by decrements to an ultimate rate of 5.0% after eight years. The assumptions
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A
COUNTY OF HAWAI`I NI
•
Notes to the Basic Financial Statements
June 30,2016 "J
all
also include a 3.5% increase in payroll and a 3.0% inflation rate. The UAAL is being
amortized as a level percentage of projected payroll on a closed basis. The remaining
amortization period at July 1, 2015 for the UAAL balance varies depending on the date each
portion was established but is set to not exceed 30 years. The equivalent single amortization
period is 22.0.
The EUTF issues a publicly available financial report that includes financial statements and .0
required supplementary information,which is available on-line at their web-site
www.eutf.hawaii.gov or by contacting them at P.O. Box 2121,Honolulu,HI 96805-2121.
Deferred Compensation Plan
County employees are permitted to participate in a deferred compensation plan of the State of
Hawai`i, adopted pursuant to Internal Revenue Code(IRC) section 457. The plan permits
eligible employees to defer a portion of their salary until future years by contributing to a fund
managed by a plan administrator. The deferred compensation amounts are not available to
employees until termination, retirement, death, or unforeseeable emergency.
All plan assets are held in a trust fund to protect them from claims of general creditors and
from diversion to any uses other than paying benefits to participants and beneficiaries. The
County has no responsibility for loss due to the investment or failure of investment of funds 0•4
and assets in the plans,but does have the duty of due care that would be required of an
ordinary prudent investor. Therefore,the deferred compensation plan assets are not reported ""'
in the accompanying basic financial statements.
14. COMPONENT UNIT DISCLOSURES vat
Deposits and Investments "4
.r
At June 30, 2016,the carrying amount of cash,time certificates of deposit and money market
funds of$43,285,053,with bank balances of$43,917,552 were held by the County on behalf
of the Department. These balances were fully insured or collateralized with securities held by
the County's agent in the County's name.
The deposits and investments include cash received by the Department that is restricted as to
use and is recorded as a restricted asset. Such funds amounted to$908,852 at June 30, 2016.
At June 30, 2016,the Department had $10,000,000 in investments.
in
S
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li
COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Capital Assets
The Department began operations as of January 1, 1950. At that date, the utility plant in
service was transferred to the Department from the County at the cost of the utility plant assets
acquired by the County for its water system from January 1, 1924 to December 31, 1949, less
accumulated depreciation. Acquisitions prior to 1924 and acquisitions by gift or grant prior to
1950 are not included in utility plant. Additions to utility plant since January 1, 1950 are
stated at original cost and include contributions by governmental agencies,private subdividers
and customers at their cost or estimated cost. Construction costs include amounts for contract
work, engineering supervision and other direct and indirect costs. Construction period interest
is capitalized on utility plan constructed with tax-exempt debt.
Depreciation on the Department's utility plant assets in service is computed using the
straight-line method over the estimated useful lives of the assets as follows:
Structures and improvements 40 to 50 years
Machinery and equipment 5 to 25 years
Water systems 10 to 40 years
The capital assets of the Department at June 30, 2016 were as follows:
Utility plant in service $490,527,519
Less: accumulated depreciation (224,115,993)
266,411,526
Preliminary survey and investigation charges 4,820,471
Construction work in progress 16,984,349
Land and rights 4,869,383
Net capital assets $291085}729
Long-Term Debt
The County has issued general obligation bonds on behalf of the Department. The
Department is responsible for the payment of the debt service on these bonds, but the County
remains liable because they are general obligations of the County. The Department has
recorded a liability for these general obligation bonds,which amounted to $32,276,037 at June
30, 2016.
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IMMiainige...116.1015. eft,*
rn
COUNTY OF HAWAII UPI
sit
Notes to the Basic Financial Statements
June 30,2016
11,
General obligation bonds payable issued on behalf of the Department and other long-term debt
at June 30,2016 are comprised of the following:
Public improvement bonds:
2004 Series D at 4.5%, due through 2039 $ 217,813
2006 Series A at 4.0%to 5.0%, due through 2016 1,180,000
2008 Series A at 4.125%,due through 2043 132,559 rtri
2010 Series A at 4.0%to 5.0%, due through 2020 1,816,250
2010 Series B at 3.33%to 6.1%, due through 2030 5,626,250 *1
Total public improvement bonds 8,972,872
Public improvement refunding bonds:
2007 Series C at 4.0%to 5.0%, due through 2021 3,451,915
2016 Series B at 3.0%to 5.0%, due through 2026 13,497,500
2016 Series E at 2.0%to 5.0%, due through 2029 6,353,750
Revolving fund loans: 00
State revolving fund loans, interest up to 1.37%,
due through 2037 25,528,470
Total long-term debt 57,804,507
Add: Unamortized premium 2,130,969
Total $59,935,476
At June 30, 2016, future principal and interest payments for long-term debt are scheduled as
follows:
.10
Fiscal year ending June 30: Principal Interest Total
2017 $ 3,939,842 $ 2,035,687 $ 5,975,529
2018 3,919,404 1,864,870 5,784,274
2019 4,311,051 1,720,028 6,031,079
2020 4,432,406 1,557,585 5,989,991 so
2021 4,534,513 1,372,860 5,907,373
2022—2026 20,085,420 4,300,300 24,385,720 100
2027—2031 12,578,346 1,162,846 13,741,192
2032—2036 3,335,233 196,673 3,531,906
2037—2041 652,881 21,681 674,562 ""
2042—2046 15,411 958 16,369
at
Total $57,804,507 $14,233,488 $72,037,995
rfr
The Department has a 50%proportionate share of 2016 Series B refunding bonds and 2006
Series A bonds. The Department also has a 25%proportionate share of 2016 Series E
refunding bonds and 2010 Series A bonds. The Department's proportionate share of the net
proceeds from 2016 Series B and 2016 Series E refunding bonds was$19,851,250 which was
used to advance refund the Department's proportionate share of the 2006 Series A bonds and
i
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
2010 Series A bonds amounting to $15,425,000 and $6,220,000, respectively. These bonds
were defeased and removed from the Department's 2016 financial statements.
The Department's total debt service requirement over the next eleven to fourteen years will
decrease by $3,002,238 as a result of the refunding and the net economic gain(difference
between the present values of the debt service payments on the old and new debt)was
$2,647,988. At June 30, 2016, the Departments' proportionate share of defeased bonds totaled
$21,645,000.
Contributions in Aid of Construction
The Department recognized $17,008,622 of contributions in aid of construction for the fiscal
year ended June 30, 2016.
Commitments and Contingent Liabilities
Claims and judgments—The Department maintains property, auto liability, and general
liability insurance policies. The Department remains self-insured for workers' compensation
and other perils. The liability at June 30, 2016 for workers' compensation claims of$362,000
was estimated based on a combination of case-by-case review and the application of historical
experience to outstanding claims.
Construction contracts—The Department is obligated under construction contracts for the
utility plant and other projects. Such commitments approximated$22,329,000 at
June 30, 2016.
Pension Plan
Pension liabilities,pension expense, and deferred outflows of resources and deferred
inflows of resources related to pensions—At June 30, 2016, the Department reported a
liability of$18,940,065 for its proportionate share of the net pension liability. The net pension
liability was measured as of June 30, 2015, and the total pension liability used to calculate the
net pension liability was determined by an actuarial valuation as of that date. The
Department's proportion of the net pension liability was based on the actual employer
contributions to the pension plan relative to the contributions of all participating employers.
At June 30, 2015,the Department's proportion was .22%, which was a decrease of.04%from
its proportion measured as of June 30, 2014.
For the year ended June 30, 2016,the Department recognized pension expense of$2,115,641.
At June 30, 2016,the Department reported deferred outflows of resources and deferred
inflows of resources related to pensions from the following sources:
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1110
rw
COUNTY OF HAWAII gm
Notes to the Basic Financial Statements
June 30,2016
0
Deferred Deferred
Outflows Inflows of110
of Resources Resources
Differences between expected and actual experience $ 177,397 $ (530,027)
Net difference between projected and actual investment
Earnings on pension plan investments -- (646,297)
Changes in assumptions 447,089 --
Changes in proportion and differences between employer
contributions and proportionate share of contributions 2,673,094 (2,594,137)
Department contributions subsequent to the measurement date L970,846 --
oil
�.r
Total 5,268,426 (3,770,461)
The$1,970,846 reported as deferred outflows of resources related to the Department's
contributions to the pension plan subsequent to the measurement date will be recognized as a
reduction of the net pension liability in the fiscal year ended June 30,2017.
