Annual Comprehensive Financial Reports ACFR-2020

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                         CITY OF MUSKEGON,
                              MICHIGAN




                         COMPREHENSIVE
                     ANNUAL FINANCIAL REPORT
                       FOR THE YEAR ENDED
                          JUNE 30, 2020




                             Prepared By

                    FINANCIAL SERVICES DIVISION




Elizabeth Lewis                              James Maurer
Finance Director                             Information Systems Director

Kenneth Grant                                Mike VanderMolen
Assistant Finance Director                   Management Assistant

Sarah Petersen
City Treasurer
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                                                                     City of Muskegon

                                                                TABLE OF CONTENTS


INTRODUCTORY SECTION

Letter of Transmittal .................................................................................................................................. 5
Certificate of Achievement for Excellence in Financial Reporting......................................................... 11
Organization Chart .................................................................................................................................. 12
List of Principal Officials ........................................................................................................................ 13


FINANCIAL SECTION

Independent Auditor’s Report ................................................................................................................. 17
Management’s Discussion and Analysis ................................................................................................. 21
Basic Financial Statements
 Government-wide Financial Statements
   Statement of Net Position ................................................................................................................. 34
   Statement of Activities ...................................................................................................................... 35
 Fund Financial Statements
   Governmental Funds
      Balance Sheet ................................................................................................................................ 36
      Reconciliation of the Governmental Funds Balance Sheet
        to the Statement of Net Position ................................................................................................. 37
      Statement of Revenues, Expenditures and Changes
        in Fund Balances (Deficit).......................................................................................................... 38
      Reconciliation of the Governmental Funds Statement of Revenues,
        Expenditures and Changes in Fund Balances to the Statement of
        Activities .................................................................................................................................... 39
   Proprietary Funds
      Statement of Net Position .............................................................................................................. 40
      Statement of Revenues, Expenses and Changes in Net Position ................................................... 41
      Statement of Cash Flows ............................................................................................................... 42
   Fiduciary Funds
      Statement of Fiduciary Assets and Liabilities ............................................................................... 43
 Discretely Presented Component Units
   Statement of Net Position ................................................................................................................. 44
   Statement of Activities ...................................................................................................................... 45
   Notes to Financial Statements .............................................................................................................. 46
Required Supplementary Information
 Budgetary Comparison Schedule—General Fund ............................................................................... 84
 Budgetary Comparison Schedule—Major Street and Trunkline Fund ................................................ 89
 Schedule of Changes in Net Pension Liability and Related Ratios ...................................................... 90
 Pension System Schedule of Contributions ......................................................................................... 91
 Retiree Healthcare System Schedule of Changes in the
  Net OPEB Liability and Related Ratios ............................................................................................. 92
 Retiree Healthcare System Schedule of Contributions ........................................................................ 93


                                                                                   1
                                                                     City of Muskegon

                                                                TABLE OF CONTENTS


Other Supplemental Information
 Other Governmental Funds
   Description of Other Governmental Funds ....................................................................................... 96
   Combining Balance Sheet ................................................................................................................. 98
   Combining Statement of Revenues, Expenditures and Changes in
      Fund Balances................................................................................................................................ 99
   Other Special Revenue Funds
      Combining Balance Sheet............................................................................................................ 100
      Combining Statement of Revenues, Expenditures and Changes in
        Fund Balances .......................................................................................................................... 101
      Budgetary Comparison Schedule—Other Special Revenue Funds ............................................. 102
   Other Capital Projects Funds
      Combining Balance Sheet............................................................................................................ 105
      Combining Statement of Revenues, Expenditures and Changes in
        Fund Balances .......................................................................................................................... 106
 Internal Service Funds
   Description of Internal Service Funds ............................................................................................ 107
   Combining Statement of Net Position ............................................................................................ 108
   Combining Statement of Revenues, Expenses and
      Changes in Fund Net Position ..................................................................................................... 109
   Combining Statement of Cash Flows.............................................................................................. 110
 Fiduciary Funds
   Description of Fiduciary Funds....................................................................................................... 111
   Agency Funds
      Combining Statement of Assets and Liabilities ........................................................................... 112
      Statement of Changes in Assets and Liabilities ........................................................................... 113
 Discretely Presented Component Units
   Description of Discretely Presented Component Units .................................................................. 115
   Combining Balance Sheet ............................................................................................................... 116
   Reconciliation of the Governmental Funds Balance Sheet
      to the Statement of Net Position .................................................................................................. 117
   Combining Statement of Revenues, Expenditures and Changes
      in Fund Balances (Deficits) ......................................................................................................... 118
   Reconciliation of the Governmental Funds Statement of Revenues,
      Expenditures and Changes in Fund Balances (Deficits) to the Statement
      of Activities ................................................................................................................................. 119
 Schedule of Indebtedness ................................................................................................................... 121




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                                                                   City of Muskegon

                                                              TABLE OF CONTENTS


STATISTICAL SECTION

Financial Trends
  Net Assets/Net Position by Component ............................................................................................. 126
  Changes in Net Assets/Net Position ................................................................................................... 127
  Fund Balances of Governmental Funds ............................................................................................. 129
  Changes in Fund Balances of Governmental Funds .......................................................................... 130
Revenue Capacity
  Governmental Activities Revenues by Source ................................................................................... 131
  Taxable, Assessed and Equalized and Estimated Actual Valuation of Property................................ 132
  Principal Property Taxpayers ............................................................................................................. 133
  Property Tax Rates – Direct and Overlapping Government Units ..................................................... 134
  Property Tax Levies and Collections ................................................................................................. 135
  Total Income Tax Collected and Number of Returns Filed ............................................................... 136
Debt Capacity
  Ratio of Outstanding Debt by Type ................................................................................................... 138
  Direct and Overlapping Debt ............................................................................................................. 139
  Legal Debt Margin Information ......................................................................................................... 140
  Revenue Bond Coverage .................................................................................................................... 141
Demographic and Economic Information
  Demographic and Economic Statistics ............................................................................................... 142
  Principal Employers ........................................................................................................................... 143
Operation Information
  Full-time Equivalent Government Employees ................................................................................... 144
  Operating Indicators by Function/Program ........................................................................................ 145
  Capital Asset Statistics by Function/Program .................................................................................... 146

SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS

Independent Auditor’s Report on Internal Control over Financial
   Reporting and on Compliance and Other Matters Based on an
   Audit of Financial Statements Performed in Accordance with
   Government Auditing Standards .................................................................................................... 148
Independent Auditor’s Report on Compliance for Each Major
   Program and on Internal Control over Compliance Required by
   the Uniform Guidance .................................................................................................................... 150
Schedule of Expenditures of Federal Awards ..................................................................................... 152
Notes to Schedule of Expenditures of Federal Awards ....................................................................... 154
Schedule of Findings and Responses................................................................................................... 155
Client Documents
   Summary Schedule of Prior Audit Findings ................................................................................... 158
   Corrective Action Plan ................................................................................................................... 159




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Affirmative Action
(231)724-6703
FAX (231)722-1214

Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129

Cemetery/Forestry
(231)724-6783
FAX (231)724-4188

City Manager
(231)724-6724
FAX (231)722-1214     December 22, 2020
Clerk
(231)724-6705
FAX (231)724-4178
                      To the Honorable Mayor, Members of the City Commission and Citizens of the City of
Comm. & Neigh.
Services
                      Muskegon:
(231)724-6717
FAX (231)726-2501
                      State law requires that every general-purpose local government publish, within six
Computer Info.        months of the close of each fiscal year, a complete set of audited financial
Technology
(231)724-4126         statements. This report is published to fulfill that requirement for the fiscal year ended
FAX (231)722-4301     June 30, 2020.
Engineering
(231)724-6707
FAX (231)727-6904     Management assumes full responsibility for the completeness and reliability of the
                      information contained in this report, based upon a comprehensive framework of
Finance
(231)724-6713         internal control that it has established for this purpose. Because the cost of internal
FAX (231)726-2325     control should not exceed anticipated benefits, the objective is to provide reasonable,
Fire Department       rather than absolute, assurance that the financial statements are free of any material
(231)724-6795
FAX (231)724-6985
                      misstatements.
Human Resources
Co. (Civil Service)   Brickley DeLong, PC, Certified Public Accountants, have issued an unmodified
(231)724-6442         (“clean”) opinion on the City of Muskegon’s financial statements for the year ended
FAX (231)724-6840
                      June 30, 2020. The independent auditor’s report is located at the front of the financial
Income Tax
(231)724-6770
                      section of this report.
FAX (231)724-6768

Mayor’s Office
                      Management’s discussion and analysis (MD&A) immediately follows the independent
(231)724-6701         auditor’s report and provides a narrative introduction, overview, and analysis of the
FAX (231)722-1214
                      basic financial statements. MD&A complements this letter of transmittal and should
Planning/Zoning       be read in conjunction with it.
(231)724-6702
FAX (231)724-6790

Police Department
(231)724-6750         Profile of the government
FAX (231)722-5140
                      The City of Muskegon operates under a commission-manager form of government
Public Works
(231)724-4100         and provides a full range of traditional municipal services. Policy-making and
FAX (231)722-4188     legislative authority are vested in the governing board (Commission) consisting of the
SafeBuilt             mayor and six commissioners. Two commissioners are elected at large and each of
(Inspections)         the four ward commissioners is elected by the voters of their respective wards.
(231)724-6715
FAX (231)728-4371     Commission members serve four-year terms, with the two at large members elected
Treasurer             every four years in odd years and the four ward commissioners elected every four
(231)724-6720         years in even years. The Mayor is also elected at-large for a four-year term. The
FAX (231)724-6768
                      Mayor and Commission appoint the City of Muskegon’s manager.
Water Billing
(231)724-6718
FAX (231)724-6768

Water Filtration
(231)724-4106
FAX (231)755-5290                                            5
The City of Muskegon provides a full range of services, including police and fire protection;
solid waste collection; parks and recreation activities; the construction and maintenance of
streets and roadways; street snowplowing; traffic control; building inspections; licenses and
permits; water distribution and sewer disposal services; community and economic
development; and general administrative support services. The City also provides treated
drinking water to several surrounding communities.

The Commission is required to adopt an initial budget for the fiscal year no later than the last
regular meeting in June preceding the beginning of the fiscal year on July 1. This annual
budget serves as the foundation for the City of Muskegon’s financial planning and control. The
budget is prepared by fund, function (e.g., public safety), and department (e.g., police). The
City Manager and department heads may transfer resources within a department as they see
fit. Transfers between departments, however, need special approval from the Commission.


Local economy
The City of Muskegon is located in western Michigan on the shores of Lake Michigan. The
City covers 18 square miles (including 4 miles of water) and, with a 2010 census population of
38,401, is the largest city on the eastern shore of Lake Michigan. The City is located in
Muskegon County and is part of the Muskegon-Norton Shores Metropolitan Statistical Area
(MSA).
Muskegon is home to many outstanding sports, recreation and cultural activities:
   •   Muskegon is the eastern terminus for the high-speed cross-lake ferry. Connecting
       Muskegon with Milwaukee, Wisconsin, the Lake Express service ferries 100,000-plus
       passengers each season between the two cities. 2020 marks the ferry service’s
       seventeenth successful year of operations.
   •   Muskegon is home to the annual Miss Michigan pageant.
   •   Pere Marquette beach is nationally recognized as one of the best beaches in the nation,
       and welcomes tens of thousands of visitors from across the United States each
       summer.
   •   Muskegon is home to successful summertime festivals that attract tens of thousands of
       visitors to the community. These include Taste of Muskegon, which attracts thousands
       of visitors to Muskegon each June, Bike Time and Rebel Road, which attract motorcycle
       enthusiasts to the City in July, the Unity Christian Music Festival, Shoreline Jazz
       Festival, Great Lakes Surf Festival, and the Burning Foot Beer Fest in August, and the
       Muskegon Polish Festival and Michigan Irish Music Festival in September.




                                               6
   •   Muskegon is the cultural hub for west Michigan with numerous museums and live
       performances. The Muskegon Museum of Art has one of the largest and premier art
       collections in the Midwest, and the Muskegon County Museum provides insight into the
       area’s history. The former residences of Muskegon’s lumber barons, Charles H.
       Hackley and Thomas Hume, proudly display the glory of the Victorian age. The Fire
       Barn Museum takes visitors back to an 1890’s Muskegon Fire Station. The West Shore
       Symphony and Muskegon Civic Theater bring the stage of the Frauenthal Center for the
       Performing Arts to life throughout the year. The Heritage Museum provides historic
       perspective on the city’s industrial roots.
   •   Muskegon’s downtown is home to dozens of monumental public art pieces, and new
       pieces are acquired each year.
   •   Muskegon is home to three historic museum ships that attract thousands of visitors
       each year:
       •   USS Silversides, a rare surviving World War II submarine maintained in pristine
           condition is docked at the Muskegon Lake Channel;
       •   LST-393, a landing craft used in the D-day invasion and one of only two such
           vessels remaining in existence is docked downtown Muskegon at the West Michigan
           Dock and Market; and the
       •   Milwaukee Clipper, a Great Lakes passenger ship built before the Titanic that for
           many years served as a cross-lake ferry between Muskegon and Milwaukee is
           docked in the Lakeside Business District.

