city of zeeland, michigangfoa.net/cafr/coa2012/zeelandmi.pdf21 south elm street • zeeland,...

City of Zeeland, Michigan

Comprehensive Annual Financial Report

For The Year Ended June 30, 2012

COMPREHENSIVE

ANNUAL FINANCIAL REPORT

CITY OF ZEELAND, MICHIGAN

For the Fiscal Year Ended June 30, 2012 __________________

CITY COUNCIL

Kevin Klynstra – Mayor Sally Gruppen Jim Broersma Allen Dannenberg Glenn Kass Richard VanDorp III Mary Beth Timmer _________________

PREPARED BY CITY OF ZEELAND FINANCE DEPARTMENT

http://www.ci.zeeland.mi.us/�

City of Zeeland, Michigan COMPREHENSIVE ANNUAL FINANCIAL REPORT

Year Ended June 30, 2012

TABLE OF CONTENTS Page INTRODUCTORY SECTION Letter of Transmittal ................................................................................................................................................... I GFOA Certificate of Achievement ......................................................................................................................... VII Organizational Chart ............................................................................................................................................. VIII List of Elected and Appointed Officials ................................................................................................................... IX FINANCIAL SECTION Independent Auditor’s Report .................................................................................................................................. X Management’s Discussion and Analysis .................................................................................................................. XI Basic Financial Statements Government-wide Financial Statements Statement of Net Assets .................................................................................................................................. 1 Statement of Activities .................................................................................................................................... 2 Governmental Fund Financial Statements Balance Sheet .................................................................................................................................................. 4 Statement of Revenue, Expenditures and Changes in Fund Balances ............................................................. 5 Reconciliation of the Statement of Revenue, Expenditures and Changes In Fund Balances of Governmental Funds to the Statement of Activities .................................................... 6 Proprietary Fund Financial Statements Statement of Net Assets .................................................................................................................................. 7 Statement of Revenue, Expenses and Changes in Net Assets ......................................................................... 8 Statement of Cash Flows ................................................................................................................................. 9 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets ................................................................................................................ 10 Statement of Changes in Fiduciary Net Assets ............................................................................................. 11 Notes to Financial Statements .............................................................................................................................. 12

City of Zeeland, Michigan COMPREHENSIVE ANNUAL FINANCIAL REPORT


TABLE OF CONTENTS Page

Required Supplementary Information Budgetary Comparison Schedule – General Fund ................................................................................................ 31 Budgetary Comparison Schedule – Major Street Fund ........................................................................................ 33 Budgetary Comparison Schedule – Local Street Fund ......................................................................................... 34 Defined Benefit Pension Plan-Schedule of Funding Progress .............................................................................. 35 Retiree Health Benefits Plan-Schedule of Funding Progress ............................................................................... 35 Other Supplementary Information Nonmajor Governmental Funds Combining Balance Sheet ............................................................................................................................. 36 Combining Statement of Revenue, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds ............................................................................................... 38 Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual West Michigan Airport Authority Special Revenue Fund............................................................................. 40 Brownfield Development Authority Special Revenue Fund ......................................................................... 41 Library Special Revenue Fund ...................................................................................................................... 42 Library Endowment Special Revenue Fund .................................................................................................. 43 Legal Contingency Special Revenue Fund .................................................................................................... 44 Shopping Area Redevelopment Board Special Revenue Fund ..................................................................... 45 1998 Building Authority G.O. Debt Debt Service Fund ............................................................................... 46 Library Debt Debt Service Fund ................................................................................................................... 47 Combining Statement of Net Assets – Internal Service Funds ............................................................................. 48 Combining Statement of Revenues, Expenses and Changes in Net Assets - Internal Service Funds ................... 49 Combining Statement of Cash Flows – Internal Service Funds ........................................................................... 50 Combining Statement of Fiduciary Net Assets – Pension and Benefit Trust Funds............................................. 51 Combing Statement of Changes in Fiduciary Net Assets – Pension and Benefit Trust Funds ............................. 52 Combining Statement of Assets and Liabilities – Agency Funds ......................................................................... 53 Combining Statement of Changes in Assets and Liabilities – Agency Funds ...................................................... 54


COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended June 30, 2012

TABLE OF CONTENTS

Page STATISTICAL SECTION

1 Net Assets by Component .................................................................................................................................... 55 Table

2 Changes in Net Assets .......................................................................................................................................... 57 3 Governmental Activities Tax Revenue by Source ................................................................................................ 61 4 Fund Balances of Governmental Funds ................................................................................................................ 62 5 Changes in Fund Balance of Governmental Funds .............................................................................................. 64 6 State Equalized Value and Estimated Actual Value of Taxable Property – Ad Valorem Roll ............................. 66 7 State Equalized Value and Estimated Actual Value of Taxable Property – Industrial Facilities Tax Roll .......... 68 8 Taxable Value Components by Class – Ad Valorem Roll .................................................................................. 70 9 Taxable Value Components by Class – Industrial Facilities Tax Roll ................................................................ 72 10 Property Tax Rates – Direct and Overlapping Governments ............................................................................... 73 11 Profile of Ten Largest Property Tax Payers ......................................................................................................... 74 12 Property Tax Levies and Collections .................................................................................................................... 75 13 Special Assessment Collections ........................................................................................................................... 76 14 Profile of Ten Largest Electric Customers .......................................................................................................... 77 15 Electric Revenue and Collections ......................................................................................................................... 78 16 Profile of Ten Largest Water Customers .............................................................................................................. 79 17 Profile of Ten Largest Clean Water Customers .................................................................................................... 80 18 Ratios of Outstanding Debt by Type ................................................................................................................... 81 19 Ratios of General Bonded Debt Outstanding ....................................................................................................... 83 20 Direct and Overlapping Governmental Activities Debt........................................................................................ 84 21 Legal Debt Margin Information ........................................................................................................................... 85 22 Pledged Revenue Coverage – Electric Utility ..................................................................................................... 87 23 Pledged Revenue Coverage – Water Utility ......................................................................................................... 88 24 Pledged Revenue Coverage – Clean Water Utility ............................................................................................... 89 25 State Revenue Sharing .......................................................................................................................................... 90 26 Demographic Statistics ......................................................................................................................................... 92 27 Principal Employers ............................................................................................................................................. 93 28 Full Time Equivalent City Government Employees by Function......................................................................... 94 29 Labor Contracts ................................................................................................................................................... 95 30 Operating Indicators by Function ......................................................................................................................... 96 31 Capital Assets Statistics by Function .................................................................................................................... 98

INTRODUCTORY SECTION

21 South Elm Street • Zeeland, Michigan 49464 • (616) 772-6400 • FAX (616) 772-5352

FEEL THE ZEEL

I

December 10, 2012

To the Honorable Mayor, Members of the City Council, and Citizens of the City of Zeeland:

The City Charter and State law require that the city publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of the City of Zeeland for the fiscal year ended June 30, 2012.

This report consists of management’s representations concerning the finances of the City of Zeeland. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Zeeland has established a comprehensive internal control framework that is designed both to protect the city’s assets from loss, theft or misuse and to compile sufficient reliable information for the preparation of the City of Zeeland’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Zeeland’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects.

The City of Zeeland’s financial statements have been audited by Kiekover, Scholma & Shumaker, PC, an independent firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Zeeland for the fiscal year ended June 30, 2012 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Zeeland’s financial statements for the fiscal year ended June 30, 2012, are fairly presented in conformity with GAAP. An unqualified opinion is the best opinion that an organization can receive on its financial statements. The independent auditor’s report is presented as the first component of the financial section of this report.

II

GAAP requires that management provide a narrative introduction, overview and an analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Zeeland’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Zeeland, incorporated in 1907, is located in western Michigan, approximately 25 miles west of Grand Rapids. The population of Zeeland is 5,504 within the city’s three square miles. Many more persons reside in numerous new housing developments surrounding the city, and the city is an employment center with many world-class manufacturing facilities within its borders. The strong work ethic is evident in the quality work force in the area, and pride is apparent in the upkeep of homes and businesses. The city is empowered to levy a property tax on both real and personal property located within its boundaries. The city operates under a Council-Manager form of government. Policy-making and legislative authority are vested in the City Council, which consists of a mayor and six-member council. The City Council is responsible, among other things, for setting policies, approving ordinances, adopting the budget, appointing committees and hiring the city manager. The city manager and department heads are responsible for carrying out the policies and ordinances of the governing council. The mayor and council members are elected at large. Council members are elected to four-year staggered terms with three council members elected every two years. The mayor is elected every two years to a two year term. The City of Zeeland provides a full range of services, including police and fire protection; the construction and maintenance of highways, streets and other infrastructure; recreational activities and cultural events; public improvements; planning; zoning and general administrative services. The Board of Public Works, which entails the Electric Utility Fund and Water Utility Fund is not a legally separate component unit, but is reported separately from governmental activities. These business-type activities are reported separately because they rely to a significant extent on fees and charges for support, whereas the governmental activities are normally supported by taxes and intergovernmental revenues. The City Council appoints its five member board and approves rates for user charges, their budget and any bond issuance authorizations. The legal liability for any general bonded debt remains with the city. The Electric Utility and Water Utility Funds are presented as a proprietary fund type. The Clean Water Utility Fund is directly controlled by the City Council and does not fall under the Board of Public Works. It is also reported as a proprietary fund type and combined under business-type activities. The Zeeland Building Authority is a blended component unit. Although a legally separate entity, it is in substance part of the city’s operations and is included as an integral part of the City of Zeeland’s financial statements. The city maintains budgetary controls. An annual budget is adopted in accordance with the legal requirements set forth in the Uniform Budgeting Act, State of Michigan P.A. 621 of 1978 as well as the City Charter. The annual budget serves as the foundation for the City of Zeeland’s financial planning and control. All departments of the City of Zeeland are required to submit requests for appropriations to the city manager. These requests form the basis for the development of a proposed budget. On or before March 31, the proposed budget is presented by

III

the city manager to the City Council for review. The council is required to hold public hearings on the proposed budget and to adopt a final budget no later than their first regular meeting in May. The budget is prepared by fund, function, activity (i.e. assessor, police patrol) and line item. The budget is appropriated at the activity level. Expenditures may not legally exceed budget appropriations at the activity level within the fund, department and activity. Department heads may adjust line items within the activity; however, only the City Council has the authority to amend the total activity budget. Transfers of appropriations between activities require approval of the City Council. Unexpended amounts lapse at year end; however, funding for committed capital projects is generally re-appropriated as part of the following year’s budget. Budget-to-actual comparisons are provided in this report for each governmental fund for which an appropriated annual budget has been adopted. The General Fund, Major Street Fund, and Local Street Fund can be found on pages 31-34 as part of the required supplementary information for the governmental funds. For other governmental funds this comparison can be found on pages 40-47. Factors Affecting Financial Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the specific environment within which the City of Zeeland operates. Local Economy. The city is an industrial and commercial oriented community serving as a principal business, marketing and cultural center for the surrounding suburban and agricultural area. Industrial and commercial valuations comprise 60% of the city’s ad valorem tax base of $262,543,292 (Taxable Value). Additional tax base is provided from the industrial facilities tax on property valued at $363,909,900 and levied at one-half the regular property tax rate. In 2012, the Zeeland City Council approved tax abatements for new projects valued at $56.449 million. Companies planning these expansions anticipate creating 179 new jobs with their completion. Zeeland’s industrial composition is well diversified, with some 60 industries located within the corporate limits employing in excess of 10,000 persons. Included are such well-known corporations as Herman Miller, Inc., an international leader in the manufacturing of office systems furniture; Howard Miller Clock Company, one of the largest producers of grandfather clocks in the world; Gentex Corporation, a manufacturer of transportation equipment for the auto and aerospace industry; Mead Johnson, a large producer of nutritional infant formula; ODL, a maker of door glass and skylights; Vertellus Chemicals, a large manufacturer of chemicals; and Consumer’s Energy, an electric generating plant with a 935-megawatt combined cycle turbine facility. In addition to industrial employers, over 200 commercial and service businesses employing more than 1,000 persons are located within the city. Unemployment in the Metropolitan Statistical Area (MSA) is 6.6% while the State of Michigan overall is at 8.5% (June 2012, seasonally adjusted). This is the third straight year unemployment has decreased in the MSA, and is almost cut in half from a high of 12.9% in 2009. This lower reported unemployment rate is reflective of a robust and expanding goods-producing manufacturing sector. A recent survey within the city found that 85% of companies responding

IV

reported an increase in sales and 71% reported an increase in industry market share. In addition, 71% reported that they intend to expand within the next three years. For its part, the city continues to spur the local economy with numerous street improvement projects in 2012. The estimated economic impact of these projects is not insignificant with the estimated project amounts being over $1.5 million dollars. In addition, the City is adding more than a mile in new non-motorized pathway at an estimated cost of $590,000. State grants and industry contributions are funding a large portion of the pathway project that will link our north-side pathway to our eastern sector. Signs of economic recovery continue with our FY 2013 tax base increasing for the first time since 2008. The Ad Valorem taxable value for FY 2013 increased by $11,651,728, or 4.44%, and growth in the Industrial Facilities taxable value increased by $10,995,600, or 3.02%, when compared to the previous fiscal year. Long-Term Financial Planning. The city’s long-term financial health remains strong. Unrestricted fund balance in the general fund grew by $341,413 to a total of $3,538,285, during fiscal year 2012. This equates to 54.9% of FY 2013 budgeted general fund expenditures and transfers to other funds and falls within the policy guidelines set by the Council for budgetary and planning purposes. The fund balance policy recognizes that the city’s concentrated tax base calls for a larger cushion providing flexibility to withstand economic uncertainties and respond to emergencies without increasing tax rates. For the 2013 fiscal year, the minimum fund balance is 32% of revenue and the maximum is 78% of expenditures. This healthy fund balance is particularly noteworthy given many cities and villages throughout the State of Michigan continue to struggle along with the State’s economy. Because of the city’s healthy fund balance City Council has not had to contemplate the idea of increasing taxes. For the 2013 fiscal year the Council set a goal of maintaining the city’s tax rate, which they accomplished, and their longer term goals include further reducing millage over the next five years and to have the lowest millage rate of any city or village in Ottawa County. In the General Fund, the city has had positive growth in fund balance each of the last seven years. Over the past ten years only two out of ten fiscal years used fund balance. Typically, the use of fund balance is tied to specific initiatives of the city such as large capital improvement projects. Long term the city does not intend to use fund balance, debt, or rely on annual tax increases to balance annual operating budgets. In the last ten fiscal years the city’s fund balance across all Governmental Funds has increased $1,520,925, from $5,326,949 to $6,847,874, an overall average of about 2.5% a year. Over the same period debt service as a percentage of noncapital expenditures increased from 6.91% to 7.80% and the city’s tax rate decreased from 12.3852 mills to 11.2354 mills, or 9.3%. One item the city is paying particular attention to is the Michigan Legislature’s discussion of eliminating the personal property tax. The personal property tax is a significant source of revenue for the City of Zeeland. For Fiscal Year 2012-2013, personal property accounts for 28.7% of our tax base and 27.8% ($1.383 million) of our tax revenue. The personal property tax supports 21.5% of the Fiscal Year 2012-2013 General Fund Appropriations. Clearly, the loss of this revenue source will have a significant impact on the city’s financial make-up. At this point there are indications that legislation phasing out the personal property tax may pass before the end of calendar year 2012. The State Senate passed legislation of this nature in the summer of

V

2012 and the House is planning to take-up legislation during the “lame duck” session. The latest proposals offered by the State seek to significantly start the elimination of the personal property tax in 2016 with a complete phase out by 2022. Proposed legislation does offer an opportunity for local governments to recover a portion of the personal property tax loss for essential services such as police and fire, by levying an Essential Services Tax on properties that previously paid the personal property tax. Additionally, proposed legislation would have the State reimburse local governments for 80% of the remaining personal property tax loss. An analysis of this legislation by the city estimates the city could recover approximately 69% - 89% of what it currently collects in personal property tax if this legislation goes forward. Because of the uncertainties still surrounding this proposal the city has not taken any active steps to amend our existing budget other than to maintain the importance of retaining a healthy fund balance during these turbulent economic times. Relevant Financial Policies: The city aggressively and successfully seeks Federal, State and local grant funding for infrastructure projects to enhance the public’s health and safety, provide culture and recreation, and grow and diversify manufacturing opportunities. In Fiscal Year 2012-2013 the city plans to receive $1,097,823 from the following sources:

Federal Surface Transportation Grant State Street Resurfacing 357,070$ MDOT Economic Development Category A Traffic Light Corner of Riley and Fairview 80,000 Gentex Corporation Case Karsten Intersection Improvements 174,000 Federal Surface Transportation Grant East Side Non-Motorized Pathway 90,000 Federal Congestion Mitigation and Air Quality Grant East Side Non-Motorized Pathway 200,000 Zeeland Charter Township East Side Non-Motorized Pathway 32,500 Mead Johnson East Side Non-Motorized Pathway 120,000 Herman Miller, Inc. East Side Non-Motorized Pathway 34,303 Spectrum Health-Zeeland Community Hospital East Side Non-Motorized Pathway 9,950

Total 1,097,823$ Major Initiatives. With changes in the personal property tax looming the city will continue to pursue initiatives to contain our overall personnel costs. The city will continue to pursue the Employee Compensation Plan that was approved by City Council in April of 2012. This plan was adopted by City Council in compliance with the third category of the Economic Vitality Incentive Plan established by Governor Snyder. One of the first actions the city will take to implement the Employee Compensation Plan is to require all employees that become eligible for health insurance on or after January 1, 2013 to pay a minimum of 20% of the health insurance premium. Additionally, to comply with Public Act 152 of 2011, an act that places maximums on what a local unit of government can pay toward health insurance premiums, the city will increase the premium contribution paid by employees that are currently on our health insurance plan to a minimum of 13% as of January 1, 2013 – it was 10%. Adjustments such as these helped the city budget for a 3.04% reduction in overall fringe benefit expenses in Fiscal Year 13/14. The city will also continue to monitor our overall operational expenses in the General Fund. For example, in Fiscal Year 12/13, net of transfers out, the General Fund operational expenses were budgeted for a mere .7% increase. The city feels these continued efforts will help the city mitigate potential losses in the personal property tax.

VI

While the city certainly wants to monitor its operational expenses, we also understand that we must continue to reinvest in the community in order to fortify the quality of life our constituents’ desire and have come to expect. Major capital expenditures that the city plans to undertake in the upcoming year are an expansion of our library into a portion of the existing Community Center Conference Room; an expansion of our Clean Water Plant from a 1.65 mgd facility to a 4 mgd facility so that we can serve portions of the neighboring townships on a wholesale basis and meet the needs of our growing industrial base; and reconstruction of Roosevelt Avenue, a major east/west route on the south side of our industrial park. Finally, the city will continue to pursue objectives that have been outlined in our 2012 Strategic Plan in the areas of economic development, infrastructure, operations and services, finance and policy, and culture/recreation. A detailed listing of this Strategic Action Plan can be found on the city’s website at www.ci.zeeland.mi.us. Awards and Acknowledgements Certificate of Achievement for Excellence in Financial Reporting. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Zeeland for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2011. The Certificate of Achievement is a prestigious national award, recognizing conformance with the highest standards for preparation of State and local government financial reports. In order to be awarded a Certificate of Achievement, the city published an easily readable and efficiently organized Comprehensive Annual Financial Report (CAFR), whose contents conform to program standards. This report satisfied both generally accepted accounting principles (GAAP) and applicable legal requirements. A Certificate of Achievement is valid for a period of only one year. The City of Zeeland has achieved a Certificate of Achievement for the last twenty-four consecutive years. We believe that our current CAFR 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. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance department. We would also like to express our appreciation to all the employees of the city who assisted and contributed to this report. Credit must also be given to the mayor and the governing council for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Zeeland’s finances. Respectfully submitted,

Timothy R. Klunder Karen L. Doyle City Manager Assistant City Manager/Finance Director

http://www.ci.zeeland.mi.us/�

Certificate of Achievement for Excellence

in Financial Reporting

Presented to

City of Zeeland

Michigan For its Comprehensive Annual

Financial Report

for the Fiscal Year Ended

June 30, 2011

A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers

Association of the United States and Canada to government units and public employee retirement

systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting

and financial reporting.

President

Executive Director

VII

City of Zeeland, Michigan Organizational Chart

VIII

BPW Board

Assistant Manager Treasurer Finance

City Manager

City of Zeeland Residents

Electric & Water

General Manager

Marketing / Downtown

Board of Committees

Commissioners Elected Officials (Mayor and

6 Council Persons)

Clerk Fire/Rescue Building Zoning

Assessing

Police Library &

Community Center

Facilities Maintenance /

Custodial

Clean Water Plant

Streets Parks

Cemetery

IX

City of Zeeland, Michigan LIST OF ELECTED AND APPOINTED OFFICIALS

June 30, 2012

CITY COUNCIL Mayor Kevin Klynstra Mayor Pro Tem Sally Gruppen Councilman Allen Dannenberg Councilman Jim Broersma Councilman Richard VanDorp III Councilman Glen Kass Councilwoman Mary Beth Timmer

ADMINISTRATION City Manager Timothy R. Klunder Board of Public Works General Manager William Cook Assistant City Manager/Finance Director Karen L. Doyle City Assessor/Building Official Arthur D. Grimes City Clerk Karen Jipping Police Chief William Olney Library and Community Services Director Dennis Martin Fire-Rescue Chief William Gruppen City Attorney James Donkersloot

FINANCIAL SECTION

Kiekover, Scholma & Shumaker, PC Certified Public Accountants and Consultants

205 East Main Street • Zeeland, Michigan 49464-0280 • Phone: 616-772-4615 • Fax: 616-772-9288 • www.ksscpa.com

Joseph Kuiper

David Nienhuis Emil Sabolish, Jr. Kenneth Scholma

Timothy Stob

X

INDEPENDENT AUDITOR’S REPORT December 7, 2012 City Council City of Zeeland, Michigan We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Zeeland, Michigan, as of and for the year ended June 30, 2012, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Zeeland Michigan’s management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our 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, each major fund, and the aggregate remaining fund information of the City of Zeeland, Michigan, as of June 30, 2012 and the respective changes in financial position and cash flows, where applicable, thereof for the year then ended in conformity with accounting principles generally accepted in the United States of America. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The management’s discussion and analysis, major fund budgetary comparison schedules, and defined benefit pension plan and retiree health benefits plan schedules of funding progress, as identified in the table of contents, are not a required part of the basic financial statements but are supplemental information 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. The introductory section, other supplementary information, and statistical section, as identified in the table of contents, are presented for the purpose of additional analysis and are not a required part of the basic financial statements. The budgetary comparison schedules and other supplementary information have 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 financial statements or to the financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the financial statements as a whole. We have applied certain limited procedures to the management’s discussion and analysis and schedules of funding progress, in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or to provide any assurance. 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.

Kiekover, Scholma & Shumaker, PC

XI

Management’s Discussion and Analysis As management of the City of Zeeland, Michigan, we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2012. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages I-VI of this report.

Financial Highlights

The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $120,514,997 (net assets). Of this amount, $53,435,227 (unrestricted net assets) may be used to meet the City’s ongoing obligations to citizens and creditors.

The City’s total net assets increased by $3,555,547. Approximately 89% of this increase is

attributable to the business type activities of the utility funds.

As of the close of the current fiscal year, the City of Zeeland’s governmental funds reported combined ending fund balances of $6,847,874, an increase of $617,584 in comparison with the prior year. Approximately 83% of the fund balance, $5,651,912 is available for spending at the City’s discretion (committed, assigned and unassigned fund balances).

At the end of the current fiscal year, fund balance for the General Fund was $3,538,285 or 59% of

total FY 2012 general fund expenditures and transfers out.

The City’s total debt decreased by $1,505,000 (22.3%) during the current fiscal year to a total of $10,095,000. This is a result of the City making debt service payments of $2,225,000 while incurring new refunding debt of $720,000.

Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components (1) government-wide financial statements, (2) fund financial statements, and (3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves.

Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business.

The statement of net assets presents information on all of the City’s assets and liabilities, with the difference between the two reported as net assets. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Zeeland is improving or deteriorating. The statement of activities presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and accrued interest payable).

XII

Both of the government-wide financial statements distinguish functions of the City 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 City include general government, public safety, public works, community and economic development, and recreation and culture. The business-type activities of the City include electric, water and clean water operations.

The government-wide financial statements can be found on pages 1-3 of this report. Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, 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 City can be divided into 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. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements.

Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Following the governmental funds balance sheet and the governmental funds statement of revenues, expenditures, and changes in fund balances, reconciliations are provided to facilitate this comparison between governmental funds and governmental activities. The City maintains sixteen (16) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances for the General, Major Streets, and Local Streets Funds. Each of these funds is considered to be a major fund. The City of Zeeland has thirteen (13) nonmajor funds. These include six (6) special revenue funds, two (2) debt service funds, four (4) capital projects funds and one (1) permanent fund. The permanent fund is used to record the activity of the Cemetery Trust. Data from the thirteen nonmajor governmental funds are combined into a single aggregate presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its General, Major Streets and Local Streets Funds. Budgetary comparison statements have been provided herein to demonstrate compliance with those budgets. The basic governmental fund financial statements can be found on pages 4-6 of this report.