Other amounts reported as deferred outflows of resources and deferred inflows of resources M'
related to pensions will be recognized in pension expense as follows:
Fiscal Year Ending June 30, Amount ..r
2017 $ (126,400)
2018 (126,400) '*
2019 (126,400)
2020 208,788
2021 (302,469)
$(472,881)•
.Y
Sensitivity of the Department's proportionate share of the net pension liability to changes in
the discount rate—The following presents the County's proportionate share of the net pension
liability calculated using the discount rate of 7.65%, as well as what the County's
proportionate share of the net pension liability would be if it were calculated using a discount
rate that is 1-percentage-point lower(6.65%)or 1-percentage-point higher(8.65%)than the
current rate:
1%Decrease Current Discount 1%Increase
(6.65%) Rate(7.65%) (8.65%) .r
Department's proportionate
share of the net pension liability $ 23,844,889 $ 18,940,065 $ 14,035,241 RI
.rt
111
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COUNTY OF HAWAII
Notes to the Basic Financial Statements
June 30,2016
Pension plan fiduciary net position—Detailed information about the pension plan's fiduciary
net position is available in the separately issued ERS Comprehensive Annual Financial Report
that includes financial statements and required supplementary information.
Payables to the pension plan—At June 30, 2016,the annual amount payable to the ERS
totaled $130,479, which represents the employer contribution for the month of June 2016, as
required by HRS.
Post-Retirement Benefits
Effective July 1, 2007,the Department adopted the provisions of GASB Statement No. 45.
This statement addresses how state and local governments should account for and report their
costs and obligations related to postemployment benefits, healthcare, and other nonpension
benefits. The Department's annual required contribution for its postemployment benefit
obligation for the year ended June 30, 2016 was $1,914,000. The Department made
contributions of$1,913,045 during the year ended June 30, 2016 and recorded a
postemployment benefit asset of$146 at June 30, 2016.
Prior Period Adjustment
The financial statements of the Department for the fiscal year ended June 30, 2015 contained
an error related to retainage withheld on progress payments made under construction contracts
which were not properly accrued. Therefore, an adjustment was made to increase construction
work in progress and retainages payable by$573,477 for the fiscal year ended June 30, 2015.
This adjustment had no effect on net position as of June 30, 2015.
- 97 -
COUNTY OF HAWAII
Required Supplementary Information a
June 30, 2016
a
Schedule of Funding Progress for the EUTF
(In thousands) 111
a
Actuarial
Accrued UAAL as a
Actuarial Liability Unfunded Percentage ra
Actuarial Value of (AAL)— AAL Funded Covered of Covered
Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll
Date (a) (b) (b-a) (a/b) (c) ((b-a)/c)
July 1,2011 $61,907 $394,633 $332,726 15.7% $130,170 255.6%
July 1, 2013 $66,077 $410,182 $344,105 16.1% $137,810 249.7%
July 1, 2015 $91,579 $466,874 $375,295 19.6% $159,255 235.7%
we
1111
111
a
a
U
- 98 -
S
COUNTY OF HAWAII
Required Supplementary Information
June 30, 2016
Schedule of the County's Proportionate Share of the
Net Pension Liability
Last 10 Fiscal Years
Proportionate
Share of the Plan
County's County's Net Pension Fiduciary Net
Proportion of Proportionate Liability as a Position as a
the Net Share of the County's %age of %age of the
Measurement Pension Net Pension Covered Covered Total Pension
Period Ended Liability(%) Liability($) Payroll Payroll Liability
June 30, 2015 4.4% $382,070,813 $152,685,842 250.2% 62.4%
June 30, 2014 4.0% $322,626,262 $ 139,779,309 230.8% 63.9%
June 30, 2013 4.2% $377,065,856 $ 130,725,988 288.4% 58.0%
* This schedule is intended to present information for 10 years, as of the measurement date of the
collective net pension liability for each respective fiscal year. Additional years will be built
prospectively as information becomes available.
- 99 -
COUNTY OF HAWAII
Required Supplementary Information
June 30, 2016
Schedule of the Employer Pension Contributions
Last Ten Fiscal Years
I
Actual
County Contributions
Statutorily Contributions Contribution as a%age of
Fiscal Year Required Recognized Deficiency County's Covered
Ended Contribution by the Plan (Excess) Covered Payroll Payroll
June 30, 2016 $ 47,314,812 $ 47,314,812 $ -- $ 160,261,494 29.5%
June 30, 2015 $ 43,889,431 $ 43,889,431 $ -- $ 152,685,842 28.7%
June 30, 2014 $ 37,693,618 $ 37,693,618 $ -- $ 139,779,309 27.0%
June 30, 2013 $ 34,025,108 $ 34,025,108 $ -- $ 130,725,988 26.0%
June 30, 2012 $ 31,826,341 $ 31,826,341 $ -- $ 127,901,579 24.9% "'i
June 30, 2011 $ 31,289,458 $ 31,289,458 $ -- $ 127,859,606 24.5%
June 30,2010 $ 31,991,136 $ 31,991,136 $ -- $ 133,554,827 24.0%
June 30, 2009 $ 32,183,067 $ 32,183,067 $ -- $ 135,107,940 23.8% .w
June 30,2008 $ 27,552,179 $ 27,552,179 $ -- $ 127,396,531 21.6%
June 30,2007 $ 24,578,419 $ 24,578,419 $ -- $ 114,684,034 21.4% 11111"
Note—Employer Contributions
Employer contributions include County-paid employee contributions that are classified as
employer contributions pursuant to IRC section 414(h)(2).
01.
a
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U
- 100 - 1�
NONMAJOR GOVERNMENTAL FUNDS
SPECIAL REVENUE FUNDS
HIGHWAY FUND-Used to account for the costs of maintaining the County's highways and streets.
Financing is provided primarily by fuel,motor vehicle weight and public utility franchise taxes.
SEWER FUND-Used to account for costs of operating the County's various sewer systems. Financing is
provided by charges to users for sewer services.
SOLID WASTE FUND—Used to accumulate moneys for the operation,maintenance, and administration of
the County's solid waste management,collection and disposal systems. Financing is provided by tipping
fees at the landfills and by disposal permit fees.
CEMETERY FUND-Used to accumulate moneys to guarantee the future maintenance of County cemetery
sites. Financing is provided from the sale of burial lots in County cemeteries.
PARKING METER FUND-Used to account for the costs of maintaining County on-street and off-street
parking areas. Financing is provided by the proceeds from parking meters.
VEHICLE DISPOSAL FUND-Used to accumulate moneys for the towing,removal,disposal and recycling
of abandoned or discarded automobiles and automobile parts. Financing is provided by annual fees
collected with motor vehicle registrations.
BIKEWAY FUND-Used to accumulate moneys for the construction of bikeways within the County.
Financing is provided by bicycle license fees.
WORKFORCE INVESTMENT ACT FUND-Used to account for employment and training services
provided to economically disadvantaged adults,dislocated workers and youth. Financing is provided by
federal grants.
GOLF COURSE FUND-Used to account for the cost of operating the Hilo Municipal Golf Course.
Funding is provided from green fees and payments from restaurant and pro shop concessionaires.
GEOTHERMAL RELOCATION AND COMMUNITY BENEFITS FUND-Used to account for the County's
share of geothermal resource royalties received from the operator of a geothermal power plant located in the
County. The funds are earmarked for a geothermal relocation program and to benefit the lower Puna area.
BEAUTIFICATION FUND-Used to accumulate moneys for the beautification of highways and disposal of
abandoned vehicles within the County. Financing is provided by assessments on vehicle registrations.
HAWAII COUNTY HOUSING AGENCY-Used to account for Federal and County moneys used to provide
public housing assistance within the County.
PARK DEDICATION FUND-Used to account for moneys deposited with the County by subdividers to
provide land for parks and playgrounds in subdivisions.
DEBT SERVICE FUND
INTEREST FUND-Used to accumulate moneys for payment of interest on general obligation bonds.
Moneys required to service interest maturities are transferred annually from the General Fund.