Muskegon has a diverse local economy. The manufacturing sector is strong in the areas of
aerospace, plastics, defense, metals and castings, office furniture, recreational items, and
automotive parts. The City of Muskegon also benefits from being home to large government,
corrections, healthcare, and educational employers. Even though these institutions are
exempt from paying property taxes, local income tax withholdings remitted by these employers
provide stability to City finances.

The local economy has experienced some significant adjustments to the COVID-19 pandemic.
However, headed into the pandemic, all local indicators pointed to a strong economy – with
both corporate profits and income tax withholdings significantly higher than previous years.
Indications are that the local economy will recover to pre-COVID-19 levels in 2021.

The City fully recognizes the difficulties it faces as an older urban rust-belt community. Thus,
we have attempted to position ourselves as a leader in fiscal stability and sustainability.




                                               7
Long-term financial planning and major initiatives
Unassigned fund balance in the General Fund at year end was 20.6% of total actual General
Fund revenues for the preceding year. This amount was well above the policy guidelines set
by the Commission for budgetary and planning purposes (i.e., 13% of total actual General
Fund revenue for the preceding year). Adequate fund balances are maintained to allow the
City to continue providing services to the community in case of unexpected emergencies or
requirements and/or economic downturns.

The City incorporates a five-year fiscal forecast into its yearly budget process. The forecast is
a macro-level projection of major revenue sources, expenses and fund balances, taking into
account identifiable factors, recent trends and management’s judgment as to future
developments. Two years ago, the City purchased a new web-based information source
providing financial information and forecasting for municipal governments and schools. This
new system should provide staff with enhanced information to improve forecasting.

Among the City's major initiatives and accomplishments in fiscal year 2019-20 were the
following:
   •   Downtown Muskegon experienced the commencement and/or completion of a number
       of development projects. The 1021 Jefferson project will provide low and moderate
       income workforce housing adjacent to city hall in a mixed-use setting; the Western
       Place Townhouses have been completed, and all 14 units are occupied; funding was
       secured for the second phase of Lakeview Lofts and the Leonard Building – both five
       story mixed-use buildings.
   •   Staff has made significant progress in addressing the former rail line that bisects the
       Windward Pointe development site – this is the last major hurdle to commencing
       development on the 120-acre site.
   •   The City continued construction on the $21 Million convention center that will be
       attached to the both the Delta Marriott hotel and the Mercy Health Arena. Substantial
       completion is anticipated in February 2021.
   •   Construction of Midtown Square Phase 2, which consists of 10 townhouses and 6 single
       family homes in the Nelson neighborhood, was started in 2019.
   •   KL Outdoor, the world’s largest manufacturer of kayaks, filed for bankruptcy, but was
       purchased within weeks. The new 500,000 square foot distribution center that was
       opened in the Port City Industrial Park in early 2019 is still in operation. The new KL
       Outdoors Company has pledged to keep most of the jobs in Muskegon – using most of
       the company’s pre-bankruptcy facilities.




                                                8
Relevant financial policies
The City of Muskegon has adopted a comprehensive set of financial policies used to ensure
adequate protection of the City’s assets from loss, theft, or misuse, and provide adequate
accounting data to allow for preparation of financial statements in conformity with generally
accepted accounting principles.

Budgetary control is maintained through an annual budget resolution passed by the City
Commission. Budgetary control at the functional level is maintained by review of estimated
expenditures prior to making purchases. Encumbrances are not recorded in the City’s funds.
The City does, however, utilize an informal monitoring system to facilitate budgetary control
over proposed purchases. Essentially, this system entails the use of on-line budgetary
information that details year-to-date “actual versus budgeted” expenditure comparisons by
budget category. This information is accessible to appropriate personnel to enable them to
ascertain the budget status of an expenditure category prior to authorizing additional
purchases.


Awards and Acknowledgements
The Government Finance Officers Association of the United States and Canada (GFOA)
awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of
Muskegon for its comprehensive annual financial report (CAFR) for the fiscal year ended June
30, 2018. This was the 32nd consecutive year that the City has received this award. The City
has submitted the June 30, 2019 CAFR for consideration but has not received award
confirmation at this time. In order to be awarded a Certificate of Achievement, a government
must publish an easily readable and efficiently organized CAFR that satisfies both generally
accepted accounting principles and applicable program requirements.

 A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one
year only. However, we believe our current CAFR continues to meet the Certificate of
Achievement for Excellence in Financial Reporting Program’s requirements, and we are
submitting it to the GFOA to determine its eligibility for another certificate.




                                               9
The preparation of this report would not have been possible without the skill, effort, and
dedication of the Finance Division and the entire city staff. We express appreciation to those
staff members who assisted and contributed to the preparation of this report. Credit also must
be given to the Mayor and Commissioners for their support for maintaining the highest
standards of professionalism in the management of the City of Muskegon’s finances.


Respectfully submitted,




Frank Peterson                                Elizabeth Lewis
City Manager                                  Finance Director




                                              10
          Government Finance Officers Association


                Certificate of
                 Achievement
                for Excellence
                 in Financial
                  Reporting
                       Presented to

               City of Muskegon
Text38:
                   Michigan
               For its Comprehensive Annual
                       Financial Report
                 for the Fiscal Year Ended


                     June 30, 2018



                   Executive Director/CEO




                             11
                                      Organizational Structure 2019-20
                                                          Mayor and City Commission

                                                     City Manager                                                                     External Auditors
                                                                                                                                         City Attorney
                                                                                                                                    Planning Commission
                                    Finance and                    Public Works                                                   Zoning Board of Appeals
        Public Safety                                                                         Development Services
                                Administrative Services                                                                        Historic District Commission
                                                                                                                             Housing Code Board of Appeals
                                                                                                                                       Board of Review
                                 Finance Administration                                                                        Income Tax Board of Review
                                  Treasury/Income Tax                                              Community                      Civil Service Commission
                                         City Clerk               Streets/Highways                Development                              DDA/BRA
           Police                 Information Systems                  Utilities              Neighborhood Services                          LDFA
                                                                Parks and Recreation             Planning/Zoning




12
            Fire                     Public Relations                                                                                      BID Board
     Code Enforcement                    Elections              Cemeteries Sanitation         Economic Development           Equal Opportunities Committee
                                    Risk Management                  Streetlights               Strategic Planning             Local Officers Compensation
                                   Employee Relations                                             Special Events                          Committee
                                     Farmers Market                                                                            Citizen's Police Review Board
                                                                                                                                    CDBG District Council
                                                                                                                                    Election Commission
       Environmental Code                                                                                                     Construction Board of Appeals
            (SAFEbuilt)          Human Resources (County)          Consumers Energy
      Inspections (SAFEbuilt)       Assessing (County)           Republic Waste Services         Muskegon Area First                Housing Commission
     Prosecutions (Parmenter    LC Walker Arena (Two T's LLC)      County Wastewater
             O'Toole)



                                                                       Elected Officials

                                   Independent Bodies                   Municipal Executive                 Division Heads

                                                                            Frontline Staff                   Contractual
                      COMPREHENSIVE ANNUAL FINANCIAL REPORT
                           CITY OF MUSKEGON, MICHIGAN
                            LIST OF PRINCIPAL OFFICIALS

                                                June 30, 2020




                                          ELECTED OFFICIALS


Mayor. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Stephen J. Gawron
At Large

Vice Mayor-Commissioner. . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . Eric Hood
Ward 1

Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Willie German
Ward 2

Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Teresa Emory
Ward 3

Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Michael Ramsey
Ward 4

Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Ken Johnson
At Large

Commissioner. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Dan Rinsema-Sybenga
At Large

                                        APPOINTED OFFICIALS




City Manager. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Frank Peterson

City Attorney. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . John C. Schrier

Finance Director. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Elizabeth Lewis




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                   14
FINANCIAL SECTION




        15
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                   16
                                    INDEPENDENT AUDITOR’S REPORT



City Commission
City of Muskegon
Muskegon, Michigan


We have audited the accompanying financial statements of the governmental activities, the business-type
activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund
information of the City of Muskegon, Michigan as of and for the year ended June 30, 2020, and the related notes
to the financial statements, which collectively comprise the City's basic financial statements as listed in the table
of contents.

Management’s Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these financial statements in accordance
with accounting principles generally accepted in the United States of America; this includes the design,
implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial
statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility
Our responsibility is to express opinions on these financial statements based on our audit. We conducted our
audit in accordance with auditing standards generally accepted in the United States of America and the standards
applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of
the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the
financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the
risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the
purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no
such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the
reasonableness of significant accounting estimates made by management, as well as evaluating the overall
presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit
opinions.




                               Grand Haven | Grand Rapids | Hart | Muskegon

                                                www.brickleydelong.com
                                                          17
BRICKLEY DELONG


City Commission
City of Muskegon
Page 2


Opinions
In our opinion, the financial statements referred to above present fairly, in all material respects, the respective
financial position of the governmental activities, the business-type activities, the aggregate discretely presented
component units, each major fund, and the aggregate remaining fund information of the City of Muskegon,
Michigan, as of June 30, 2020, and the respective changes in financial position and, where applicable, cash flows
thereof for the year then ended in accordance with accounting principles generally accepted in the United States
of America.

Other Matters
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the management's
discussion and analysis, budgetary comparison schedules, and pension and other post-employment benefit
information on pages 21 through 31 and 84 through 93 be presented to supplement the basic financial statements.
Such information, although not a part of the basic financial statements, is required by the Governmental
Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic
financial statements in an appropriate operational, economic, or historical context. We have applied certain
limited procedures to the required supplementary information in accordance with auditing standards generally
accepted in the United States of America, which consisted of inquiries of management about the methods of
preparing the information and comparing the information for consistency with management’s responses to our
inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial
statements. We do not express an opinion or provide any assurance on the information because the limited
procedures do not provide us with sufficient evidence to express an opinion or provide any assurance.

Other Information
Our audit was conducted for the purpose of forming opinions on the financial statements that collectively
comprise the City of Muskegon, Michigan's basic financial statements. The introductory section, combining and
individual nonmajor fund financial statements, budgetary comparison information for nonmajor funds, schedule
of indebtedness, and statistical section, are presented for purposes of additional analysis and are not a required
part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of
additional analysis as required by Title 2 U.S. Code of Federal Regulations (CFR) Part 200, Uniform
Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a
required part of the basic financial statements.




                                                         18
BRICKLEY DELONG


City Commission
City of Muskegon
Page 3


Other Matters—Continued
Other Information—Continued
The combining and individual nonmajor fund financial statements, budgetary comparison information for
nonmajor funds, schedule of indebtedness, and the schedule of expenditures of federal awards are the
responsibility of management and were derived from and relate directly to the underlying accounting and other
records used to prepare the basic financial statements. Such information has been subjected to the auditing
procedures applied in the audit of the basic financial statements and certain additional procedures, including
comparing and reconciling such information directly to the underlying accounting and other records used to
prepare the basic financial statements or to the basic financial statements themselves, and other additional
procedures in accordance with auditing standards generally accepted in the United States of America. In our
opinion, the combining and individual nonmajor fund financial statements, budgetary comparison information for
nonmajor funds, schedule of indebtedness, and the schedule of expenditures of federal awards are fairly stated in
all material respects in relation to the basic financial statements as a whole.

The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of
the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.




Muskegon, Michigan
December 22, 2020




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                   20
2020 MANAGEMENT’S DISCUSSION AND ANALYSIS

This section of the City of Muskegon’s annual financial report presents our discussion and analysis of the
City’s financial performance during the fiscal year ended June 30, 2020. Please read it in conjunction
with the City’s financial statements, which follow this section.



FINANCIAL HIGHLIGHTS

The assets/deferred outflows of resources of the City of Muskegon exceeded its liabilities/deferred
inflows of resources by $89,438,792 as of June 30, 2020. The City has a deficit in unrestricted net
position of $30,438,577. The deficit in unrestricted net position is caused by the City’s long-term
pension and other postemployment benefits liabilities.

The City’s total combined net position decreased by $13,225,060 during the year ended June 30, 2020.

The City’s governmental funds reported combined ending fund balance of $21,571,564, an increase of
$4,996,547(30%) from the prior year.

The City’s General Fund reported a total fund balance of $7,901,855, a decrease of $603,340 from the
prior year balance of $8,505,195. The decrease is primarily the result of the COVID-19 pandemic.