XIII

Proprietary funds. The City maintains two types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its electric, water and clean water operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for its vehicle and equipment maintenance activities, building maintenance activities and health-care insurance. Because these services predominantly benefit governmental rather than business-type functions, the assets and liabilities of the internal service funds have been included within governmental activities in the government-wide statement of net assets. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Electric, Water, and Clean Water Utility Funds, all of which are considered to be major funds of the City. Conversely, the internal service funds are combined into a single aggregated presentation in the proprietary fund financial statements. Individual fund data for the internal service funds is provided in the form of combining statements elsewhere in this report. The basic proprietary fund financial statements can be found on pages 7-9 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for the proprietary funds. The City accounts for two types of fiduciary funds – pension and benefit trust funds and agency funds. The City of Zeeland Defined Benefit Pension Trust Fund accounts for the activities of the City’s defined benefit pension plan for eligible employees and the Retiree Health Benefits Trust Fund accounts for the activities of the City’s Other Post Employment Benefits (OPEB) Plan for eligible employees. In addition, the City maintains three agency funds to account for tax collections and related payments, employee Section 125 benefits, as well as refundable customer deposits. The basic fiduciary fund financial statements can be found on pages 10-11 of this report. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found on pages 12-30 of this report. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information presenting the City of Zeeland’s budgetary comparison schedules for its General Fund and major special revenue funds (Major Street Fund and Local Street Fund) and information concerning the City of Zeeland’s progress in funding its obligation to provide pension and other post-employment benefits to its employees. Required supplementary information can be found on pages 31-35 of this report. The combining statements referred to earlier in connection with the nonmajor governmental funds, internal service funds, and fiduciary funds are presented immediately following the required supplementary information. Combing statements and individual nonmajor governmental fund budgetary comparison schedules can be found on pages 36-54 of this report. Immediately following the combining statements is a statistical section which provides certain information pertaining to general government revenues, expenditures, tax revenues and collections, demographics and other statistical data.

XIV

Government-wide Financial Analysis Net Assets - As noted earlier, net assets may serve over time as a useful indicator of a government’s financial position. In the case of the City of Zeeland, assets exceeded liabilities by $120,514,997 at the close of the most recent fiscal year. The largest portion of the City’s net assets (54%) reflects its investment in capital assets (e.g., land, buildings, vehicles, equipment and infrastructure); less any related debt used to acquire those assets that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’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.

City of Zeeland's Net Assets

Governmental Business-Type

Activities Activities Total

2012 2011 2012 2011 2012 2011

Current and other assets 10,501,751$ 9,842,951$ 47,187,909$ 43,679,234$ 57,689,660$ 53,522,185$

Capital assets 22,739,309 23,315,863 52,591,499 52,608,692 75,330,808 75,924,555

Total assets 33,241,060 33,158,814 99,779,408 96,287,926 133,020,468 129,446,740

Long-term debt outstanding 2,880,000 3,185,000 7,215,000 8,415,000 10,095,000 11,600,000

Other liabilities 449,976 445,198 1,960,495 1,287,367 2,410,471 1,732,565

Total liabilities 3,329,976 3,630,198 9,175,495 9,702,367 12,505,471 13,332,565

Net assets:

Invested in capital assets,

net of related debt 19,859,309 20,130,863 45,376,499 44,193,692 65,235,808 64,324,555

Restricted 1,195,962 1,104,867 648,000 648,000 1,843,962 1,752,867

Unrestricted 8,855,813 8,292,886 44,579,414 41,743,867 53,435,227 50,036,753

Total net assets 29,911,084$ 29,528,616$ 90,603,913$ 86,585,559$ 120,514,997$ 116,114,175$

An additional portion of the City’s net position (1.5%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets ($53,435,227) may be used to meet the City’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year.

XV

Change in Net Assets - The City of Zeeland’s net assets increased by $3,555,547 during the current fiscal year. 11% of this increase, $382,468, is related to the governmental activities. The other 89%, $3,173,079, is associated with the business-type activities.

City of Zeeland's Changes in Net Assets



2012 2011 2012 2011 2012 2011

Program revenues

Charges for services 376,891$ 264,682$ 30,254,898$ 28,031,059$ 30,631,789$ 28,295,741$

Operating grants and contributions 771,661 762,698 - - 771,661 762,698

Capital grants and contributions 152,500 140,439 245,222 53,682 397,722 194,121

General revenues

Property taxes 5,050,366 5,214,088 - - 5,050,366 5,214,088

State shared revenues 461,041 465,740 - - 461,041 465,740

Interest 93,371 123,076 610,915 1,088,469 704,286 1,211,545

Gain on sale of capital assets 47,000 (5,536) - - 47,000 (5,536)

Other 112,738 81,873 103,169 96,730 215,907 178,603

Total Revenues 7,065,568 7,047,060 31,214,204 29,269,940 38,279,772 36,317,000

Program expenses

General government 1,304,855 1,284,622 - - 1,304,855 1,284,622

Public safety 1,963,942 1,881,525 - - 1,963,942 1,881,525

Public works 2,232,450 2,169,695 - - 2,232,450 2,169,695

Community and economic

development 382,332 360,714 - - 382,332 360,714

Recreation and culture 1,232,715 1,259,106 - - 1,232,715 1,259,106

Interest on long-term debt 159,419 139,634 - - 159,419 139,634

Electric - - 22,678,566 20,707,012 22,678,566 20,707,012

Water - - 3,123,965 3,001,618 3,123,965 3,001,618

Clean water - - 1,688,601 1,523,557 1,688,601 1,523,557

Total expenses 7,275,713 7,095,296 27,491,132 25,232,187 34,766,845 32,327,483

Change before contributions

and transfers (210,145) (48,236) 3,723,072 4,681,510 3,512,927 3,989,517

Contributions to permanent funds 42,620 52,825 - - 42,620 52,825

Transfers in (out) 549,993 533,850 (549,993) (533,850) - -

Change in Net Assets 382,468$ 538,439$ 3,173,079$ 4,147,660$ 3,555,547$ 4,042,342$

Governmental activities. Governmental activities increased the City’s net assets by $382,468, accounting for 11% of the total growth in the net assets of the City. Total net revenues increased by $18,508 due to increases in charges for services and other revenue, offset by decreases in taxes and interest. Total expenses increased by $180,417 or 2.5%.

XVI

Expenses and Program Revenues – Governmental Activities

Revenues by Source – Governmental Activities

0

500,000

1,000,000

1,500,000

2,000,000

2,500,000

General government

Public safety Public works Community and economic

development

Recreation and culture

Interest on long-term debt

Expenses

Program revenues

Charges for services5%

Operating grants & contributions

11%

Capital grants and contributions

2%

Property taxes71%

State shared revenues7%

Interest1%

Sale of capital asssets1%

Other2%

XVII

Business-type activities. Business-type activities increased the City of Zeeland’s net assets by $3,173,079 accounting for 89% of the total growth in the government’s net assets. Key elements of this increase are as follows:

The electric utility recorded a 4.0% increase in annual electrical sales volume to 324.4 million kilowatt-hours. Sales revenue increased $1,716,270, or 7.5%. Operating expenses increased by $1,944,617 or 9.4%. The net asset increase was $2,123,847.

The water utility recorded a 29.1% increase in water sales volume to 1.64 billion gallons. Sales revenue increased by $435,341, or 12.5%. Operating expenses increased by $85,369, or 3.1%. The net asset increase was $957,117.

The clean water utility treatment volume decreased by 2.5% due to less inflow and infiltration as we continue to replace aging infrastructure. Sales revenue increased $29,228, or 1.7%. Operating expenses increased by $92,731, or 6.5%. The net asset increase was $185,158.

Expenses and Program Revenues-Business-type Activities

Revenues by Source – Business-type Activities

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

30,000,000

Electric Water Clean water

Expenses

Program revenues

Charges for Services97%

Capital Grants1%

Interest2% Other

0%

XVIII

Financial Analysis of the Government’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unrestricted fund balances may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $6,847,874, an increase of $617,584 from the prior year. Approximately 83% of this amount ($5,651,912) constitutes unrestricted fund balances (either committed, assigned or unassigned), which is available for spending at the government’s discretion. The remainder of fund balance is either non-spendable - $927,673 permanent corpus of Cemetery trust or restricted - $268,289 for specific purposes. The General Fund is the chief operating fund of the City. At the end of the current fiscal year the total fund balance of the General Fund was $3,538,285 ($191,745 - committed, $36,124 - assigned, $3,310,416 – unassigned). As a measure of the General Fund’s liquidity, it may be useful to compare this fund balance to total fund expenditures. The total fund balance ($3,538,285) represented 59.0% of the fiscal year’s total General Fund expenditures and transfers out ($5,998,176). The fund balance of the City’s General Fund increased by $341,413 during the current fiscal year compared to an increase of $23,731 in the prior year. Key factors to this increase are:

Revenues and transfers in decreased by $20,749 or 0.3% compared to the prior year. Expenditures and transfers out decreased by $338,431 or 5.3% compared to the prior year.

The Major Street Fund has a total fund balance of $833,096, an increase of $572,012 during the year. Net transfers in from the General Fund increased by $250,000 from the prior year for a total of $630,000. The Local Street Fund has a total fund balance of $281,267, a decrease of $207,493 during the year. Net transfers in from the General Fund decreased by $455,000 from the prior year for a total of $690,000. Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financial statements (business-type activities), but in more detail. Unrestricted net assets of the Electric, Water and Clean Water Utility Funds at the end of the year amounted to $34,772,114, $4,697,993 and $4,462,326, respectively. Increases in the Electric, Water, and Clean Water Utility Funds net assets during the current year were $2,123,847, $957,117 and $185,158, respectively. Other factors concerning the finances of these three funds have already been addressed in the discussion of the City’s business-type activities.

XIX

General Fund Budgetary Highlights During the year amendments were made to revenue that reflected increases from two sources. The most significant differences were as follows:

VarianceBudgeted Amounts Actual with Final

Original Final Amounts BudgetRevenues:

Licenses and permits 91,100$ 157,100$ 202,909$ 45,809$

State shared revenues 351,050 417,050 462,867 45,817 Building permit related revenue increased substantially due to several large-scale industrial construction projects undertaken during the year. State shared revenues were budgeted low because the State eliminated the statutory portion of revenue sharing and created the Economic Vitality Incentive Program (EVIP). The City met the requirements of all three categories, namely Accountability and Transparency, Consolidation of Services, and Employee Compensation and so received the full allotment of the EVIP funding. During the year budgeted expenditures increased $44,500 (1.0%) between the original and final amended budgets. City operational departments stayed below budget overall, resulting in total expenditures $292,944 below the final budget. The most significant differences were as follows:


Original Final Amounts BudgetExpenditures:

Fire-Rescue department 534,815$ 539,515$ 514,958$ 24,557$ Municipal parking system 157,430 197,430 154,401 43,029 Economic development 124,480 124,480 102,302 22,178

The variance in the Fire-Rescue department was due to paid-on-call wages reflecting the number of alarms that were responded to. We estimate on the high side because the department’s emergency response alarms are simply hard to predict in advance. The decrease in the Municipal parking system was due to the light snowfall. Clearing the parking lots from snow and ice typically would eat up a larger chunk of the budget. Economic Development was under budget due to two projects being delayed until FY 2013. Capital Assets and Debt Administration Capital assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2012 amounted to $75,330,808 (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, and street and sidewalks. The City’s investment in capital assets for the current fiscal year decreased $576,554 (2.5%) for governmental activities and decreased $17,193 (0.0%) for business-type activities. Major capital asset events during the current fiscal year included the following:

Street and pathway construction projects amounted to $871,400. Purchase of Fire-Rescue department rescue vehicle for $165,000. Electrical system expansion, improvements and equipment amounted to $1,474,747. Water system expansion, improvements and equipment amounted to $359,625. Clean Water plant rehabilitations and system improvements amounted to $651,680.

Additional information on the City’s capital assets can be found in note 5 on pages 21-22 of this report.

XX

City of Zeeland's Capital Assets(net of depreciation)



2012 2011 2012 2011 2012 2011

Land 1,368,215$ 1,342,797$ 1,405,064$ 1,403,920$ 2,773,279$ 2,746,717$

Construction in progress 317,813 111,298 1,626,182 1,088,111 1,943,995 1,199,409

Land improvements 846,597 910,988 93,036 98,951 939,633 1,009,939

Buildings and improvements 7,539,742 7,882,461 5,746,618 5,943,122 13,286,360 13,825,583

Systems - - 43,492,872 43,751,169 43,492,872 43,751,169

Machinery, equipment,vehicles 2,083,371 2,092,770 227,727 323,419 2,311,098 2,416,189

Infrastructure 10,583,571 10,975,549 - - 10,583,571 10,975,549

Total 22,739,309$ 23,315,863$ 52,591,499$ 52,608,692$ 75,330,808$ 75,924,555$ Long-term debt. At the end of the current fiscal year, the City had total installment debt outstanding of $10,095,000. Of this amount, $4,745,000 comprises debt backed by the full faith and credit of the government, of which $1,865,000 is to be repaid from Clean Water Fund revenue sources. The remainder of the City’s debt represents bonds secured by specified revenue sources.

City of Zeeland's Outstanding DebtGeneral Obligation and Revenue Bonds



2012 2011 2012 2011 2012 2011

General obligation bonds 2,880,000$ 3,185,000$ 1,865,000$ 1,935,000$ 4,745,000$ 5,120,000$

Revenue bonds - - 5,350,000 6,480,000 5,350,000 6,480,000

Total 2,880,000$ 3,185,000$ 7,215,000$ 8,415,000$ 10,095,000$ 11,600,000$

General obligation debt decreased by a net amount of $375,000 while revenue bond debt decreased by a net amount of $1,130,000 during the current year. This was a result of the City making debt payments of $2,225,000 while incurring $720,000 in new refunding debt. The City of Zeeland’s general obligation (GO) debt maintained an AA- rating with a stable outlook. Moody’s Investors Service assigned an Aa2 for the City’s GO Unlimited Tax and an Aa3 for its GO Limited Tax debt. The Zeeland Board of Public Work’s electric utility revenue bonds maintained an A- rating with a stable outlook from Standard & Poor’s. Both the electric and water utilities hold a bond rating of A1 from Moody’s Investor Service. State statutes limit the amount of general obligation debt the City may issue to 10 percent of the state equalized value of taxable property in the City. The current debt limitation for the City is $63,090,790, which is significantly in excess of the City’s outstanding general obligation debt. Additional information on the City’s long-term debt can be found in note 7 on pages 23-24 of this report.

XXI

Economic Factors and Next Year’s Budgets and Rates

Unemployment has decreased for the third straight year. The Holland-Grand Haven Metropolitan Statistical Area unemployment rate is 6.6% while the State of Michigan overall is at 8.5% (June 2011, seasonally adjusted). The city’s largest employer, Gentex, continues to expand thanks to further demand in their auto dimming mirror products. New manufacturing facilities valued at over $45 million are under construction and employment has increased over 500 persons from the prior year, from 2,928 to 3,480. In addition to Gentex, a number of companies decided to add capital investments to their companies during 2012. These companies included Herman Miller, Woodward FST, Lakeshore Cutting Solutions, and Eagle Design and Technology. In total these capital investments have a projected value of $56.65 million and within two years the projects are estimated to create 179 new jobs within the city.

The city’s taxable value increased for Fiscal Year 2012-2013. The city’s overall taxable value for

Fiscal Year 2012-2013 is $649,125,254. This is a 3.6% increase when compared to the 2011 taxable value of the city.

The city’s tax rate for Fiscal Year 2012-2013 remains the same as the previous fiscal year. When

comparing the city’s current millage rate for operating purposes and library debt (not including airport authority) to Fiscal Year 1999-2000, the rate is 29% lower.

Fiscal Year 2012-2013 general fund budget was balanced using $191,745 in fund balance. If the city does in fact use $191,745 in fund balance in Fiscal Year 2012-2013, the ending fund balance will be $3,346,540. This projected use of fund balance will be the first reduction in the General Fund fund balance since Fiscal Year 2004-2005. For comparison purposes, the ending fund balance for Fiscal Year 2004-2005 was $1,820,057.

Capital projects planned in Fiscal Year 2012-2013 total over $9.74 million. Major projects

include $2.14 million in street and sidewalk improvements and $6.87 million in public utility improvements.

The Water Utility rates were maintained for the 2012-2013 budget year while the Clean Water

Utility Rates remained the same. The Commodity rates for water increased from $1.70/CCF to $1.75/CCF for non-contractual customers.

The general Electric Utility rates were maintained for the 2012-2013 budget year. The Energy Optimization fee will also be maintained to comply with Public Act 295 of 2008.

Requests for Information This financial report is designed to provide a general overview of the City’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 financial information should be addressed to the City Finance Director, 21 South Elm Street, Zeeland, MI 49464.

Basic Financial Statements

See Notes to Financial Statements1

City of Zeeland, MichiganSTATEMENT OF NET ASSETS

June 30, 2012

BusinessGovernmental Type

Activities Activities TotalASSETS

Cash and investments 10,362,391$ 30,616,000$ 40,978,391$ Receivables:

Accounts 50,963 3,099,891 3,150,854 Interest 23,279 48,121 71,400

Due from other governments 317,019 - 317,019 Internal balances (646,981) 646,981 - Inventories - 319,660 319,660 Prepaid items 75,039 8,909 83,948 Prepaid pension obligation 170,310 36,908 207,218 Prepaid other post employment benefits obligation 149,731 148,321 298,052 Deposits with MPPA - 5,284,731 5,284,731 Deposits with MPIA - 6,330,387 6,330,387 Restricted cash - revenue bond covenant accounts - 648,000 648,000 Capital assets not being depreciated:

Land 1,368,215 1,405,064 2,773,279 Construction in progress 317,813 1,626,182 1,943,995

Capital assets net of accumulated depreciation:Land improvements 846,597 93,036 939,633 Buildings and improvements 7,539,742 5,746,618 13,286,360 Systems - 43,492,872 43,492,872 Machinery and equipment 2,083,371 227,727 2,311,098 Infrastructure 10,583,571 - 10,583,571

Total Assets 33,241,060 99,779,408 133,020,468

LIABILITIESAccounts payable 341,795 1,811,737 2,153,532 Accrued payroll 82,935 74,877 157,812 Accrued interest payable 25,246 73,881 99,127 Noncurrent liabilities:

Due within one year 365,000 1,250,000 1,615,000 Due in more than one year 2,515,000 5,965,000 8,480,000

Total Liabilities 3,329,976 9,175,495 12,505,471

NET ASSETSInvested in capital assets, net of related debt 19,859,309 45,376,499 65,235,808 Restricted for:

Pathway project 75,396 - 75,396 Library 70,632 - 70,632 Debt service 9,336 648,000 657,336 Perpetual care-nonexpendable 927,673 - 927,673 Perpetual care-expendable 112,925 - 112,925

Unrestricted 8,855,813 44,579,414 53,435,227

Total Net Assets 29,911,084$ 90,603,913$ 120,514,997$


Program Revenues

Operating CapitalCharges for Grants and Grants and

Expenses Services Contributions ContributionsFunction/Programs:Primary Government:

Governmental Activities:General government 1,304,855$ 110,009$ -$ -$ Public safety 1,963,942 152,610 1,825 - Public works 2,232,450 29,247 411,775 152,500 Community and economic development 382,332 20,877 40,423 - Recreation and culture 1,232,715 64,148 317,638 - Interest on long-term debt 159,419 - - -

Total Governmental Activities 7,275,713 376,891 771,661 152,500

Business-type activities:Electric 22,678,566 24,544,455 - 60,912 Water 3,123,965 3,955,970 - 257 Clean water 1,688,601 1,754,473 - 184,053

Total Business-type Activities 27,491,132 30,254,898 - 245,222

Total Primary Government 34,766,845$ 30,631,789$ 771,661$ 397,722$

General revenues:Property taxesUnrestricted state shared revenuesInterestGain (loss) on sale of capital assetsOther

Contributions to permanent funds Transfers

Total General Revenues,Contributions and Transfers

Change in Net Assets

Net Assets - Beginning

Net Assets - Ending

Year Ended June 30, 2012STATEMENT OF ACTIVITIES


3

Net (Expense) Revenueand Changes in Net Assets

Governmental Business TypeActivities Activities Total

(1,194,846)$ -$ (1,194,846)$ (1,809,507) - (1,809,507) (1,638,928) - (1,638,928)

(321,032) - (321,032) (850,929) - (850,929) (159,419) - (159,419)

(5,974,661) - (5,974,661)

- 1,926,801 1,926,801 - 832,262 832,262 - 249,925 249,925 - 3,008,988 3,008,988

(5,974,661) 3,008,988 (2,965,673)

5,050,366 - 5,050,366 461,041 - 461,041

93,371 610,915 704,286 47,000 - 47,000

112,738 103,169 215,907 42,620 - 42,620

549,993 (549,993) -

6,357,129 164,091 6,521,220

382,468 3,173,079 3,555,547

29,528,616 87,430,834 116,959,450

29,911,084$ 90,603,913$ 120,514,997$


City of Zeeland, MichiganBALANCE SHEET

GOVERNMENTAL FUNDSJune 30, 2012

OtherMajor Local Nonmajor Total

General Street Street Governmental GovernmentalFund Fund Fund Funds Funds

ASSETSCash and investments 3,584,780$ 813,235$ 399,580$ 2,058,977$ 6,856,572$ Receivables:

Accounts 20,367 834 1,790 3,343 26,334 Interest 14,880 315 409 4,205 19,809

Due from other governments 88,039 45,658 16,082 167,240 317,019

Total Assets 3,708,066$ 860,042$ 417,861$ 2,233,765$ 7,219,734$

LIABILITIESAccounts payable 116,337$ 22,449$ 131,564$ 26,305$ 296,655$ Accrued payroll 53,444 4,497 5,030 12,234 75,205

Total Liabilities 169,781 26,946 136,594 38,539 371,860

FUND BALANCESNon-spendable - - - 927,673 927,673 Restricted - 75,396 - 192,893 268,289 Committed 191,745 185,165 143,400 676,632 1,196,942 Assigned 36,124 572,535 137,867 398,028 1,144,554 Unassigned 3,310,416 - - - 3,310,416

Total Fund Balances 3,538,285 833,096 281,267 2,195,226 6,847,874

Total Liabilities and Fund Balances 3,708,066$ 860,042$ 417,861$ 2,233,765$

Amount reported for governmental activities in the statement of net assets are different because:Capital assets used in governmental activities are not financial resources and are

not reported in the funds:General capital assets 8,046,200 Infrastructure assets 10,583,571

Prepaid items 320,041 Interest accrued on outstanding bonds is not reported in the funds (25,246) Long term liabilities are not due and payable in the current period and are

not reported in the funds (2,880,000) Internal Service Funds are included as part of governmental activities 7,018,644

Net Assets of Governmental Activities 29,911,084$


City of Zeeland, MichiganSTATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCES

GOVERNMENTAL FUNDSYear Ended June 30, 2012

OtherMajor Local Nonmajor Total

General Street Street Governmental GovernmentalFund Fund Fund Funds Funds

Revenues:Taxes 4,829,179$ -$ -$ 221,187$ 5,050,366$ Licenses and permits 202,909 - - - 202,909 State shared revenues 462,867 285,979 125,796 6,995 881,637 Local unit contributions - - - 305,684 305,684 Charges for services 67,063 400 150 55,304 122,917 Fines and forfeitures 52,777 - - 24,363 77,140 Interest 59,526 1,281 2,201 22,822 85,830 Other 115,275 152,748 515 45,382 313,920

Total Revenues 5,789,596 440,408 128,662 681,737 7,040,403

Expenditures:Current:

General government 1,148,992 - - 11,373 1,160,365 Public safety 1,845,404 - - - 1,845,404 Public works 404,954 498,396 1,026,155 45,419 1,974,924 Community and economic development 156,114 - - 228,024 384,138 Recreation and culture 468,292 - - 658,838 1,127,130 Other 9,684 - - - 9,684

Capital outlay - - - 25,418 25,418 Debt service:

Principal 85,000 - - 240,000 325,000 Interest 69,736 - - 53,887 123,623 Bond issuance costs - - - 17,126 17,126

Total Expenditures 4,188,176 498,396 1,026,155 1,280,085 6,992,812

Excess of RevenuesOver (Under) Expenditures 1,601,420 (57,988) (897,493) (598,348) 47,591

Other Financing Sources (Uses):Transfers in 549,993 630,000 690,000 490,000 2,359,993 Transfers out (1,810,000) - - - (1,810,000) Refunding bonds issued - - - 720,000 720,000 Payment to refunding bond escrow agent - - - (700,000) (700,000)

Total Other Financing Sources (Uses) (1,260,007) 630,000 690,000 510,000 569,993

Net Change in Fund Balances 341,413 572,012 (207,493) (88,348) 617,584

Fund Balances - July 1 3,196,872 261,084 488,760 2,283,574 6,230,290

Fund Balances - June 30 3,538,285$ 833,096$ 281,267$ 2,195,226$ 6,847,874$


City of Zeeland, MichiganRECONCILIATION OF THE STATEMENT OF REVENUE, EXPENDITURES AND CHANGESIN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES


Net change in fund balances-Total Governmental Funds 617,584$

Amounts reported for the governmental activities in the statement of activities are different because:

Govenmental funds report capital outlays as expenditures; in the statement of activitiesthese costs are allocated over their estimated useful lives as depreciation:

Current year capital outlays capitalized 1,018,722 Current year depreciation expense on capitalized assets (1,550,261)

The issuance of long-term debt (e.g., bonds, leases) provides current financial resources togovernmental funds, while the repayment of the principal of long-term debt consumes the currentfinancial resources of governmental funds. Neither transaction, however , has any effect on netassets. Also, governmental funds report the effect of issuance costs, premiums, discounts, andsimilar items when debt is first issued, whereas these amounts are deferred and amortized in thestatement of activities. The effect of these differences in the treatment of long-term debt andrelated items is as follows:

Refunding bonds issued (720,000) Bonds defeased 700,000 Amortization of deferred bond refunding loss/issuance costs/premiums/discounts (25,533) Principal payments on long-term debt 325,000

In the statement of activities, interest is accrued on outstanding bonds, whereas ingovernmental funds, an interest expenditure is reported when due 6,863

Change in net pension obligation 26,264

Change in net post employment benefit obligation 8,144

Internal service funds are used by management to charge the costs of certain activities, such asinsurance and equipment rental, to individual funds. The net revenue (expenses) of certaininternal service funds is reported with governmental activities (24,315)

Change in net assets of governmental activities 382,468$


City of Zeeland, MichiganSTATEMENT OF NET ASSETS

PROPRIETARY FUNDSJune 30, 2012

Enterprise FundsClean Internal

Electric Water Water ServiceUtility Utility Utility Total Funds

ASSETSCurrent Assets:

Cash and investments 21,543,147$ 4,590,096$ 4,482,757$ 30,616,000$ 3,505,819$ Receivables:

Accounts 2,521,332 403,141 175,418 3,099,891 24,629 Interest 33,979 6,284 7,858 48,121 3,470

Inventories 223,722 95,938 - 319,660 - Prepaid items 5,298 1,168 2,443 8,909 75,039 Prepaid pension obligation - - 36,908 36,908 - Prepaid other post employment benefits obligation 80,788 26,119 41,414 148,321 - Deposits with MPPA 5,284,731 - - 5,284,731 - Deposits with MPIA 6,330,387 - - 6,330,387 -

Total Current Assets 36,023,384 5,122,746 4,746,798 45,892,928 3,608,957

Noncurrent Assets:Restricted cash - Revenue bond covenant accounts 141,500 506,500 - 648,000 -

Capital assets:Land 971,353 123,005 310,706 1,405,064 225,000 Construction in progress 1,091,792 164,707 369,683 1,626,182 - Land improvements 452,115 157,826 129,781 739,722 - Buildings and improvements 4,140,597 793,857 3,737,481 8,671,935 2,227,080 Systems 46,004,265 23,547,040 16,352,319 85,903,624 - Machinery and equipment 1,032,073 130,833 62,488 1,225,394 3,692,876 Less accumulated depreciation (29,130,724) (9,850,875) (7,998,823) (46,980,422) (2,035,418)

Total Capital Assets 24,561,471 15,066,393 12,963,635 52,591,499 4,109,538

Total Noncurrent Assets 24,702,971 15,572,893 12,963,635 53,239,499 4,109,538

Total Assets 60,726,355 20,695,639 17,710,433 99,132,427 7,718,495

LIABILITIESCurrent Liabilities:

Accounts payable 1,197,305 365,038 249,394 1,811,737 45,140 Accrued payroll 46,765 13,306 14,806 74,877 7,730 Accrued interest payable 7,200 46,409 20,272 73,881 - Current portion of long-term debt 470,000 710,000 70,000 1,250,000 -

Total Current Liabilities 1,721,270 1,134,753 354,472 3,210,495 52,870

Noncurrent Liabilities:Long-term debt, net of current portion 490,000 3,680,000 1,795,000 5,965,000 -

Total Liabilities 2,211,270 4,814,753 2,149,472 9,175,495 52,870

NET ASSETSInvested in capital assets, net of related debt 23,601,471 10,676,393 11,098,635 45,376,499 4,109,538 Restricted for debt service 141,500 506,500 - 648,000 - Unrestricted 34,772,114 4,697,993 4,462,326 43,932,433 3,556,087

Total Net Assets 58,515,085$ 15,880,886$ 15,560,961$ 89,956,932 7,665,625$

Adjustment to reflect the consolidation of internal service fund activities to enterprise funds 646,981

Net assets of business-type activities 90,603,913$


City of Zeeland, MichiganSTATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET ASSETS

PROPRIETARY FUNDSYear Ended June 30, 2012



Operating Revenues:Electric sales 24,462,493$ -$ -$ 24,462,493$ -$ Water sales - 3,914,987 - 3,914,987 - Sewage disposal charges - - 1,746,305 1,746,305 - Charges for services - - - - 1,788,577 Other revenues 81,962 40,983 8,168 131,113 141,473

Total Operating Revenues 24,544,455 3,955,970 1,754,473 30,254,898 1,930,050

Operating Expenses:Electric production and purchases 18,276,614 - - 18,276,614 - Water purchases - 1,335,398 - 1,335,398 - Waste treatment - - 564,977 564,977 - Transmission and distribution 1,210,690 542,129 113,772 1,866,591 - Customer accounts 294,230 133,996 148,645 576,871 - Supplies and other operating expenses - - - - 1,815,636 General and administrative 889,043 163,342 285,319 1,337,704 35,393 Depreciation 1,902,947 646,570 410,444 2,959,961 264,164

Total Operating Expenses 22,573,524 2,821,435 1,523,157 26,918,116 2,115,193

Operating Income 1,970,931 1,134,535 231,316 3,336,782 (185,143)

Nonoperating Revenues (Expenses)Interest income 519,013 45,465 46,437 610,915 20,785 Interest expense (47,632) (286,693) (145,648) (479,973) - Gain (loss) on sale of capital assets - - - - 47,000 Other 39,616 63,553 - 103,169 -

Total Nonoperating Revenues (Expenses) 510,997 (177,675) (99,211) 234,111 67,785

Income Before Contributions and Transfers 2,481,928 956,860 132,105 3,570,893 (117,358)

Capital contributions 60,912 257 184,053 245,222 - Transfers out (418,993) - (131,000) (549,993) -

Change in Net Assets 2,123,847 957,117 185,158 3,266,122 (117,358)

Net Assets - July 1 56,391,238 14,923,769 15,375,803 7,782,983

Net Assets - June 30 58,515,085$ 15,880,886$ 15,560,961$ 7,665,625$

Adjustment to reflect the consolidation of internal service funds activities to enterprise funds (93,043)

Change in net assets of business-type activities 3,173,079$


City of Zeeland, MichiganSTATEMENT OF CASH FLOWS

PROPRIETARY FUNDSYear Ended June 30, 2012



Cash Flows From Operating Activities:Receipts from customers 24,484,349$ 3,895,076$ 1,741,656$ 30,121,081$ -$ Payments to suppliers (20,038,552) (1,827,677) (557,901) (22,424,130) (1,642,873) Payments to employees (1,089,124) (346,191) (392,802) (1,828,117) (211,990) Received from interfund charges - - - - 1,788,577 Other receipts (payments) 39,616 63,553 - 103,169 117,030

Net Cash Provided By Operating Activities 3,396,289 1,784,761 790,953 5,972,003 50,744

Cash Flows From Noncapital Financing Activities:Transfers from/to other funds (418,993) - (131,000) (549,993) -

Cash Flows From Capital and Related Financing Activities:Capital contributions 60,912 257 184,053 245,222 - Acquisition and construction of capital assets (1,474,747) (359,625) (651,680) (2,486,052) (219,149) Principal paid on capital debt (455,000) (675,000) (70,000) (1,200,000) - Interest paid on capital debt (35,875) (211,051) (82,038) (328,964) - Proceeds from sale of capital assets 388,559 - - 388,559 47,000

Net Cash Provided (Used) ByCapital and Related Financing Activities (1,516,151) (1,245,419) (619,665) (3,381,235) (172,149)

Cash Flows From Investing Activities:Interest received on investments 526,791 45,887 53,481 626,159 25,590

Net Increase (Decrease) in Cash and Investments 1,987,936 585,229 93,769 2,666,934 (95,815)

Cash and Investments - July 1 19,696,711 4,511,367 4,388,988 28,597,066 3,601,634

Cash and Investments - June 30 21,684,647$ 5,096,596$ 4,482,757$ 31,264,000$ 3,505,819$

Reconciliation of Operating Income to Net Cash Provided By Operating Activities:

Operating income (loss) 1,970,931$ 1,134,535$ 231,316$ 3,336,782$ (185,143)$ Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation 1,902,947 646,570 410,444 2,959,961 264,164 Other nonoperating income (expense) 39,616 63,553 - 103,169 - Change in assets and liabilities:

Receivables (60,106) (60,894) (12,817) (133,817) 35,720 Inventories (9,763) 1,021 - (8,742) - Prepaid items and deposits (972,057) (1,225) (6,915) (980,197) (38,675) Accounts payable 529,014 6,619 169,605 705,238 (25,288) Accrued and other liabilities (4,293) (5,418) (680) (10,391) (34)

Net Cash Provided By Operating Activities 3,396,289$ 1,784,761$ 790,953$ 5,972,003$ 50,744$

Cash and investments:Cash and investments 21,543,147$ 4,590,096$ 4,482,757$ 30,616,000$ 3,505,819$ Revenue bond covenant accounts 141,500 506,500 - 648,000 -

21,684,647$ 5,096,596$ 4,482,757$ 31,264,000$ 3,505,819$


City of Zeeland, MichiganSTATEMENT OF FIDUCIARY NET ASSETS

FIDUCIARY FUNDSJune 30, 2012

Pensionand Benefit AgencyTrust Funds Funds

ASSETSCash and investments 433$ 127,726$ Investments:

Money market funds 301,049 - Mutual funds-equity 4,235,329 - Mutual funds-fixed income 1,823,445 -

Employer contributions receivable 5,931 - Accrued interest receivable 3,361 -

Total Assets 6,369,548 127,726$

LIABILITIESCustomer deposits - 119,645$ Accounts payable - 1,362 Due to other governments - 6,719

Total Liabilities - 127,726$

NET ASSETSHeld in Trust for Pension Benefits and

Other Post Employment Benefits 6,369,548$


City of Zeeland, MichiganSTATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

FIDUCIARY FUNDSYear Ended June 30, 2012

Pensionand BenefitTrust Funds

ADDITIONSContributions:

Employer 618,786$ Employee 3,988

Total Contributions 622,774

Investment earnings:Net appreciation (depreciation) in fair value of investments (153,079) Interest 69,881 Dividends 94,335 Investment expense (2,036) Miscellaneous income 411

Net Investment Earnings 9,512

Total Additions 632,286

DEDUCTIONSBenefit payments 507,480 Administrative expense 44,432

Total Deductions 551,912

Change in Net Assets 80,374

Net Assets - July 1 6,289,174

Net Assets - June 30 6,369,548$

12

City of Zeeland, Michigan NOTES TO FINANCIAL STATEMENTS

Year Ended June 30, 2012 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accounting policies of the City of Zeeland conform to accounting principles generally accepted in the United States of America (GAAP) as applicable to governmental units. The following is a summary of the significant accounting policies used by the City of Zeeland: Reporting Entity The City of Zeeland is governed by an elected mayor and six-member council. The accompanying financial statements present the city and its component units, entities for which the city is considered to be financially accountable. Although blended component units are legal separate entities, in substance, they are part of the city’s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government (see discussion below for description).

Blended Component Unit. The Zeeland Building Authority has a three member board that is appointed by the City Council. During 1991, the Building Authority issued limited tax general obligation bonds to finance a part of the cost of the acquisition and construction of improvements of two existing downtown parking lots. The city has entered into a long-term lease with the authority for the use of these facilities. The city established special assessment districts and will levy an annual operating millage to finance the operations of the authority. During 1998, the Building Authority issued limited tax general obligation bonds to finance additions and improvements to city hall and the construction of a storage building at the street department. The city has entered into a long-term lease with the authority for the project. The city is required to provide annually sufficient monies from its general funds for the payment of the outstanding bonds.

Discretely Presented Component Unit. The city has no discretely presented component units.

Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net assets and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, normally 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 City of Zeeland has no such component units.) 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: (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment; and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenue. 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. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements, except for agency funds which do not have a measurement focus. Revenue is recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met.

13

Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenue is recognized as soon as it is both measurable and available. Revenue is considered to be available if it is collected within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the city considers revenues to be available if they are collected within 60 days of the end of the current fiscal period or within one year for expenditure driven grants. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, expenditures relating to compensated absences, and claims and judgments are recorded only when payment is due. Property taxes, intergovernmental revenue, charges for services, licenses and interest are all considered to be susceptible to accrual and have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. Other revenue is recorded when received. The city reports the following major governmental funds: General Fund - The General Fund is the city’s primary operating fund. It accounts for all financial resources of the general government, except those accounted for in another fund. Major and Local Street Funds - The Major Street and Local Street Funds account for the resources of state gas and weight taxes that are restricted for use on major and local streets. They also account for monies received from special taxes levied for street improvement purposes and for monies received from General Fund contributions. The city reports the following major proprietary funds: Electric Utility Fund - This fund is used to account for the electric utility sales and costs associated with the generation, purchase, transmission and distribution of electricity. Water Utility Fund - This fund is used to account for the operation and maintenance of a water distribution system, including storage tanks, pumping stations, distribution mains and services and related equipment. Water is purchased from the City of Holland Board of Public Works for storage and distribution to Zeeland’s customers. Clean Water Utility Fund - This fund is used to account for the operation and maintenance of a wastewater collection system, lift stations and treatment facility. Additionally, the government reports the following fund types: Special Revenue Funds - Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. Debt Service Funds - Debt Service Funds account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Capital Projects Funds - Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent Funds - The Permanent Fund is used to account for and report the activity of the Cemetery Trust which provides funds for the perpetual care of cemetery lots. Internal Service Funds - Internal Service Funds account for 1) building maintenance services, 2) major machinery, equipment and vehicle purchases and maintenance and 3) health care insurance services provided to other departments of the city on a cost reimbursement basis. Pension and Benefit Trust Funds - The Pension Trust and Retiree Health Benefits Trust Funds account for the activities of the city’s defined benefit pension plan for eligible employees and the city’s retiree health care benefits plan for eligible employees and are accounted for in essentially the same manner as proprietary funds.

14

Agency Funds - Agency Funds account for assets held by the city in a purely custodial capacity. Agency funds are custodial in nature (i.e., assets equal liabilities) and do not involve the measurement of results of operations. The City maintains agency funds to account for tax collections and related payments, certain payroll withholdings, and refundable customer deposits. As a general rule, the effect of the inter-fund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are charges between the city’s electric, water and sewer functions and various other functions of the city. Eliminations of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenue include: (1) charges to customers or applicants for goods, services or privileges provided; (2) operating grants and contributions; and (3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenue rather than as program revenue. Likewise, general revenue includes all taxes. Proprietary funds distinguish operating revenue and expenses from non-operating items. Operating revenue and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenue of the proprietary funds relate to charges to customers for sales and services. The water and clean water funds also recognize the portion of tap fees intended to recover current costs (e.g., labor and materials to hook up new customers) as operating revenue. The portion intended to recover the cost of the infrastructure is recognized as non-operating revenue. Operating expenses for proprietary funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as non-operating revenue and expenses. When both restricted and unrestricted resources are available for use, it is the city’s policy to use restricted resources first, then unrestricted resources as they are needed. Budgets and Budgetary Accounting Annual budgets are adopted on a basis consistent with generally accepted accounting principles for all governmental funds. Annual appropriated budgets are adopted for the general, special revenue and debt service funds. All annual appropriations lapse at fiscal year end. Non-appropriated budgets are adopted for the capital projects, enterprise, and internal service funds. In February of each year, all department heads of the city submit requests for appropriations for each activity for which they are responsible to the budget officer so that a budget may be prepared. On or before March 31, the proposed budget is presented to the City Council for review. The City Council holds study sessions and public hearings and a final budget must be prepared and adopted no later than June 30. In addition to adopting the annual operating budget, the City Council annually reviews and approves the Capital Improvement Program (CIP). The CIP is a six-year plan for capital project expenditures and anticipated revenue sources. Expenditures and revenues for these projects are budgeted in the appropriate fund. The appropriated budget is prepared by fund, function, department and activity (i.e. treasurer, city hall, police patrol). Expenditures may not legally exceed budget appropriations at the activity level within the fund, department and activity. Department heads may adjust line items within the activity, however, only the City Council has the authority to amend the total activity budget. Transfers of appropriations between activities require approval of the City Council. A transfer of cash from one fund to another requires a vote of not less than five members of the City Council. Appropriated budgets are amended from time to time throughout the course of the fiscal year by supplementary resolutions approved by a majority vote of the City Council. Amounts encumbered for purchase orders, contracts, etc., are not tracked during the year. Budget appropriations are considered to be spent once the goods are delivered or the services rendered.

15

Bank Deposits and Investments The city pools cash resources of its various funds to facilitate the management of cash. The balances in the pooled cash accounts are available to meet current operating requirements. Cash in excess of current requirements is invested in various interest bearing securities and disclosed as part of the city’s investments. Debt service funds, self-insurance funds, bond covenant accounts and Pension and Retiree Benefit Health Benefits Trust Funds are maintained in separate accounts. For purposes of the statement of cash flows, the proprietary funds type considers all transactions within the city’s pooled cash accounts to be cash and cash equivalents. Investments are recorded at fair value. Interest is accrued and earnings in the pooled cash accounts are allocated to each fund based upon monthly balances of cash and investments. Receivables and Payables In general, outstanding balances between funds are reported as “due to/from other funds.” Activity between funds that is representative of lending/borrowing arrangements outstanding at the end of the fiscal year is referred to as “advances to/from other funds.” Any residual balances outstanding between the governmental activities and the business-type activities are reported in the government-wide financial statements as “internal balances.” All trade and property tax receivables are shown net of an allowance for uncollectible amounts. The property tax receivable allowance is equal to 100 percent of the outstanding property taxes. No allowance for uncollectible accounts is considered necessary for other receivables. Inventories and Prepaid Items Inventories are valued at cost, on a first-in, first-out basis. Inventories of governmental funds are not material and are recorded as expenditures when purchased. Certain payments to vendors reflect costs applicable to future fiscal years and are recorded as prepaid items in both government-wide and fund financial statements. Restricted Assets Certain proceeds of the enterprise funds revenues bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the statement of net assets because their use is limited by applicable bond covenants. The “revenue bond covenant accounts” are used to segregate resources set aside to make up potential future deficiencies in the bond current debt service accounts.

16

Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities column in the government-wide financial statements. Capital assets are defined by the city as assets with an initial individual cost of more than $5,000 and an estimated useful life in excess of two years. 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. Interest incurred during the construction of capital assets of business-type activities is included as part of the capitalized value of the assets constructed. During the current year $0 of interest expense was capitalized as part of the cost of assets under construction. Property, plant and equipment are depreciated using the straight line method over the following estimated useful lives:

Assets Years

Buildings and improvements 20-40Land improvements 5-10Machinery and equipment 5-15Office furniture and equipment 5-20Vehicles 3-25Roads and sidewalks 15-25Electric, water and sewer systems 10-50

Deferred Revenue Governmental funds report deferred revenue in connection with receivables for revenue that are not considered to be available to liquidate liabilities of the current period. Governmental funds also defer revenue recognition in connection with resources that have been received but not yet earned. At the end of the current fiscal year, the city reported no deferred revenue. Compensated Absences It is the city’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. There is no liability for sick leave since the city does not have a policy to pay amounts when the employees separate from service from the city. If material, all vacation pay is accrued when incurred in the government-wide, proprietary, and fiduciary fund financial statements. A liability for these amounts is reported in the governmental funds only for employee terminations at year-end. Long-Term Obligations In the government-wide financial statements and the proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts are reported as other financing uses. Issuance costs are reported as debt service expenditures.

17

Fund Equity In governmental fund financial statements, fund balances are classified as follows:

• Non-spendable – amounts that are not in spendable form (such as prepaids, inventory and long-term receivables) or are required to be maintained intact such as the corpus of a permanent fund.

• Restricted – amounts constrained to specific purposes by their providers (such as creditors, grantors, contributors, or laws and regulations) or imposed by law through constitutional provisions or enabling legislation.

• Committed – amounts constrained to specific purposes determined by formal action by City Council resolution, and that remains binding unless removed in the same manner.

• Assigned – amounts, neither restricted nor committed, for which the city has stated intended use for a specific purpose; intent is expressed by the City Council by City Council resolution.

• Unassigned – amounts that are available for any purpose; positive amounts are reported only in the general fund.

The City Council has adopted a minimum fund balance policy in which the total unrestricted fund balances of the General Fund will be equal to 25 percent of the prior year’s revenues or the sum of the top two taxpayers total annual city tax, whichever is higher. When the General Fund fund balance falls below the minimum range, the city will replenish deficiencies by following measures detailed in the policy, which generally call for cutting or delaying capital expenditures, then cutting operating expenditures, and finally raising rates and charges for services and, if necessary, property tax millage rates. When the city incurs an expenditure for purposes for which various fund balance classifications can be used, it is the city’s policy to use the most restrictive first in the following order: restricted, committed, assigned, and unassigned as they are needed. Property Taxes City property taxes are attached as an enforceable lien on property as of December 31. Summer taxes are levied on levied July 1 and are due without penalty on or before August 15, and winter taxes are levied December 1 and are due without penalty on or before March 1. The city bills and collects its own property taxes for general governmental services, airport operations, and debt retirement. Additionally, the city collects taxes for Ottawa County and various school districts and authorities. Collections of property taxes and remittances to the appropriate authorities are accounted for in the Tax Collection agency fund. Real property taxes not collected as of March 1 are turned over to the county for collection. The county’s policy has been to pay the city for all delinquent real property taxes returned. The city continues to collect delinquent personal property taxes. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the period. Actual results could differ from those estimates.

18

2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Excess of Expenditures Over Appropriations in Budgeted Funds During the year, the city incurred expenditures in certain budgeted funds which were in excess of the amounts appropriated, as follows:

Budget ActualAppropriation Expenditure

Budget ItemsLocal Street Fund

Public WorksConstruction 691,300$ 694,960$ Engineering 1,000 5,055

1998 Building Authority Debt Service FundDebt Service

Interest 34,550 34,847

State Construction Code Act The city oversees building construction, in accordance with the State’s Construction Code Act, including inspection of building construction and renovation to ensure compliance with the building codes. The city charges fees for these services. Beginning January 1, 2000, the law requires that collection of these fees be used only for construction code costs, including an allocation of estimated overhead costs. The city accounts for the activity of its building inspection department within its general fund. Following is a summary of the cumulative deficit and activity for the year ended June 30, 2012:

Surplus (deficit) - July 1, 2011 (861,804)$

Charges for services 154,514$ Building inspection expenditures (222,577) (68,063)

Surplus (deficit) - June 30, 2012 (929,867)$

3. DEPOSITS AND INVESTMENTS Michigan Compiled Laws, Section 129.91, authorizes the local governmental unit to make deposits and invest in the accounts of federally insured banks, credit unions, and savings and loan associations which have an office in Michigan. The local unit is allowed to invest in bonds, securities and other direct obligations of the United States or any agency or instrumentality of the United States; United States government or federal agency obligations; repurchase agreements; bankers’ acceptance of United States banks; commercial paper rated within the two highest classifications which mature not more than 270 days after the date of purchase; obligations of the State of Michigan or its political subdivisions which are rated as investment grade; and mutual funds composed of investment vehicles which are legal for direct investment by local units of government in Michigan. The governing body has designated several banks for the deposit of city funds. The investment policy adopted by the city in accordance with Public Act 196 of 1997 has authorized investment in all of the State statutory authority as listed above. The city’s pension trust funds investments are held in trust by the investment fiduciary, Merrill Lynch Trust Company. Michigan Compiled Laws, Section 38.1132, authorizes the city pension trusts to invest in a wide variety of investments including stocks, bonds, diversified investment companies, certificates of deposit, real estate, annuity investment contracts, and certain other specified investment vehicles. Specific limitations apply to the various investment types depending on the size of the pension trust. The city’s deposits and investment policy are in accordance with statutory authority.