BOND REDEMPTION FUND-Used to accumulate moneys for the payment of general obligation bonds.
Moneys required to retire the bonds are transferred from the General Fund one year in advance of maturity.
This page intentionally left blank.
- 101 -
Ili
arg
COUNTY OF HAWAII ANI
Nonmajor Governmental Funds ...0
Combining Balance Sheet mil
June 30,2016 ,,ko
Am
Special Revenue Funds .r
Solid Parking
Highway Sewer Waste Cemetery Meter 1
Fund Fund Fund Fund Fund ma
Assets
Cash and cash equivalents $ 10,911,880 $ 7,552,351 $11,045,740 $118,909 $248,637 mg
Investments - - - - -
aii
Imprest fund - 400 250 - -
Receivables:
lig
Due from other governments 812,650 11,033 613,358 - -
Due from other governmental funds 42,880 13,904 - - - al
Due from other nongovernmental funds - 1,350 - - -
Trade,net of allowance for doubtful accounts - 1,299,081 905,291 - -
Ill
Real estate held for sale - - - - - ali
Other 27,948 - 198,973 - -
883,478 1,325,368 1,717,622 - -
Ili
Total assets $ 11,795,358 $ 8,878,119 $12,763,612 $118,909 $248,637 ill
Liabilities,Deferred Inflows and Fund Balances
Liabilities:
Accounts payable $ 854,254 $ 201,590 $ 1,953,508 $ - $ - all
Accrued payroll 494,967 161,179 360,884 - -
Due to other governmental funds 156,973 396,892 669,702 - - Ili
Advance Collections-Intergovernmental 220,102 - 14,588 - - tii
Other 4 78,391 - - -
Total liabilities 1,726,300 838,052 2,998,682 - - 4
Deferred Inflows of Resources rail
Unavailable Revenue - 1,299,081 905,292 - -
Fund balances: 111
Restricted for: II
Debt service - - - - -
Highways,streets and abandoned vehicles 10,069,058 - - - - 111
Rental assistance and subsidy - - - - - I,
Committed to:
Sanitation - 6,740,986 8,859,638 - - ill
Highways,streets and abandoned vehicles - - - - 248,637 el
Rental assistance and subsidy - - - - -
Cemetery - - - 118,909 - Ilit
Golf course - - - - - -
rl
Lower Puna area - - - - -
Parks and recreational projects - - - - -
SI
Total fund balances 10,069,058 6,740,986 8,859,638 118,909 248,637
rat
Total liabilities,deferred inflows
and fund balances $ 11,795,358 $ 8,878,119 $12,763,612 $118,909 $248,637 Illi
rii
- 102 IR
-
a
Special Revenue Funds
Vehicle Workforce Golf Geothermal Reloc. Beauti- Hawaii County Park
Disposal Bikeway Innovation& Course &Community fication Housing Dedication
Fund Fund Opport.Act Fund Fund Benefits Fund Fund Agency Fund
$8,069,500 $643,775 $ - $ 288,439 $ 3,328,766 $ 771,487 $4,157,249 $ 27,008
- _ - - - - 61,403
- - - 2,000 - - 200 -
- - 134,509 - - - 45,544 -
- - _ - - - 33,777 -
_ - - - 721,270 - - -
6,396 - 38,994 401 66,346 533 51,189 -
6,396 - 173,503 401 787,616 533 130,510 -
$8,075,896 $643,775 $ 173,503 $ 290,840 $4,116,382 $ 772,020 $4,287,959 $ 88,411
$ 99,760 $ 13,903 $ - $ 1,423 $ 1,091 $ 2,741 $ 121,825 $ -
3,700 - - 43,740 - - 146,251 -
72,985 - 173,503 3,396 - - 153 -
_
- _ - 99,666 -
176,445 13,903 173,503 48,559 1,091 2,741 367,895 -
- - - - - - 22,661 -
- 629,872 - - - 769,279 - -
- - - - - 1,365,653 -
7,899,451 - - - - - - -
- - - - - - 2,531,750 -
- - 242,281 - - - -
- - - - 4,115,291 - - -
- - - _ _ - - 88,411
7,899,451 629,872 - 242,281 4,115,291 769,279 3,897,403 88,411
$8,075,896 $643,775 $ 173,503 $ 290,840 $4,116,382 $ 772,020 $4,287,959 $ 88,411
(Continued)
- 103 -
op
COUNTY OF HAWAII Ail
aiiio
Nonmajor Governmental Funds
Combining Balance Sheet PIP
June 30,2016 um
(Concluded)
es
Debt Service Fund Total wass
Bond Nonmajor
Interest Redemption Governmental 4
Fund Fund Funds
wi
Assets
Cash and cash equivalents $3,162,012 $ 7,591,832 $ 57,917,585 w
Investments - 13,000,000 13,061,403
Imprest fund - - 2,850 ,.
Receivables:
Due from other governments - - 1,617,094
Due from other governmental funds - - 90,561 ma
Due from other nongovernmental funds - - 1,350
IIIii
Trade,net of allowance for doubtful accounts - - 2,204,372
Real estate held for sale - - 721,270 ari
Other - - 390,780
- - 5,025,427 1110
Total assets $3,162,012 $20,591,832 $ 76,007,265 iis
Liabilities and Fund Balances
wit
Liabilities:
Accounts payable $ - $ - $ 3,250,095 W
Accrued payroll - - 1,210,721
Due to other governmental funds - - 1,473,604 AO
Advance Collections-Intergovernmental - - 234,690 .r
Other 70,712 205,000 453,773
Total liabilities 70,712 205,000 6,622,883 so
Deferred Inflows of Resources ,,,,,,
Unavailable Revenue - - 2,227,034
Fund balances: x!
Restricted for: .o
Debt service 3,091,300 20,386,832 23,478,132
Highways,streets and abandoned vehicles - - 11,468,209 11111
Rental assistance and subsidy - - 1,365,653 lad
Committed to:
Sanitation - - 15,600,624
Highways,streets and abandoned vehicles - - 8,148,088 ad
Rental assistance and subsidy - - 2,531,750
Cemetery - - 118,909Ili
Golf course - - 242,281
idi
Lower Puna area - - 4,115,291
Parks and recreational projects - - 88,411
P.
Total fund balances 3,091,300 20,386,832 67,157,348
mi
Total liabilities,deferred inflows
and fund balances $3,162,012 $20,591,832 $ 76,007,265 II
a
See accompanying independent auditors'report.