OVERVIEW OF THE FINANCIAL STATEMENTS

This annual report consists of three parts - management’s discussion and analysis (this section), the
basic financial statements, and required supplementary information. The basic financial statements
include two kinds of statements that present different views of the City.

•   The first two statements are government-wide financial
    statements that provide both long-term and short-term
    information about the City’s overall financial status.

•   The remaining statements are fund financial statements
    that focus on individual parts of the government, reporting
    individual City operations in greater detail than the government-
    wide statements.

•   The governmental funds statements tell how general
    government services were financed in the short-term as
    well as what remains available for future spending.

•   Proprietary fund statements offer short- and long-term
    financial information about activities the City operates like
    private businesses.

•   Fiduciary fund statements provide information about the
    financial relationships in which the City acts solely as a trustee or agent
    for the benefit of others, to whom the resources in question belong.



                                                     21
The financial statements also include detailed notes that explain some of the information in the financial
statements and provide additional data. The statements are followed by a section of required
supplementary information that further explains and supports the information in the financial
statements. The figure above shows how the required parts of this annual report are arranged and
related to one another.

The remainder of this overview section of management’s discussion and analysis explains the structure
and contents of each of the statements.



Government-Wide Statements

The government-wide statements report information about the City as a whole using accounting
methods similar to those used by private-sector companies. The statement of net position includes all
of the government’s assets/deferred outflows of resources and liabilities/deferred inflows of resources.
All of the current year’s revenues and expenses are accounted for in the statement of activities
regardless of when cash is received or paid.

The two government-wide statements report the City’s net position and how they have changed. Net
position—the difference between the City’s assets/deferred outflows of resources and
liabilities/deferred inflow of resources—is one way to measure the City’s overall financial health or
position. Over time, increases or decreases in the City’s net position are an indicator of whether its
financial health is improving or deteriorating, respectively. However, to assess the overall health of the
City, one needs to consider additional nonfinancial factors such as changes in the City’s tax base.

The government-wide financial statements include not only the City of Muskegon itself (known as the
primary government), but also legally separate component units for which the City is financially
accountable. Financial information for these component units is reported separately from the financial
information presented for the primary government itself.

The government-wide financial statements of the City include the governmental activities. Most of the
City’s basic services are included here, such as public representation services, administrative services,
financial services, public safety, public works, highways, streets and bridges, community and economic
development, culture and recreation, general administration, and interest on long-term debt. Income
taxes, federal grants, property taxes and revenues from the State of Michigan finance most of these
activities.

Also included in the government-wide statements are the City’s business-type activities: water, sewer
and marina operations.




                                                    22
Fund Financial Statements

The fund financial statements provide more detailed information about the City’s major funds—not the
City as a whole. Funds are accounting devices that the City uses to keep track of specific sources of
funding and spending for particular purposes.

The City has the following kinds of funds:

•   Governmental funds—Most of the City’s basic services are included in governmental funds, which
    focus on (1) how cash and other financial assets that can readily be converted to cash flow in and
    out and (2) the balances left at year-end that are available for spending. Consequently, the
    governmental fund statements provide a detailed short-term view that helps the user determine
    whether there are more or fewer financial resources that can be spent in the near future to finance
    the City’s programs. Because this information does not encompass the additional long-term focus
    of the government-wide statements, we provide additional information on the subsequent page of
    the governmental funds statements that explain the relationship (or differences) between them.

•   Proprietary funds—Services for which the City charges customers a fee and are intended to be self-
    supporting are generally reported in proprietary funds. The City uses three proprietary funds:
    water, sewer, and marina and launch ramp. Proprietary funds, like the government-wide
    statements, provide both long-term and short-term financial information.

•   The City uses internal service funds to report activities that provide supplies and services for the
    City’s other programs and activities.

•   Fiduciary funds—The City is the trustee, or fiduciary, for certain funds. It is also responsible for
    other assets that—because of a trust arrangement—can be used only for the trust beneficiaries.
    The City is responsible for ensuring that the assets reported in these funds are used for their
    intended purposes. All of the City’s fiduciary activities are reported in a separate statement of
    fiduciary net position and a statement of changes in fiduciary net position. We exclude these
    activities from the City’s government-wide financial statements because the City cannot use these
    assets to finance its operations.

•   Component units – Finally, the City of Muskegon’s Comprehensive Annual Financial report includes
    seven component units: The Downtown Development Authority (DDA), the Tax Increment Finance
    Authority (TIFA), the Local Development Finance Authority (LDFA) and, the Brownfield
    Redevelopment Authority (BRA 1, BRA 2 , BRA 3 and BRA 4). Component units are separate legal
    entities for which the City of Muskegon has some level of financial accountability. The component
    units of the City exist primarily for the issuance and repayment of debt to finance projects in
    specific areas of the City. Accordingly, they are discussed below under the Capital Assets and Debt
    Administration heading.




                                                    23
FINANCIAL ANALYSIS OF THE CITY AS A WHOLE

Net position. The Statement of Net Position provides an overview of the City’s assets/deferred outflows
of resources, liabilities/deferred inflow of resources and net position. Over time this can provide a good
indicator of the City’s fiscal health.

The total net position of the City was $89,438,792 as of June 30, 2020. This is a decrease of $13,225,060
from reported net position for the prior year. An overview of the City’s net position follows:


                                                          City's Net Position
                                                       (In Thousands of Dollars)
                                                            Governmental                 Business-Type
                                                               Activities                   Activities                     Total             Percentage
                                                        6/30/2020     6/30/2019      6/30/2020   6/30/2019     6/30/2020     6/30/2019        Change


Current and other assets                                  $31,646       $23,349        $4,304       $6,718      $35,950        $30,067           19.57%
Capital assets                                             89,062           73,229     51,747       47,886      140,809        121,115           16.26%
Total Assets                                              120,708           96,578     56,051       54,604      176,759        151,182           16.92%
Deferred outflows of resources                               4,278          10,997        297            764      4,575            11,761        -61.10%
Total Assets and Deferred Outflows of Resources           124,986       107,575        56,348       55,368      181,334        162,943           11.29%


Long-term liabilities                                      67,333           42,851      8,880        7,517       76,213            50,368        51.31%
Other liabilities                                          10,208            6,482      4,624        3,061       14,832             9,543        55.42%
Total Liabilities                                          77,541           49,333     13,504       10,578       91,045            59,911        51.97%
Deferred inflows of resources                                 795             344          55             24        850               368       130.98%
Total Liabilities and Deferred Outflows of Resources       78,336           49,677     13,559       10,602       91,895            60,279        52.45%


Net Position
    Net investment in capital assets                       70,275           66,734     44,543       41,742      114,818        108,476            5.85%
    Restricted                                               4,460           5,519        599            599      5,059             6,118        -17.31%
    Unrestricted                                           -28,085      -14,355         -2,353       2,425       -30,438           -11,930      155.14%
Total Net Position                                        $46,650       $57,898       $42,789     $44,766       $89,439       $102,664           -12.88%



The bulk of the City’s net position $114,818,070 represents investments in capital assets net of
accumulated depreciation, less the remaining balance of debt issued to acquire those assets. These
infrastructure assets are used to provide public services to citizens and are not available for spending.

Another $5,059,299 of the City’s net position are legally restricted as to use. The City has a deficit in
unrestricted net position of $30,438,577. The deficit in unrestricted net position is caused by the City’s
long-term pension and other postemployment benefits liabilities. The City’s unrestricted net position
decreased $18,508,050 during the year.

Changes in net position. The City’s total revenues were $61,022,981 for the year ended June 30, 2020.
This represents a less than 1% increase over total revenues collected during the prior fiscal year.
Approximately 40.6% of the City’s revenue stream came from charges to users of specific services such
as water or sewer. Another 18.9% came from grants from the state and federal governments and 29.3%
was from local property and income taxes. The remainder was comprised of state revenues and other
sources such as franchise fees and investment income.


                                                            24
The total cost of all City programs and services for the year ended June 30, 2020 was $74,248,041. This
represents a 19.6% increase from reported expenses for the last fiscal year ended June 30, 2019. 74.6%
of the City’s expenses were for governmental activities such as police and fire protection, streets, parks,
and general administration. The remaining 25.4% represents the costs of the City’s business-type
activities, specifically, water, sewer and marina operations.

The table on the following page (Changes in City’s Net Position) further breaks down the change in total
net position into period-to-period changes in individual revenue and expense categories.

As can be seen, net position for governmental activities decreased $11,248,368 and the net position for
business-type activities decreased by $1,976,782. For governmental activities, most of these changes
are related to the increased net pension liability and net other postemployment benefits liability. For
business-type activities, the changes similarly represent the impact of the increased net pension liability
and other postemployment benefits liability.
                                             Changes in City’s Net Position
                                                (In thousands of dollars)
                                                      Governmental               Business-Type
                                                         Activities                 Activities                       Total             Percentage
                                                 6/30/2020    6/30/2019       6/30/2020   6/30/2019      6/30/2020     6/30/2019        Change
Program revenues
 Charges for services                               $7,980        $7,632       $16,789     $16,344        $24,769        $23,976            3.31%
 Operating grants and contributions                  7,398            6,893         94            511       7,492             7,404         1.19%
 Capital grants and contributions                    4,064            4,015           -              -      4,064             4,015         1.22%
General revenues
 Property taxes                                      8,467            8,230           -              -      8,467             8,230         2.88%
 Income taxes                                        9,437            8,940           -              -      9,437             8,940         5.56%
 State shared revenues                               5,276            5,102           -              -      5,276             5,102         3.41%
 All other                                           1,508            2,811          9             24       1,517             2,835        -46.49%
Total revenues                                      44,130        43,623        16,892       16,879        61,022            60,502         0.86%


Governmental activities expenses
 Public representation                               1,501            1,336           -              -      1,501             1,336        12.35%
 Administrative services                               962             801            -              -        962               801        20.10%
 Financial services                                  3,007            2,701           -              -      3,007             2,701        11.33%
 Public safety                                      25,982        20,433              -              -     25,982            20,433        27.16%
 Public works                                        4,582            4,438           -              -      4,582             4,438         3.24%
 Highways, streets and bridges                       7,593            7,186           -              -      7,593             7,186         5.66%
 Community and economic development                  5,359            2,890           -              -      5,359             2,890        85.43%
 Culture and recreation                              5,270            4,542           -              -      5,270             4,542        16.03%
 General administration                                390             302            -              -        390               302        29.14%
 Interest on long-term debt                            732             151            -              -        732               151       384.77%
Business-type activities expenses
 Sewer                                                    -               -      9,902           9,120      9,902             9,120         8.57%
 Water                                                    -               -      8,438           7,753      8,438             7,753         8.84%
 Marina and launch ramp                                   -               -        529            430         529               430        23.02%
Total expenses                                      55,378        44,780        18,869       17,303        74,247            62,083        19.59%


Change in net position                            (11,248)       (1,157)        (1,977)          (424)    (13,225)           (1,581)      736.50%


Net position at beginning of year                   57,898        59,055        44,766       45,190       102,664        104,245            -1.52%

Net position at end of year                        $46,650      $57,898        $42,789     $44,766        $89,439       $102,664           -12.88%




                                                       25
Governmental Activities

The following table (Net Cost of Selected City Functions) presents the cost of each of the City’s largest
functions as well as each function’s net cost (total cost less fees generated by the activities and
intergovernmental aid specifically related to the function). The net cost reflects the portion of costs
funded by local tax dollars and other general resources:

•     The operational cost of all governmental activities during the year ended June 30, 2020 was
      $55,378,657.
•     The net cost that City taxpayers paid for these activities through local property taxes and income
      taxes was $17,904,337, or about 32% of the total.
•     The remaining cost was paid by user charges to those directly benefitting from the programs or by
      state and federal grants and contributions or use of net position.

                                        Net Cost of Selected City Functions
                                                  (in thousands of dollars)


                                         Total Cost of Services                    Net Cost of Services
                                        6/30/2020     6/30/2019        % Change   6/30/2020    6/30/2019    % Change
Governmental activities
 Public safety                           $25,982       $20,433          27.16%    $23,528       $18,049      30.36%
 Public works                             4,581         4,438            3.22%     3,746         3,747       -0.03%
 Highways, streets and bridges            7,593         7,186            5.66%      897           544        64.89%
 Community and economic development       5,359         2,890           85.43%      (38)        (1,188)     -96.80%
 Culture and recreation                   5,270         4,542           16.03%     2,853         1,600       78.31%
 All other                                6,593         5,291           24.61%     4,950         3,419       44.78%
Total governmental activities            $55,378       $44,780          23.67%    $35,936       $26,171      37.31%




Business-Type Activities

The financial goal of the City’s business-type activities (i.e. water, sewer and marina and launch ramp
operations) is to operate on a self-supporting basis without making significant profit or needing general
tax subsidies. For the fiscal year ended June 30, 2020, the City’s total business-type activities realized an
overall decrease in net position of $1,976,692.