19

At year-end, the city’s deposits and investments were reported in the basic financial statements in the following categories:

Governmental Business-Type Fiduciary

Activities Activities Funds Total

Cash and investments 10,362,391$ 30,616,000$ 6,487,982$ 47,466,373$

Revenue bond covenant accounts - 648,000 - 648,000

10,362,391$ 31,264,000$ 6,487,982$ 48,114,373$

The breakdown between deposits and investments is as follows:

Pension andBenefit

City Trusts Total

Bank deposits (checking and savings accounts,certificates of deposit) 9,195,634$ 433$ 9,196,067$

Investments:Federal Home Loan Mortgage Corporation 4,021,830 - 4,021,830 Federal National Mortgage Association 11,579,005 - 11,579,005 Federal Home Loan Bank 5,003,375 - 5,003,375 Federal Farm Credit Bank 4,494,900 - 4,494,900 Federal Agricultural Mortgage Corporation 526,415 - 526,415 Mutual funds - equity - 4,235,329 4,235,329 Mutual funds - fixed income - 1,823,445 1,823,445 External investment pool 2,179,683 - 2,179,683 Money market accounts 4,753,275 301,049 5,054,324

Total investments 32,558,483 6,359,823 38,918,306

Total deposits and investments 41,754,117$ 6,360,256$ 48,114,373$

The city’s investment in US Government and Agency debt obligations at year end consists of:

Investments Maturities Fair Value Investments Maturities Fair Value

Federal Home Loan Mtg Corp 11/14/16 506,640$ Federal National Mtg Assoc 2/28/17 1,003,450$

Federal Home Loan Mtg Corp 11/28/16 501,785 Federal National Mtg Assoc 3/14/17 1,001,640

Federal Home Loan Mtg Corp 2/14/17 1,009,710 Federal National Mtg Assoc 3/28/17 1,001,500

Federal Home Loan Mtg Corp 6/20/17 997,860 Federal Home Loan Bank 9/30/16 1,000,000

Federal Home Loan Mtg Corp 7/17/17 1,004,540 Federal Home Loan Bank 1/23/17 1,000,650

Federal Home Loan Mtg Corp 5/1/19 1,295 Federal Home Loan Bank 4/20/17 1,000,320

Federal National Mtg Assoc 9/16/15 1,050,860 Federal Home Loan Bank 4/26/17 501,025

Federal National Mtg Assoc 9/20/16 1,503,075 Federal Home Loan Bank 4/27/17 500,250

Federal National Mtg Assoc 9/21/16 1,002,650 Federal Home Loan Bank 11/30/18 1,001,130

Federal National Mtg Assoc 9/28/16 1,001,970 Federal Farm Credit Bank 6/30/12 1,497,300

Federal National Mtg Assoc 10/26/16 1,003,290 Federal Farm Credit Bank 9/26/16 1,000,050

Federal National Mtg Assoc 10/26/16 1,003,600 Federal Farm Credit Bank 11/1/16 997,830

Federal National Mtg Assoc 11/28/16 1,002,690 Federal Farm Credit Bank 12/27/16 999,720

Federal National Mtg Assoc 12/14/16 1,004,280 Federal Agricultural Mtg Corp 6/30/12 526,415

25,625,525$

20

Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a bank failure, the city’s deposits may not be returned. At year end the bank balance of the city’s bank deposits was $9,304,907 of which $1,750,000 was covered by federal depository insurance and $7,554,907 was exposed to custodial credit risk because it was uninsured and uncollateralized. The city believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank deposits. The city’s investment policy provides that deposits are restricted to financial institutions that have been evaluated for creditworthiness and meet certain ratios. Interest rate risk. Except as limited by state law as listed in the above list of authorized investments the city does not have a formal investment policy that limits investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit risk. The city has no investment policy that limits its investment choices beyond those required by state law. At June 30, 2012 the city’s investments in US Government Agency obligations were rated AA+ by Standard & Poor’s. The city’s investment in external investment pools were rated AAAm by Standard & Poor’s. At year end the city had $4,753,275 in permissible money market funds and the pension and benefit trust funds had $301,049 in permissible money market funds and $1,823,445 in fixed income mutual funds that are not separately rated. Custodial Credit Risk-Investments. For an investment, custodial credit risk is the risk that, in the event of failure of the counterparty, the city will not be able to recover the value of its investments or collateral securities that are in the possession of the outside party. The city has not adopted a policy for investment custodial credit risk. As of June 30, 2012, the city’s investments were held by a third party in the city’s name. The city’s investments in money market accounts are not subject to risk categorization. Concentration of Credit Risk. State law does not limit and the city has not adopted a formal policy on the amount the city may invest in any one issuer. More than 5% of the city’s investments are in the Federal Home Loan Mortgage Corporation (10.3%), the Federal National Mortgage Association (29.8%), the Federal Home Loan Bank (12.9%), and the Federal Farm Credit Bank (11.5%). 4. RESTRICTED ASSETS Restricted assets in the business-type activities are amounts required to be set aside for debt service by Electric Utility Fund and Water Utility Fund revenue bond covenants as follows:

Electric Utility revenue bond covenant amounts 141,500$ Water Utility revenue bond covenant amounts 506,500

648,000$

21

5. CAPITAL ASSETS Capital asset activity for the current year was as follows:

Beginning Ending

Governmental Activities Balance Increases Decreases Balance

Capital Assets Not Being Depreciated

Land 1,117,797$ 25,418$ -$ 1,143,215$

Land-Motor Pool 225,000 - - 225,000

Construction in Progress 111,298 854,460 (647,945) 317,813

Subtotal 1,454,095 879,878 (647,945) 1,686,028

Capital Assets Being Depreciated

Land improvements 2,020,161 35,508 - 2,055,669

Buildings and improvements 9,620,110 32,023 (24,240) 9,627,893

Machinery and equipment 529,062 - - 529,062

Office furniture and equipment 815,093 34,062 - 849,155

Buildings-Motor Pool 2,227,080 - - 2,227,080

Equipment-Motor Pool 917,144 28,400 (31,197) 914,347

Vehicles-Motor Pool 2,687,264 190,749 (99,484) 2,778,529

Infrastructure 23,383,804 685,196 - 24,069,000

Subtotal 42,199,718 1,005,938 (154,921) 43,050,735

Less Accumulated Depreciation for

Land improvements (1,109,173) (99,899) - (1,209,072)

Buildings and improvements (3,732,721) (318,585) 24,240 (4,027,066)

Machinery and equipment (504,809) (10,620) - (515,429)

Office furniture and equipment (681,057) (43,983) - (725,040)

Buildings-Motor Pool (232,008) (56,157) - (288,165)

Equipment-Motor Pool (489,244) (71,433) 31,197 (529,480)

Vehicles-Motor Pool (1,180,683) (136,574) 99,484 (1,217,773)

Infrastructure (12,408,255) (1,077,174) - (13,485,429)

Subtotal (20,337,950) (1,814,425) 154,921 (21,997,454)

Net Capital Assets Being Depreciated 21,861,768 (808,487) - 21,053,281

Governmental Activities Total

Capital Assets-Net of Depreciation 23,315,863$ 71,391$ (647,945)$ 22,739,309$

22

Beginning Ending

Business-Type Activities Balance Increases Decreases Balance

Capital Assests Not Being Depreciated

Land 1,403,920$ 1,144$ -$ 1,405,064$

Construction in progress 1,088,111 1,293,447 (755,376) 1,626,182

Subtotal 2,492,031 1,294,591 (755,376) 3,031,246

Capital Assets Being Depreciated

Land improvements 754,183 21,282 (35,743) 739,722

Building and improvements 8,642,617 29,318 - 8,671,935

Systems 85,369,600 1,877,899 (1,343,875) 85,903,624

Machinery and equipment 1,207,056 18,338 - 1,225,394

Subtotal 95,973,456 1,946,837 (1,379,618) 96,540,675

Less Accumulated Depreciation for

Land improvements (655,232) (27,197) 35,743 (646,686)

Building and improvements (2,699,495) (225,822) - (2,925,317)

Systems (40,773,156) (2,592,912) 955,316 (42,410,752)

Machinery and equipment (883,637) (114,030) - (997,667)

Subtotal (45,011,520) (2,959,961) 991,059 (46,980,422)

Net Capital Assets Being Depreciated 50,961,936 (1,013,124) (388,559) 49,560,253

Business-Type Activities Total

Capital Assets-Net of Depreciation 53,453,967$ 281,467$ (1,143,935)$ 52,591,499$

Depreciation expense was charged to programs of the primary government as follows:

Governmental Activities

General government 110,486$

Public safety 80,084

Public works 1,103,740

Recreation and culture 239,219

Internal service fund deprerciation is charged to the

various functions based on their usage of the assets 270,480

Total Governmental Activities 1,804,009$

Business-Type Activities

Electric 1,902,947$

Water 646,570

Clean water 410,444

Total Business-Type Activities 2,959,961$

23

Construction Commitments-The city has active construction projects at year-end. At year-end the city’s commitments with contractors are as follows:

RemainingSpent to Date Commitment

Water Utility projects 146,864$ 428,116$ Clean Water Utility projects 287,617 232,496 Street repaving projects 103,364 1,064,988

537,845$ 1,725,600$

6. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS At June 30, 2012, there were no interfund balances. Interfund transfers reported in the funds statements were as follows:

Transfers Out

Electric Clean Water

General Utility UtilityFund Fund Fund Total

Transfers In

General Fund -$ 418,993$ (1) 131,000$ (2) 549,993$

Major Street Fund 630,000 (3) - - 630,000

Local Street Fund 690,000 (3) - - 690,000

Library Fund 250,000 (4) - - 250,000

Shopping Area Redevelopment Board Fund 50,000 (4) - - 50,000

Residential Improvement Fund 70,000 (4) - - 70,000

1998 Building Authority G.O. Debt Service Fund 115,000 (5) - - 115,000 Library Building Debt Service Fund 5,000 (5) - - 5,000

1,810,000$ 418,993$ 131,000$ 2,359,993$

The following describes the nature of the significant transfers:

(1) Transfer from Electric Utility Fund to General Fund for annual agreed upon payment in lieu of taxes

(2) Transfer from Clean Water Utility Fund to General Fund for administrative charge -back

(3) Transfers from General Fund to Major and Local Street Funds for street construction

(4) Transfers from General Fund for annual operating purposes

(5) Transfers from General Fund for annual debt service requirements 7. LONG-TERM DEBT The city issues bonds to provide for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. County contractual agreements and installment purchase agreements are also general obligations of the government. Special assessment bonds provide for capital improvements that benefit specific properties, and will be repaid from amounts levied against those properties benefited from the construction. In the event that a deficiency exists because of unpaid or delinquent special assessments at the time a debt service payment is due, the city is obligated to provide resources to cover the deficiency until other resources (such as tax sale proceeds or a re-assessment of the district) are received. Revenue bonds involve a pledge of specific income derived from the acquired or constructed assets to pay debt service.

24

Bond and contractual obligation activity can be summarized as follows:

Original Beginning Ending Due WithinIssue Balance Additions Reductions Balance One Year

Governmental ActivitiesGeneral obligation bonds

1998 Building Authority, interest rates

from 4.1% to 6.0%, maturing 2018 1,400,000$ 780,000$ -$ (780,000)$ -$ -$

2003 Library Refunding, interest rates

from 2.0% to 3.1%, maturing 2014 1,630,000 700,000 - (160,000) 540,000 170,000

2006 Capital Improvement, interest rates

from 4.0% to 4.4%, maturing 2025 2,100,000 1,705,000 - (85,000) 1,620,000 90,000

2012 Building Authority Refunding, interest rate of 2.0%, maturing 2018 720,000 - 720,000 - 720,000 105,000

3,185,000$ 720,000$ (1,025,000)$ 2,880,000$ 365,000$

Business-Type ActivitiesRevenue bonds

2003 Electric Refunding, interest rates

from 2.0% to 3.0%, maturing 2013 4,230,000$ 1,415,000$ -$ (455,000)$ 960,000$ 470,000$

2002 Water Refunding, interest rates

from 3.0% to 3.9%, maturing 2013 1,810,000 585,000 - (185,000) 400,000 195,000

2005 Water Refunding, interest rates

from 3.5% to 4.0%, maturing 2015 3,515,000 2,130,000 - (310,000) 1,820,000 315,000

2011 Water Refunding, interest rate

4.55% , maturing 2020 2,350,000 2,350,000 - (180,000) 2,170,000 200,000

General obligation bonds

2009 Capital Improvement (Clean Water), interestrates from 3.0% to 5.25%, maturing 2029 2,000,000 1,935,000 - (70,000) 1,865,000 70,000

8,415,000$ -$ (1,200,000)$ 7,215,000$ 1,250,000$ Annual debt service requirements to maturity for the above obligations are as follows:

Year Ended Governmental Activities Business-Type ActivitiesJune 30 Principal Interest Principal Interest

2013 365,000$ 94,385$ 1,250,000$ 273,311$ 2014 365,000 82,335 1,310,000 227,433 2015 385,000 71,040 865,000 186,238 2016 200,000 62,195 910,000 150,275 2017 210,000 56,045 320,000 125,043

2018-2022 795,000 189,310 1,530,000 405,084 2023-2027 560,000 50,723 590,000 191,020

2028-2030 - - 440,000 35,437

2,880,000$ 606,033$ 7,215,000$ 1,593,841$

Advance Refunding-1998 Building Authority Bonds – On March 1, 2012 the city issued $720,000 in Building Authority Limited Tax General Obligation Bonds, Series 2012 with an average interest rate of 2.00% to advance refund $700,000 of outstanding 1998 Building Authority Bonds with an average interest rate of 4.64%. The net proceeds of $700,000 were used to purchase government securities. Those securities were deposited in an irrevocable trust with an escrow agent to provide for the debt service payments until the Series 1998 bonds were called on April 1, 2012. As a result of the advance refunding, the 1998 bonds are considered defeased and the liability for those bonds has been removed from the governmental activities column of the government-wide statement of net assets. The advance refunding reduced the aggregate debt service payments by $62,800, which represents an economic gain of $45,890.

25

8. RISK MANAGEMENT, HEALTH-CARE INSURANCE AND LITIGATION The city is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries (workers’ compensation), as well as medical benefits provided to employees. The city has purchased commercial insurance for medical benefit claims. The city is insured under the Michigan Municipal League for workers’ compensation claims, general liability, and property loss. In addition the Electric Utility and Water Utility Funds obtain commercial insurance coverage for general liability and property loss. The Electric Utility and Water Utility are self-insured for claims not exceeding $25,000. Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage in any of the past three fiscal years. The Michigan Municipal League risk pool operates as a common risk-sharing program for local units of government in Michigan; member premiums are used to purchase commercial excess insurance coverage and to pay member claims in excess of deductible amounts. The city maintains a health care insurance fund to account for the city’s health care and dental coverage which were partially self-insured by the city. Health care claims in excess of specified amounts and long-term disability claims were covered through third-party insurance policies. Effective January 1, 2012 the city obtained commercial insurance for medical benefit and dental claims. Revenues are recognized from city contributions. The city estimates the liability for health and dental claims that have been incurred through the end of the fiscal year but have not been reported. These estimates are recorded in the Health Care Insurance Internal Service Fund. Changes in the claims liability for the past two fiscal years were as follows:

2012 2011

Balance-July 1 40,000$ 40,000$ Incurred claims-including claims

incurred but not reported 310,924 533,463 Claims payments (350,924) (533,463)

Balance-June 30 -$ 40,000$

The city is defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, in the opinion of the city attorney the resolution of these matters will not have a material adverse effect on the financial condition of the city. 9. POWER SALES CONTRACT AND PROJECT CONTRACT

The City of Zeeland through its Board of Public Works (BPW) entered into an agreement with the Michigan Public Power Agency (MPPA), a public body political and corporate of the State of Michigan created in 1978. MPPA was formed to undertake the planning, financing, development, acquisition, construction, improvement, operations, and maintenance of projects to supply electric power and energy for present or future needs of its members. Each of MPPA's participating members is a municipal corporation organized under the laws of the State of Michigan and owns and operates a municipal electric system. As of June 30, 2012, the MPPA had 17 participating municipalities. In January, 1983, MPPA entered into a participation agreement with the Detroit Edison Company providing for the sale to MPPA of an undivided ownership interest (37.22%) in the Belle River Unit No. 1 coal-fueled electric generating facility. The 652 megawatt (MW) generating plant was placed in commercial operation on August 1, 1987. MPPA initially financed the purchase of its portion of the Belle River plant by issuing $590,000,000 of Project Revenue Bonds. The BPW has entered into a Power Sales Contract and a Project Support Contract with MPPA whereby MPPA will sell and the BPW will purchase its entitlement share (11.3MW or 4.94% of MPPA's interest) of power and energy from the Belle River plant. During fiscal year 2012 approximately 78.2 million kwh (or approximately 25% of the system’s needs) were provided to Zeeland from the Belle River project. The BPW also has a Power Sales Contract through the MPPA where the BPW will purchase its entitlement share (7.5MW or 20.27% of MPPA’s interest) of power and energy from the AMP Fremont Energy Center (AFEC) located in Sandusky, Ohio. The AFEC has supplied approximately 10% of the BPW’s capacity and energy requirements since it was placed in service in January, 2012.

26

The contracts require the BPW to charge rates for electric power, sufficient to provide revenues adequate to meet its obligations under the agreements. Payments made under the Power Sales Contract are operating expenses of the electric system. Payments made under the Project Support Contract are made after payment of operation and maintenance expenses of the electric system and after debt service payments of the electric system. Under the provisions of the MPPA bonding resolution, neither the State of Michigan nor any political subdivision thereof, other than MPPA, nor any Participant or any other nonparticipating Member of MPPA is obligated to pay the principal of, premium, if any, or interest on the project revenue bonds and neither the full faith and credit or the taxing power of the State of Michigan or any such Participant or nonparticipating Member is pledged to the payment of the principal of, premium, if any, or interest on the project revenue bonds. MPPA does not have any taxing powers. 10. DEFERRED COMPENSATION PLAN The city offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all city employees, permits them to defer a portion of their current salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseen emergency. All assets of the plan are held in trust for the employees thereby insulating the assets from the city’s general creditors. As a result, the plan assets are not included in these financial statements. 11. EMPLOYEE RETIREMENT SYSTEMS AND PLANS The City of Zeeland maintains two pension plans. The defined contribution plan was established July 1, 2000 and covers eligible employees hired after July 1, 2000 and employees hired prior to July 1, 2000 who elected to have their balances transferred from the city’s defined benefit plan. Participation in the defined benefit plan was frozen effective July 1, 2000 and now covers only eligible employees hired prior to July 1, 2000 who elected to remain participants in the defined benefit plan and not participate in the defined contribution plan. City of Zeeland Defined Contribution Plan The city provides pension benefits to all its employees meeting length of service requirements not participating in the defined benefit plan through a defined contribution plan administered by Merrill Lynch. In a defined contribution plan, benefits depend solely on amounts contributed to the plan plus investment earnings. The city contributes 8% of covered compensation for participants who were employed by the city before July 1, 2000 and 6% of covered compensation for employees for participants employed after July 1, 2000. Contributions made to the plan were $199,036 for the year ended June 30, 2012. Plan provisions and contribution requirements are established and may be amended by the City Council. City of Zeeland Defined Benefit Pension Plan

Plan Description

The City of Zeeland Defined Benefit Pension Plan is a single employer plan administered by the City of Zeeland. All full-time employees employed by the city before July 1, 2000 and who work 25 hours or more per week were eligible to remain a participant in the plan. All employees hired on or after July 1, 2000 are required to become a participant in the defined contribution plan. The plan provides retirement and death benefits to plan members and their beneficiaries. The plan was established by the city and can be amended at its discretion, subject to the terms of collective bargaining agreements covering various employee classes. The plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained at the city’s offices.

Summary of Significant Accounting Policies

Basis of Accounting – The plan’s financial statements are prepared using the accrual basis of accounting. Contributions are recognized when due, pursuant to formal commitments, as well as statutory or contractual requirements. Benefits are recognized when due and payable in accordance with the terms of the plan. Method Used to Value Investments - Plan investments are reported at fair market value. Quoted market prices are used to value investments.

27

Funding Policy

The City of Zeeland, under its charter and through various collective bargaining agreements, has the authority to establish and amend the obligations of the city and plan members to contribute to the plan. Except for police employees, active plan members are currently not obligated to make contributions to the plan. Police employees make contributions equal to 1.12% of compensation to partially fund their benefit. The city is required by the terms of the plan to contribute the actuarially determined amount necessary to fund the plan.

Annual Pension Cost and Net Pension Obligation

The following table shows the component of the city’s annual pension cost for the year ended June 30, 2012, the amount actually contributed to the plan, and the changes in the city’s net pension obligation (asset):

Annual required contribution 345,189$ Interest on net pension asset (12,373) Adjustment to annual required contribution 20,290

Annual pension cost 353,106 Contributions made (383,567)

Increase in net pension obligation (asset) (30,461) Net pension obligation (asset) - beginning of year (176,757)

Net pension obligation (asset) - end of year (207,218)$

Three year trend information as of June 30 follows:

PercentageAnnual of Annual Net Pension

Year Ended Pension Pension Cost ObligationJune 30, Cost (APC) Contributions Contributed (Asset)

2010 421,023$ 565,445$ 134% (144,422)$ 2011 378,854 411,189 109% (176,757) 2012 353,106 383,567 109% (207,218)

Funded Status and Funding Progress

As of June 30, 2012, the most recent actuarial valuation date, the plan was 66.9% funded. The actuarial accrued liability for benefits was $8,007,100, and the actuarial value of plan assets was $5,359,035, resulting in an unfunded actuarial accrued liability (UAAL) of $2,648,065. The covered payroll (annual payroll for employees covered by the plan) was $742,087, and the ratio of the UAAL to the covered payroll was 356.8%. The schedule of funding progress, presented as RSI following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets are increasing or decreasing over time relative to the actuarial accrued liability for benefits.

Actuarial Methods and Assumptions

The required pension contribution was determined as part of an actuarial valuation at July 1, 2011, using the aggregate actuarial cost method. Significant actuarial assumptions included (a) a 7.0% investment rate of return, (b) projected salary increases of 4.0% per year, and (c) no cost of living adjustments. The actuarial value of assets is equal to the fair market value of the assets held in the plan. The plan uses the aggregate actuarial cost method. Because this method does not identify and separately amortize unfunded actuarial liabilities, information about the funded status and funding progress was prepared using the entry age actuarial cost method for that purpose and is intended to serve as a surrogate for the funded status and funding progress of the plan.

28

12. OTHER POST-EMPLOYMENT BENEFITS

Plan Description

The City of Zeeland Retiree Health Benefits Plan is a single employer plan administered by the City of Zeeland. The plan provides healthcare benefits to certain eligible retires employees and their spouses. Benefits are provided to all employees hired prior to July 1, 2010 who are participants in either the City of Zeeland Defined Benefit Pension Plan or the City of Zeeland Defined Contribution Plan and have reached age 62 and worked at least 10years for the city. For employees hired subsequent to June 30, 2010 benefits are provided to employees who have reached age 65 and worked at least 15 years for the city. The plan was established by the city and can be amended at its discretion. The plan issues a publicly available financial report that includes financial statements and required supplementary information. The report may be obtained at the city’s offices. Summary of Significant Accounting Policies

Basis of Accounting – The plan’s financial statements are prepared using the accrual basis of accounting. Contributions are recognized when paid or formal commitment to provide the contribution has been made. Benefits are recognized when paid according to the terms of the plan. Method Used to Value Investments – Plan investments are reported at fair value. Quoted market prices are used to value investments.

Funding Policy

The City of Zeeland has the authority to establish and amend the obligations of the city and plan members to contribute to the plan. Actively employed plan members have no obligation to contribute to the plan. The city has no obligation to make contributions in advance of when insurance premiums are due for payment (financed on a pay-as-you-go basis), however the city made contributions to advance fund these benefits. For the year ended June 30, 2012 the city contributed $239,207 to the plan.

Annual OPEB Cost and Net OPEB Obligation

The city’s annual other post employment benefit (OPEB) cost is calculated based on the annual required contribution of the employer (ARC). 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 fifteen years. The first actuarial report of the Retiree Health Benefits Plan was performed effective July 1, 2008 with the requirements of GASB Statement No. 45 being applied prospectively. The following table shows the component of the city’s annual OPEB cost for the year ended June 30, 2012, the amount actually contributed to the plan, and the changes in the city’s net OPEB obligation (asset):

Annual required contribution 207,697$ Interest on net OPEB obligation (asset) (21,138) Adjustment to annual required contribution 36,436

Annual OPEB cost (expense) 222,995 Contributions made (239,207)

Increase in net OPEB obligation (asset) (16,212) Net OPEB obligation (asset) - beginning of year (281,840)

Net OPEB obligation (asset) - end of year (298,052)$

29

Three year trend information as of June 30 follows:

PercentageAnnual of Annual Net OPEB

Year Ended OPEB OPEB Cost ObligationJune 30, Cost Contributions Contributed (Asset)

2010 283,351$ 157,404$ 56% (158,877)$ 2011 186,118 309,081 166% (281,840) 2012 222,995 239,207 107% (298,052)

Funded Status and Funding Progress

As of June 30, 2012, the most recent actuarial valuation date, the plan was 52.3% funded. The actuarial accrued liability for benefits was $1,929,336, and the actuarial value of plan assets was $1,010,513, resulting in an unfunded actuarial liability (UAAL) of $918,823. The covered payroll (annual payroll of the active employees covered by the plan) was $1,465,233, and the ratio of UAAL to covered payroll was 62.7%. 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 review as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of the plan assets is increasing or decreasing over time relative to the actual accrued liabilities for benefits.