- 104- 1
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- 105 -
wry
MO
COUNTY OF HAWAII +a
Nonmajor Governmental Funds m++
Combining Statement of Revenues,Expenditures,and Changes in Fund Balances
For the Fiscal Year Ended June 30,2016
we
An
Special Revenue Funds
Solid Parking IMO
Highway Sewer Waste Cemetery Meter
Fund Fund Fund Fund Fund Ili
Revenues .r
Fuel taxes $ 7,933,810 $ - $ - $ - $ -
Public utility franchise taxes 9,004,330 - - - - w
Licenses and permits 11,617,480 - - - - r+'
Intergovernmental 1,309,488 - 782,589 - -
Charges for services - 7,440,163 9,367,704 - 13,743 to
Investment earnings(loss) - - - - - .r
Other 827,469 437 258,520 7,250 -
all
Total revenues 30,692,577 7,440,600 10,408,813 7,250 13,743
..r
Expenditures
Current: „m,
General Government 37,757 - - - - we
Public safety 6,952,911 - - - -
Highways and streets 18,410,199 - - - - wia
Health,education and welfare - - - - -
Ili
Culture and recreation - - - - -
Sanitation - 7,793,981 24,605,009 - - ,iii
Pension and retirement contributions 2,092,166 716,660 1,405,567 - -
so
Employees'health insurance 1,033,832 249,802 660,709 - -
Other 578,436 19,408 413,675 - - 1.0
Debt service:
Principal 51,472 - 408,134 - - .iii
Interest 3,411 - 12,228 - -
1110
Total expenditures 29,160,184 8,779,851 27,505,322 - -
glik
Excess(deficiency)of revenues
over(under)expenditures 1,532,393 (1,339,251) (17,096,509) 7,250 13,743 1
Other Financing Sources(Uses) iii
Transfers in 47,100 2,280,878 16,608,221 - -
Increases in capital leases 788,074 - 891,405 - - tigi
Transfers out (3,336,056) - - - - uti
Total other financing sources(uses) (2,500,882) 2,280,878 17,499,626 - -
01111
Net change in fund balances (968,489) 941,627 403,117 7,250 13,743
Fund balances at beginning of year 11,037,547 5,799,359 8,456,521 111,659 234,894 lin
Fund balances at end of year $ 10,069,058 $ 6,740,986 $ 8,859,638 $ 118,909 $248,637 O1
is
19
aiii
- 106- Nil
a
Special Revenue Funds
Vehicle Workforce Golf Geothermal Reloc. Beauti- Hawaii County Park
Disposal Bikeway Innovation& Course &Community fication Housing Dedication
Fund Fund Opport.Act Fund Fund Benefits Fund Fund Agency Fund
$ - $ - $ - $ - $ - $ - $ - $ -
2,261,508 70,070 - - - 188,462 - -
- 736,530 - - - 16,950,536 -
2,102 - - 650,311 - - - -
_ _
- - _ - 3,049 1,229
36,824 - - 20 705,242 - 267,561 -
2,300,434 70,070 736,530 650,331 705,242 188,462 17,221,146 1,229
- - - 1,329,426 - - -
- 267,440 - - - 356,692 - -
- - 736,530 - - - 17,406,467 -
- - - 971,039 919 282,052 - -
591,740 - - - - - - -
18,380 - - 180,647 - - 601,807 -
15,719 - - 102,688 - - 262,223 -
- - - 3,396 - - - -
- - - - - - 7,353 -
- - _ - - - 166 -
625,839 267,440 736,530 1,257,770 1,330,345 638,744 18,278,016 -
1,674,595 (197,370) - (607,439) (625,103) (450,282) (1,056,870) 1,229
- - - 462,856 - - 1,611,502 -
- - - 462,856 - - 1,611,502 -
1,674,595 (197,370) - (144,583) (625,103) (450,282) 554,632 1,229
6,224,856 827,242 - 386,864 4,740,394 1,219,561 3,342,771 87,182
$7,899,451 $ 629,872 $ - $ 242,281 $ 4,115,291 $ 769,279 $ 3,897,403 $ 88,411
(Continued)
- 107 -
10.
lib
COUNTY OF HAWAII 010
Nonmajor Governmental Funds w
Combining Statement of Revenues,Expenditures,and Changes in Fund Balances
OP
For the Fiscal Year Ended June 30,2016
inii
(Concluded)
AIR
Debt Service Fund Total
Bond Nonmajor IOW
Interest Redemption Governmental
Fund Fund Funds se
Revenues ..
Fuel taxes $ - $ - $ 7,933,810
Public utility franchise taxes - - 9,004,330
Licenses and permits - - 14,137,520 war
Intergovernmental 400,365 - 20,179,508
Charges for services - - 17,474,023 el
Investment earnings(loss) - - 4,278 .ii
Other - - 2,103,323
Total revenues 400,365 - 70,836,792 "
.r
Expenditures
Current: s
General Government - - 1,367,183
.rr
Public safety - - 6,952,911
Highways and streets - - 19,034,331 go
Health,education and welfare - - 18,142,997
Culture and recreation - - 1,254,010 .r
Sanitation - - 32,990,730
Pension and retirement contributions - - 5,015,227
Employees'health insurance - - 2,324,973 gip
Other - - 1,014,915 ,gil
Debt service:
Principal - 20,977,209 21,444,168 `+
Interest 12,894,983 - 12,910,788
it
Total expenditures 12,894,983 20,977,209 122,452,233
di
Excess(deficiency)of revenues
over(under)expenditures (12,494,618) (20,977,209) (51,615,441)
Other Financing Sources(Uses) iiii
Transfers in 13,140,457 19,793,386 53,944,400
Increases in capital leases - - 1,679,479 IR
Transfers out - - (3,336,056) oil
Total other financing sources(uses) 13,140,457 19,793,386 52,287,823
ill
Net change in fund balances 645,839 (1,183,823) 672,382
Fund balances at beginning of year 2,445,461 21,570,655 66,484,966 ail
Fund balances at end of year $ 3,091,300 $20,386,832 $67,157,348
411
See accompanying independent auditors'report. illi
illi
iii
- 108 - 1111
COUNTY OF HAWAII
Highway Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Taxes:
Fuel taxes $ 7,390,000 $7,390,000 $ 7,933,810 $ 543,810
Public utility franchise taxes 11,578,499 11,578,499 9,004,330 (2,574,169)
Total taxes 18,968,499 18,968,499 16,938,140 (2,030,359)
Licenses and permits-motor vehicle weight taxes 10,849,616 10,849,616 11,617,480 767,864
Intergovernmental 630,000 927,710 1,304,601 376,891
Charges for services 500,000 500,000 348,680 (151,320)
Other 69,000 69,000 478,789 409,789
Total revenues 31,017,115 31,314,825 30,687,690 (627,135)
Expenditures:
General government 40,000 162,711 36,208 126,503
Public safety-protective inspection 11,000 11,000 3,450 7,550
Public safety-traffic engineering 7,672,131 7,894,231 7,568,677 325,554
Highways and streets 13,506,994 13,506,994 10,266,952 3,240,042
Highways and streets-mass transit 7,500,000 7,500,000 6,164,448 1,335,552
Pension and retirement contributions 2,178,000 2,178,000 2,089,042 88,958
Employees'health insurance 1,411,000 1,411,000 1,032,266 378,734
Other 992,070 992,070 582,713 409,357
Total expenditures 33,311,195 33,656,006 27,743,756 5,912,250
Excess(deficiency)of revenues over(under)
expenditures (2,294,080) (2,341,181) 2,943,934 5,285,115
Other financing uses-transfers in(out)-
Transfers in-General Fund - 47,100 47,100
Transfers out-Capital Projects Fund (3,500,000) (3,636,056) (3,336,056) 300,000
Deficiency of revenues and other sources
under expenditures and other uses (5,794,080) (5,930,137) (345,022) 5,585,115
Fund balance at beginning of year 11,037,547 11,037,547 11,037,547 -
Fund balance at end of year $ 5,243,467 $5,107,410 $ 10,692,525 $ 5,585,115
See accompanying independent auditors'report.
- 109 -
,,�.
alp
COUNTY OF HAWAII 4,10
Sewer Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance- IR
Budget and Actual(Budgetary Basis) rrr
For the Fiscal Year Ended June 30,2016 414
www
Actual Variance
Original Final (Budgetary Positive Ili
Budget Budget Basis) (Negative)
Revenues: +it
Charges for services-sewer fees $7,262,500 $ 7,262,500 $7,440,163 $ 177,663
Other - - 437 437 .si
Total revenues 7,262,500 7,262,500 7,440,600 178,100 Ili
iiii
Expenditures:
Sanitation 10,381,347 10,381,347 7,768,248 2,613,099 MI
Pension and retirement contributions 844,863 844,863 714,083 130,780
ai
Employees'health insurance 456,000 396,000 248,884 147,116
Other 577,000 637,000 (549,424) 1,186,424 111
Total expenditures 12,259,210 12,259,210 8,181,791 4,077,419 n
Deficiency of revenues under expenditures (4,996,710) (4,996,710) (741,191) 4,255,519
II
Other financing sources: „i
Transfers in-General Fund 2,280,87.8 2,280,878 2,280,878 -
iii
Excess(deficiency)of revenues and other
el
sources over(under)expenditures (2,715,832) (2,715,832) 1,539,687 4,255,519
Fund balance at beginning of year 5,799,359 5,799,359 5,799,359 - 1l
Fund balance at end of year $ 3,083,527 $ 3,083,527 $ 7,339,046 $ 4,255,519 Ili
411/
See accompanying independent auditors'report.
ssi
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Si
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- 110- 1!