Sewer Fund net position decreased $1,435,021 primarily as result of increased wastewater treatment
costs. The Water Fund saw a net position increase of $37,222. Marina and Launch Ramp Fund net
position decreased $452,375 due to lower revenues after not opening for the season due to high water
issues.




                                                         26
FINANCIAL ANALYSIS OF THE CITY’S FUNDS


The fund financial statements provide detailed information about the major City funds, not the City as a
whole. The City’s major funds for the fiscal year ended June 30, 2020 were the General Fund, the Major
Street and Trunkline Fund, the State Grants Fund, Public Improvement Fund, and Convention Center
Fund.
General Fund Highlights
The General Fund receives most public attention since it is where local tax revenues are accounted for
and where the most visible municipal services such as police, fire and parks are funded. The City
reforecasts its General Fund budget on a quarterly basis taking into account changing economic
conditions and policy priorities. The following table shows the General Fund year-end unassigned fund
balance for the last five years.

                                                                                Unassigned Fund
                  Year-End
                                   Year-to-Year %        Prior Year’s        Balance as a % of Prior
Year Ended       Unassigned
                                      Change              Revenues           Year Revenues (Policy
                Fund Balance
                                                                                  Target=13%)
   6/30/2020          $5,920,869       -9.79%                  $28,747,772           20.60%
   6/30/2019           6,563,511       1.46%                    28,729,919           22.85%
   6/30/2018           6,469,108       5.22%                    27,051,766           23.91%
   6/30/2017           6,148,292       0.81%                    25,821,114           23.81%
   6/30/2016           6,098,977       19.10%                   24,890,399           24.50%


For the year ended June 30, 2020, General Fund revenues were $753,537 higher than the final amended
budget estimate. This variance is primarily due to the Third Quarter Budget Reforecast not being official
approved by the City Commission.
General Fund expenditures were $769,270 higher than projected in the final amended budget. This was
mostly due to COVID-19 and expenses associated with the pandemic.


Major Street and Trunkline, State Grant, Public Improvement and Convention Center Fund Highlights
The Major Street and Trunkline Fund accounts for all of the City’s street construction and maintenance
activities on its primary road system. Primary funding comes from the State of Michigan. For the year
ended June 30, 2020, the fund balance of the Major Street and Trunkline Fund decreased $943,540
which is attributable to an increase in construction projects including Lakeshore Drive from Laketon to
McCracken.
The State Grants Fund received an upfront payment of $4,000,000 on a Michigan Enhancement Grant at
the former prison site. The project is expected to be complete in FY2020-21.
Heritage Square Phase 2 Housing Project is being accounted for in the Public Improvement Fund. For
the fiscal year ended June 30, 2020 the Public Improvement Fund is in a deficit of $1,601,331. This
deficit will go away as the City records the revenue from the sale of the houses in Heritage Square Phase
2 Housing Project.
The Convention Center Fund is accounting for the construction of the Convention Center and is being
funded by the 2019 Capital Improvement Bond of $19,420,000.


                                                    27
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2020, the City had invested $139,197,588 in a variety of capital assets, including land,
streets, equipment, buildings, water and sewer lines, and vehicles. This is an increase of $19,834,314
from capital assets reported as of June 30, 2019. The increase is due to current year additions offset by
normal depreciation of assets. Note F of the notes to the basic
financial statements provides detailed information on the
                                                                                    Bond Ratings
City’s capital asset investment.
Long-Term Debt                                                                                    The City’s limited full faith and credit bonds
                                                                                                  (bonds guaranteed by the City’s taxing
At June 30, 2020, the City had $43,996,660 in bonds and other                                     powers) were upgraded by Standard &
long-term obligations outstanding. This represents a 172.2%                                       Poor’s from a rating of “A+” to “AA-“ in
increase from the prior year. The City issued new debt for a                                      early 2016. The City’s rating remained at
new convention center, Mercy Health Arena improvements,
                                                                                                  “AA-“ in 2020. The City’s Water System
and water and sewer improvements.
                                                                                                  revenue bonds carry the “AA-“ S&P rating.
Additional information concerning the City’s long-term debt is
presented in Note I to the basic financial statements.
                                                  City’s Long-Term Debt – Bonds and Other Obligations
                                                                   (In thousands of dollars)
                                                  Governmental                         Business-Type
                                                    Activities                           Activities                              Total                  Percentage
                                          6/30/2020      6/30/2019            6/30/2020        6/30/2019          6/30/2020        6/30/2019             Change
 Due within one year                         $1,340              $818                 $803             $780             $2,143            $1,598           34.11%

 Due in more than one year                   26,793              6,283             6,061              4,975             32,854            11,258          191.83%

 Total bonds & other obligations            $28,133          $7,101              $6,864           $5,755            $34,997              $12,856          172.22%




In addition to direct City debt, component units such as the Downtown Development Authority (DDA)
and Local Development Finance Authority (LDFA) had outstanding debt totaling $1,760,377 at year-end
as shown in the table below. This represents a decrease of 44% from the prior year.
Debt issued by component units typically is secured by the limited full faith and credit of the City and so
is an important consideration in assessing the City’s overall fiscal health. Additional information
concerning component units’ long-term debt is presented in Note I to the basic financial statements and
is summarized as follows:
                             Component Unit Long Term Debt – Bonds and Other Obligations (In thousands of dollars)


                                           Downtown                        Local Development
                                                                                                                    Total                          Percentage
                                     Development Authority                  Finance Authority

                                       6/30/20        6/30/19              6/30/20           6/30/19          6/30/20     6/30/019                    Change
 Due within one year                         $0        $1,000                 $395             $390             $395         $1,390                  -71.58%
 Due in more than one year                    0              0                1,365            1,777            1,365            1,777               -23.19%
                                             $0        $1,000               $1,760            $2,167           $1,760        $3,167
 Total bonds & other obligations                                                                                                                     -44.43%




                                                                         28
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2020-21 capital budget anticipates spending $23,028,998 for capital projects,
consisting of street improvements, water and sewer system improvements, scheduled equipment
replacements, Midtown Square Phase II housing construction, the rehab of houses in a city
neighborhood and the replacement of fire department rescue equipment. These improvements will be
funded by anticipated grants ($1,186,726), State Revolving Loan revenue ($8,940,000) revenues
generated from operations and fund balance.

From an operating standpoint, the City’s 2020-21 budget will be relatively stable while the City attempts
to maintain a healthy fund balance and allow time to plan for and address economic challenges with a
long-term solution:

•    The full-time personnel complement will remain stable at 245.
•    Some user fees will be increased and new fees recommended during the course of the year.
•    The City will continue to look for opportunities to partner with other entities to deliver quality
     services in a cost-effective manner (e.g. Farmers’ Market kitchen management, Marsh Field and
     recreation programs).

City operations depend on five major sources of revenue: local income taxes, local property taxes, state-
shared revenues, state street funds, and water and sewer utility fees. Together, these five income
sources account for about three-quarters of total revenues.

Local Income Tax
The City income tax was approved by voters in 1993 and is the primary source of funding for police, fire,
parks and other general operations. The income tax rate is 1% on City residents and ½ of 1% on non-
residents working in the City. The income tax provides key advantages for core cities such as Muskegon.

First, it allows the City to regionalize its tax structure by taxing non-residents who work here and use
City services. Second, it allows the City to benefit from development occurring outside City limits
because City residents employed by non-City employers pay income taxes.

Finally, the income tax generates revenue from workers at not-for-profit hospitals, churches,
government agencies, colleges and other institutions that are traditionally exempt from paying local
property taxes. This is particularly important for Muskegon since it is the regional center for many such
institutions.

Income tax revenues increased 5.1% from $8,691,673 for the year ended June 30, 2019 to $9,137,714
for year ended June 30, 2020. For 2020-21, the City estimates income tax revenue to be $7,750,000.

                                Year     City Income Tax Revenues   Percent Change
                             6/30/2020         $9,137,714               5.1%
                             6/30/2019          8,691,673               -0.8%
                             6/30/2018          8,758,674               1.7%
                             6/30/2017          8,610,812               5.6%
                             6/30/2016          8,151,902               -1.5%




                                                      29
Local Property Tax
City charter and state law authorize the City to levy a general operating millage up to 10 mills and a
maximum sanitation millage of 3 mills. Millage rates are applied to the taxable value of property in the
City to arrive at the City’s property tax levy.

For 2020-21, the City tax levy will be at 10 mills for general operations and 3 mills for sanitation service.
We project that $7,355,060 in total property tax revenue will be collected during fiscal year 2020-21.

It should be noted that several property tax appeals are currently pending. The impact of these appeals
on City finances is being monitored closely.



State Shared Revenues
State shared sales tax revenues represent about 14% of total General Fund revenue. The City’s state
shared revenue allocation is made up of two parts. The constitutional component is a fixed percentage
of total state sales tax collections that is allocated to cities on a per capita basis and that cannot be
reduced by the legislature. The non-constitutional component is determined by a complex formula and
is subject to adjustment through the State’s annual budget process. Both components depend, of
course, on overall state sales tax collections. The City’s recent state shared revenue history is
summarized as follows:

                             Year           State Shared Revenues     Percent Change
                           6/30/2020             $4,117,935                -3.6%
                           6/30/2019              4,271,438                2.8%
                           6/30/2018              4,153,072                2.8%
                           6/30/2017              4,046,147                4.1%
                           6/30/2016              3,886,514                -0.1%



For 2020-21, the City projects $4,130,818 in state shared revenues.



Street Funds
The State also returns to the City a share of gasoline tax revenues to help fund maintenance and
construction of major and local streets within the City. These revenues have been more stable than
general state sales tax state-shared revenues have been:

                            Year       Street Revenues from State   Percent Change

                         6/30/2020            $5,450,220                6.2%
                         6/30/2019             5,134,277                1.4%
                         6/30/2018             5,060,936                25.9%
                         6/30/2017             4,020,630                 1.0%
                         6/30/2016             3,981,345                10.8%




                                                       30
Based on recent legislative changes, the City began seeing increases in street funding that will carry into
future years. At this time, the City is projecting an increase in street revenues for fiscal year 2020-21 up
to $5,686,000.



Water and Sewer Fees
From a government-wide entity perspective, combined water and sewer fees represent one of the City’s
largest income streams, totaling $16,357,650 during the year ended June 30, 2020. Charges to
customers are based on the amount of metered services used times rates periodically set by the City
Commission. During the year ended June 30, 2020 water rates increased by 4%. Water rates will
increase by 4% in each of the next three fiscal years to pay for improvements being made at the Water
Filtration Plant. The City began providing treated water to the City of Norton Shores and Fruitport
Charter Township in May 2015. The addition of these two new large municipal customers allows the
spreading of water treatment costs over a larger customer base while remaining well within the plant’s
rated treatment capacity.

Due to the impact of continued increases in wastewater treatment charges from the Muskegon County
Wastewater Treatment System, the City Commission passed a resolution effective July 1, 2016, which
ties the sewer rate the City will charge to its customers to a multiplier of the rate that the county bills
the City for wastewater treatment. This rate change is expected to help maintain the financial viability
of the City’s sewer system.



CONTACTING THE CITY’S FINANCIAL MANAGEMENT

This financial report is designed to provide our citizens, taxpayers, customers, and investors and
creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for
the money it receives. If you have questions about this report, need additional financial information, or
wish to obtain separate financial statements for the City’s component units, contact the City’s Finance
Department at (231) 724-6713 or by e-mail (finance@shorelinecity.com).