Actuarial Methods and Assumptions

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing the benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. The annual required contribution was determined as part of an actuarial valuation as of July 1, 2010. In the actuarial valuation, the projected unit credit actuarial cost method, level dollar, closed amortization method, and an amortization period of 15 years were utilized. The actuarial assumptions included a 7.5% return on plan assets, a discount rate of 7.5% and projected healthcare benefit increases (inflation rate) of 3% inflation (as limited by the plan). The actuarial value of plan assets is equal to the fair market value of assets held in the plan.

30

13. FUND BALANCES – GOVERNMENTAL FUNDS Detailed information on governmental fund balances at June 30, 2012 is as follows:

General Major Street Local Street Non-majorFund Fund Fund Funds Total

Non-spendable:

Permanent corpus-Cemetery -$ -$ -$ 927,673$ 927,673$

Restricted for:

Pathway project - 75,396 - - 75,396

Library - - - 70,632 70,632

Debt service - - - 9,336 9,336

Cemetery operations - - - 112,925 112,925

Total Restricted - 75,396 - 192,893 268,289

Committed for:

Next year's budget deficit 191,745 185,165 143,400 288,238 808,548

Brownfield activities - - - 118,259 118,259

Legal defense activites - - - 255,135 255,135

Main and Fairview park project - - - 15,000 15,000

Total Committed 191,745 185,165 143,400 676,632 1,196,942

Assigned for:

Public safety activities 24,244 - - - 24,244

Special events and parks 11,880 - - - 11,880

Highways and streets - 572,535 137,867 - 710,402

Library - - - 170,290 170,290

Shopping area redevelopment - - - 77,403 77,403

Capital projects - - - 150,335 150,335

Total Assigned 36,124 572,535 137,867 398,028 1,144,554

Unassigned 3,310,416 - - - 3,310,416

Total fund balances-governmental funds 3,538,285$ 833,096$ 281,267$ 2,195,226$ 6,847,874$

14. PRIOR PERIOD ADJUSTMENT Net assets of the city’s Clean Water Utility Fund have been increased as of June 30, 2011 to reflect the value of

wastewater trunkage systems contributed to the city in prior years but not previously recorded. Net assets at the beginning of the year have been restated as follows:

Government-wide ProprietaryBusiness Type Clean Water

Activities Utility

Net assets at June 30, 2011:As previously reported 86,585,559$ 14,530,528$ Restatement for previously contributed trunkage systems 845,275 845,275

As restated 87,430,834$ 15,375,803$

Required Supplementary Information

(Continued on next page)

31

City of Zeeland, MichiganREQUIRED SUPPLEMENTARY INFORMATION

BUDGETARY COMPARISON SCHEDULE - GENERAL FUNDYear Ended June 30, 2012



Taxes 4,791,350$ 4,791,350$ 4,829,179$ 37,829$ Licenses and permits 91,100 157,100 202,909 45,809 State shared revenues 351,050 417,050 462,867 45,817 Charges for services 45,000 45,000 67,063 22,063 Fines and forfeitures 37,400 37,400 52,777 15,377 Interest 100,100 100,100 59,526 (40,574) Other 89,000 113,000 115,275 2,275

Total Revenues 5,505,000 5,661,000 5,789,596 128,596


General Government:Governing body 56,880 56,880 56,333 547 Youth council 3,845 3,845 2,746 1,099 Chief executive-mayor 13,795 13,795 13,720 75 City manager 159,675 165,125 162,017 3,108 Elections 14,640 14,640 9,662 4,978 Finance and tax administration 207,080 210,080 209,906 174 Assessor 173,725 173,725 157,419 16,306 Attorney 6,400 7,400 6,720 680 Clerk 163,110 167,610 165,281 2,329 Personnel administration 57,440 57,440 56,716 724 Board of review 1,970 1,970 1,528 442 General services 109,700 109,700 106,724 2,976 Data processing 60,000 60,000 42,951 17,049 Cemetery 121,490 121,490 120,106 1,384 Storm water management 19,990 19,990 12,223 7,767 Tree management 13,070 13,070 1,739 11,331 Public relations 28,100 28,100 23,201 4,899

Total General Government 1,210,910 1,224,860 1,148,992 75,868

Public Safety:Police administration 455,500 455,500 437,087 18,413 Police patrol 679,680 679,680 663,685 15,995 Team police project 26,325 26,325 7,097 19,228 Fire-Rescue department 534,815 539,515 514,958 24,557 Building and zoning 212,550 240,050 222,577 17,473

Total Public Safety 1,908,870 1,941,070 1,845,404 95,666

32


BUDGETARY COMPARISION SCHEDULE - GENERAL FUNDYear Ended June 30, 2012


Original Final Amounts BudgetPublic Works:

Sidewalks 41,345 41,345 36,309 5,036 Highways, streets, and bridges 18,110 18,110 14,389 3,721 Street lighting 42,840 42,840 37,133 5,707 City clean-up 97,385 97,385 87,426 9,959 MACC transit 80,000 80,000 75,296 4,704 Municipal parking system 157,430 197,430 154,401 43,029

Total Public Works 437,110 477,110 404,954 72,156

Community and Economic DevelopmentEconomic development 124,480 124,480 102,302 22,178 Planning commission 58,615 58,615 49,864 8,751 Construction board of appeals 1,090 1,090 248 842 Zoning board of appeals 4,840 4,840 3,700 1,140

Total Community andEconomic Development 189,025 189,025 156,114 32,911

Recreation and Culture:Parks 219,685 228,035 221,047 6,988 Community center 250,975 250,975 247,245 3,730

Total Recreation and Culture 470,660 479,010 468,292 10,718

Other:Other 65,300 15,300 9,684 5,616

Total Other 65,300 15,300 9,684 5,616

Debt Service:Principal 85,000 85,000 85,000 - Interest 69,745 69,745 69,736 9

Total Debt Service 154,745 154,745 154,736 9

Total Expenditures 4,436,620 4,481,120 4,188,176 292,944

Excess Of Revenues Over (Under) Expenditures 1,068,380 1,179,880 1,601,420 421,540

Other Financing Sources (Uses):Transfers in 549,993 549,993 549,993 - Transfers out (1,780,000) (1,810,000) (1,810,000) -

Total Other Financing Sources (Uses) (1,230,007) (1,260,007) (1,260,007) -

Net Change in Fund Balances (161,627) (80,127) 341,413 421,540

Fund Balances - July 1 3,196,872 3,196,872 3,196,872 -

Fund Balances - June 30 3,035,245$ 3,116,745$ 3,538,285$ 421,540$

33


BUDGETARY COMPARISON SCHEDULE - MAJOR STREET FUNDYear Ended June 30, 2012



State grants 607,500$ -$ -$ -$ State shared revenues 274,000 274,000 285,979 11,979 Charges for services 200 200 400 200 Interest 7,000 7,000 1,281 (5,719) Other - 179,500 152,748 (26,752)

Total Revenues 888,700 460,700 440,408 (20,292)


Public Works:Construction 550,000 677,000 117,223 559,777 Surface maintenance 513,515 170,515 135,977 34,538 Off-surface maintenance 33,070 40,070 36,628 3,442 Storm and drainage 60,775 83,925 71,958 11,967 Traffic services 48,910 48,910 41,317 7,593 Winter maintenance 95,690 88,690 65,380 23,310 Administration 4,980 4,980 4,263 717 Engineering 25,000 25,000 8,142 16,858 Record keeping 18,190 18,190 17,508 682

Total Expenditures 1,350,130 1,157,280 498,396 658,884

Excess Of Revenues Over (Under) Expenditures (461,430) (696,580) (57,988) 638,592

Other Financing Sources (Uses):Transfers in 480,000 630,000 630,000 - Transfers out - - - -

Total Other Financing Sources (Uses) 480,000 630,000 630,000 -

Net Change in Fund Balances 18,570 (66,580) 572,012 638,592

Fund Balances - July 1 261,084 261,084 261,084 -

Fund Balances - June 30 279,654$ 194,504$ 833,096$ 638,592$

34


BUDGETARY COMPARISON SCHEDULE - LOCAL STREET FUNDYear Ended June 30, 2012



State shared revenues 99,000$ 99,000$ 125,796$ 26,796$ Charges for services 250 250 150 (100) Interest 7,000 7,000 2,201 (4,799) Other - - 515 515

Total Revenues 106,250 106,250 128,662 22,412


Public Works:Construction 925,000 691,300 694,960 (3,660) Surface maintenance 76,775 126,775 109,461 17,314 Off-surface maintenance 28,140 28,140 23,362 4,778 Storm and drainage 44,400 80,400 63,143 17,257 Traffic services 39,785 39,785 26,748 13,037 Winter maintenance 116,035 101,035 81,814 19,221 Administration 4,815 4,815 4,061 754 Engineering 1,000 1,000 5,055 (4,055) Record keeping 18,140 18,140 17,551 589

Total Public Expenditures 1,254,090 1,091,390 1,026,155 65,235

Excess Of Revenues Over (Under) Expenditures (1,147,840) (985,140) (897,493) 87,647

Other Financing Sources (Uses):Transfers in 880,000 690,000 690,000 - Transfers out - - - -


Net Change in Fund Balances (267,840) (295,140) (207,493) 87,647



35

City of Zeeland, MichiganREQUIRED SUPLEMENTARY INFORMATION

Defined Benefit Pension PlanSchedule of Funding Progress

Actuarial UAAL as aActuarial Accrued Unfunded Percentage

Actuarial Value of Liability AAL Funded Covered of CoveredFiscal Year Valuation Assets (AAL) 1 (UAAL) Ratio Payroll Payroll

Ending Date ( a ) ( b ) ( b-a ) ( a/b ) ( c ) [ ( b-a )/c ]

6-30-04 7-1-04 4,182,948$ 5,124,087$ 941,139$ 81.6% 907,819$ 104.0%6-30-05 7-1-05 4,425,925 5,878,268 1,452,343 75.3 821,585 176.86-30-06 7-1-06 4,758,716 6,043,770 1,285,054 78.7 900,867 142.76-30-07 7-1-07 5,281,385 6,417,866 1,136,481 82.3 892,607 127.36-30-08 7-1-08 4,960,020 6,786,649 1,826,629 73.1 929,778 196.56-30-09 7-1-09 4,242,748 7,098,239 2,855,491 59.8 851,797 335.26-30-10 7-1-10 4,818,887 7,320,641 2,501,754 65.8 744,601 336.06-30-11 7-1-11 5,440,065 7,493,057 2,052,992 72.6 766,665 268.06-30-12 7-1-12 5,359,035 8,007,100 2,648,065 66.9 742,087 356.8

1 Entry age normal accrued liability

The City of Zeeland Defined Benefit Pension Plan uses the aggregate actuarial cost method. The Schedule of FundingProgress is prepared using the entry age actuarial cost method and the informatiom presented herein is intended to serveas a surrogate for the funded status and funding progress of the plan.

Retiree Health Benefits PlanSchedule of Funding Progress

Actuarial UAAL as aActuarial Accrued Unfunded Percentage

Actuarial Value of Liability AAL Funded Covered of CoveredFiscal Year Valuation Assets (AAL) (UAAL) Ratio Payroll Payroll

Ending Date ( a ) ( b ) ( b-a ) ( a/b ) ( c ) [ ( b-a )/c ]

6-30-09 7-1-09 447,271$ 2,043,208$ 1,595,937$ 21.9% 1,938,921$ 82.3%6-30-10 7-1-10 557,485 1,683,228 1,125,743$ 33.1% 1,627,287 69.2%6-30-12 7-1-122 1,010,513 1,929,336 918,823$ 52.4% 1,465,233 62.7%

2 Latest actuarial valuation available

Other Supplementary Information

Nonmajor Governmental Funds

Special Revenue Funds

Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditures for specified purposes other than debt service or capital projects. West Michigan Airport Authority Fund –was established to account for a special tax levy to support operations of the West Michigan Airport Authority. Brownfield Development Authority Fund--was established to account for administrative revenues and expenditures related to future Brownfield Development Authority tax increment financing projects. Library Fund--was established for the purpose of receiving restricted state revenue sharing, library penal fines, etc. Monies expended from this fund must be for authorized library purposes. Library Endowment Fund--was established for the purpose of receiving restricted earnings from a privately established endowment fund. Monies expended from this fund must be for authorized library purposes. Legal Contingency Fund--was established to account for out of the ordinary legal expenditures the city may incur throughout the fiscal year. Shopping Area Redevelopment Board Fund--was established to account for the economic development activities in the downtown area.

Debt Service Funds

Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest.

Building Authority General Obligation Debt Fund--to account for the payment of interest and principal on long-term debt. Its assets are used for the redemption of Building Authority Bonds issued specifically for capital projects financed by the Zeeland Building Authority. In 1998, $1,400,000 of Building Authority Bonds were issued to finance the additions and improvements to City Hall and the construction of a storage building for the street department. In 2012, $720,000 of Building Authority Refunding Bonds were issued to redeem the then $700,000 outstanding balance of the 1998 Building Authority Bonds. Library General Obligation Debt Fund--to account for the current payment of principal and interest on 1993 and 1994 unlimited tax general obligation bonds. In 1993, $2,000,000 of general obligation bonds were issued to finance part of the cost of constructing a library/community center. In 1994, an additional $400,000 of general obligation bonds were issued for this same purpose. In 2003, $1,630,000 of Library Refunding Bonds were issued to redeem the then outstanding balance of the 1993 and 1994 bonds.

Capital Projects Funds

Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditures for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Capital Improvement Fund—this fund accounts for monies set aside for future improvements and/or construction projects not accounted for elsewhere. City Park Improvement Fund—this fund accounts for monies set aside for future improvements to all city parks. City Building Fund— this fund is used to account for the purchase and/or construction of capital facilities budgeted in the current year of the city's 6-Year Capital Improvement Program which are not accounted for by proprietary funds, trust funds, projects financed through special assessments, and street construction/improvements financed by Act 51 funds. Residential Improvement Fund--this fund was set up to accumulate monies for the purpose of purchasing, demolishing and improving substandard residential property.

Permanent Fund

The permanent fund is used to report resources that are legally restricted to the extent that only earnings, not principal, may be used for purposes that support the government’s programs. Perpetual Care – this fund is used to account for and report activity of the Cemetery Trust which provides funds for the perpetual care of cemetery lots.

36

Special Revenue Funds W. Mich Brownfield Shopping AreaAirport Development Library Legal Redevelpoment

Authority Authority Library Endowment Contingency Board TotalASSETS

Cash and investments 1,300$ 118,029$ 155,433$ 55,960$ 252,277$ 109,824$ 692,823$ Receivables:

Accounts - - 133 - 2,310 900 3,343 Interest - 230 299 112 548 108 1,297

Due from other governments - - 167,240 - - - 167,240

TOTAL ASSETS 1,300$ 118,259$ 323,105$ 56,072$ 255,135$ 110,832$ 864,703$

LIABILITIES AND FUND BALANCES

Liabilities:Accounts payable 1,300$ -$ 7,376$ 10,500$ -$ 7,129$ 26,305$ Accrued payroll - - 12,234 - - - 12,234

Total Liabilities 1,300 - 19,610 10,500 - 7,129 38,539

Fund Balances:Non-spendable - - - - - - - Restricted - - 25,060 45,572 - - 70,632 Committed - 118,259 108,145 - 255,135 26,300 507,839 Assigned - - 170,290 - - 77,403 247,693

Total Fund Balances - 118,259 303,495 45,572 255,135 103,703 826,164

Total Liabilities andFund Balances 1,300$ 118,259$ 323,105$ 56,072$ 255,135$ 110,832$ 864,703$

June 30, 2012NONMAJOR GOVERNMENTAL FUNDS

COMBINING BALANCE SHEETCity of Zeeland, Michigan

37

PermanentDebt Service Funds Capital Projects Funds Fund

1998 Building Total NonmajorAuthority Library Capital City Park City Residential Perpetual GovernmentalG.O. Debt Debt Total Improvement Improvement Building Improvement Total Care Funds

3,028$ 6,308$ 9,336$ 4,986$ 121,601$ 183,276$ 8,609$ 318,472$ 1,038,346$ 2,058,977$

- - - - - - - - - 3,343 - - - - 262 394 - 656 2,252 4,205 - - - - - - - - - 167,240

3,028$ 6,308$ 9,336$ 4,986$ 121,863$ 183,670$ 8,609$ 319,128$ 1,040,598$ 2,233,765$

-$ -$ -$ -$ -$ -$ -$ -$ -$ 26,305$ - - - - - - - - - 12,234

- - - - - - - - - 38,539

- - - - - - - - 927,673 927,673 3,028 6,308 9,336 - - - - - 112,925 192,893

- - - - 15,000 153,793 - 168,793 - 676,632 - - - 4,986 106,863 29,877 8,609 150,335 - 398,028

3,028 6,308 9,336 4,986 121,863 183,670 8,609 319,128 1,040,598 2,195,226

3,028$ 6,308$ 9,336$ 4,986$ 121,863$ 183,670$ 8,609$ 319,128$ 1,040,598$ 2,233,765$

38

Special Revenue Funds W. Mich Brownfield Shopping AreaAirport Development Library Legal Redevelpoment

Authority Authority Library Endowment Contingency Board TotalRevenues:

Taxes 44,477$ 21,263$ -$ -$ -$ -$ 65,740$ State shared revenues - - 6,995 - - - 6,995 Local unit contributions - - 305,684 - - - 305,684 Charges for services - - 12,684 - - - 12,684 Fines and forfeitures - - 24,363 - - - 24,363 Interest - 1,603 1,786 730 3,131 793 8,043 Other - - 4,959 - - 40,423 45,382

Total Revenues 44,477 22,866 356,471 730 3,131 41,216 468,891


General government - - - - - - - Public works 45,419 - - - - - 45,419 Community and economic development - - - - - 58,024 58,024 Recreation and culture - - 645,150 13,688 - - 658,838

Capital outlay - - - - - - - Debt service -

Principal - - - - - - - Interest - - - - - - - Bond issuance costs - - - - - - -

Total Expenditures 45,419 - 645,150 13,688 - 58,024 762,281

Excess of RevenuesOver (Under) Expenditures (942) 22,866 (288,679) (12,958) 3,131 (16,808) (293,390)

Other Financing Sources (Uses):Transfers in - - 250,000 - - 50,000 300,000 Transfers out - - - - - - - Refunding bonds issued - - - - - - - Payment to refunding bond escrow agent - - - - - - -

Total Other Financing Sources (Uses) - - 250,000 - - 50,000 300,000

Net Change in Fund Balances (942) 22,866 (38,679) (12,958) 3,131 33,192 6,610

Fund Balances - July 1 942 95,393 342,174 58,530 252,004 70,511 819,554

Fund Balances - June 30 -$ 118,259$ 303,495$ 45,572$ 255,135$ 103,703$ 826,164$

Year Ended June 30, 2012NONMAJOR GOVERNMENTAL FUNDS

COMBINING STATEMENT OF REVENUE, EXPENDITURES AND CHANGES IN FUND BALANCESCity of Zeeland, Michigan

39

PermanentDebt Service Funds Capital Projects Funds Fund

1998 Building Total NonmajorAuthority Library Capital City Park City Residential Perpetual GovernmentalG.O. Debt Debt Total Improvement Improvement Building Improvement Total Care Funds

-$ 155,447$ 155,447$ -$ -$ -$ -$ -$ -$ 221,187$ - - - - - - - - - 6,995 - - - - - - - - - 305,684 - - - - - - - - 42,620 55,304 - - - - - - - - - 24,363 - - - (601) 773 1,377 (14) 1,535 13,244 22,822 - - - - - - - - - 45,382

- 155,447 155,447 (601) 773 1,377 (14) 1,535 55,864 681,737

- - - - - - - - 11,373 11,373 - - - - - - - - - 45,419 - - - - - - 170,000 170,000 - 228,024 - - - - - - - - - 658,838 - - - - 25,418 - - 25,418 - 25,418

80,000 160,000 240,000 - - - - - - 240,000 34,847 19,040 53,887 - - - - - - 53,887 17,126 - 17,126 - - - - - - 17,126

131,973 179,040 311,013 - 25,418 - 170,000 195,418 11,373 1,280,085

(131,973) (23,593) (155,566) (601) (24,645) 1,377 (170,014) (193,883) 44,491 (598,348)

115,000 5,000 120,000 - - - 70,000 70,000 - 490,000 - - - - - - - - - -

720,000 - 720,000 - - - - - - 720,000 (700,000) - (700,000) - - - - - - (700,000)

135,000 5,000 140,000 - - - 70,000 70,000 - 510,000

3,027 (18,593) (15,566) (601) (24,645) 1,377 (100,014) (123,883) 44,491 (88,348)

1 24,901 24,902 5,587 146,508 182,293 108,623 443,011 996,107 2,283,574

3,028$ 6,308$ 9,336$ 4,986$ 121,863$ 183,670$ 8,609$ 319,128$ 1,040,598$ 2,195,226$

40

City of Zeeland, MichiganWEST MICHIGAN AIRPORT AUTHORITY SPECIAL REVENUE FUND




Taxes 44,510$ 44,510$ 44,477$ (33)$


Public works 44,510 45,452 45,419 33

Net Change in Fund Balances - (942) (942) -

Fund Balances - July 1 942 942 942 -

Fund Balances - June 30 942$ -$ -$ -$

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESBUDGET AND ACTUAL

41

City of Zeeland, MichiganBROWNFIELD DEVELOPMENT AUTHORITY SPECIAL REVENUE FUND




Taxes 20,337$ 20,337$ 21,263$ 926$ Interest 1,000 1,000 1,603 603

Total Revenues 21,337 21,337 22,866 1,529


Community and economic development - - - -

Net Change in Fund Balances 21,337 21,337 22,866 1,529




42

City of Zeeland, MichiganLIBRARY SPECIAL REVENUE FUND




State shared revenues 1,400$ 1,400$ 6,995$ 5,595$ Local unit contributions 325,000 325,000 305,684 (19,316) Charges for services 10,000 10,000 12,684 2,684 Fines and forfeitures 20,000 20,000 24,363 4,363 Interest 4,300 4,300 1,786 (2,514) Other 5,400 5,400 4,959 (441)

Total Revenues 366,100 366,100 356,471 (9,629)


Recreation and culture 638,200 649,200 645,150 4,050

Excess of Revenues Over (Under) Expenditures (272,100) (283,100) (288,679) (5,579)

Other Financing Sources (Uses):Transfers in 250,000 250,000 250,000 -

Net Change in Fund Balances (22,100) (33,100) (38,679) (5,579)


Fund Balances - June 30 320,074$ 309,074$ 303,495$ (5,579)$


43

City of Zeeland, MichiganLIBRARY ENDOWMENT FUND SPECIAL REVENUE FUND

SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCESBUDGET AND ACTUALYear Ended June 30, 2012



Interest 500$ 500$ 730$ 230$ Foundation income 37,700 37,700 - (37,700)

Total Revenues 38,200 38,200 730 (37,470)


Recreation and culture 22,500 22,500 13,688 8,812

Net Change in Fund Balances 15,700 15,700 (12,958) (28,658)


Fund Balances - June 30 74,230$ 74,230$ 45,572$ (28,658)$

44

City of Zeeland, MichiganLEGAL CONTINGENCY SPECIAL REVENUE FUND




Interest 4,000$ 4,000$ 3,131$ (869)$ Other - - - -

Total Revenues 4,000 4,000 3,131 (869)


General government - - - -

Net Change in Fund Balances 4,000 4,000 3,131 (869)


Fund Balances - June 30 256,004$ 256,004$ 255,135$ (869)$


45

City of Zeeland, MichiganSHOPPING AREA REDEVELOPMENT BOARD SPECIAL REVENUE FUND




Interest 300$ 300$ 793$ 493$ Other 40,000 40,000 40,423 423

Total Revenues 40,300 40,300 41,216 916


Community and economic development 91,600 91,600 58,024 33,576

Excess of Revenues Over (Under) Expenditures (51,300) (51,300) (16,808) 34,492


Net Change in Fund Balances (1,300) (1,300) 33,192 34,492




46

City of Zeeland, Michigan1998 BUILDING AUTHORITY G.O. DEBT DEBT SERVICE FUND




Interest -$ -$ -$ -$

Expenditures:Debt service

Principal 80,000 80,000 80,000 - Interest 34,550 34,550 34,847 (297) Bond issuance costs - 18,000 17,126 874

Total Expenditures 114,550 132,550 131,973 577

Excess of Revenues Over (Under) Expenditures (114,550) (132,550) (131,973) 577

Other Financing Sources (Uses):Transfers in 115,000 115,000 115,000 - Refunding bonds issued - 720,000 720,000 - Payment to refunding bond escrow agent - (700,000) (700,000) -


Net Change in Fund Balances 450 2,450 3,027 577

Fund Balances - July 1 1 1 1 -

Fund Balances - June 30 451$ 2,451$ 3,028$ 577$

47

City of Zeeland, MichiganLIBRARY DEBT DEBT SERVICE FUND




Taxes 155,555$ 155,555$ 155,447$ (108)$ Interest - - - -

Total Revenues 155,555 155,555 155,447 (108)

Expenditures:Debt service

Principal 160,000 160,000 160,000 - Interest 19,090 19,090 19,040 50

Total Expenditures 179,090 179,090 179,040 50

Excess of Revenues Over (Under) Expenditures (23,535) (23,535) (23,593) (58)


Net Change in Fund Balances (18,535) (18,535) (18,593) (58)


Fund Balances - June 30 6,366$ 6,366$ 6,308$ (58)$

Other Supplementary Information

Internal Service Funds

Internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the government and to other government units, on a cost reimbursement basis.