Ali
COUNTY OF HAWAII
Solid Waste Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Intergovernmental $ 517,583 $ 717,583 $ 540,004 $ (177,579)
Charges for services-tipping fees 7,231,696 7,231,696 9,367,704 2,136,008
Other 407,212.00 407,212 258,520 (148,692)
Total revenues 8,156,491 8,356,491 10,166,228 1,809,737
Expenditures:
Sanitation 25,233,061 25,433,061 24,183,188 1,249,873
Pension and retirement contributions 1,491,502 1,491,502 1,399,503 91,999
Employees'health insurance 820,000 789,000 660,045 128,955
Other 509,000 540,000 471,498 68,502
Total expenditures 28,053,563 28,253,563 26,714,234 1,539,329
Deficiency of revenues under expenditures (19,897,072) (19,897,072) (16,548,006) 3,349,066
Other fmancing sources:
Transfers in-General Fund 16,608,221 16,608,221 16,608,221 -
Excess(deficiency)of revenues and other
sources over(under)expenditures (3,288,851) (3,288,851) 60,215 3,349,066
Fund balance at beginning of year 8,456,521 8,456,521 8,456,521 -
Fund balance at end of year $ 5,167,670 $ 5,167,670 $ 8,516,736 $3,349,066
See accompanying independent auditors'report
- 111 -
COUNTY OF HAWAII
Cemetery Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016111
wag
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-other-sale of cemetery plots $ 10,000 $ 10,000 $ 7,250 $ (2,750) 141
Expenditures-health,education and welfare 10,000 10,000 - 10,000
Excess of revenues over expenditures - - 7,250 7,250
Fund balance at beginning of year 111,659 111,659 111,659 - -
Fund balance at end of year $ 111,659 $ 111,659 $ 118,909 $ 7,250 r�
See accompanying independent auditors'report.
wl
mi
1.1
rM
111
m
ori
- 112sit
-
COUNTY OF HAWAII
Parking Meter Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-Charges for services-highways and streets $ - $ - $ 13,743 $ 13,743
Excess of revenues over expenditures - - 13,743 13,743
Fund balance at beginning of year 234,894 234,894 234,894 -
Fund balance at end of year $ 234,894 $ 234,894 $ 248,637 $ 13,743
See accompanying independent auditors'report.
- 113 -
..y
COUNTY OF HAWAII
Vehicle Disposal Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis) r++
For the Fiscal Year Ended June 30,2016 .,a.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues: 1011
Licenses and permits-vehicle disposal fee $2,098,632 $ 2,098,632 $ 2,261,508 $ 162,876 .w
Charges for services-towing charges 1,000 1,000 2,102 1,102
Miscellaneous 1,500 1,500.00 36,824 35,324 141
Total revenues 2,101,132 2,101,132 2,300,434 199,302 111
Expenditures:
Sanitation 4,418,450 4,418,450 391,113 4,027,337
Pension and retirement contributions 27,367 27,367 18,624 8,743
Employees'health insurance 24,000 24,000 15,671 8,329 41,
Other 8,400 8,400 - 8,400
..r
Total expenditures 4,478,217 4,478,217 425,408 4,052,809
Excess(deficiency)of revenues
over(under)expenditures (2,377,085) (2,377,085) 1,875,026 (3,853,507) r`
Fund balance at beginning of year 6,224,856 6,224,856 6,224,856
Fund balance at end of year $3,847,771 $ 3,847,771 $ 8,099,882 $ (3,853,507)
114
See accompanying independent auditors'report.
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- 114- '
iii
COUNTY OF HAWAII
Bikeway Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-licenses and permits-bicycle tax $ 60,000 $ 60,000 $ 70,070 $ 10,070
Expenditures-highways and streets 223,000 473,000 330,742 142,258
Excess(deficiency)of revenues over(under)
expenditures (163,000) (413,000) (260,672) 152,328
Fund balance at beginning of year 827,242 778,327 827,242 -
Fund balance at end of year $664,242 $365,327 $566,570 $152,328
See accompanying independent auditors'report.
- 115 -
COUNTY OF HAWAII AN%
Workforce Innovation & Opportunity Act Fund
opt
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis) mai
For the Fiscal Year Ended June 30,2016 4101.
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
aid
Revenues-intergovernmental-federal grants $ - $ 1,521,232 $ 1,127,934 $ (393,298)
Expenditures-health,education and welfare - 1,521,232 1,127,934 393,298 ii
Excess of revenues over expenditures - - - -
Fund balance at beginning of year - - - -
Fund balance at end of yearire
See accompanying independent auditors'report.
111
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- 116 - MI
COUNTY OF HAWAII
Golf Course Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues:
Charges for services $ 884,400 $ 884,400 $ 650,311 $ (234,089)
Expenditures:
Culture and recreation 1,012,735 1,012,735 974,085 38,650
Pension and retirement contributions 194,173 194,173 180,848 13,325
Employees'health insurance 114,212 114,212 101,919 12,293
Other 26,136 26,136 3,396 22,740
Total expenditures 1,347,256 1,347,256 1,260,248 87,008
Deficiency of revenues under expenditures (462,856) (462,856) (609,937) (321,097)
Other financing sources:
Transfers in-General Fund 462,856 462,856 462,856 -
Excess of revenues and other sources
over expenditures - - (147,081) (321,097)
Fund balance at beginning of year 386,864 386,864 386,864 -
Fund balance at end of year $ 386,864 $ 386,864 $ 239,783 $ (321,097)
See accompanying independent auditors'report.
- 117 -
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COUNTY OF HAWAIImom
Geothermal Relocation and Community Benefits Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis) w
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive 00
Budget Budget Basis) (Negative)
am
Revenues-other-geothermal royalties $ 600,000 $ 600,000 $ 705,242 $ 105,242 a1
Expenditures: elm
General government:
Planning and zoning 1,700,000 1,700,000 1,283,059 416,941
Deficiency of revenues
under expenditures (1,100,000) (1,100,000) (577,817) (311,699) 011
Fund balance at beginning of year 4,740,394 4,740,394 4,740,394 - wit
Fund balance at end of year $ 3,640,394 $3,640,394 $ 4,162,577 $ (311,699) w
See accompanying independent auditors'report.
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- 118-
COUNTY OF HAWAII
Beautification Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-licenses and permits-highway
beautification $ 175,000 $ 175,000 $ 188,462 $ 13,462
Expenditures:
Highways and streets 136,600 136,600 134,600 2,000
Culture and recreation 352,700 352,700 314,418 38,282
Total expenditures 489,300 489,300 449,018 40,282
Deficiency of revenues under expenditures (314,300) (314,300) (260,556) 53,744
Fund balance at beginning of year 1,219,561 1,219,561 1,219,561 -
Fund balance at end of year $ 905,261 $ 905,261 $ 959,005 $ 53,744
See accompanying independent auditors'report.
- 119 -
OS
COUNTY OF HAWAII .0*
Hawaii County Housing Agency
Schedule of Revenues,Expenditures,and Changes in Fund Balance- I.
Budget and Actual(Budgetary Basis) w
For the Fiscal Year Ended June 30,2016 .,isip
Actual Variance tei
Original Final (Budgetary Positive
Budget Budget Basis) (Negative) 4/4
+ri
Revenues:
MO
Intergovernmental-
awl
Federal-HUD-Voucher program $ 15,395,461 $ 16,916,961 $ 16,950,536 $ 33,575
Investment earnings 1,500 1,500 3,049 1,549
110
Resale of property - - 93,407 93,407
Other 35,132 85,132 174,155 89,023 "r"
Total revenues 15,432,093 17,003,593 17,221,147 217,554 IN
Expenditures: .r
Health,education and welfare 16,474,958 18,086,170 17,725,120 361,050
Pension and retirement contributions 634,660 634,660 598,632 36,028 as
Employees'health insurance 278,825 278,825 259,342 19,483 ,ri
Total expenditures 17,388,443 18,999,655 18,583,094 416,561
xi
Deficiency of revenues under expenditures (1,956,350) (1,996,062) (1,361,947) 634,115 r
Other financing uses-transfers in(out)-
Transfers in-General Fund 1,571,796 1,611,502 1,611,502 - 4,
NMI
Deficiency of revenues and other sources
under expenditures (384,554) (384,560) 249,555 634,115
all
Fund balance at beginning of year 3,342,771 3,342,771 3,342,771 - ..
Fund balance at end of year $ 2,958,217 $ 2,958,211 $ 3,592,326 $ 634,115
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See accompanying independent auditors'report.