                                                     31
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                   32
FINANCIAL STATEMENTS




         33
                                                                           City of Muskegon
                                                                      STATEMENT OF NET POSITION
                                                                             June 30, 2020


                                                                                      Governmental       Business-type                         Component
                                                                                        Activities        Activities           Total             Units
ASSETS
Current assets
  Cash and investments                                                                $    23,471,098    $    1,930,535    $     25,401,633    $     99,100
  Assets managed by others                                                                  1,261,605                 -           1,261,605               -
  Receivables                                                                               4,059,105         2,517,138           6,576,243               -
  Due from other governmental units                                                         1,836,536            19,403           1,855,939               -
  Internal balances                                                                           427,950          (427,950)                  -               -
  Inventories                                                                                   6,033           124,609             130,642               -
  Prepaid items                                                                               583,220           139,838             723,058               -
         Total current assets                                                              31,645,547         4,303,573          35,949,120          99,100
Noncurrent assets
  Restricted cash and investments                                                                   -          595,500             595,500                 -
  Advances to component units                                                                 721,831                -             721,831                 -
  Notes receivable, less amounts due within one year                                          294,294                -             294,294                 -
  Capital assets, net
     Nondepreciable                                                                        32,988,730         9,085,133          42,073,863         400,000
     Depreciable                                                                           55,057,511        42,066,214          97,123,725         935,177
         Total noncurrent assets                                                           89,062,366        51,746,847         140,809,213        1,335,177
            Total assets                                                                  120,707,913        56,050,420         176,758,333        1,434,277
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                                        1,220,001           84,813            1,304,814                -
  Related to other postemployment benefits                                                  3,057,597          212,560            3,270,157                -
            Total deferred outflows of resources                                            4,277,598          297,373            4,574,971                -
                Total assets and deferred outflows of resources                           124,985,511        56,347,793         181,333,304        1,434,277
LIABILITIES
Current liabilities
  Accounts payable and accrued liabilities                                                  5,581,515         2,471,253           8,052,768          14,832
  Due to other governmental units                                                             100,066         1,344,044           1,444,110               -
  Short-term draw note                                                                      1,102,021                 -           1,102,021               -
  Unearned revenues - unused Farmers Market tokens                                            107,527                 -             107,527               -
  Unearned revenues - expenditure-driven grants                                             1,976,701                 -           1,976,701               -
  Unearned revenues - prepaid fees                                                                  -             6,183               6,183               -
  Bonds and other obligations, due within one year                                          1,339,844           802,600           2,142,444         395,000
         Total current liabilities                                                         10,207,674         4,624,080          14,831,754         409,832
Noncurrent liabilities
  Advances from primary government                                                                  -                 -                   -          721,831
  Bonds and other obligations, less amounts due within one year                            26,793,148         6,061,068          32,854,216        1,365,377
  Net pension liability                                                                    28,920,873         2,010,542          30,931,415                -
  Net other postemployment benefits liability                                              11,618,909           807,732          12,426,641                -
         Total noncurrent liabilities                                                      67,332,930         8,879,342          76,212,272        2,087,208
                Total liabilities                                                          77,540,604        13,503,422          91,044,026        2,497,040
DEFERRED INFLOWS OF RESOURCES
  Related to other postemployment benefits                                                    795,205           55,281             850,486                 -
                Total liabilities and deferred inflows of resources                        78,335,809        13,558,703          91,894,512        2,497,040
NET POSITION
  Net investment in capital assets                                                         70,274,679        44,543,391         114,818,070        (425,200)
  Restricted
    Highways, streets and bridges                                                           2,262,658                -            2,262,658                -
    Debt service                                                                                    -          599,500              599,500                -
    Mercy Health Arena                                                                         31,560                -               31,560                -
    Law enforcement                                                                            11,844                -               11,844                -
    Downtown BID                                                                              176,813                -              176,813                -
    Perpetual care
        Expendable                                                                            365,171                 -             365,171               -
        Non-expendable                                                                      1,605,620                 -           1,605,620               -
    Other purposes                                                                              6,133                 -               6,133               -
  Unrestricted                                                                            (28,084,776)       (2,353,801)        (30,438,577)       (637,563)
                Total net position                                                    $   46,649,702     $ 42,789,090      $   89,438,792      $ (1,062,763)


The accompanying notes are an integral part of this statement.

                                                                                 34
                                                                                                               City of Muskegon
                                                                                                         STATEMENT OF ACTIVITIES
                                                                                                          For the year ended June 30, 2020


                                                                                                                                                             Net (Expense) Revenue and Changes in Net Position
                                                                                                             Program Revenue                                        Primary Government
                                                                                        Charges for         Operating Grants        Capital Grants    Governmental Business-type                        Component
     Functions/Programs                                                   Expenses       Services           and Contributions     and Contributions     Activities      Activities        Total              Units
     Primary government
        Governmental activities
           Public representation services                             $     1,501,079   $      253,511         $           -        $           -     $    (1,247,568)   $            -    $    (1,247,568)   $            -
           Administrative services                                            962,981          538,791                     -                    -            (424,190)                -           (424,190)                -
           Financial services                                               3,007,018          913,968                40,000                    -          (2,053,050)                -         (2,053,050)                -
           Public safety                                                   25,982,246        2,290,640               163,365                    -         (23,528,241)                -        (23,528,241)                -
           Public works                                                     4,581,526          835,149                     -                    -          (3,746,377)                -         (3,746,377)                -
           Highways, streets and bridges                                    7,593,019          193,267             5,289,916            1,049,653          (1,060,183)                -         (1,060,183)                -
           Community and economic development                               5,359,282          769,860             1,833,603            2,793,863              38,044                 -             38,044                 -
           Culture and recreation                                           5,269,578        2,124,968                71,318              220,700          (2,852,592)                -         (2,852,592)                -
           General administration                                             389,863           59,537                     -                    -            (330,326)                -           (330,326)                -
           Interest on long-term debt                                         732,065                -                     -                    -            (732,065)                -           (732,065)                -
              Total governmental activities                                55,378,657        7,979,691             7,398,202            4,064,216         (35,936,548)                -        (35,936,548)                -
        Business-type activities
          Sewer                                                             9,902,515        8,397,838                    -                     -                   -        (1,504,677)        (1,504,677)                -
          Water                                                             8,437,862        8,316,552               94,462                     -                   -           (26,848)           (26,848)                -
          Marina and launch ramp                                              529,007           74,659                    -                     -                   -          (454,348)          (454,348)                -
              Total business-type activities                               18,869,384       16,789,049               94,462                     -                   -        (1,985,873)        (1,985,873)                -




35
                  Total primary government                            $ 74,248,041      $ 24,768,740           $ 7,492,664          $ 4,064,216           (35,936,548)       (1,985,873)       (37,922,421)                -
     Component units
       Local Development Finance Authority - SmartZone                $      218,806    $            -         $          -         $    360,000                    -                 -                  -          141,194
       Downtown Development Authority                                        134,919                 -                2,000              134,072                    -                 -                  -            1,153
       Tax Increment Finance Authority                                        40,000                 -                    -                    -                    -                 -                  -          (40,000)
       Brownfield Redevelopment Authority I                                   26,659                 -                    -                    -                    -                 -                  -          (26,659)
       Brownfield Redevelopment Authority II                                 180,000                 -                    -                    -                    -                 -                  -         (180,000)
       Brownfield Redevelopment Authority III                                274,776                 -                    -                    -                    -                 -                  -         (274,776)
       Brownfield Redevelopment Authority IV                                   6,771                 -                    -                    -                    -                 -                  -           (6,771)
                  Total component units                               $     881,931     $            -         $      2,000         $   494,072                     -                 -                  -         (385,859)
     General revenues
       Property taxes                                                                                                                                      8,466,886                 -           8,466,886        1,653,545
       Income taxes                                                                                                                                        9,437,451                 -           9,437,451                -
       Cable franchise agreement                                                                                                                             361,405                 -             361,405                -
       Grants and contributions not restricted to specific programs                                                                                        5,276,036                 -           5,276,036           25,821
       Unrestricted investment earnings                                                                                                                      568,408             9,181             577,589            1,246
       Miscellaneous                                                                                                                                         577,677                 -             577,677                -
       Gain on sale of capital asset                                                                                                                             317                 -                 317                -
                  Total general revenues                                                                                                                  24,688,180             9,181          24,697,361        1,680,612
                     Change in net position                                                                                                               (11,248,368)       (1,976,692)       (13,225,060)       1,294,753
     Net position at beginning of year                                                                                                                    57,898,070         44,765,782        102,663,852        (2,357,516)
     Net position at end of year                                                                                                                      $ 46,649,702       $ 42,789,090      $ 89,438,792       $ (1,062,763)


     The accompanying notes are an integral part of this statement.
                                                                                    City of Muskegon
                                                                                    BALANCE SHEET
                                                                                    Governmental Funds
                                                                                      June 30, 2020


                                                                                                                                         Convention
                                                                                 Major Street                             Public           Center            Other            Total
                                                                  General       and Trunkline          State Grants    Improvement       Construction     Governmental     Governmental
                                                                   Fund             Fund                   Fund           Fund              Fund             Funds            Funds
ASSETS
  Cash and investments                                        $     5,619,284   $     1,665,548        $   2,071,905   $           -     $   10,009,335   $    2,851,259   $   22,217,331
  Assets managed by others                                                  -                 -                    -          26,868                  -        1,234,737        1,261,605
  Receivables
     Accounts and loans (net of allowance for uncollectibles)         196,140           41,588               18,555          295,525                 -          730,967         1,282,775
     Property taxes                                                    28,093                -                    -                -                 -                -            28,093
     Income taxes                                                   1,556,602                -                    -                -                 -                -         1,556,602
     Special assessments                                                    -            5,448                    -                -                 -            2,072             7,520
  Due from other governmental units                                   601,524          585,708               15,564                -           377,377          256,364         1,836,537
  Due from other funds                                              2,478,129                -                    -                -                 -                -         2,478,129
  Advances to component units                                               -                -                    -                -                 -          240,611           240,611
  Prepaid items                                                       270,986           32,430                    -                -                 -           35,929           339,345
            Total assets                                     $ 10,750,758       $    2,330,722         $ 2,106,024     $    322,393      $ 10,386,712     $   5,351,939    $ 31,248,548

LIABILITIES
  Accounts payable                                           $      1,763,532   $       18,564         $     285,001   $     324,578     $    1,974,717   $     164,756    $    4,531,148
  Accrued liabilities                                                 431,241           11,997                     -               -                  -          25,284           468,522
  Due to other governmental units                                      53,276           43,530                     -               -                  -           2,140            98,946
  Due to other funds                                                        -                -                     -         341,125                  -         443,475           784,600
  Short-term draw note                                                      -                -                     -       1,102,021                  -               -         1,102,021
  Unearned revenues - unused Farmers Market tokens                          -                -                     -               -                  -         107,527           107,527
  Unearned revenues - expenditure-driven grants                           854                -             1,819,847         156,000                  -               -         1,976,701
         Total liabilities                                          2,248,903           74,091             2,104,848       1,923,724          1,974,717         743,182         9,069,465

DEFERRED INFLOWS OF RESOURCES
  Unavailable revenues - income taxes                                600,000                 -                     -                -                 -               -          600,000
  Unavailable revenues - special assessments                               -             5,447                     -                -                 -           2,072            7,519
         Total deferred inflows of resources                         600,000             5,447                     -                -                 -           2,072          607,519

FUND BALANCES (DEFICIT)
  Nonspendable
    Prepaid items                                                    270,986            32,430                     -                -                 -           35,929          339,345
    Perpetual care                                                    10,000                 -                     -                -                 -        1,595,620        1,605,620
  Restricted
    Highways, streets and bridges                                           -         2,218,754                   -                 -                 -        1,061,222        3,279,976
    Capital projects                                                        -                 -                   -                 -         8,411,995                -        8,411,995
    Mercy Health Arena                                                      -                 -                   -                 -                 -            2,524            2,524
    Law enforcement                                                         -                 -                   -                 -                 -           11,844           11,844
    Downtown BID                                                            -                 -                   -                 -                 -          176,813          176,813
    Perpetual care                                                          -                 -                   -                 -                 -          365,171          365,171
    Other purposes                                                          -                 -                   -                 -                 -            6,133            6,133
  Assigned for capital projects and public improvements             1,700,000                 -               1,176                 -                 -        1,351,429        3,052,605
  Unassigned                                                        5,920,869                 -                   -        (1,601,331)                -                -        4,319,538
         Total fund balances (deficit)                              7,901,855         2,251,184               1,176        (1,601,331)        8,411,995        4,606,685       21,571,564
            Total liabilities, deferred inflows of
             resources and fund balances (deficit)           $ 10,750,758       $    2,330,722         $ 2,106,024     $    322,393      $ 10,386,712     $   5,351,939    $ 31,248,548




The accompanying notes are an integral part of this statement.

                                                                                                  36
                                                                 City of Muskegon
                        RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET
                                    TO THE STATEMENT OF NET POSITION
                                               June 30, 2020


Total fund balance—governmental funds                                                                              $   21,571,564

Amounts reported for governmental activities in the Statement of Net Position
are different because:

    Capital assets used in governmental activities are not current financial
    resources and, therefore, are not reported in the governmental funds.
       Cost of capital assets                                                                    $ 154,927,932
       Accumulated depreciation                                                                    (69,888,453)        85,039,479

    Other long-term assets are not available to pay for current period
    expenditures and, therefore, are reported as unavailable revenues
    in the governmental funds.
        Income taxes                                                                                   600,000
        Special assessments                                                                              7,520            607,520

    Long-term liabilities in governmental activities are not due and payable in the
    current period and, therefore, are not reported in the governmental funds.
       Accrued interest payable                                                                        (198,000)
       Bonds and notes payable                                                                      (26,183,557)
       Compensated absences                                                                          (1,823,243)
       Net pension liability and related deferred outflows/inflows of resources                     (26,515,807)
       Net other post employment benefits liability and related
          outflows/inflows of resources                                                              (8,956,238)       (63,676,845)

    Internal service funds are used by management to charge the costs of certain activities
    to individual funds. The assets and liabilities of the internal service funds are reported
    with governmental activities in the Statement of Net Position.
        Net position of the internal service funds                                                    3,979,046
        Internal balances representing the cumulative difference between
           actual costs and amounts charged to business-type activities                               (871,062)         3,107,984

               Net position of governmental activities                                                             $ 46,649,702




The accompanying notes are an integral part of this statement.