Building Maintenance Fund--this fund is used to account for the expense of building operations and maintenance of all city buildings. Motor Pool Fund--this fund is used to account for the rental of motor vehicles and machinery and equipment to other departments and related costs. Health Care Insurance Fund--this fund is used to account for costs associated for the city's health insurance program. All claims, premiums and administrative expenses are paid from this fund.

48

City of Zeeland, MichiganCOMBINING STATEMENT OF NET ASSETS

INTERNAL SERVICE FUNDSJune 30, 2012

Building Motor Health CareMaintenance Pool Insurance Total

ASSETSCurrent Assets:

Cash and investments 399,953$ 1,680,523$ 1,425,343$ 3,505,819$ Receivables:

Accounts 24,443 - 186 24,629 Interest 462 3,008 - 3,470

Prepaid items 696 368 73,975 75,039

Total Current Assets 425,554 1,683,899 1,499,504 3,608,957

Capital assets:Land - 225,000 - 225,000 Buildings and improvements - 2,227,080 - 2,227,080 Machinery and equipment - 3,692,876 - 3,692,876 Less accumulated depreciation - (2,035,418) - (2,035,418)

Total Capital Assets - 4,109,538 - 4,109,538

Total Assets 425,554 5,793,437 1,499,504 7,718,495

LIABILITIESCurrent Liabilities:

Accounts payable 28,368 14,805 1,967 45,140 Accrued payroll 5,477 2,253 - 7,730

Total Current Liabilities 33,845 17,058 1,967 52,870

NET ASSETSInvested in capital assets, net of related debt - 4,109,538 - 4,109,538 Unrestricted 391,709 1,666,841 1,497,537 3,556,087

Total Net Assets 391,709$ 5,776,379$ 1,497,537$ 7,665,625$

49

City of Zeeland, MichiganCOMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET ASSETS

INTERNAL SERVICE FUNDSYear Ended June 30, 2012


Operating Revenues:Charges for services 554,996$ 479,598$ 753,983$ 1,788,577$ Other revenue 27,713 108 113,652 141,473

Total Operating Revenues 582,709 479,706 867,635 1,930,050

Operating Expenses:Supplies and other operating expenses 490,736 294,694 1,030,206 1,815,636 General and administrative - - 35,393 35,393 Depreciation - 264,164 - 264,164

Total Operating Expenses 490,736 558,858 1,065,599 2,115,193

Operating Income (Loss) 91,973 (79,152) (197,964) (185,143)

Nonoperating Revenues (Expenses)Interest earned 3,322 15,603 1,860 20,785 Gain (loss) on sale of capital assets - 47,000 - 47,000

Total Nonoperating Revenues (Expenses) 3,322 62,603 1,860 67,785

Change in Net Assets 95,295 (16,549) (196,104) (117,358)

Net Assets - July 1 296,414 5,792,928 1,693,641 7,782,983

Net Assets - June 30 391,709$ 5,776,379$ 1,497,537$ 7,665,625$

50

City of Zeeland, MichiganCOMBINING STATEMENT OF CASH FLOWS

INTERNAL SERVICE FUNDSYear Ended June 30, 2012


Cash Flows From Operating Activities:Payments to suppliers (326,777)$ (226,548)$ (1,089,548)$ (1,642,873)$ Payments to employees (145,111) (66,879) - (211,990) Received from interfund charges 554,996 479,598 753,983 1,788,577 Other receipts (payments) 3,270 108 113,652 117,030

Net Cash Provided (Used) By Operating Activities 86,378 186,279 (221,913) 50,744

Cash Flows From Capital and Related Financing Activities:

Acquisition and construction of capital assets - (219,149) - (219,149) Proceeds from sale of capital assets - 47,000 - 47,000

Net Cash Provided (Used) ByCapital and Related Financing Activities - (172,149) - (172,149)

Cash Flows From Investing Activities:Interest received on investments 3,207 20,523 1,860 25,590

Net Increase (Decrease) in Cash and Investments 89,585 34,653 (220,053) (95,815)

Cash and Investments - July 1 310,368 1,645,870 1,645,396 3,601,634

Cash and Investments - June 30 399,953$ 1,680,523$ 1,425,343$ 3,505,819$

Reconciliation of Operating Income to Net Cash Provided (Used) By Operating Activities:

Operating income (loss) 91,973$ (79,152)$ (197,964)$ (185,143)$ Adjustments to reconcile operating income to net cash provided by operating activities:

Depreciation - 264,164 - 264,164 Change in assets and liabilities:

Receivables (24,443) - 60,163 35,720 Prepaid items 1,601 61 (40,337) (38,675) Accounts payable 17,278 1,209 (43,775) (25,288) Accrued and other liabilities (31) (3) - (34)

Net Cash Provided (Used) By Operating Activities 86,378$ 186,279$ (221,913)$ 50,744$

Other Supplementary Information Fiduciary Funds

Trust Funds

Trust funds are used to account for resources that are required to be held in trust for the beneficiaries of defined benefit pension plans and other post employment benefit plans. Defined Benefit Pension Trust Fund – was established to account for the assets held in trust for the City of Zeeland Defined Benefit Pension Plan. Retiree Health Benefits Trust Fund – was established to account for assets held in trust for the City of Zeeland Retiree Health Benefits Plan.

Agency Funds Agency funds are used to account for assets held by a government as an agent for individuals, private organizations, other governmental units and/ or other funds.

Trust and Agency Fund--was established to account for customer deposits in connection with the Electric Fund. Section 125 Benefits Fund--was established to account for a redirection of employee wages for the purpose of allowing the employee pre-tax savings on supplemental insurance, dependent day care and unreimbursed expenses. Property Tax Collection Fund--was established to account for taxes levied for other taxing jurisdictions and collections paid in advance.

51

City of Zeeland, MichiganCOMBINING STATEMENT OF FIDUCIARY NET ASSETS

PENSION AND BENEFIT TRUST FUNDSJune 30, 2012

Defined RetireeBenefit HealthPension Benefits

Trust Fund Trust TotalsASSETS

Cash and investments 433$ -$ 433$ Investments:

Money market funds 301,049 - 301,049 Mutual funds-equity 3,230,747 1,004,582 4,235,329 Mutual funds-fixed income 1,823,445 - 1,823,445

Employer contributions receivable - 5,931 5,931 Accrued interest receivable 3,361 - 3,361

Total Assets 5,359,035 1,010,513 6,369,548

LIABILITIES - - -

NET ASSETSHeld in Trust for Pension Benefits and

Other Post Employment Benefits 5,359,035$ 1,010,513$ 6,369,548$

52

City of Zeeland, MichiganCOMBINING STATEMENT OF CHANGES IN FIDUCIARY NET ASSETS

PENSION AND BENEFIT TRUST FUNDSYear Ended June 30, 2012

Defined RetireeBenefit HealthPension Benefits

Trust Fund Trust TotalsADDITIONS

Contributions:Employer 379,579$ 239,207$ 618,786$ Employee 3,988 - 3,988

Total Contributions 383,567 239,207 622,774

Investment earnings:Net appreciation (depreciation) in fair value of investments (160,048) 6,969 (153,079) Interest 69,881 - 69,881 Dividends 94,335 - 94,335 Investment expense (2,036) - (2,036) Miscellaneous income 411 - 411

Net Investment Earnings 2,543 6,969 9,512

Total Additions 386,110 246,176 632,286

DEDUCTIONSBenefit payments 422,708 84,772 507,480 Administrative expense 44,432 - 44,432

Total Deductions 467,140 84,772 551,912

Change in Net Assets (81,030) 161,404 80,374

Net Assets - July 1 5,440,065 849,109 6,289,174

Net Assets - June 30 5,359,035$ 1,010,513$ 6,369,548$

53

City of Zeeland, MichiganCOMBINING STATEMENT OF ASSETS AND LIABILITIES

AGENCY FUNDSJune 30, 2012

Trust Section Propertyand 125 Tax

Agency Benefits Collection TotalASSETS

Cash and investments 119,645$ 1,362$ 6,719$ 127,726$

LIABILITIESAccounts payable -$ 1,362$ -$ 1,362$ Customer deposits 119,645 - - 119,645 Due to other governments - - 6,719 6,719

Total Liabilities 119,645$ 1,362$ 6,719$ 127,726$

54

City of Zeeland, MichiganCOMBINING STATEMENT OF CHANGES IN ASSETS AND LIABILITIES

AGENCY FUNDSYear Ended June 30, 2012

Balances BalancesJune 30, 2011 Additions Deductions June 30, 2012

Trust and Agency Fund:ASSETS

Cash 126,300$ 24,642$ 31,297$ 119,645$

LIABILITIESCustomer deposits 126,300$ 24,642$ 31,297$ 119,645$

Section 125 Benefits Fund:ASSETS

Cash 166$ 320,090$ 318,894$ 1,362$

LIABILITIESAccounts payable 166$ 320,090$ 318,894$ 1,362$

Property Tax Collection Fund:ASSETS

Cash 6,778$ 20,663,795$ 20,663,854$ 6,719$

LIABILITIESDue to other governments 6,778$ 20,663,795$ 20,663,854$ 6,719$

Total All Agency Funds:ASSETS

Cash 133,244$ 21,008,527$ 21,014,045$ 127,726$

LIABILITIESAccounts payable 166$ 320,090$ 318,894$ 1,362$ Customer deposits 126,300 24,642 31,297 119,645 Due to other governments 6,778 20,663,795 20,663,854 6,719

Total Liabilities 133,244$ 21,008,527$ 21,014,045$ 127,726$

STATISTICAL SECTION

This part of the City of Zeeland’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city’s overall financial health

Contents Financial Trends

These schedules contain trend information to help the reader understand how the city’s financial performance and well-being have changed over time.

Revenue Capacity

These schedules contain information to help the reader assess the factors affecting the city’s ability to generate its property taxes.

Debt Capacity

These schedules present information to help the reader assess the affordability of the city’s current levels of outstanding debt and the city’s ability to issue additional debt in the future.

Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the city’s financial activities take place and to help make comparisons over time and with other governments.

Operating Information

These schedules contain information about the city’s operations and resources to help the reader understand how the city’s financial information relates to the services the city provides and the activities it performs.

Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The city implemented Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year.

Page

55-65

66-80

81-91

92-93

94-99

55

City of Zeeland, MichiganNET ASSETS BY COMPONENT

2003 Through 2012(Accrual Basis of Accounting)

Fiscal2003 2004 2005 2006 2007

Governmental activitiesInvestment in capital assets,

net of related debt 13,494,266$ 15,634,224$ 16,797,135$ 17,811,055$ 18,434,067$ Restricted 1,047,786 1,103,472 1,205,899 1,019,607 1,049,329 Unrestricted 6,195,770 4,864,250 5,435,110 6,194,063 6,817,771

Total Governmental activities net assets 20,737,822$ 21,601,946$ 23,438,144$ 25,024,725$ 26,301,167$

Business-type activitiesInvestment in capital assets,


Total Business-type activities net assets 53,028,242$ 55,969,699$ 59,469,596$ 64,020,132$ 70,682,653$

Primary governmentInvestment in capital assets,


Total primary government net assets 73,766,064$ 77,571,645$ 82,907,740$ 89,044,857$ 96,983,820$

56

Table 1

Year2008 2009 2010 2011 2012

18,672,336$ 18,694,521$ 19,444,160$ 20,130,863$ 19,859,309$ 1,079,221 1,076,492 1,028,874 1,104,867 1,195,962 7,512,859 8,532,637 8,517,143 8,292,886 8,855,813

27,264,416$ 28,303,650$ 28,990,177$ 29,528,616$ 29,911,084$

40,618,814$ 42,121,775$ 42,610,854$ 45,038,967$ 45,376,499$ 1,567,500 1,567,500 1,567,500 648,000 648,000

33,805,692 36,135,309 39,771,137 41,743,867 44,579,414 75,992,006$ 79,824,584$ 83,949,491$ 87,430,834$ 90,603,913$

59,291,150$ 60,816,296$ 62,055,014$ 65,169,830$ 65,235,808$ 2,646,721 2,643,992 2,596,374 1,752,867 1,843,962

41,318,551 44,667,946 48,288,280 50,036,753 53,435,227 103,256,422$ 108,128,234$ 112,939,668$ 116,959,450$ 120,514,997$

57

City of Zeeland, MichiganCHANGES IN NET ASSETS


Fiscal2003 2004 2005 2006 2007

ExpensesGovernmental activities:

General government 1,167,596$ 1,491,032$ 1,464,461$ 1,551,802$ 1,397,008$ Public safety 1,425,273 1,569,481 1,596,297 1,566,566 1,590,617 Public works 1,414,933 1,678,934 1,653,600 1,757,575 2,187,110 Community and economic development 87,308 81,503 69,799 87,883 190,998 Recreation and culture 999,616 911,645 979,687 1,156,064 1,119,817 Interest on long-term debt 161,393 132,072 122,436 149,395 190,276

Total governmental activities 5,256,119 5,864,667 5,886,280 6,269,285 6,675,826

Business-type activitiesElectric utility 13,528,626 13,623,753 15,525,207 17,218,625 14,486,594 Water utility 2,568,071 2,639,329 2,611,241 2,622,554 2,689,487 Clean water utility 1,170,639 1,223,119 1,176,679 1,258,149 1,272,299

Total business-type activities 17,267,336 17,486,201 19,313,127 21,099,328 18,448,380 Total primary government expenses 22,523,455$ 23,350,868$ 25,199,407$ 27,368,613$ 25,124,206$

Program RevenuesGovernmental activities:

Charges for services:General government 90,086$ 72,949$ 135,206$ 199,318$ 161,359$ Public safety 43,351 72,281 172,126 56,026 80,355 Public works 6,715 12,383 24,491 29,458 25,936 Community and economic development 13,900 18,495 19,352 22,150 18,918 Recreation and culture 48,041 57,820 56,750 55,074 65,864

Operating grants and contributions 687,884 688,041 668,186 706,947 747,704 Capital grants and contributions 216,660 101,079 1,153,192 835,413 794,026


Business-type activitiesCharges for services:

Electric utility 15,862,628 15,903,445 17,133,817 20,153,855 18,408,779 Water utility 3,017,125 2,911,415 3,136,499 3,254,846 3,350,163 Clean water utility 1,412,044 1,406,202 1,569,012 1,604,482 1,695,553

Capital grants and contributions 323,117 407,909 530,834 287,971 369,125 Total business-type activities 20,614,914 20,628,971 22,370,162 25,301,154 23,823,620

Total primary government program revenues 21,721,551$ 21,652,019$ 24,599,465$ 27,205,540$ 25,717,782$

Net (Expense) RevenueGovernmental activities (4,149,482)$ (4,841,619)$ (3,656,977)$ (4,364,899)$ (4,781,664)$ Business-type activities 3,347,578 3,142,770 3,057,035 4,201,826 5,375,240

Total primary government net (expense) revenue (801,904)$ (1,698,849)$ (599,942)$ (163,073)$ 593,576$

(Continued)

58

Table 2

Year2008 2009 2010 2011 2012

1,325,574$ 1,357,770$ 1,393,818$ 1,284,622$ 1,304,855$ 1,744,568 1,750,136 1,975,750 1,881,525 1,963,942 2,093,787 2,444,767 2,091,932 2,169,695 2,232,450

240,532 263,168 259,451 360,714 382,332 1,205,154 1,263,295 1,258,375 1,259,106 1,232,715

177,673 164,315 152,244 139,634 159,419 6,787,288 7,243,451 7,131,570 7,095,296 7,275,713

17,991,250 17,205,377 17,890,009 20,707,012 22,678,566 2,808,641 2,942,915 2,903,856 3,001,618 3,123,965 1,386,937 1,325,204 1,452,716 1,546,117 1,688,601

22,186,828 21,473,496 22,246,581 25,254,747 27,491,132 28,974,116$ 28,716,947$ 29,378,151$ 32,350,043$ 34,766,845$

109,630$ 115,623$ 95,938$ 94,002$ 110,009$ 81,539 49,616 67,802 59,829 152,610 27,867 26,467 25,799 30,051 29,247 11,910 7,250 9,061 15,800 20,877 66,287 79,710 69,436 65,000 64,148

754,826 698,811 750,140 762,698 771,661 100,284 212,346 36,966 140,439 152,500

1,152,343 1,189,823 1,055,142 1,167,819 1,301,052

20,933,353 20,015,797 20,914,359 22,813,383 24,544,455 3,487,286 3,306,052 3,331,895 3,496,339 3,955,970 1,621,326 1,633,303 1,588,038 1,721,337 1,754,473

554,735 148,368 48,734 53,682 245,222 26,596,700 25,103,520 25,883,026 28,084,741 30,500,120

27,749,043$ 26,293,343$ 26,938,168$ 29,252,560$ 31,801,172$

(5,634,945)$ (6,053,628)$ (6,076,428)$ (5,927,477)$ (5,974,661)$ 4,409,872 3,630,024 3,636,445 2,829,994 3,008,988

(1,225,073)$ (2,423,604)$ (2,439,983)$ (3,097,483)$ (2,965,673)$

59

City of Zeeland, MichiganCHANGES IN NET ASSETS


Fiscal2003 2004 2005 2006 2007

General Revenues and Other Changes in Net PositionGovernmental activities:

Property taxes 4,123,781$ 4,412,908$ 4,295,400$ 4,387,708$ 4,504,467$ State shared revenue 745,664 578,090 571,833 563,245 549,155 Investment earnings 192,169 161,918 199,875 278,159 530,023 Gain on sale of capital assets 141,822 79,719 8,450 322,829 29,790 Other 58,322 101,424 27,742 22,249 49,821 Contributions to permanent funds 38,815 29,755 45,875 32,790 47,250 Transfers - internal activities 346,704 341,929 344,000 344,500 347,600


Business-type activitiesInvestment earnings 550,719 58,342 731,551 589,708 1,504,509 Gain on sale of capital assets (14,525) 17,871 2,361 43,440 28,614 Other (176,703) 64,403 52,950 60,062 101,758 Transfers - internal activities (346,704) (341,929) (344,000) (344,500) (347,600)

Total business-type activities 12,787 (201,313) 442,862 348,710 1,287,281

Total primary government 5,660,064$ 5,504,430$ 5,936,037$ 6,300,190$ 7,345,387$

Changes in Net AssetsGovernmental activities 1,497,795$ 864,124$ 1,836,198$ 1,586,581$ 1,276,442$ Business-type activities 3,360,365 2,941,457 3,499,897 4,550,536 6,662,521

Total Change in Net Assets 4,858,160$ 3,805,581$ 5,336,095$ 6,137,117$ 7,938,963$

60

Table 2

Year2008 2009 2010 2011 2012

4,895,267$ 5,536,652$ 5,410,986$ 5,214,088$ 5,050,366$ 546,150 523,657 465,740 465,740 461,041 467,117 388,944 208,237 123,076 93,371 24,174 8,500 17,265 (5,536) 47,000

112,547 87,920 95,084 81,873 112,738 34,175 39,875 31,600 52,825 42,620

518,764 507,314 534,043 533,850 549,993 6,598,194 7,092,862 6,762,955 6,465,916 6,357,129

1,299,615 599,330 934,704 1,088,469 610,915 9,145 13,812 (3,766) - -

109,485 96,726 91,567 96,730 103,169 (518,764) (507,314) (534,043) (533,850) (549,993) 899,481 202,554 488,462 651,349 164,091

7,497,675$ 7,295,416$ 7,251,417$ 7,117,265$ 6,521,220$

963,249$ 1,039,234$ 686,527$ 538,439$ 382,468$ 5,309,353 3,832,578 4,124,907 3,481,343 3,173,079 6,272,602$ 4,871,812$ 4,811,434$ 4,019,782$ 3,555,547$

61

City of Zeeland, MichiganGOVERNMENTAL ACTIVITIES TAX REVENUE BY SOURCE

Last Ten Fiscal Years(Accrual Basis of Accounting)

Table 3

Fiscal West Michigan BrownfieldYear Ended General Street Airport Development Debt

June 30 Property Tax Millage Authority Authority Service

2003 3,289,293$ 653,684² -$ -$ 180,804$

2004 4,210,780 - - - 202,128

2005 4,108,392 - - - 187,008

2006 4,175,591 - - 21,245¹ 190,872

2007 4,310,152 - - 38,219 156,096

2008 4,678,138 - - 48,254 168,875

2009 5,267,000 - 47,601¹ 31,626 190,425

2010 5,167,487 - 47,603 29,398 166,498

2011 4,977,889 - 45,879 29,982 160,338

2012 4,829,179 - 44,477 21,263 155,447

¹ First year of tax² Last year of tax

62

City of Zeeland, MichiganFUND BALANCES OF GOVERNMENTAL FUNDS

Last Ten Fiscal Years(Modified Accrual Basis of Accounting)

Fiscal2003 2004 2005 2006 2007

General FundReserved 15,172$ 31,693$ 56,239$ 4,828$ 6,412$ Nonspendable - - - - - Restricted - - - - - Committed - - - - - Assigned - - - - - Unassigned 1,411,786 1,791,087 1,763,818 2,227,120 2,326,289

Total General Fund 1,426,958$ 1,822,780$ 1,820,057$ 2,231,948$ 2,332,701$

All Other Governmental FundsReserved 1,088,710$ 1,113,599$ 1,205,899$ 2,792,140$ 1,049,624$ Nonspendable

Permanent Fund - - - - - Restricted

Special Revenue Funds - - - - - Debt Service Funds - - - - - Capital Projects Funds - - - - - Permanent Fund - - - - -

CommittedSpecial Revenue Funds - - - - - Debt Service Funds - - - - - Capital Projects Funds - - - - -

AssignedSpecial Revenue Funds - - - - - Debt Service Funds - - - - - Capital Projects Funds - - - - -

Unreserved, reported in:Special Revenue Funds 1,843,682 897,372 1,311,737 1,102,301 1,354,395 Debt Service Funds 10,094 3,123 4,993 5,669 5,806 Capital Projects Funds 957,505 650,576 447,676 826,006 878,721

Total All Other Governmental Funds 3,899,991$ 2,664,670$ 2,970,305$ 4,726,116$ 3,288,546$

63

Table 4

Year2008 2009 2010 2011 2012

4,597$ 6,935$ 5,048$ -$ -$ - - - - - - - - - - - - - 161,722 191,745 - - - 116,968 36,124

2,675,953 3,031,866 3,103,680 2,918,182 3,310,416

2,680,550$ 3,038,801$ 3,108,728$ 3,196,872$ 3,538,285$

1,081,857$ 1,006,034$ 1,031,756$ -$ -$

- - - 885,053 927,673

- - - 83,859 146,028 - - - 24,901 9,336 - - - - - - - - 111,054 112,925

- - - 638,637 836,404 - - - - - - - - 117,000 168,793

- - - 846,902 958,095 - - - 1 - - - - 326,011 150,335

1,448,264 1,617,189 1,867,738 - - 34 504 234 - -

801,680 839,168 654,769 - - 3,331,835$ 3,462,895$ 3,554,497$ 3,033,418$ 3,309,589$

64

City of Zeeland, MichiganCHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS

Last Ten Fiscal Years(Modified Accrual Basis of Accounting)

Fiscal2003 2004 2005 2006 2007

RevenuesTaxes 4,123,781$ 4,412,908$ 4,295,400$ 4,387,708$ 4,504,467$ Special assessments 27,788 - - - - Licenses and permits 79,548 103,610 199,632 91,876 114,302 Intergovernmental:

State 1,151,033 1,021,500 999,132 983,045 973,047 Grants 6,000 46,416 1,141,804 411,991 413,166 Local unit contributions 217,676 222,951 232,226 243,453 280,605

Charges for services 129,918 132,182 130,967 95,475 121,188 Fines and forfeitures 36,917 56,235 58,076 56,640 58,896 Interest and rentals 167,411 164,039 213,725 269,143 480,706 Reimbursements 217,272 - - - - Private contributions 47,882 - - - - Other 33,882 154,882 66,349 171,659 493,738

Total Revenues 6,239,108 6,314,723 7,337,311 6,710,990 7,440,115

ExpendituresGeneral government 920,553 1,156,122 1,108,848 1,354,763 1,283,268 Public safety 1,155,303 1,171,332 1,183,683 1,511,068 1,559,896 Public works 1,055,383 2,657,019 2,668,064 2,359,935 2,256,665 Community and economic development - 72,161 58,759 87,883 190,998 Recreation and culture 621,409 644,478 672,212 949,848 999,404 Insurance and other 850,710 867,041 884,035 54,290 11,343 Capital outlay 2,094,069 596,122 433,058 604,110 2,301,547 Debt service:

Principal 185,000 230,000 230,000 240,000 325,000 Interest 163,916 131,195 113,540 104,908 196,411 Bond issuance costs - - - - -

Total Expenditures 7,046,343 7,525,470 7,352,199 7,266,805 9,124,532

Excess of Revenues Over (Under) Expenditures (807,235) (1,210,747) (14,888) (555,815) (1,684,417)

Other Financing Sources (Uses)Bonds issued - 1,648,950 - 2,100,000 - Discount on bonds issued - - - (20,983) - Payment to refunding escrow - (1,570,431) - - - Proceeds- sale of capital assets 156,200 - - 300,000 - Transfers in 2,055,484 2,626,380 2,593,088 2,114,558 2,438,600 Transfers out (1,753,130) (2,313,651) (2,295,288) (1,770,058) (2,091,000)

Total Other Financing Sources (Uses) 458,554 391,248 297,800 2,723,517 347,600

Net Changes in Fund Balances (348,681)$ (819,499)$ 282,912$ 2,167,702$ (1,336,817)$

Debt service as a percentage ofnoncapital expenditures 6.91% 7.00% 6.87% 7.28% 9.03%

65

Table 5

Year2008 2009 2010 2011 2012

4,895,267$ 5,536,652$ 5,410,986$ 5,214,088$ 5,050,366$ - - - - -

117,276 101,909 106,559 107,014 202,909

980,645 935,791 866,045 873,352 881,637 23,051 - - - -

286,014 310,178 343,028 310,465 305,684 95,652 99,773 101,319 123,051 122,917 61,814 62,997 66,330 67,940 77,140

418,145 383,056 181,476 75,069 85,830 - - - - - - - - - -

203,023 244,185 145,699 313,435 313,920 7,080,886 7,674,541 7,221,442 7,084,414 7,040,403

1,254,049 1,375,375 1,312,545 1,213,813 1,160,365 1,678,483 1,724,905 1,909,318 1,879,085 1,845,404 2,243,690 2,364,056 2,265,454 2,935,150 1,974,924

244,989 269,174 263,435 364,582 384,138 1,083,947 1,132,083 1,137,206 1,087,402 1,127,130

11,923 13,948 12,087 11,563 9,684 186,055 350,697 46,035 114,740 25,418

335,000 305,000 315,000 310,000 325,000 170,376 157,306 146,376 134,864 123,623

- - - - 17,126

7,208,512 7,692,544 7,407,456 8,051,199 6,992,812

(127,626) (18,003) (186,014) (966,785) 47,591

- - - - 720,000 - - - - - - - - - (700,000) - - - - -

2,625,165 2,887,314 2,897,393 2,560,806 2,359,993 (2,106,401) (2,380,000) (2,549,850) (2,026,956) (1,810,000)

518,764 507,314 347,543 533,850 569,993

391,138$ 489,311$ 161,529$ (432,935)$ 617,584$

8.77% 7.31% 7.88% 7.35% 7.80%

66

Real Property Personal Property Fiscal State Estimated State Estimated

Year Ended Taxable Equalized Actual Taxable Equalized ActualJune 30 Value Value Value Value Value Value

2003 172,485,944$ 201,240,400$ 402,480,800$ 49,387,300$ 49,387,300$ 98,774,600$

2004 179,679,963 214,320,600 428,641,200 48,309,000 48,309,000 96,618,000

2005 184,345,185 214,738,800 429,477,600 47,012,900 47,012,900 94,025,800

2006 191,586,140 218,231,500 436,463,000 47,083,250 47,083,250 94,166,500

2007 198,054,275 225,594,000 451,188,000 47,319,800 47,319,800 94,639,600

2008 229,437,001 253,693,600 507,387,200 59,945,200 59,945,200 119,890,400

2009 230,039,423 251,362,000 502,724,000 61,069,675 60,935,600 121,871,200

2010 231,160,330 242,434,000 484,868,000 60,866,500 60,866,500 121,733,000

2011 218,802,918 226,982,200 453,964,400 59,538,800 59,538,800 119,077,600

2012 201,134,492 205,591,500 411,183,000 61,408,800 61,406,500 122,813,000

Source: City of Zeeland

Valuations are stated as of the March Board of Review.

City of Zeeland, MichiganSTATE EQUALIZED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

Ad Valorem RollLast Ten Fiscal Years

State Equalized Value and Taxable Value do not include any value of tax exempt property or property granted abatement under either Act 198, Michigan Public Acts of 1974, as amended ("Act 198") or Act 255, Michigan Public Acts of 1978 , as amended ("Act 255"). Such an abatement entitles a facility to exemption from ad valorem property taxes for a period of up to 12 years. In lieu of the property tax, the facility pays a reduced tax.

The City is authorized by Charter to levy 15 mills for operations. The maximum allowable millage rate after Headlee Rollback reduction is 14.1636 for 2012.

The City is authorized by vote to levy unlimited tax for debt.

Taxable property is assessed initially by the city assessing officials, then equalized by Ottawa County and finally by the State. In accordance with Act 409, P.A. 1965, and Article IX, Section 3 of the Michigan Constitution, State Equalized Value ("SEV") represents 50% of true cash value.

On March 15, 1994, the people of the State of Michigan approved an amendment to the Michigan Constitution. The Amendment and implementing legislation limit the growth in assessments ("capped value") for each parcel of property to the percentage change in State Equalized Value, the rate of inflation, or 5%, whichever is less. When ownership of the parcel of property is transferred as defined by law, the parcel shall be assessed at the applicable proportion of current true cash value. The lower of the "capped value" or SEV is the Taxable Value of each parcel.

67

Table 6

Total Ad Valorem Taxable PropertyState Estimated Tax Taxable Value

Taxable Equalized Actual Rate as a PercentageValue Value Value Mills of Actual Value

221,873,244$ 250,627,700$ 501,255,400$ 12.3852 44.26%

227,988,963 262,629,600 525,259,200 11.3854 43.41%

231,358,085 261,751,700 523,503,400 11.3854 44.19%

238,669,390 265,314,750 530,629,500 11.3854 44.98%

245,374,075 272,913,800 545,827,600 11.3854 44.95%

289,382,201 313,638,800 627,277,600 11.3854 46.13%

291,109,098 312,297,600 624,595,200 11.4854 46.61%

292,026,830 303,300,500 606,601,000 11.2354 48.14%

278,341,718 286,521,000 573,042,000 11.2354 48.57%

262,543,292 266,998,000 533,996,000 11.2354 49.17%

68

City of Zeeland, MichiganSTATE EQUALIZED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY

Industrial Facilities Tax RollLast Ten Fiscal Years

Real Property - IFT Roll Personal Property - IFT Roll Fiscal State Estimated State Estimated

Year Ended Taxable Equalized Actual Taxable Equalized ActualJune 30 Value Value Value Value Value Value

2003 142,466,841$ 144,436,700$ 288,873,400$ 85,681,300$ 85,681,300$ 171,362,600$

2004 170,406,913 171,737,400 343,474,800 108,673,800 108,673,800 217,347,600

2005 180,511,200 181,423,000 362,846,000 104,846,900 104,846,900 209,693,800

2006 182,998,137 183,296,500 366,593,000 104,268,900 104,268,900 208,537,800

2007 185,484,800 185,484,800 370,969,600 103,935,000 103,935,000 207,870,000

2008 169,426,200 169,426,200 338,852,400 96,355,200 96,355,200 192,710,400

2009 250,915,600 250,915,600 501,831,200 119,908,500 119,908,500 239,817,000

2010 254,370,400 254,370,400 508,740,800 113,405,700 113,405,700 226,811,400

2011 251,183,400 251,183,400 502,366,800 110,218,100 110,218,100 220,436,200

2012 253,738,600 253,738,600 507,477,200 110,171,300 110,171,300 220,342,600

The city is authorized by Charter to levy 15 mills for operations. The maximum allowable millage rate after Headlee Rollback reduction is 14.1636 for 2012.

The City is authorized by vote to levy unlimited tax for debt.

Valuations are stated as of the March Board of Review.

Taxable property is assessed initially by the city assessing officials, then equalized by Ottawa County and finally by the State. In accordance with Act 409, P.A. 1965, and Article IX, Section 3 of the Michigan Constitution, State Equalized Value ("SEV") represents 50% of true cash value.

On March 15, 1994, the people of the State of Michigan approved an amendment to the Michigan Constitution. The Amendment andimplementing legislation limit the growth in assessments ("capped value") for each parcel of property to the percentage change in State Equalized Value, the rate of inflation, or 5%, whichever is less. When ownership of the parcel of property is transferred as defined by law, the parcel shall be assessed at the applicable proportion of current true cash value. The lower of the "capped value" or SEV is the Taxable Value of each parcel.

State Equalized Value and Taxable Value includes only the value of property granted abatement under either Act 198, Michigan Public Acts of 1974, as amended ("Act 198") or Act 255, Michigan Public Acts of 1978 , as amended ("Act 255"). Such an abatement entitles a facility to exemption from ad valorem property taxes for a period of up to 12 years. In lieu of the property tax, the facility pays a reduced tax.

69

Table 7

Total Taxable Property - IFT RollState Estimated Tax Taxable Value

Taxable Equalized Actual Rate as a PercentageValue Value Value Mills of Actual Value

228,148,141$ 230,118,000$ 460,236,000$ 6.1926 49.57%

279,080,713 280,411,200 560,822,400 5.6927 49.76%

285,358,100 286,269,900 572,539,800 5.6927 49.84%

287,267,037 287,565,400 575,130,800 5.6927 49.95%

289,419,800 289,419,800 578,839,600 5.6927 50.00%

265,781,400 265,781,400 531,562,800 5.6927 50.00%

370,824,100 370,824,100 741,648,200 5.7427 50.00%

367,776,100 367,776,100 735,552,200 5.6177 50.00%

361,401,500 361,401,500 722,803,000 5.6177 50.00%

363,909,900 363,909,900 727,819,800 5.6177 50.00%

70

Real Property - Ad Valorem RollFiscal

Year Ended Real PropertyJune 30 Agriculture Commercial Industrial Residential Total

2006 46,466$ 29,048,990$ 49,872,264$ 112,618,420$ 191,586,140$

2007 42,937 31,063,948 50,380,208 116,567,182 198,054,275

2008 44,525 32,790,266 76,901,562 119,700,648 229,437,001

2009 45,549 33,554,674 77,358,145 119,081,055 230,039,423

2010 47,553 34,317,015 79,574,812 117,220,950 231,160,330

2011 47,410 36,272,125 75,239,380 107,244,003 218,802,918

2012 48,215 32,061,676 64,741,345 104,283,256 201,134,492


City of Zeeland, MichiganTAXABLE VALUE COMPONENTS BY CLASS

Ad Valorem RollLast Seven Fiscal Years

71

Table 8

Total

Personal Property Ad Valorem RollCommercial Industrial Utility Total Total

6,170,700$ 39,112,250$ 1,800,300$ 47,083,250$ 238,669,390$

7,058,000 38,501,700 1,760,100 47,319,800 245,374,075

5,432,600 52,407,700 2,104,900 59,945,200 289,382,201

5,474,175 53,692,800 1,902,700 61,069,675 291,109,098

5,571,100 53,470,500 1,824,900 60,866,500 292,026,830

5,463,000 52,583,000 1,492,800 59,538,800 278,341,718

5,434,100 54,308,500 1,666,200 61,408,800 262,543,292

Personal Property - Ad Valorem Roll

72

City of Zeeland, MichiganTAXABLE VALUE COMPONENTS BY CLASS

Industrial Facilities Tax RollLast Seven Fiscal Years

Table 9

FiscalYear Ended Real Property Personal Property IFT Roll

June 30 Industrial Industrial Total

2006 182,998,137$ 104,268,900$ 287,267,037$

2007 185,484,800 103,935,000 289,419,800

2008 169,426,200 96,355,200 265,781,400

2009 250,915,600 119,908,500 370,824,100

2010 254,370,400 113,405,700 367,776,100

2011 251,183,400 110,218,100 361,401,500

2012 253,738,600 110,171,300 363,909,900


Industrial Facility Tax Roll

73

City of Zeeland, MichiganPROPERTY TAX RATES

DIRECT AND OVERLAPPING GOVERNMENTS

Table 10

City SchoolFiscal State

Year Ended Airport EducationJune 30¹ Operating Streets Debt Authority Total Operating Debt Tax Total

2003 H 9.8500 1.9852 0.5500 - 12.3852 1.3665 6.6300 6.0000 13.99652003 NH 9.8500 1.9852 0.5500 - 12.3852 19.3665 6.6300 6.0000 31.9965 2004 H 10.8354 - 0.5500 - 11.3854 1.3710 6.6300 5.0000 13.0010 2004 NH 10.8354 - 0.5500 - 11.3854 19.3710 6.6300 5.0000 31.0010 2005 H 10.8854 - 0.5000 - 11.3854 1.4000 6.6300 6.0000 14.0300 2005 NH 10.8854 - 0.5000 - 11.3854 19.4000 6.6300 6.0000 32.0300 2006 H 10.8854 - 0.5000 - 11.3854 1.4000 6.6300 6.0000 14.0300 2006 NH 10.8854 - 0.5000 - 11.3854 19.4000 6.6300 6.0000 32.0300 2007 H 10.9854 - 0.4000 - 11.3854 1.4000 6.6300 6.0000 14.0300 2007 NH 10.9854 - 0.4000 - 11.3854 19.4000 6.6300 6.0000 32.0300 2008 H 10.9854 - 0.4000 - 11.3854 1.4000 6.6300 6.0000 14.0300 2008 NH 10.9854 - 0.4000 - 11.3854 19.4000 6.6300 6.0000 32.0300 2009 H 10.9854 - 0.4000 0.1000 11.4854 1.4000 6.6300 6.0000 14.0300 2009 NH 10.9854 - 0.4000 0.1000 11.4854 19.4000 6.6300 6.0000 32.0300 2010 H 10.7854 - 0.3500 0.1000 11.2354 1.4000 6.6300 6.0000 14.0300 2010 NH 10.7854 - 0.3500 0.1000 11.2354 19.4000 6.6300 6.0000 32.0300 2011 H 10.7854 - 0.3500 0.1000 11.2354 1.4000 6.6300 6.0000 14.0300 2011 NH 10.7854 - 0.3500 0.1000 11.2354 19.4000 6.6300 6.0000 32.0300 2012 H 10.7854 - 0.3500 0.1000 11.2354 1.4000 6.6300 6.0000 14.0300 2012 NH 10.7854 - 0.3500 0.1000 11.2354 19.4000 6.6300 6.0000 32.0300

Fiscal County Intermediate School DistrictYear Ended Ottawa Intermediate Special Vocational Grand

June 30¹ County School Education Education Total Total

2003 H 4.1672 0.1078 3.1040 1.0570 4.2688 34.81772003 NH 4.1672 0.1078 3.1040 1.0570 4.2688 52.81772004 H 4.1611 0.1068 3.0762 1.0475 4.2305 32.77802004 NH 4.1611 0.1068 3.0762 1.0475 4.2305 50.77802005 H 4.2593 0.1065 3.0680 1.0447 4.2192 33.89392005 NH 4.2593 0.1065 3.0680 1.0447 4.2192 51.89392006 H 4.2579 0.1062 3.0620 1.0427 4.2109 33.88422006 NH 4.2579 0.1062 3.0620 1.0427 4.2109 51.88422007 H 4.2572 0.1061 3.0609 1.0423 4.2093 33.88192007 NH 4.2572 0.1061 3.0609 1.0423 4.2093 51.88192008 H 4.3572 0.1061 4.3750 1.0423 5.5234 35.29602008 NH 4.3572 0.1061 4.3750 1.0423 5.5234 53.29602009 H 4.3572 0.1061 4.3761 1.0423 5.5245 35.39712009 NH 4.3572 0.1061 4.3761 1.0423 5.5245 53.39712010 H 4.3565 0.1061 4.3750 1.0423 5.5234 35.39532010 NH 4.3565 0.1061 4.3750 1.0423 5.5234 53.14532011 H 4.3565 0.1061 4.3750 1.0423 5.5234 35.14532011 NH 4.3565 0.1061 4.3750 1.0423 5.5234 53.14532012 H 4.3565 0.1061 4.3750 1.0423 5.5234 35.14532012 NH 4.3565 0.1061 4.3750 1.0423 5.5234 53.1453

Source: City of Zeeland¹ Fiscal year for Ottawa County begins January 1

² H = Homestead Properties NH = Non-Homestead Properties

The City's millage rate is currently limited to 15 mills for operations. The maximum allowable millage rate after Headlee Rollback Reduction is 14.1636.

Last Ten Fiscal Years

74

Table 11

% of Total % of TotalPrincipal Product Taxable Taxable Taxable Taxable

Taxpayer or Type of Business Valuation Rank Valuation Valuation Rank Valuation

Consumers Energy Power Generation 253,284,903$ 1 40.43% -$ -

Gentex Corporation Automotive and Glass Parts 112,185,300 2 17.91% 51,311,824 3 11.35%

Mead Johnson Infant Formula 54,149,996 3 8.64% 52,182,751 2 11.55%

Herman Miller, Inc. Institutional Furniture 16,242,900 4 2.59% 27,263,571 4 6.03%

ITW Drawform Stamping Operations 11,673,100 5 1.86% 10,138,002 5 2.24%

Innotec Corp Automotive and Furniture Parts 8,184,922 6 1.31% -

ODL Inc Glass and Skylights 5,464,400 7 0.87% 5,228,836 8 1.16%

Woodward FST Airline/Aerospace Fuel Systems 4,677,000 8 0.75% 4,020,975 10 0.89%

Howard Miller Clock Co. Grandfather and Wall Clocks 4,661,592 9 0.74% 6,026,204 7 1.33%

Plascore, Inc Structural Honeycomb Products 4,656,500 10 0.74% 4,545,979 9 1.01%

Zeeland Chemical Chemicals - - 6,636,849 6 1.47%

Mirant Power Generation - - 161,344,817 1 35.70%

Ten Largest Taxpayers 475,180,613 75.85% 328,699,808 72.73%

Other Taxpayers 151,272,579 24.15% 123,218,936 27.27%

Total Taxable Value 626,453,192$ 100.00% 451,918,744$ 100.00%


Note: Includes ad valorem taxable value and the value of IFT's granted under Act 198.An Act 198 abatement entitles a facility to a reduced tax for a period up to 12 years.

2012 2003

City of Zeeland, MichiganPROFILE OF TEN LARGEST PROPERTY TAXPAYERS

Current Year and Nine Years Ago

75

City of Zeeland, MichiganPROPERTY TAX LEVIES AND COLLECTIONS


Table 12

FiscalTax Year Ended Tax Collected within the Fiscal Year Total Collections to DateYear June 30 Levy Amount % of Levy Amount % of Levy

2002 2003 4,228,641$ 4,159,407$ 98.36% 4,208,314$ 99.52%

2003 2004 4,184,440 4,163,708 99.50% 4,172,946 99.73%

2004 2005 4,258,538 4,257,954 99.99% 4,258,296 99.99%

2005 2006 4,347,684 4,311,251 99.16% 4,334,704 99.70%

2006 2007 4,443,254 4,433,551 99.78% 4,443,072 100.00%

2007 2008 4,810,163 4,808,214 99.96% 4,808,222 99.96%

2008 2009 5,475,041 5,451,268 99.57% 5,471,206 99.93%

2009 2010 5,349,640 5,344,711 99.91% 5,344,711 99.91%

2010 2011 5,159,822 5,155,366 99.91% 5,157,156 99.95%

2011 2012 4,995,558 4,989,195 99.87% 4,994,400 99.98%


76

City of Zeeland, MichiganSPECIAL ASSESSMENT COLLECTIONS


Table 13

Fiscal Current Current and TotalYear Ended Assessments Deferred Percent Outstanding

June 30 Due Collections Collected Assessments

2003 8,701$ 8,701$ 100.00% 9,221$

2004 9,221 9,221 100.00% -

2005 20,841 20,841 100.00% 89,786

2006 21,463 21,463 100.00% 68,323

2007 22,107 22,107 100.00% 46,216

2008 22,767 22,768 100.00% 23,448

2009 23,448 23,448 100.00% -

2010 24,782 22,558 91.03% 102,916

2011 25,154 27,378 108.84% 77,762

2012 25,535 25,535 100.00% 52,227


77

Table 14

Principal Product Percent of Percent ofCustomer or Type of Business KWH Rank Total KWH KWH Rank Total KWH

Gentex Corporation Automotive and Glass Parts 77,855,207 1 24.00% 31,379,557 2 11.94%

Mead Johnson Infant Formula 48,804,660 2 15.04% 45,236,550 1 17.22%

Herman Miller, Inc. Institutional Furniture 24,630,263 3 7.59% 25,335,916 3 9.64%

ITW Drawform Stamping Operations 12,354,300 4 3.81% 10,731,600 5 4.08%

Zeeland Public Schools Education 9,912,580 5 3.06% 9,075,263 7 3.45%

Vertellus Chemical Chemicals 9,311,377 6 2.87% 8,345,531 9 3.18%

Plascore Inc. Structural Honeycomb Products 7,860,760 7 2.42% - -

Stone Plastics Plastic Thermoformers 7,776,000 8 2.40% - -

ODL Inc Glass and Skylights 7,147,300 9 2.20% 10,794,000 4 4.11%

Woodward FST Airline/Aerospace Fuel Systems 6,005,280 10 1.85% 5,959,220 10 2.27%

Sinter Metals Inc. Powder Coated Metal Parts - - 9,810,000 6 3.73%

Howard Miller Clock Manufacturer - - 8,526,240 8 3.25%

Ten Largest Customers 211,657,727 65.24% 165,193,877 62.87%

Other Customers 112,748,194 34.76% 97,550,277 37.13%

Total KWH 324,405,921 100.00% 262,744,154 100.00%


City of Zeeland, MichiganPROFILE OF TEN LARGEST ELECTRIC CUSTOMERS


2012 2003

78

City of Zeeland, MichiganELECTRIC REVENUE AND COLLECTIONS

Last Ten Fiscal Years(Accrual Basis of Accounting)

Table 15

Fiscal Percent ofYear Ended Total Collections to Percent Delinquent Total Billed

June 30 Billed June 30 Collected Collections Collected

2003 15,823,610$ 15,823,010$ 99.996% 600$ 100.000%

2004 15,868,080 15,867,080 99.994% 1,000 100.000%

2005 17,093,517 17,091,214 99.987% 2,303 100.000%

2006 20,104,349 20,102,845 99.993% 1,504 100.000%

2007 18,366,973 18,366,573 99.998% 400 100.000%

2008 20,872,508 20,871,764 99.996% 744 100.000%

2009 19,955,658 19,954,279 99.993% 1,379 100.000%

2010 20,870,023 20,867,705 99.989% 2,318 100.000%

2011 22,746,223 22,743,824 99.989% 2,399 100.000%

2012 24,462,493 24,462,393 100.000% 100 100.000%


79

Table 16

Principal Product 1,000 Percent of 1,000 Percent ofCustomer or Type of Business Gallons Rank Total Gallons Gallons Rank Total Gallons

Consumers Energy Power Generation 614,883 1 37.5% 206,651 2 15.08%

Mead Johnson Infant Formula 520,699 2 31.7% 683,110 1 49.85%

Gentex Corporation Automotive and Glass Parts 122,207 3 7.4% 67,540 3 4.93%

Vertellus Chemical Chemicals 38,524 4 2.3% 23,676 6 1.73%

Plascore Inc. Structural Honeycomb Products 35,432 5 2.2% 37,897 4 2.77%

Herman Miller, Inc. Institutional Furniture 36,061 6 2.2% 26,282 5 1.92%

Royal Park Condominiums 15,709 7 1.0% - -

Zeeland Public Schools Education 9,371 8 0.6% 9,418 9 0.69%

City of Zeeland Government 8,915 9 0.5% - -

ODL Inc Glass and Skylights 9,088 10 0.6% 14,781 8 1.08%

ITW Drawform Stamping Operations - - 17,545 7 1.28%

Woodward FST Airline/Aerospace Fuel Systems - 8,429 10 0.62%

Ten Largest Customers 1,410,889 85.98% 1,095,329 79.93%

Other Customers 230,000 14.02% 275,089 20.07%

Total Gallons 1,640,889 100.00% 1,370,418 100.00%


City of Zeeland, MichiganPROFILE OF TEN LARGEST WATER CUSTOMERS


2012 2003

80


Table 17

Principal Product Percent of Percent ofCustomer or Type of Business CCF 1 Rank CCF 1 CCF 1 Rank CCF 1

Gentex Corporation Automotive and Glass Parts 152,574 1 31.6% 63,961 1 16.14%

Plascore Inc. Structural Honeycomb Products 44,873 2 9.3% 45,719 2 11.54%

Herman Miller, Inc. Institutional Furniture 18,280 3 3.8% 11,210 6 2.83%

Consumers Energy Power Generation 12,719 4 2.6% - -

ITW Drawform Stamping Operations 11,671 5 2.4% 20,128 4 5.08%

Royal Park Condos Condominiums 7,678 6 1.6% - -

ODL Inc Glass and Skylights 8,165 7 1.7% 11,712 5 2.96%

Woodward FST Airline/Aerospace Fuel Systems 5,941 8 1.2% 8,369 7 2.11%

Crestwood Village Condominiums 4,884 9 1.0% - -

Vertellus Chemical Chemicals 3,745 10 0.8% 24,830 3 6.27%

Zeeland Hospital Medical Care - - 6,606 8 1.67%

Haven Park Christian Nursing Home - - 6,255 9 1.58%

Hy-Lift Automotive Parts Supplier - 5,730 10 1.45%

Ten Largest Customers 270,530 55.99% 204,520 51.61%

Other Customers 212,603 44.01% 191,780 48.39%

Total CCF (includes IPP usage and surcharges) 483,133 100.00% 396,300 100.00%

1 CCF: Thousands of cubic feet

²2003 Not Available


PROFILE OF TEN LARGEST CLEAN WATER CUSTOMERSCurrent Year and Nine Years Ago

2012 2002²

81

City of Zeeland, MichiganRATIOS OF OUTSTANDING DEBT BY TYPE


Fiscal General Michigan Electric Water Clean WaterYear Ended Obligation Transportation System System System

June 30 Bonds Bonds Bonds Bonds Bonds¹

2003 3,085,000$ 185,000$ 6,555,000$ 9,880,000$ -$

2004 2,995,000 150,000 5,965,000 9,415,000 -

2005 2,800,000 115,000 5,305,000 8,935,000 -

2006 4,695,000 80,000 4,935,000 8,490,000 -

2007 4,410,000 40,000 4,555,000 7,930,000 -

2008 4,115,000 - 4,160,000 7,345,000 -

2009 3,810,000 - 3,750,000 6,735,000 -

2010 3,495,000 - 3,330,000 6,095,000 2,000,000

2011 3,185,000 - 1,415,000 5,065,000 1,935,000

2012 2,880,000 - 960,000 4,390,000 1,865,000

Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements.