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- 120- MN
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COUNTY OF HAWAII
Park Dedication Fund
Schedule of Revenues,Expenditures,and Changes in Fund Balance-
Budget and Actual(Budgetary Basis)
For the Fiscal Year Ended June 30,2016
Actual Variance
Original Final (Budgetary Positive
Budget Budget Basis) (Negative)
Revenues-investment earnings $ - $ - $ 1,232 $ 1,232
Deficiency of revenues under expenditures - - 1,232 1,232
Fund balance at beginning of year 87,182 87,182 87,182 -
Fund balance at end of year $ 87,182 $ 87,182 $ 88,414 $ 1,232
See accompanying independent auditors'report.
- 121 -
COUNTY OF HAWAII ANgt
Agency Funds
Combining Statement of Agency Funds Net Position
June 30,2016
yogi
Performance '""'
State Improvement Improvement Improvement and
Weight District District District Refundable
Tax No. 18 No. 19 Revolving Deposits ur
Fund Fund Fund Fund Fund
Assets
Cash and cash equivalents $1,933,982 $ 402,107 $ 222,675 $ 3,536 $ 258,768
Investments - - 258,205 170,056 -
Due from other agency funds - - - - - ""
Other receivables - 3,684 4,312 - 1,600
Total assets $1,933,982 $ 405,791 $ 485,192 $ 173,592 $ 260,368
- .rr
Liabilities
Due to other agency funds $ - $ - $ - $ - $ 5,678 .w
Accrued liabilities 1,933,982 5,561 6,852 - -
Advances payable - 14,626 6,580 - 254,690
Assets held for the benefit of .,l
improvement districts - 385,604 471,760 173,592
Total liabilities $1,933,982 $ 405,791 $ 485,192 $ 173,592 $ 260,368
See accompanying independent auditors'report.
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- 122 - +I
Non-Profit Organ and Business
Payroll Flexible Lapsed License Tissue Improvement
Clearance Spending Warrants Plates Education District
Fund Account Fund Fund Fund 1 -Kailua Total
$ 470,978 $ 355,731 $ 311,363 $ 1,125 $ 1,115 $ 811 $ 3,962,191
- - - - - - 428,261
- - 5,855 - - - 5,855
2,179 - 6,073 - - 22,158 40,006
$ 473,157 $355,731 $ 323,291 $ 1,125 $ 1,115 $ 22,969 $ 4,436,313
$ 177 $ - $ - $ - $ - $ - $ 5,855
472,980 355,731 323,291 1,125 1,115 813 3,101,450
- - - - - - 275,896
- - - - - 22,156 1,053,112
$ 473,157 $ 355,731 $ 323,291 $ 1,125 $ 1,115 $ 22,969 $ 4,436,313
- 123 -
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YF'
COUNTY OF HAWAII As
Agency Funds two
Combining Statement of Changes in Assets and Liabilities SII
For the Fiscal Year Ended June 30,2016 Iwo
wit
Balance Balance „rr
July 1, June 30,
2015 Additions Deductions 20161/11
State Weight Tax Fund
Assets
Cash and cash equivalents $1,935,232 $ 23,397,486 $ 23,398,736 $1,933,982
us
Liabilities
Vouchers payable $ - $ 23,394,347 $ 23,394,347 $ - X11
Accrued liabilities-due to State of Hawaii 1,935,232 23,397,486 23,398,736 1,933,982 r
Total liabilities $1,935,232 $ 46,791,833 $ 46,793,083 $1,933,982
el
Improvement District No. 18 Fund vii
Assets
Cash and cash equivalents $ 350,023 $ 208,186 $ 156,102 $ 402,107 at
Other receivables 4,313 222,149 222,778 3,684 at
Total assets $ 354,336 $ 430,335 $ 378,880 $ 405,791
ill
Liabilities
,r
Vouchers Payable $ - $ 1,101 $ 1,101 $ -
Due to other non-agency funds 2,058 1,878 2,058 1,878 1'
Accrued liabilities 4,313 180,154 180,784 3,683 art
Advances payable 14,617 14,626 14,617 14,626
Assets held for the benefit Ai
of improvement districts 333,348 180,809 128,553 385,604 viii,
Total liabilities $ 354,336 $ 378,568 $ 327,113 $ 405,791
I
Improvement District No. 19 Fund
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Assets
Cash and cash equivalents $ 424,287 $ 109,587 $ 311,199 $ 222,675 al
Investments - 258,205 - 258,205 soc
Other receivables 3,456 100,996 100,140 4,312
Total assets $ 427,743 $ 468,788 $ 411,339 $ 485,192 I
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Liabilities
Vouchers Payable $ - $ 853 $ 853 $ - 411
Due to other non-agency funds 1,779 2,540 1,779 2,540 tit
Accrued liabilities 3,456 100,996 100,140 4,312
Advances payable 5,879 6,580 5,879 6,580 1111
Assets held for the benefit
to
of improvement districts 416,629 111,213 56,082 471,760
Total liabilities $ 427,743 $ 222,182 $ 164,733 $ 485,192 110
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- 124 - ON
till
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2016
Balance Balance
July 1, June 30,
2015 Additions Deductions 2016
Improvement District Revolving Fund
Assets
Cash and cash equivalents $ 6,162 $ 3,400 $ 6,026 $ 3,536
Investments 170,064 170,056 170,064 170,056
Total assets $ 176,226 $ 173,456 $ 176,090 $ 173,592
Liabilities
Vouchers payable $ - $ 6,026 $ 6,026 $ -
Assets held for the benefit
of improvement districts 176,226 9,417 12,051 173,592
Total liabilities $ 176,226 $ 15,443 $ 18,077 $ 173,592
Performance and Refundable
Deposits Fund
Assets
Cash and cash equivalents $ 213,387 $ 474,267 $ 428,886 $ 258,768
Due from other non-agency funds - 1,600 - 1,600
Total assets $ 213,387 $ 475,867 $ 428,886 $ 260,368
Liabilities
Vouchers payable $ - $ 423,386 $ 423,386 $ -
Due to other agency funds 2,975 5,678 2,975 5,678
Advances payable 210,412 470,389 426,111 254,690
Total liabilities $ 213,387 $ 899,453 $ 852,472 $ 260,368
Payroll Clearance Fund
Assets
Cash and cash equivalents $ 447,703 $266,402,055 $266,378,780 $ 470,978
Due from other non-agency funds 177 255,681,415 255,681,592 -
Other receivables 16,691 123 14,635 2,179
Total assets $ 464,571 $522,083,593 $ 522,075,007 $ 473,157
Liabilities
Vouchers payable $ - $ 126,143,380 $ 126,143,380 $ -
Due to other agency funds 532 177 532 177
Accrued liabilities 464,039 273,467,026 273,458,085 472,980
Total liabilities $ 464,571 $ 399,610,583 $ 399,601,997 $ 473,157
- 125 -
-
ms
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities all
For the Fiscal Year Ended June 30,2016 two
Mill
Balance Balance tad
July 1, June 30,
2015 Additions Deductions 2016
mit
Not
Flexible Spending Account
Assets illi
Cash and cash equivalents $ 358,861 $ 306,243 $ 309,373 $ 355,731 °1d
Liabilities IR
Accrued liabilities $ 358,861 $ 306,243 $ 309,373 $ 355,731 r
Lapsed Warrants Fund ,1
Assets 'r+
Cash and cash equivalents $ 299,087 $ 17,639 $ 5,363 $ 311,363 ,O
Due from other agency funds 3,507 5,855 3,507 5,855
Other receivables 13,893 6,073 13,893 6,073 "`a
Total assets $ 316,487 $ 29,567 $ 22,763 $ 323,291 ■1
Liabilities .w
Vouchers payable $ - $ 5,363 $ 5,363 $ - „R
Accrued liabilities 316,487 25,636 18,832 323,291
w
Total liabilities $ 316,487 $ 30,999 $ 24,195 $ 323,291
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Non-Profit License Plates Fund
rr
Assets
Cash and cash equivalents $ 950 $ 4,515 $ 4,340 $ 1,125 "ill'
Liabilities wi'
Vouchers payable $ - $ 4,340 $ 4,340 $ - mil
'
Accrued liabilities: ,r,,,
Due to non-profit agency 950 4,325 4,150 1,125
Total liabilities $ 950 $ 8,665 $ 8,490 $ 1,125 MU
IMO
Organ and Tissue Education Fund
AO
Assets
UM
Cash and cash equivalents $ 97.3 $ 4,476 $ 4,334 $ 1,115
Liabilities ft
Vouchers payable $ - $ 4,286 $ 4,286 $ - am
Accrued liabilities-due to State of Hawaii 973 4,281 4,139 1,115 li►
Total liabilities $ 973 $ 8,567 $ 8,425 $ 1,115 iri
- 126- IIIP
Alit
COUNTY OF HAWAII
Agency Funds
Combining Statement of Changes in Assets and Liabilities
For the Fiscal Year Ended June 30,2016
Balance Balance
July 1, June 30,
2015 Additions Deductions 2016
Business Improvement District 1-Kailua
Assets
Cash and cash equivalents $ 625 $ 769,237 $ 769,051 $ 811
Other receivables-BID 1-Kailua Assessment 20,176 772,399 770,419 22,156
Due from other nob-agency funds - 4,104 4,102 2
Total assets $ 20,801 $ 1,545,740 $ 1,543,572 $ 22,969
Liabilities
Vouchers payable $ - $ 768,000 $ 768,000 $ -
Accrued liabilities-due to KVBID 625 516 625 516
Due to other non-agency funds - 1,070 773 297
Assets held for the benefit