                                                                        37
                                                                       City of Muskegon
          STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICIT)
                                         Governmental Funds
                                   For the year ended June 30, 2020


                                                                                                                        Convention
                                                                    Major Street                        Public            Center             Other             Total
                                                    General        and Trunkline    State Grants     Improvement        Construction      Governmental      Governmental
                                                     Fund              Fund             Fund            Fund               Fund              Funds             Funds
REVENUES
  Taxes                                         $   17,253,857     $           -    $            -   $             -    $            -    $            -    $   17,253,857
  Licenses and permits                               2,420,604                 -                 -                 -                 -                 -         2,420,604
  Intergovernmental revenues
     Federal                                           147,191         1,049,653                 -                -                 -         1,833,603          3,030,447
     State                                           5,031,525         4,174,142         2,028,611          220,700           420,914         1,276,078         13,151,970
     Local                                              40,000                 -                 -          294,300           260,685                 -            594,985
  Charges for services                               3,135,282            18,001                 -           22,424                 -         1,387,945          4,563,652
  Fines and forfeitures                                412,325                 -                 -                -                 -               250            412,575
  Investment earnings and rental income                537,665             9,665                 -              569           143,132            24,620            715,651
  Income from assets managed by others                       -                 -                 -            8,968                 -            17,948             26,916
  Other                                                674,999            55,016                 -          790,493                 -           648,752          2,169,260
         Total revenues                             29,653,448         5,306,477         2,028,611         1,337,454          824,731         5,189,196         44,339,917

EXPENDITURES
  Current
    Public representation services                   1,379,406                 -                 -                 -                 -                -          1,379,406
    Administrative services                            844,270                 -                 -                 -                 -                -            844,270
    Financial services                               2,358,848                 -                 -                 -                 -                -          2,358,848
    Public safety                                   16,795,547                 -                 -                 -                 -           24,809         16,820,356
    Public works                                     3,439,326                 -                 -                 -                 -          112,629          3,551,955
    Highways, streets and bridges                            -         6,018,144                 -                 -                 -        1,405,870          7,424,014
    Community and economic development                 773,101                 -                 -                 -                 -                -            773,101
    Culture and recreation                           1,924,793                 -                 -                 -                 -        2,207,827          4,132,620
    Other governmental functions                       371,461                 -                 -                 -                 -                -            371,461
  Debt service
    Principal                                          290,000           215,000            19,699           293,586                 -                -            818,285
    Interest and fees                                  160,811            16,873               394           104,977           260,685                -            543,740
    Bond issuance costs                                      -                 -                 -                 -            70,525                -             70,525
  Capital outlay                                       786,725                 -         2,028,610         6,446,282        10,474,016        2,682,820         22,418,453
         Total expenditures                         29,124,288         6,250,017         2,048,703         6,844,845        10,805,226        6,433,955         61,507,034

Excess of revenues over (under) expenditures           529,160          (943,540)         (20,092)        (5,507,391)       (9,980,495)       (1,244,759)       (17,167,117)

OTHER FINANCING SOURCES (USES)
  Proceeds from sale of capital assets                        -                -                -            448,218                 -           43,706            491,924
  Long-term debt issued                                       -                -                -          2,417,390        19,420,000                -         21,837,390
  Discount on long-term debt issued                           -                -                -                  -          (145,650)               -           (145,650)
  Transfers in                                                -                -           10,000            881,860                 -        1,125,217          2,017,077
  Transfers out                                      (1,132,500)               -                -                  -          (881,860)         (22,717)        (2,037,077)
         Total other financing sources (uses)        (1,132,500)               -           10,000          3,747,468        18,392,490        1,146,206         22,163,664

Net change in fund balances (deficit)                 (603,340)         (943,540)         (10,092)        (1,759,923)        8,411,995          (98,553)         4,996,547
Fund balances at beginning of year                   8,505,195         3,194,724           11,268           158,592                  -        4,705,238         16,575,017
Fund balances (deficit) at end of year          $ 7,901,855        $ 2,251,184      $       1,176    $   (1,601,331)    $   8,411,995     $ 4,606,685       $ 21,571,564




The accompanying notes are an integral part of this statement.

                                                                                    38
                                                                 City of Muskegon
             RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF REVENUES,
          EXPENDITURES AND CHANGES IN FUND BALANCES TO THE STATEMENT OF ACTIVITIES
                                   For the year ended June 30, 2020


Net change in fund balances—total governmental funds                                                         $    4,996,547

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

    Governmental funds report outlays for capital assets as expenditures. However,
    in the Statement of Activities, the cost of these assets is allocated over their
    estimated useful lives and reported as depreciation expense.
        Depreciation expense                                                                 $ (4,731,160)
        Capital outlay                                                                         21,498,055        16,766,895

    The net effect of various miscellaneous transactions involving capital assets
    (i.e., sales and donations) on net position.
        In the Statement of Activities, only the gain or loss on the sale of capital
        assets is reported. However, in the governmental funds, the proceeds
        from the sale increase financial resources. Thus, the change in net
        position differs from the change in fund balance by the remaining
        undepreciated cost of the capital assets sold.                                                             (860,048)

    Revenues reported in the Statement of Activities that do not provide current
    financial resources are not reported as revenues in the governmental funds.                                      80,000

    The issuance of long-term debt provides current financial resources to
    governmental funds, but increases liabilities in the Statement of Net Position.
    Repayment of debt is an expenditure in the governmental funds, but reduces
    long-term liabilities in the Statement of Net Position.
       Issuance of long-term debt                                                             (21,837,390)
       Discount on long-term debt issued                                                          145,650
       Repayment of principal on long-term debt                                                   818,285        (20,873,455)
        Changes in accrual of interest and amortization of premiums and discounts
          Change in accrued interest payable                                                     (150,300)
          Amortization of premiums and discounts                                                   32,500          (117,800)

    Some expenses reported in the Statement of Activities do not require the use
    of current financial resources and, therefore, are not reported as expenditures
    in the governmental funds.
        Change in compensated absences                                                           (179,748)
        Change in net pension liability and related deferred outflows/inflows of resources     (8,105,232)
        Change in net other post employment benefits liability
           and related deferred outflows/inflows of resources                                  (2,560,924)       (10,845,904)

    The internal service funds are used by management to charge the costs of
    certain activities used to individual funds. The net revenue of certain activities
    of the internal service fund is reported with governmental activities.
        Change in net position of the internal service funds                                     (521,121)
        Change in internal balances representing the current year difference
           between actual costs and amounts charged to business-type activities                   126,518          (394,603)
               Change in net position of governmental activities                                             $ (11,248,368)


The accompanying notes are an integral part of this statement.

                                                                        39
                                                                                  City of Muskegon
                                                                       STATEMENT OF NET POSITION
                                                                             Proprietary Funds
                                                                               June 30, 2020



                                                                                                                                                         Governmental
                                                                                                                                                          Activities -
                                                                                        Business-type Activities - Enterprise Funds                        Internal
                                                                                                                 Marina and                                Service
                                                                                  Sewer          Water          Launch Ramp         Total                   Funds
ASSETS
Current assets
  Cash and investments                                                        $            -     $     1,844,501    $      86,034     $    1,930,535     $   1,253,766
  Receivables                                                                      1,384,312           1,120,770           12,056          2,517,138         1,478,408
  Due from other governmental units                                                        -              19,403                -             19,403                 -
  Inventories                                                                         15,505             109,104                -            124,609             6,033
  Prepaid items                                                                       58,195              77,368            4,275            139,838           243,875
          Total current assets                                                      1,458,012          3,171,146          102,365          4,731,523         2,982,082
Noncurrent assets
  Restricted cash and investments                                                           -           595,500                  -           595,500                 -
  Advances to component units                                                               -                 -                  -                 -           481,220
  Capital assets
     Land                                                                              16,188            103,500            22,562            142,250            65,000
     Land improvements                                                                      -             62,948         1,888,965          1,951,913           301,715
     Buildings, improvements and systems                                           22,407,278         70,986,199         2,322,488         95,715,965         1,668,215
     Machinery and equipment                                                          129,622          3,073,170            60,620          3,263,412         9,878,509
     Construction in progress                                                       4,447,799          4,440,084            55,000          8,942,883            79,822
        Less accumulated depreciation                                             (11,599,533)       (43,918,802)       (3,346,741)       (58,865,076)       (8,986,499)
          Net capital assets                                                      15,401,354         34,747,099         1,002,894         51,151,347         3,006,762
          Total noncurrent assets                                                 15,401,354         35,342,599         1,002,894         51,746,847         3,487,982
             Total assets                                                         16,859,366         38,513,745         1,105,259         56,478,370         6,470,064
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                                  19,572             65,241                  -            84,813            52,192
  Related to other postemployment benefits                                            49,052            163,508                  -           212,560           130,806
          Total deferred outflows of resources                                        68,624            228,749                  -           297,373           182,998
                 Total assets and deferred outflows of resources                  16,927,990         38,742,494         1,105,259         56,775,743         6,653,062
LIABILITIES
Current liabilities
  Accounts payable                                                                 1,746,573            581,002            11,708          2,339,283           345,205
  Accrued liabilities                                                                 27,169            103,325             1,476            131,970            38,641
  Due to other governmental units                                                  1,318,293             25,631               120          1,344,044             1,120
  Due to other funds                                                               1,299,012                  -                 -          1,299,012           394,517
  Unearned revenues - prepaid fees                                                         -                  -             6,183              6,183                 -
  Bonds and other obligations, due within one year                                    11,400            791,000               200            802,600            21,000
          Total current liabilities                                                4,402,447          1,500,958            19,687          5,923,092           800,483

Noncurrent liabilities
  Bonds and other obligations, less amounts due within one year                    1,601,765          4,458,232             1,071          6,061,068           105,191
  Net pension liability                                                              463,971          1,546,571                 -          2,010,542         1,237,257
  Net other postemployment benefits liability                                        186,400            621,332                 -            807,732           497,066
          Total noncurrent liabilities                                             2,252,136          6,626,135             1,071          8,879,342         1,839,514
                 Total liabilities                                                  6,654,583          8,127,093           20,758         14,802,434         2,639,997
DEFERRED INFLOWS OF RESOURCES
  Related to other postemployment benefits                                            12,757             42,524                  -            55,281            34,019
                 Total liabilities and deferred inflows of resources                6,667,340          8,169,617           20,758         14,857,715         2,674,016
NET POSITION
  Net investment in capital assets                                                13,856,615         29,683,882         1,002,894         44,543,391         3,006,762
  Restricted for debt service                                                              -            599,500                 -            599,500                 -
  Unrestricted                                                                    (3,595,965)           289,495            81,607         (3,224,863)          972,284
                 Total net position                                           $ 10,260,650       $ 30,572,877       $ 1,084,501           41,918,028     $ 3,979,046

Adjustment to report the cumulative internal balance for the net effect of the activity
  between the internal service funds and the enterprise funds over time                                                                      871,062
Net position of business-type activities                                                                                              $ 42,789,090


The accompanying notes are an integral part of this statement.