¹2010 Clean Water Bonds are General Obligation Bonds paid from revenue from the Clean Water Fund²See the Demographic Statistics at Table 26 for personal income and population data³See the Operating Indicators by Function at Table 30 for number of utility customers

Governmental Activities Business-Type Activities

82

Table 18

Business-Type Total Per Capita² Percentage of Personal Income² Activities

Primary Governmental Total Primary Governmental Total Primary DebtGovernment Activities Government Activities Government Per Customer³

19,705,000$ 563$ 3,394$ 1.97% 11.87% 2,082$

18,525,000 542 3,191 1.82% 10.71% 1,887

17,155,000 502 2,955 1.63% 9.61% 1,702

18,200,000 823 3,135 2.60% 9.90% 1,598

16,935,000 767 3,091 2.48% 9.43% 1,475

15,620,000 709 2,867 2.24% 8.51% 1,352

14,295,000 699 2,624 2.20% 8.27% 1,211

14,920,000 640 2,730 1.93% 8.26% 1,011

11,600,000 579 2,108 1.71% 6.24% 749

10,095,000 523 1,834 N/A N/A 634 .

83

City of Zeeland, MichiganRATIOS OF GENERAL BONDED DEBT OUTSTANDING


Table 19

Percentage ofEstimated

Fiscal General Less: Amounts ActualYear Ended Obligation Available in Value of Per

June 30 Bonds¹ Debt Service Total Property ² Capita³

2003 3,085,000$ 90,128$ 2,994,872$ 0.31% 516$

2004 2,995,000 102,364 2,892,636 0.27% 498

2005 2,800,000 104,364 2,695,636 0.25% 464

2006 4,695,000 104,453 4,590,547 0.42% 791

2007 4,410,000 78,752 4,331,248 0.39% 791

2008 4,115,000 57,745 4,057,255 0.35% 745

2009 3,810,000 60,534 3,749,466 0.27% 688

2010 5,495,000 38,479 5,456,521 0.41% 998

2011 5,120,000 24,902 5,095,098 0.39% 926

2012 4,745,000 9,336 4,735,664 0.38% 860

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.

¹Includes $1,865,000 2010 GO Clean Water Bonds to be repaid from revenue from the Clean Water Fund

²See the Schedules of State Equalized Value and Estimated Actual Value of Taxable Property in Tables 6 & 7 for property value data.

³ Population data can be found in the Demographic Statistics in Table 26.

84

Table 20

Percentage City'sBonds Applicable Share of

Jurisdiction Outstanding to City Debt

Direct Debt: City of ZeelandGeneral obligation bonds¹ 4,745,000$ 100.00% 4,745,000$

Overlapping Debt:Ottawa County 23,265,000$ 2.79% 649,094 Ottawa Intermediate School District 5,065,000 2.44% 123,586 Zeeland Public School District 97,195,000 24.19% 23,511,471

Total Overlapping Debt 24,284,150

Total Direct and Overlapping Debt 29,029,150$

¹Includes $1,865,000 2010 GO Clean Water Bonds to be repaid from revenue from the Clean Water Fund

Sources: Direct Debt provided by the City of Zeeland; Overlapping Debt provided by the Municipal Advisory Council ofMichigan.

Overlapping governments are those that coincide, at least in part, with geographic boundaries of the city. This scheduleestimates the portion of the outstanding debt of those overlapping governments that is borne by the property taxpayers ofthe City of Zeeland. This process recognizes that, when considering the city's ability to issue and repay long-term debt,the entire debt burden borne by the property taxpayers shoould be taken into account.


As of June 30, 2012DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT

85

Fiscal2003 2004 2005 2006

Debt Limit 53,123,060$ 54,889,950$ 54,931,710$ 55,209,540$ Net General Obligation Debt Subject to Limitation 2,994,072 2,895,189 2,688,192 4,670,547 Legal Debt Margin 50,128,988$ 51,994,761$ 52,243,518$ 50,538,993$

Total net debt applicable to the limit as a percentage of the debt limit 5.64% 5.27% 4.89% 8.46%

Legal Debt Margin Calculation for Fiscal Year 2012

State Equalized ValuationAd Valorem 266,998,000$ Public Act 198 Industrial Facility Taxed Property 363,909,900

Total State Equalized Valuation 630,907,900$

Debt Limit - 10% of State Equalized Value 63,090,790$

Debt Outstanding 10,095,000$ Less: Exempt Debt (5,350,000) Less: Amount set aside for repayment of General Obligation Debt (9,336)

Net General Obligation Debt Subject to Limitation 4,735,664

Legal Debt Margin 58,355,126$

Percentage of Debt Limit Available 92.49%

Percentage of Debt Contracting Power Exhausted 7.51%

Note: State law limits the amount of city general obligation debt to 10% of state equalized value.State Equalized Valuation of property granted tax abatement under Act 198 is included.

LEGAL DEBT MARGIN INFORMATIONCity of Zeeland, Michigan


86

Table 21

Year2007 2008 2009 2010 2011 2012

56,233,360$ 57,942,020$ 68,312,170$ 67,107,660$ 64,792,250$ 63,090,790$

4,371,248 4,057,255 3,749,466 5,456,521 5,095,098 4,735,664 51,862,112$ 53,884,765$ 64,562,704$ 61,651,139$ 59,697,152$ 58,355,126$

7.77% 7.00% 5.49% 8.13% 7.86% 7.51%

87

Table 22

Fiscal Electric Utility Less: NetYear Ended Gross Operating Available

June 30 Revenue¹ Expenses² Revenue Principal Interest Coverage

2003 16,328,342$ 12,235,926$ 4,092,416$ 560,000$ 308,559$ 4.71

2004 16,206,496 12,374,279 3,832,217 665,000 176,192 4.56

2005 17,965,115 14,276,920 3,688,195 660,000 181,392 4.38

2006 20,672,638 15,976,548 4,696,090 370,000 167,647 8.73

2007 19,571,538 13,041,544 6,529,994 380,000 160,045 12.09

2008 22,059,728 16,464,081 5,595,647 395,000 151,946 10.23

2009 20,330,185 15,641,672 4,688,513 410,000 142,044 8.49

2010 21,730,402 16,306,725 5,423,677 420,000 131,579 9.83

2011 23,917,128 19,114,205 4,802,923 1,915,0003 119,575 2.36

2012 25,163,996 21,089,570 4,074,426 455,000 35,875 8.30

¹ Total revenues include operating revenues, interest, other nonoperating revenues, and capital contributions.² Total expenses include operating expenses and operating transfers, exclusive of depreciation and interest.3 Includes $1,470,000 in early redemptions of bonds

Debt Service

City of Zeeland, MichiganPLEDGED REVENUE COVERAGE - ELECTRIC UTILITY


88

Table 23

Fiscal WaterUtility Less: NetYear Ended Gross Operating Available


2003 3,225,744$ 1,513,949$ 1,711,795$ 420,000$ 502,448$ 1.86

2004 3,074,877 1,583,390 1,491,487 465,000 467,643 1.60

2005 3,369,382 1,577,604 1,791,778 480,000 445,905 1.94

2006 3,533,748 1,634,120 1,899,628 555,000 342,775 2.12

2007 3,808,290 1,706,299 2,101,991 560,000 354,322 2.30

2008 3,811,658 1,852,162 1,959,496 585,000 332,195 2.14

2009 3,572,190 2,011,484 1,560,706 610,000 309,408 1.70

2010 3,473,733 1,974,309 1,499,424 640,000 284,890 1.62

2011 3,601,963 2,109,449 1,492,514 1,030,000 259,155 1.16

2012 4,065,245 2,174,865 1,890,380 675,000 211,051 2.13

¹ Total revenues include operating revenues, interest, other nonoperating revenues, and capital contributions.² Total expenses include operating expenses and operating transfers, exclusive of depreciation and interest.

Debt Service

City of Zeeland, MichiganPLEDGED REVENUE COVERAGE - WATER UTILITY


89

Table 24

Fiscal Sewer Utility Less: NetYear Ended Gross Operating Available


2003 1,663,463$ 742,015$ 921,448$ 395,000$ 117,196$ 1.80

2004 1,470,789 866,930 603,859 - - N/A

2005 1,825,416 834,523 990,893 - - N/A

2006 1,787,978 933,808 854,170 - - N/A

2007 2,078,673 969,809 1,108,864 - - N/A

2008 2,143,559 1,167,408 976,151 - - N/A

2009 1,911,013 1,072,232 838,781 - - N/A

2010 1,701,396 1,182,283 519,113 - 56,150 9.25

2011 1,772,078 1,148,884 623,194 65,000 84,263 4.18

2012 1,984,963 1,243,713 741,250 70,000 82,038 4.88

¹ Total revenues include operating revenues, interest, other nonoperating revenues, and capital contributions.² Total expenses include operating expenses and operating transfers, exclusive of depreciation and interest.

Debt Service

City of Zeeland, MichiganPLEDGED REVENUE COVERAGE - CLEAN WATER UTILITY


90

City of Zeeland, MichiganSTATE REVENUE SHARING


FiscalState Sales Tax: PA 140 of 1971 2003 2004 2005 2006Constitutional 386,979$ 382,777$ 391,909$ 398,583$ Statutory 253,899 193,214 177,804 164,791 TOTAL 640,878$ 575,991$ 569,713$ 563,374$

Michigan Transportation Fund: PA 51 of 1951Major Streets 273,579$ 294,790$ 284,353$ 283,452$ Local Streets 101,030 109,124 105,503 103,031 Winter Maintenance (Snow) 13,972 6,878 5,045 1,922

388,581$ 410,792$ 394,901$ 388,405$

Metro Authority: PA 48 of 2002Public Right-of-Way N/A 17,274$ 19,048$ 17,612$

91

Table 25

Year2007 2008 2009 2010 2011 2012390,300$ 403,331$ 380,390$ 366,559$ 364,375$ 395,239$ 156,297 143,266 143,266 99,181 101,365 65,802 546,597$ 546,597$ 523,656$ 465,740$ 465,740$ 461,041$

288,907$ 281,886$ 271,206$ 266,417$ 270,274$ 276,857$ 110,556 99,633 95,937 94,305 95,714 97,608

11,212 23,849 15,215 16,063 15,253 19,336 410,675$ 405,368$ 382,358$ 376,785$ 381,242$ 393,801$

17,535$ 18,030$ 18,140$ 18,575$ 17,087$ 17,974$

92

City of Zeeland, MichiganDEMOGRAPHIC STATISTICS


Table 26

Fiscal City of Zeeland State of MichiganYear Ended City of Zeeland Estimated Per Capita Unemployment Unemployment

June 30 Population¹ Personal Income² Personal Income Personal Income² Rate³ Rate

2003 5,805 7,134,942,000$ 165,953,340$ 28,588$ 5.9% 6.9%

2004 5,805 7,539,371,000 173,047,050 29,810 5.5% 6.4%

2005 5,805 7,845,325,000 178,463,115 30,743 5.0% 7.0%

2006 5,805 8,162,000,000 183,884,985 31,677 4.9% 6.5%

2007 5,478 8,498,925,000 179,612,664 32,788 5.1% 7.1%

2008 5,448 8,775,000,000 183,624,840 33,705 7.2% 8.0%

2009 5,448 8,313,000,000 172,892,280 31,735 12.9% 14.1%

2010 5,465 8,732,000,000 180,722,085 33,069 11.3% 12.6%

2011 5,504 8,994,921,000 185,908,608 33,777 8.5% 10.6%

2012 5,504 N/A N/A N/A 6.6% 8.5%

¹ Source: U.S. Census Bureau² U.S. Department of Commerce, Bureau of Economic Analysis, Holland-Grand Haven Metropolitan Statistical Area³ U.S. Department of Labor, Bureau of Labor Statistics, Holland-Grand Haven Metropolitan Statistical Area

93

Table 27

Employer Principal Product/Service Employees Rank% of Total Employees Rank

Gentex Corporation Automotive and Glass Parts 3,480 1 30.9% 2,000 1

Herman Miller, Inc. Institutional Furniture 1,337 2 11.9% 1,684 2

Zeeland Public Schools Elementary/Secondary Education 778 3 6.9% 658 3

ODL Inc Glass and Skylights 316 4 2.8% 431 6

Mead Johnson Infant Formula 346 5 3.1% 363 7

Howard Miller Clock Co. Grandfather and Wall Clocks 227 6 2.0% 490 4

ITW Drawform Stamping Operations 251 7 2.2% 300 8

Woodward FST Airline/Aerospace Fuel Systems 269 8 2.4% 223 9

Plascore, Inc. Structural Honeycomb Products 216 9 1.9% 200 10

Innotec Corporation Automotive and Furniture Parts 206

Providence Healthcare & Rehabilitation Senior Health Care 200 10 1.8% - -

Zeeland Community Hospital Medical - - - 470 5

Total Employees Ten Largest Employers 7,626 67.7%


2003

City of Zeeland, MichiganPRINCIPAL EMPLOYERS


2012

94

City of Zeeland, MichiganFULL TIME EQUIVALENT CITY GOVERNMENT EMPLOYEES BY FUNCTION

Last Seven1 Fiscal Years

Table 28

2006 2007 2008 2009 2010 2011 2012

FunctionGeneral Government

Administration 1.50 1.50 1.50 1.75 1.75 1.75 1.75 Clerk 2.50 2.50 2.50 1.50 1.50 1.50 1.50 Finance/Treasury 3.75 3.75 3.75 2.06 2.10 2.10 1.76 Assessing 2.50 2.50 2.50 2.19 1.55 1.55 1.55 Cemetery 3.00 3.00 3.00 1.10 1.10 1.10 1.21 Custodial 2.50 2.50 2.50 4.20 4.20 4.20 4.50 Economic Development - 1.00 1.00 1.00 1.00 1.00 1.00

Public SafetyPolice 11.75 11.75 11.75 11.40 11.78 11.78 12.12 Fire/Rescue 2.50 2.50 2.50 0.96 1.00 1.00 0.50 Building and Zoning 2.00 2.00 2.00 2.20 2.45 2.45 2.45

Culture and RecreationLibrary 8.00 8.00 8.00 8.42 8.22 8.22 8.92 Community Center 1.50 1.50 1.50 0.60 0.80 0.80 0.60 Parks 1.50 1.50 1.50 1.83 1.83 1.83 2.07

Public WorksStreets & Motor Pool 6.50 6.50 6.50 7.05 7.66 7.66 5.62 Electric Utility 22.00 22.00 22.00 18.80 18.43 18.43 19.76 Water Utility 2.50 2.50 2.50 6.71 7.39 7.39 5.41 Clean Water Utility 5.75 5.75 5.75 6.92 6.24 6.24 7.24

Total 79.75 80.75 80.75 78.69 79.00 79.00 77.96

Source: City of Zeeland1 Full-time equivalents for prior years are not available.

95

City of Zeeland, MichiganLABOR CONTRACTS

Current Fiscal Year

Table 29

The City has 64 full-time employees, of which 34% are represented by labor organizations. Following is a list of theorganizations, number of the members, and contract extension dates.

ContractNumber of Expiration

Name of Organization Members Date

Fraternal Order of Police 7 June 30, 2014Utility Workers Union of America, AFL-CIO (Electric and Water Utility Employees) 15 June 30, 2013Non-Affiliated Employees 42 N/A

Total Full-time Employees 64


96

Fiscal2003 2004 2005 2006

FunctionGeneral government

Area - square miles 3 3 3 3 Population 5,805 5,805 5,805 5,805 Number of registered voters 3,689 3,875 3,896 3,896 Number of tax bills 6,062 6,052 6,092 6,146

Public safetyPolice

Number of incidents 3,460 3,002 2,837 3,148 Physical arrests 895 631 556 507 Traffic violations 533 807 824 776

Fire/RescueNumber of incidents 156 134 110 103 Mutual aid agreements¹ 2 2 2 2

EMS/Rescue²Number of incidents 435 490 475 509

Building and zoningNumber of construction permits 222 215 206 209 Value of permits 14,345,093$ 4,255,569$ 47,201,031$ 40,099,884$

Streets and highwaysMiles reconstructed 0.50 1.10 0.90 0.90 Miles resurfaced 0.70 0.60 1.20 1.10

Recreation and cultureLibrary circulation 189,073 207,287 239,832 239,278 Patron visits 183,438 194,626 198,347 N/ACommunity center rentals N/A N/A N/A N/ACommunity center attendance N/A N/A N/A 15,360

Public worksParking lots 6 6 6 6 Cemetery - acres 15 15 17 17

Electric UtilityConnections - residential 4,600 4,810 4,920 5,030 Connections - commercial/industrial 645 660 710 730 M.W.H. generated and purchased 282,222 291,528 307,608 323,825 M.W.H. sold 262,744 273,386 286,370 304,808 Revenues from sales 15,823,610$ 15,868,080$ 17,093,517$ 20,104,349$

Water UtilityConnections - residential 2,165 2,190 2,232 2,252 Connections - commercial/industrial 367 370 386 388 Pumped - million gallons 1,401 1,224 1,367 1,386 Sold - million gallons 1,370 1,207 1,299 1,361 Revenues from sales 3,006,226$ 2,903,300$ 3,128,092$ 3,245,258$

Clean Water UtilityConnections - residential 2,182 2,230 2,201 2,203 Connections - commercial/industrial 332 329 330 344 Average daily sewage treatment 1.16 1.17 1.17 1.21 Treated effluent - million gallons 421 427 429 432 Residuals - million gallons 1.45 1.28 1.32 1.13 Revenues from sales 1,409,342$ 1,403,136$ 1,548,347$ 1,590,235$

Source: City of Zeeland¹ Mutual Aid Agreements are formalized for the Counties of Ottawa, Allegan, and Kent;

Michigan Emergency Management Assistance Compact (MEMAC) and the Mutual Aid Box Alarm System (MABAS).² EMS/Rescue are reported with Fire/Rescue beginning in 2009Public Safety Statistics are calendar year

City of Zeeland, MichiganOPERATING INDICATORS BY FUNCTION


97

Table 30

Year2007 2008 2009 2010 2011 2012

3 3 3 3 3 3 5,478 5,448 5,448 5,465 5,504 5,504 3,878 3,923 3,868 3,845 4,003 4,023 6,005 6,254 6,200 6,176 6,038 6,232

3,334 2,977 2,707 2,638 2,842 N/A456 377 392 382 490 N/A

1,132 908 990 911 1,156 N/A

85 110 536 532 521 N/A2 3 3 5 5 15

420 424 - - - -

184 184 147 140 132 171 14,367,868$ 7,021,578$ 9,048,404$ 6,376,322$ 3,987,208$ 51,958,990$

0.58 1.07 0.55 0.59 0.10 0.45 - 1.00 1.15 0.20 1.55 0.30

239,636 255,342 268,383 257,780 261,856 272,064 178,213 179,400 191,160 188,340 194,365 197,453

729 811 1,127 1,211 1,234 1,245 18,977 17,977 23,241 23,854 22,705 21,532

6 6 6 6 6 6 17 17 17 17 17 17

5,055 5,090 5,161 5,246 5,224 5,300 760 765 809 811 775 788

332,434 336,871 313,989 320,400 330,145 343,049 312,293 314,428 295,442 296,506 311,937 324,406

18,366,973$ 20,872,508$ 19,955,658$ 20,870,023$ 22,746,223$ 24,462,493$

2,245 2,248 2,257 2,261 2,261 2,309 407 407 429 426 436 424

1,408 1,427 1,253 1,183 1,295 1,642 1,372 1,398 1,211 1,150 1,274 1,641

3,343,128$ 3,476,026$ 3,294,457$ 3,323,842$ 3,479,646$ 3,914,987$

2,190 2,216 2,205 2,206 2,185 2,198 353 354 351 349 358 361

1.21 1.31 1.38 1.21 1.33 1.33 442 463.5 502.6 463.7 489.7 477.5

1.22 1.28 1.40 1.52 1.34 1.38 1,690,374$ 1,616,629$ 1,628,955$ 1,584,278$ 1,717,077$ 1,746,305$

98

Fiscal2003 2004 2005 2006

FunctionPublic Safety

PoliceNumber of stations 1 1 1 1 Number of patrol vehicles 5 5 5 5

FireNumber of stations 2 2 2 2 Number of Fire Fighting Apparatus 5 5 5 5 Number of K9 Teams 1 1 1 1

Emergency Medical/Rescue Number of Rescue Vehicles 2 2 2 2

Culture and RecreationLibrary 1 1 1 1 Community centers 2 2 2 2 Number of parks 8 8 8 8 Number of acres in parks 30.2 30.2 30.5 30.5 Park pavillions 6 6 6 6 Playgrounds 4 4 4 4 Tennis courts 3 3 3 3 Bike trails - miles N/A N/A 6 6.3

StreetsMiles of Major streets 10.67 10.87 10.87 11.17 Miles of Local streets 19.59 19.29 19.49 19.49 Miles of Sidewalks N/A N/A N/A 24 Traffic signals 6 6 6 6 Street Light Accounts 118 118 120 120 Street garage buildings leased or owned 3 3 3 3 Storm sewers - miles 14 16 15.5 15.5

Parking Lots Owned - square feet 166,700 166,700 166,700 166,700 Leased - square feet 71,500 71,500 71,500 71,500

Electric UtilityNumber of distribution stations 4 4 4 4 Miles of service lines

Overhead 46 48 45 44 Underground 63 66 69 73

Water UtilityNumber of Storage Tanks 5 5 5 5 Miles of Distribution Mains 47 47 48 49 Number of Fire Hydrants N/A N/A 531 540

Clean Water UtilityMiles of Sanitary Sewer 31 37 37 37 Major Lift Stations 7 7 7 7


City of Zeeland, MichiganCAPITAL ASSETS STATISTICS BY FUNCTION


99

Table 31

Year2007 2008 2009 2010 2011 2012

1 1 1 1 1 1 6 5 5 5 5 5

2 2 2 2 2 2 5 5 5 5 5 5 1 1 1 1 - -

2 2 2 2 2 2

2 2 2 2 2 2 2 2 2 2 2 2 8 8 8 8 8 8

30.5 30.5 30.5 30.5 30.5 30.5 6 6 8 8 8 8 4 4 4 4 4 4 3 3 3 3 3 3

7.5 8.7 8.6 8.6 8.6 8.6

11.17 11.17 11.17 11.17 11.17 11.17 19.49 19.49 19.49 19.49 19.49 19.49 24.16 24.49 24.62 24.88 25.29 25.29

6 7 7 7 7 7 125 125 125 125 123 123

2 3 3 3 3 3 15.5 15.5 15.5 15.8 15.8 15.8

166,700 166,700 166,700 166,700 166,700 166,700 71,500 71,500 71,500 71,500 71,500 71,500

4 4 4 4 4 4

48 48 47 46 46 44 79 82 87 89 91 93

5 5 5 5 5 5 51 51 51 49 49 49

548 555 558 530 567 570

37 37 37 37 37 37 7 7 7 7 7 7

city of zeeland, michigangfoa.net/cafr/coa2012/zeelandmi.pdf21 south elm street • zeeland,...

Documents