of improvement districts 20,176 764,466 762,486 22,156
Total liabilities $ 20,801 $ 1,534,052 $ 1,531,884 $ 22,969
Total-All Agency Funds
Assets
Cash and cash equivalents $4,037,290 $291,697,091 $291,772,190 $3,962,191
Investments 170,064 428,261 170,064 428,261
Due from other agency funds 3,507 5,855 3,507 5,855
Due from other non-agency funds 177 255,687,119 255,685,694 1,602
Other receivables-BID 1-Kailua Assessment 20,176 772,399 770,419 22,156
Other receivables 38,353 329,341 351,446 16,248
Total assets $4,269,567 $ 548,920,066 $548,753,320 $4,436,313
Liabilities
Vouchers payable $ - $ 150,751,082 $ 150,751,082 $ -
Due to other agency funds 3,507 5,855 3,507 5,855
Due to other non-agency funds 3,837 5,488 4,610 4,715
Accrued liabilities 1,147,156 274,080,055 274,067,214 1,159,997
Accrued liabilities-due to non-profit agency 950 4,325 4,150 1,125
Accrued liabilities-due to State of Hawaii 1,936,205 23,401,767 23,402,875 1,935,097
Accrued liabilities-due to KVBID 625 516 625 516
Advances payable 230,908 491,595 446,607 275,896
Assets held for the benefit
of improvement districts 946,379 1,065,905 959,172 1,053,112
Total liabilities $4,269,567 $449,806,588 $449,639,842 $4,436,313
See accompanying independent auditors'report.
- 127 -
NIP
COUNTY OF HAWAII -004
Private Purpose Trusts
Combining Statement of Private Purpose Trust Net Position !!
June 30, 20161111
Shippers' Total
rid
Geothermal Wharf Private
Asset Trust Purpose
Assets Fund Fund Trusts
+wi
Cash and cash equivalents $ 675,526 $ 1,088,961 $ 1,764,487
Investments 1,562,469 1,428,351 2,990,820
Total assets $ 2,237,995 $ 2,517,312 $ 4,755,307
Net Position IAIII
Held in trust for other parties $ 2,237,995 $ 2,517,312 $ 4,755,307 r,
Total net position $ 2,237,995 $ 2,517,312 $ 4,755,307
See accompanying independent auditors'report.
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- 128 - ORI
COUNTY OF HAWAII
Private Purpose Trusts
Combining Statement of Changes in Private Purpose Trust Net Position
For the Fiscal Year Ended June 30,2016
Shippers' Total
Geothermal Wharf Private
Asset Trust Purpose
Fund Fund Trusts
Additions
Contributions:
Puna Geothermal Venture $ 50,000 $ - $ 50,000
Investment earnings:
Net increase(decrease) in fair value of
investments (72) 197,415 197,343
Dividends - 59,305 59,305
Interest 31,355 857 32,212
Total additions 81,283 257,577 338,860
Deductions
Claims Consultant 22,846 - 22,846
Grant payments - 128,070 128,070
Total deductions 22,846 128,070 150,916
Change in net position 58,437 129,507 187,944
Net position,beginning of year 2,179,558 2,387,805 4,567,363
Net position, end of year $ 2,237,995 $ 2,517,312 $ 4,755,307
See accompanying independent auditors'report.
- 129 -
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111
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- 130 -
STATISTICAL SECTION
(UNAUDITED)
Contents Page
Financial Trends—These schedules contain trend information to help help the reader understand
how the County's financial performance and well-being have changed over time. 131
Revenue Capacity—These schedules contain information to help the reader assess the County's
most significant local revenue source,the property tax. 136
Debt Capacity—These schedules present information to help the reader assess the affordability of
the County's current levels of outstanding debt and the County's ability to issue additional debt in
the future. 142
Demographic and Economic Information—These schedules offer demographic and economic
indicators to help the reader understand the environment within which the County's financial
acitivities take place. 145
Operating Information—These schedules contain service and infrastructure data to help the
reader understand how the information in the County's financial report relates to the services
provided and the activities performed by the County. 147
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Table 4
COUNTY OF HAWAII
Changes in Fund Balances,Governmental Funds
(Modified accrual basis of accounting)
Last Ten Fiscal Years
(Amounts in thousands)
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
Revenues:
Property tax $181,446 $208,313 $225,858 $215,548 $216,511 $208,231 $201,201 $223,482 $236,190 $249,054
Public service company tax 7,396 8,381 10,229 9,647 9,297 9,897 10,766 10,380 10,386 9,801
Fuel tax 8,471 7,888 7,662 7,406 7,603 8,293 6,353 7,373 7,633 7,934
Public utility franchise tax 8,520 9,027 11,118 8,963 9,416 11,065 11,087 10,793 10,824 9,004
Licenses and permits 16,269 15,918 14,972 14,725 15,097 15,790 15,991 19,618 22,046 22,432
Intergovernmental 63,599 72,601 70,869 77,614 93,748 100,867 79,912 75,257 86,272 85,173
Charges for services 21,685 22,154 21,404 18,909 16,416 16,885 17,055 19,392 20,357 21,672
Investment earnings(loss)' 10,291 12,144 8,914 2,253 510 406 (618) 1,704 716 614
Settlement contributions - - - - - - 12,500 - - -
Other 5,073 7,151 5,690 3,241 7,874 4,201 4,399 30,084 9,769 16,132
Total Revenues 322,750 363,577 376,716 358,306 376,472 375,635 358,646 398,083 404,193 421,816
Expenditures:
Current:
General government 37,652 42,991 45,882 40,586 34,251 35,088 33,360 36,679 40,805 40,488
Public safety 93,241 103,617 107,540 108,798 104,917 104,523 106,885 111,221 122,819 127,451
Highways and streets 14,033 19,529 17,159 20,222 17,114 17,338 17,923 20,270 20,984 22,479
Sanitation 31,817 33,405 35,025 35,675 28,424 29,511 30,672 29,949 31,464 34,015
Health,education and welfare 21,470 24,609 24,596 25,519 26,847 23,749 24,199 23,070 24,540 25,380
Culture and recreation 17,118 18,179 18,853 17,266 16,001 16,763 16,337 18,334 20,056 21,561
Pension and retirement contributions 21,796 24,296 28,870 28,509 27,284 27,773 29,816 33,032 38,485 41,359
Employees'health insurance 16,941 18,089 19,119 23,573 25,212 25,902 26,011 26,786 27,731 30,112
Other postemployment benefits - 13,629 14,950 15,700 17,307 - - 3,170 4,532 7,180
Other 5,108 5,344 6,257 4,773 4,758 4,183 2,991 3,238 4,686 3,931
Debt service:
Principal 16,076 16,548 19,749 20,720 42,233 24,834 25,718 19,013 22,004 22,432
Interest 9,894 13,116 12,790 14,584 14,841 15,032 14,345 14,644 13,871 12,974
Capital outlay 52,285 70,156 89,368 100,653 87,782 71,220 48,565 51,369 79,398 144,288
Total Expenditures 337,431 403,508 440,158 456,578 446,971 395,916 376,822 390,775 451,375 533,650
Revenues over(under)Expenditures (14,681) (39,931) (63,442) (98,272) (70,499) (20,281) (18,176) 7,308 (47,182) (111,834)
Other Financing Sources(Uses):
Sale of assets 5 3,470 58 10 6 153 1 10 25 66
Capital leases 2,403 2,187 1,026 1,948 47 2,521 1,307 14 1,971 3,389
State Revolving Fund loans 6,255 1,916 280 6,811 9,257 4,569 4,991 3,072 - 7,317
Sale of bonds 85,000 - 50,000 - 45,000 - 50,480 - - 130,136
Issuance of bond anticipation notes(BANs) - - - 19,000 - - - -
Refunding bonds 31,607 - - - - - 47,510 - - 106,254
Premium on bonds 3,099 - 185 - 2,078 - 17,570 - - 23,174
Refunding bonds/BANs issuance costs (218) - - (19) - - - - - (508)
Payment to refunded bond escrow agent (32,699) - - - - - (45,352) - - (128,920)
Retirement of refunded debt - - - - - - (9,635) - -
Transfers in 59,139 64,929 56,697 61,495 56,099 59,971 51,356 61,238 59,394 57,412
Transfers out (59,139) (64,929) (56,697) (61,495) (56,099) (59,971) (51,356) (61,238) (59,394) (57,412)
Total other financing sources 95,452 7,573 51,549 27,750 56,388 7,243 66,872 3,096 1,996 140,908
Net change in fund balances $ 80,771 $(32,358) $(11,893) $(70,522) $(14,111) $(13,038) $ 48,696 $ 10,404 $(45,186) $ 29,074
Debt service as a percentage of
noncapital expenditures 9.0% 9.3% 9.0% 10.4% 15.9% 12.3% 13.9% 10.0% 9.3% 9.3%
Unaudited-see accompanying independent auditors'report.