                                                                                           40
                                                                         City of Muskegon
                                    STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION
                                                             Proprietary Funds
                                                     For the year ended June 30, 2020



                                                                                                                                             Governmental
                                                                                                                                              Activities -
                                                                                Business-type Activities - Enterprise Funds                    Internal
                                                                                                         Marina and                             Service
                                                                          Sewer           Water         Launch Ramp         Total                Funds
OPERATING REVENUES
  Charges for services                                               $     8,272,639      $    8,085,011   $     72,744    $   16,430,394    $    9,362,324
  Other                                                                      125,199             326,003          1,915           453,117           115,171
           Total operating revenues                                        8,397,838           8,411,014         74,659        16,883,511         9,477,495

OPERATING EXPENSES
  Administration                                                             476,958             989,718          8,066         1,474,742           304,305
  Insurance premiums and claims                                                    -                   -              -                 -         5,455,327
  Wastewater treatment                                                     6,978,294                   -              -         6,978,294                 -
  Wastewater maintenance                                                   1,852,145                   -              -         1,852,145                 -
  Filtration plant operations                                                      -           2,659,232              -         2,659,232                 -
  Water distribution                                                               -           2,725,083              -         2,725,083                 -
  Other operations                                                                 -                   -        414,143           414,143         3,753,969
  Depreciation                                                               462,846           1,866,375        106,040         2,435,261           523,925
           Total operating expenses                                        9,770,243           8,240,408        528,249        18,538,900        10,037,526

           Operating income (loss)                                         (1,372,405)          170,606        (453,590)       (1,655,389)        (560,031)

NONOPERATING REVENUES (EXPENSES)
  Investment earnings                                                          1,209              6,757           1,215            9,181            27,071
  Gain on sale of capital assets                                                   -                  -               -                -            (8,161)
  Interest expense                                                            (7,200)          (110,516)              -         (117,716)                -
  Bond issuance costs                                                        (56,625)           (29,625)              -          (86,250)                -
           Total nonoperating revenue (expenses)                             (62,616)          (133,384)          1,215         (194,785)           18,910

           Income (loss) before transfers                                  (1,435,021)           37,222        (452,375)       (1,850,174)        (541,121)

TRANSFERS
  Transfers in                                                                        -                -               -                -           20,000

           Change in net position                                          (1,435,021)           37,222        (452,375)       (1,850,174)        (521,121)

Net position at beginning of year                                         11,695,671          30,535,655       1,536,876                          4,500,167

Net position at end of year                                          $ 10,260,650         $ 30,572,877     $ 1,084,501                       $ 3,979,046

Adjustment for the net effect of the current year activity between
  the internal service funds and the enterprise funds                                                                           (126,518)
Change in net position of business-type activities                                                                         $ (1,976,692)




The accompanying notes are an integral part of this statement.

                                                                                 41
                                                                             City of Muskegon
                                                                    STATEMENT OF CASH FLOWS
                                                                             Proprietary Funds
                                                                     For the year ended June 30, 2020


                                                                                                                                                          Governmental
                                                                                                                                                           Activities -
                                                                                             Business-type Activities - Enterprise Funds                    Internal
                                                                                                                     Marina and                             Service
                                                                                         Sewer         Water        Launch Ramp          Total               Funds
CASH FLOWS FROM OPERATING ACTIVITIES
  Receipts from customers                                                           $     8,291,023    $    8,969,828    $      86,094    $ 17,346,945    $      106,659
  Receipts from interfund services provided                                                  71,606           173,459                -         245,065         7,303,632
  Other receipts                                                                                  -                 -                -               -         1,867,451
  Payments to suppliers                                                                  (7,221,435)       (3,131,481)        (369,204)    (10,722,120)       (6,680,206)
  Payments to employees                                                                    (709,542)       (2,097,526)         (48,064)     (2,855,132)       (1,503,546)
  Payments for interfund services used                                                     (597,578)         (906,709)         (32,213)     (1,536,500)         (828,757)
         Net cash provided by (used for) operating activities                             (165,926)        3,007,571          (363,387)      2,478,258          265,233
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
  Interfund borrowing                                                                    1,228,368                  -                -       1,228,368           40,954
  Advances to component units                                                                    -                  -                -               -           87,282
         Net cash provided by (used for) noncapital financing activities                 1,228,368                  -                -       1,228,368          148,236
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
  Proceeds from long-term debt                            1,544,739                                           263,217                -       1,807,956                -
  Issuance costs on long-term debt                          (56,625)                                          (29,625)               -         (86,250)               -
  Purchases of capital assets                            (2,551,765)                                       (2,417,260)               -      (4,969,025)        (622,533)
  Principal paid on capital debt                                  -                                          (745,000)               -        (745,000)               -
  Interest paid on capital debt                                   -                                          (109,916)               -        (109,916)               -
  Proceeds from sale of capital assets                            -                                                 -                -               -           27,661
         Net cash provided by (used for) capital and related financing activities        (1,063,651)       (3,038,584)               -      (4,102,235)        (594,872)
CASH FLOW FROM INVESTING ACTIVITIES
  Investment earnings                                                                        1,209             6,757             1,215           9,181           27,071
         Net increase (decrease) in cash and investments                                          -          (24,256)         (362,172)       (386,428)        (154,332)
Cash and investments at beginning of year                                                         -        2,464,257          448,206        2,912,463        1,408,098
Cash and investments at end of year                                                 $             -    $ 2,440,001       $    86,034      $ 2,526,035     $ 1,253,766
Reconciliation of cash and investments to the Statement of Net Position
  Cash and investments                                                              $             -    $   1,844,501     $     86,034     $ 1,930,535     $   1,253,766
  Restricted cash and investments                                                                 -          595,500                -         595,500                 -
                                                                                    $             -    $ 2,440,001       $    86,034      $ 2,526,035     $ 1,253,766
Reconciliation of operating income (loss) to net cash provided by (used for)
  operating activities
     Operating income (loss)                                                        $ (1,372,405)      $     170,606     $    (453,590)   $ (1,655,389)   $    (560,031)
     Adjustments to reconcile operating income (loss) to net cash provided by
         (used for) operating activities
             Depreciation expense                                                          462,846         1,866,375          106,040        2,435,261          523,925
         Change in assets and liabilities
             Receivables                                                                   (35,209)          732,273             5,252         702,316         (199,753)
             Inventories                                                                     1,447              (339)                -           1,108            3,292
             Prepaid items                                                                  (9,537)          (15,533)           (1,739)        (26,809)          28,985
             Accounts payable                                                              590,456          (373,508)          (26,628)        190,320          (21,014)
             Unearned revenues                                                                   -                 -             6,183           6,183                -
             Accrued liabilities                                                           196,476           627,697             1,095         825,268          489,829
                Net cash provided by (used for) operating activities                $    (165,926)     $ 3,007,571       $   (363,387)    $ 2,478,258     $    265,233




The accompanying notes are an integral part of this statement.

                                                                                    42
                                                           City of Muskegon
                           STATEMENT OF FIDUCIARY ASSETS AND LIABILITIES
                                           Fiduciary Funds
                                            June 30, 2020


                                                                                  Agency
                                                                                   Funds
ASSETS
  Cash and investments                                                        $     927,093
  Accounts receivable                                                                73,203
             Total assets                                                     $ 1,000,296

LIABILITIES
  Accounts payable                                                            $     327,077
  Due to other governmental units                                                   511,793
  Deposits held for others                                                          161,426
             Total liabilities                                                $ 1,000,296




The accompanying notes are an integral part of this statement.

                                                                     43
                                                                                               City of Muskegon
                                                                                       STATEMENT OF NET POSITION
                                                                                       Discretely Presented Component Units
                                                                                                   June 30, 2020


                                                                         Local
                                                                      Development                           Tax
                                                                        Finance         Downtown        Increment       Brownfield    Brownfield    Brownfield
                                                                       Authority -     Development        Finance     Redevelopment Redevelopment Redevelopment
                                                                       SmartZone        Authority        Authority      Authority I  Authority II  Authority III         Total
     ASSETS
     Current assets
       Cash and investments                                           $     32,146     $      11,529    $   15,888     $          3,450    $   13,115   $   22,972   $     99,100

     Noncurrent assets
       Capital assets, net
          Nondepreciable                                                   400,000                 -              -                   -             -            -        400,000
          Depreciable                                                      935,177                 -              -                   -             -            -        935,177
                Total noncurrent assets                                   1,335,177                -              -                   -             -            -       1,335,177
                        Total assets                                      1,367,323           11,529        15,888                3,450        13,115       22,972       1,434,277

     LIABILITIES




44
     Current liabilities
       Accounts payable                                                          -               806              -                   -             -            -            806
       Accrued liabilities                                                   9,650             4,376              -                   -             -            -         14,026
       Bonds and other obligations, due within one year                    395,000                 -              -                   -             -            -        395,000
                Total current liabilities                                  404,650             5,182              -                   -             -            -        409,832

     Noncurrent liabilities
       Advances from primary government                                           -                -              -            721,831              -            -        721,831
       Bonds and other obligations, less amounts due
          within one year                                                 1,365,377                -              -                   -             -            -       1,365,377
                Total noncurrent liabilities                              1,365,377                -              -            721,831              -            -       2,087,208
                        Total liabilities                                 1,770,027            5,182              -            721,831              -            -       2,497,040

     NET POSITION
       Net investment in capital assets                                    (425,200)               -             -                    -             -            -        (425,200)
       Unrestricted                                                          22,496            6,347        15,888             (718,381)       13,115       22,972        (637,563)
                        Total net position                            $   (402,704)    $      6,347     $ 15,888       $      (718,381)    $   13,115   $   22,972   $ (1,062,763)



     The accompanying notes are an integral part of this statement.
                                                                                                                  City of Muskegon
                                                                                                         STATEMENT OF ACTIVITIES
                                                                                                        Discretely Presented Component Units
                                                                                                          For the year ended June 30, 2020


                                                                                                                                                   Net (Expense) Revenue and Changes in Net Position
                                                                                                               Local
                                                                                   Program Revenue          Development                          Tax
                                                                               Operating      Capital         Finance         Downtown       Increment        Brownfield    Brownfield    Brownfield    Brownfield
                                                                               Grants and    Grants and      Authority -     Development       Finance      Redevelopment Redevelopment Redevelopment Redevelopment
     Functions/Programs                                      Expenses         Contributions Contributions    SmartZone        Authority       Authority       Authority I  Authority II  Authority III Authority IV              Total
     Local Development Finance Authority - SmartZone
       Community and economic development                   $    172,648       $        -     $         -   $    (172,648)   $          -    $         -     $           -    $          -    $            -   $        -    $    (172,648)
       Interest on long-term debt                                 46,158                -         360,000         313,842               -              -                 -               -                 -            -          313,842
           Total Local Development Finance
            Authority - SmartZone                                218,806                -         360,000        141,194                -              -                 -               -                 -            -          141,194

     Downtown Development Authority
       Economic development                                      134,919            2,000         134,072               -           1,153              -                 -               -                 -            -            1,153

     Tax Increment Finance Authority
       Community and economic development                         40,000                -               -               -               -        (40,000)                -               -                 -            -          (40,000)

     Brownfield Redevelopment Authority I
        Interest on long-term debt                                26,659                -               -               -               -              -           (26,659)              -                 -            -          (26,659)

     Brownfield Redevelopment Authority II
        Community and economic development                       180,000                -               -               -               -              -                 -        (180,000)                -            -         (180,000)




45
     Brownfield Redevelopment Authority III
        Community and economic development                       274,776                -               -               -               -              -                 -               -        (274,776)             -         (274,776)

     Brownfield Redevelopment Authority IV
        Community and economic development                            6,771             -               -               -               -              -                 -               -                 -       (6,771)           (6,771)
              Total discretely presented component units    $ 875,160          $        -     $ 494,072          141,194            1,153        (40,000)          (26,659)       (180,000)       (274,776)        (6,771)        (385,859)

     General revenues
       Property taxes                                                                                             98,643         924,457         35,383           138,401         168,248         281,642          6,771         1,653,545
       Grants and contributions not restricted to specific programs                                                3,311               -          7,270             6,822           8,418               -              -            25,821
       Unrestricted investment income                                                                                 95             280             54                44             382             391              -             1,246
              Total general revenues                                                                             102,049         924,737         42,707           145,267         177,048         282,033          6,771         1,680,612

                  Change in net position                                                                         243,243         925,890           2,707          118,608           (2,952)            7,257            -        1,294,753

     Net position at beginning of year                                                                           (645,947)       (919,543)       13,181           (836,989)        16,067          15,715               -        (2,357,516)

     Net position at end of year                                                                            $   (402,704)    $     6,347     $   15,888      $   (718,381)    $   13,115      $   22,972       $        -    $ (1,062,763)




     The accompanying notes are an integral part of this statement.
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  The financial statements of the City of Muskegon (City) have been prepared in conformity with accounting
  principles generally accepted in the United States of America (GAAP) as applied to government units. The
  Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing
  governmental accounting and financial reporting principles. The more significant of the City's accounting
  policies are described below.

  Reporting Entity
  The City of Muskegon was incorporated October 6, 1919, under the provisions of the Home Rule Act of the
  State of Michigan. The City is a municipal corporation governed by an elected mayor and six-member City
  Commission and is administered by a city manager appointed by the City Commission. The accompanying
  financial statements present the City and its component units, entities for which the government is considered
  to be financially accountable. Blended component units, are, in substance, part of the primary government's
  operations, even though they are legally separate entities. Thus, blended component units are appropriately
  presented as funds of the primary government. Each discretely presented component unit is reported in a
  separate column in the government-wide financial statements (see note below for description) to emphasize
  that it is legally separate from the City.