'Amount for fiscal year 2014 has been changed for consistency.
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Table 6 ago
COUNTY OF HAWAI`I ii'
Principal Taxpayers
'
June 30,2016 and 2007 ait
II
Fiscal Year 2016 Fiscal Year 2007 tat
Percentage Percentage
2015 of Total 2006 of Total 01
Assessed Assessed Assessed Assessed te
Taxpayer Business Valuation Rank Valuation Valuation Rank Valuation
Alt
Kohanaiki Shores LLC Developer $ 252,423,900 1 1.0% $ - -
wr
Mauna Kea/Hapuna Beach Corps. Developer/Hotel 174,091,900 2 0.7% - -
Hualalai Investors LLC Developer/Hotel 162,656,400 3 0.6% - - PR.
Hilton Resorts Corp. Timeshare 153,541,800 4 0.6% - -
rr
Orchid 09 LLC Hotel 117,121,800 5 0.4% - -
Mauna Lani Resort Inc. Developer/Hotel 94,590,800 6 0.4% 112,047,800 8 0.4% fah
Raptor Residence LLC Residential 68,016,200 7 0.3% - - O
Target Corporation Retailer 65,142,500 8 0.2% - -
Ho Retail Properties LTD Retailer 64,012,900 9 0.2% - - iim
KD Acquisition LLP Hotel 63,928,000 10 0.2% - -
r+
Kamehameha Schools(a) Land Trust - - 622,224,400 1 0
Liliuokalani Trust Estate Land Trust - - 298,188,800 2 1.1% at
Kaupulehu Makai Venture Developer - - 230,742,900 3 0.9% it
Mauna Kea Development Corp Hotels/Dev. - - 216,837,700 4 0.8%
Global Resort Partners Hotel - - 204,812,400 5 0.8% am
WB KD Acquisition LLC Developer - - 158,250,000 6 0.6% w.
WB-LCP Orchid Owner LLC Hotel - - 136,074,700 7 0.5%
Kona Coast Resort Ltd Condo/Time Share - - 78,575,300 9 0.3% i
BRE/Waikoloa LLC Hotel - - 65,574,600 10 0.2% m
$1,215,526,200 4.7% $ 2,123,328,600 7.9% ili1
wit
Note: Gross valuation at January I,2015: $26,392,845,357 S!
Gross valuation at January 1,2006: $26,887,311,800 'moi
Source: County of Hawai`i,Department of Finance,Real Property Tax Division 11
lb
Unaudited-see accompanying independent auditors'report.
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- 142 - -1
Table 9
COUNTY OF HAWAI`I
Ratios of General Bonded Debt Outstanding
Last Ten Fiscal Years
Debt Percent of
Applicable to Net Taxable
Fiscal Legal Debt Property Per
Year Margin (a) Value(b) Capita(c)
2007 281,836,503 L2% 1,633
2008 265,431,280 1.0% 1,510
2009 296,535,925 1.0% 1,667
2010 277,481,633 1.0% 1,549
2011 305,615,691 1.2% 1,636
2012 317,699,844 1.3% 1,679
2013 315,676,941 1.3% 1,654
2014 298,709,020 1.3% 1,538
2015 312,632,049 1.2% 1,592
2016 362,963,113 1.4% N/A
NOTES:
(a) See Table 10 for debt applicable to legal debt margin.
(b) See Table 5 for net taxable property values.
(c) See Table 11 for population data.
Details regarding the County's outstanding debt can be found in the
notes to the basic financial statements.
Unaudited-see accompanying independent auditors'report.
- 143 -
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Table 11
COUNTY OF HAWAII
Demographic and Economic Statistics
Last Ten Fiscal Years
Fiscal *Personal *Per
Year *Resident Income Capita
Ended Population (thousands Personal School Unemployment
June 30, as of July 1 of dollars) Income Enrollment Rate
2006 173,536 $ 5,064,624 $ 29,185 30,539 3.0%
2007 177,733 $ 5,509,169 $ 30,997 30,618 3.4%
2008 181,506 $ 5,899,236 $ 32,502 30,408 5.7%
2009 183,629 $ 5,517,497 $ 30,047 30,138 9.9%
2010 185,381 $ 5,717,885 $ 30,844 29,741 10.0%
2011 187,229 $ 6,114,237 $ 32,656 30,103 9.7%
2012 189,191 $ 6,318,657 $ 33,398 30,314 8.3%
2013 190,821 $ 6,544,583 $ 34,297 33,948 6.6%
2014 194,190 $ 6,771,329 $ 34,870 29,985 6.5%
2015 196,428 $ 7,067,347 $ 35,979 29,865 5.2%
* Amounts reflect subsequent adjustments
Source: County of Hawai`i, Department of Research and Development, Bureau of Economic Analysis,
State of Hawaii Department of Labor, State of Hawaii DOE and University of Hawaii Hilo
Unaudited-see accompanying independent auditors'report.
- 145 -
ill
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Table 12
MI
COUNTY OF HAWAII
rill
Principal Employers,County of Hawaii ll
oil
June 30,2016 and 2007
Ili
2016 2007 iiill
Percentage Percentage ing
of Total County of Total County
Employer Employees Rank Employment Employees Rank Employment of
mu
State of Hawai`i 9,100 1 13.4% 7,696 1 9.3%
County of Hawaii 2,700 2 4.0% 2,335 2 2.8% 'r
United States Government 1,300 3 1.9% 1,231 3 1.5%
Four Seasons Resort Hualalai 1,200 4 1.8% 676 7 0.8%
Mauna Kea and Hapuna Prince Resorts mi
and Mauna Kea Services 1,053 5 1.5% - - -
Hilton Waikoloa Village 903 6 1.3% 1,128 4 1.4% me
KTA Super Stores 815 7 1.2% 885 5 1.1% .0
The Fairmont Orchid,Hawai`i 650 8 1.0% 800 6 1.0%
Walmart 645 9 0.9% - - - am
Mauna Lani Resort(Operations),Inc. 500 10 0.7% - - - Ms
Mauna Lani Bay Hotel - - - 630 8 0.8%
Hapuna Beach Prince Hotel - - - 572 9 0.7% ori
Mauna Kea Beach Hotel - - - 561 10 0.7% ust
Total 18,866 27.7% 16,514 20.1%
.wh
Total employee count 67,942 82,750 Mil
Source: County of Hawaii,Department of Research and Development at
iYl
Unaudited-see accompanying independent auditors'report. MI
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