  Discretely Presented Component Units
  Downtown Development Authority (DDA). The DDA’s sole purpose is the collection of property tax
  incremental revenues, the issuance and repayment of debt and the construction of public facilities to promote
  and facilitate economic growth in the downtown district. Members of the DDA are appointed by the City
  Commission and the Authority is fiscally dependent on the City since the City Commission approves the
  DDA budget and must approve any debt issuance. The DDA is presented as a governmental fund type.

  Tax Increment Finance Authority (TIFA). The TIFA’s sole purpose is the collection of property tax
  incremental revenues and promotion of economic development activities (including issuance of debt) in a
  sub-section of the downtown district. Members of the TIFA are appointed by the City Commission and the
  Authority is fiscally dependent on the City since the City Commission approves the TIFA budget and must
  approve any debt issuance. The TIFA is presented as a governmental fund type.

  Local Development Finance Authority (LDFA). The City has created three separate local development
  finance authority districts under the aegis of the LDFA to promote and facilitate economic growth in the Port
  City Industrial Park, the Medendorp Industrial Park, and the SmartZone Hi-Tech Park (SmartZone).
  Currently only the SmartZone is active. The LDFA’s sole purpose is the collection of property tax
  incremental revenues and the construction of public facilities within the districts. Members of the LDFA are
  appointed by the City Commission and the Authority is fiscally dependent on the City since the City
  Commission approves budgets and must approve any debt issuance. The LDFA districts are presented as
  governmental fund types.

  Brownfield Redevelopment Authority (BRA). There are four separate designated areas under the aegis of the
  BRA – the Betten-Henry Street site, the former downtown mall site, the Terrace Point site, and the Pigeon
  Hill site. The Authority’s sole purpose is the collection of property tax incremental revenues and promotion
  of environmental remediation (including issuance of debt) in designated brownfield areas. Members of the
  BRA are appointed by the City Commission and the Authority is fiscally dependent on the City since the City
  Commission approves the BRA budget and must approve any debt issuance. The BRA areas are presented as
  governmental fund types.




                                                      46
                                                City of Muskegon
                                   NOTES TO FINANCIAL STATEMENTS
                                              June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Reporting Entity—Continued

  Discretely Presented Component Units—Continued
  Complete financial statements of the component units can be obtained from their administrative offices,
  933 Terrace Street, Muskegon, Michigan 49443.

  Related Organizations
  The following organizations are related to the City’s financial reporting entity:

  Muskegon Hospital Finance Authority. The Muskegon Hospital Finance Authority was created by the City of
  Muskegon in accordance with the laws of the State of Michigan. Members of the Hospital Finance Authority
  are appointed by the City, but the City is not financially accountable for the Authority and therefore the
  Authority is excluded from the accompanying financial statements. The Hospital Finance Authority’s sole
  purpose is to issue tax-exempt debt for the benefit of Mercy Health Partners Hospital which is located within
  the City. The Authority has no assets or financial activity and does not prepare financial statements. The
  Hospital Finance Authority has no taxing power. As of June 30, 2020, there was no outstanding debt issued
  by the Hospital Finance Authority. The City is not obligated in any manner for repayment of debt issued by
  the Hospital Finance Authority, as any debt is payable solely from contractual payments from the hospitals.

  Muskegon Housing Commission. The Muskegon Housing Commission was created by the City of Muskegon
  in accordance with the laws of the State of Michigan. Members of the Housing Commission are appointed by
  the City, but the City is not financially accountable for the Commission and therefore the Commission is
  excluded from the accompanying financial statements. The Housing Commission’s main purpose is to
  administer activities that provide adequate housing facilities for low-income families and the elimination of
  housing conditions that are detrimental to the public peace, health, safety, and welfare. The Commission’s
  policy is to prepare its financial statements on the basis prescribed by the Department of Housing and Urban
  Development. Accordingly, the summary information below (which is required by federal regulations), is not
  intended to present financial position and results of operations in conformity with generally accepted
  accounting principles. Summary financial information for the fiscal year ended September 30, 2019, the date
  of its latest audited financial statements is as follows:

  Total assets and deferred outflows of resources                                     $    3,637,610
  Total liabilities and deferred inflows of resources                                       (452,090)
  Total net position                                                                  $   3,185,520

  Total operating income                                                              $    2,016,544
  Total operating expenses                                                                (2,332,975)
  Total nonoperating revenues                                                                    383
  Capital contributions                                                                      127,240
  Prior period adjustment                                                                     91,707
  Change in net position                                                              $     (97,101)




                                                        47
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Basis of Presentation—Government-wide and Fund Financial Statements
  The government-wide financial statements (i.e., the Statement of Net Position and the Statement of Activities)
  report information on all of the nonfiduciary activities of the primary government and its component units.
  All fiduciary activities are reported only in the fund financial statements. Governmental activities, which
  normally are supported by taxes, intergovernmental revenues, and other nonexchange transactions, are
  reported separately from business-type activities, which rely to a significant extent on fees and charges to
  external customers for support. Likewise, the primary government is reported separately from certain legally
  separate component units for which the primary government is financially accountable.

  While separate government-wide and fund financial statements are presented, they are interrelated. The
  governmental activities column incorporates data from governmental funds and internal service funds, while
  business-type activities incorporate data from the City’s enterprise funds. 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.

  As discussed earlier, the City’s discretely presented component units are reported in a separate column in the
  government-wide financial statements.

  As a general rule, the effect of interfund activity has been eliminated from the government-wide financial
  statements. Exceptions to this general rule are payments-in-lieu of taxes where the amounts are reasonably
  equivalent in value to the interfund services provided and other charges between the City's water and sewer
  functions and various other functions of the government. Elimination of these charges would distort the
  direct costs and program revenues reported for the various functions concerned.

  The fund financial statements provide information about the City’s funds, including its fiduciary funds and
  blended component units. Separate statements for each fund category – governmental, proprietary, and
  fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise
  funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated
  and reported as nonmajor funds. Major individual governmental and enterprise funds are reported as separate
  columns in the fund financial statements.

  The City reports the following major governmental funds:

      The General Fund is the government's primary operating fund. It accounts for all financial resources of
      the general government, except those required to be accounted for in another fund.

      The Major Street and Trunkline Fund accounts for gas and weight tax allocations to the City by the
      Michigan Department of Transportation for construction and maintenance of major streets within the
      City.

      The State Grants Fund accounts for grant revenues received from the State of Michigan for the purpose of
      improvements and/or rehabilitation of City property, environmental remediation at lakeshore sites or new
      infrastructure in the City’s downtown.

      The Public Improvement Fund accounts for grant, private contributions, sale of property and other
      resources used to finance various capital projects.




                                                      48
                                             City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Basis of Presentation—Government-wide and Fund Financial Statements—Continued

      The Convention Center Construction Fund accounts for proceeds from debt issuance for the construction
      of a convention center in downtown Muskegon.

  The City reports the following three major proprietary funds:

      The Sewer Fund accounts for user charges, operating expenses and debt service of the City’s sewer
      system.

      The Water Fund accounts for user charges, operating expenses and debt service of the City’s water
      system.

      The Marina and Launch Ramp Fund accounts for user fees collected and operating expenses for the
      Hartshorn Marina and boat launch ramp facilities.

  Additionally, the City reports the following fund types:

      Internal Service Funds account for internal engineering services for City projects; the purchase, operation,
      and depreciation of all City owned equipment; the payment of insurance claims and benefits; and the
      operation, maintenance, and depreciation of the City’s public service building to other funds of the
      government on a cost reimbursement basis.

      The Agency Funds are used to account for employee payroll withholdings, property taxes collected by the
      City on behalf of other governments, and deposits made by housing rehabilitation program participants.

  During the course of operations, the City has activity between funds for various purposes. Any residual
  balances outstanding at year-end are reported as due from/to other funds and advances to/from other funds.
  While these balances are reported in fund financial statements, certain eliminations are made in the
  preparation of the government-wide financial statements. Balances between funds included in governmental
  activities (i.e., the governmental and internal service funds) are eliminated so that only the net amount is
  included as internal balances in the governmental activities column. Similarly, balances between the funds
  included in business-type activities (i.e., enterprise funds) are eliminated so that only the net amount is
  included as internal balances in the business-type activities column.

  Further, certain activity occurs during the year involving transfers of resources between funds. In fund
  financial statements these amounts are reported at gross amounts as transfers in/out. While reported in fund
  financial statements, certain eliminations are made in the preparation of the government-wide financial
  statements. Transfers between the funds included in governmental activities are eliminated so that only the
  net amount is included as transfers in the governmental activities column. Similarly, balances between funds
  included in business-type activities are eliminated so that only the net amount is included as transfers in the
  business-type activities column.

  Measurement Focus and Basis of Accounting
  The accounting and financial reporting treatment is determined by the applicable measurement focus and
  basis of accounting. Measurement focus indicates the type of resources being measured such as current
  financial resources or economic resources. The basis of accounting indicates the timing of transactions or
  events for recognition in the financial statements.




                                                       49
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Measurement Focus and Basis of Accounting—Continued
  The government-wide financial statements are reported using the economic resources measurement focus and
  the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a
  liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues
  in the 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.

  The governmental fund financial statements are reported using the current financial resources measurement
  focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both
  measurable and available. Revenues are considered to be available when they are collectible within the
  current period or soon enough thereafter to pay liabilities of the current period. 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.
  Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt
  service expenditures, as well as expenditures related to compensated absences and claims and judgments, are
  recorded only when payment is due. General capital asset acquisitions are reported as expenditures in
  governmental funds. Issuance of long-term debt and acquisitions under capital leases are reported as other
  financing sources.

  Income taxes, property taxes, franchise taxes, licenses, and interest associated with the current fiscal period
  are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal
  period. Entitlements are recorded as revenues when all eligibility requirements are met, including any time
  requirements, and the amount is received during the period or within the availability period for this revenue
  source (within 60 days of year-end). Expenditure-driven grants are recognized as revenue when the
  qualifying expenditures have been incurred and all other eligibility requirements have been met. Only the
  portion of special assessments receivable within 60 days of the end of the current fiscal period is considered
  to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be
  measurable and available only when cash is received by the government.

  The proprietary funds are reported using the economic resources measurement focus and the accrual basis of
  accounting. The agency fund has no measurement focus but utilizes the accrual basis of accounting for
  reporting its assets and liabilities.

  Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance

  Cash and Investments
  The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term
  investments with original maturities of three months or less from the date of acquisition.

  Investments for the City are reported at fair value (generally based on quoted market prices).

  The City has adopted an investment policy in compliance with State of Michigan statutes. Those statutes
  authorize the City to invest in obligations of the United States, certificates of deposit, prime commercial
  paper, securities guaranteed by United States agencies or instrumentalities, United States government or
  federal agency obligation repurchase agreements, bankers’ acceptances, state-approved investment pools and
  certain mutual funds.




                                                       50
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued

  Cash and Investments—Continued
  The component unit’s cash and investments are maintained within the City’s investment pool.

  For the purpose of the statement of cash flows, the City considers all assets held in the cash and investment
  pool to be cash and cash equivalents because the investments are not identifiable to the specific funds and the
  assets can be withdrawn at any time, similar to a demand deposit account.

  Inventories and Prepaid Items
  All inventories are valued at cost using the first-in/first-out (FIFO) method. The cost of such inventories is
  recorded as expenses when consumed rather than when purchased in the business-type activities.

  Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid
  items in both government-wide and fund financial statements. The cost of prepaid items is recorded as
  expenditures/expenses when consumed rather than when purchased.

  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 $10,000 and an estimated useful life in excess of two years.

  In the case of initial capitalization of general infrastructure assets (i.e., those reported by governmental
  activities) the City chose to include all such items regardless of their acquisition date or amount. The City
  was able to obtain the historical cost of the initial reporting of these assets by recording the actual costs
  incurred by the City.

  As the City constructs or acquires additional capital assets each period, including infrastructure assets, they
  are capitalized and reported at historical cost. The reported value excludes normal maintenance and repairs
  which are essentially amounts spent in relation to capital assets that do not increase the capacity or efficiency
  of the item or increase its estimated useful life. Donated capital assets are recorded at their estimated fair
  value at the date of donation.

  Interest incurred during the construction phase of capital assets of enterprise funds is included as part of the
  capitalized value of the assets constructed. The amount of interest capitalized depends on the specific
  circumstances.

  Land and construction in progress are not depreciated. The other property, plant, equipment, and
  infrastructure of the City are depreciated using the straight-line method over the following estimated useful
  lives:




                                                        51
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued

  Capital Assets—Continued

           Capital Asset Classes                                                           Years
          Land improvements                                                                5-25
          Leasehold improvements                                                          10-25
          Buildings and improvements                                                      25-50
          Utility buildings, improvements and systems                                     40-100
          Furniture, vehicles and equipment                                                5-20
          Infrastructure                                                                  15-50
          Shared improvements                                                               20

  Defined Benefit Plan
  The City offers a defined benefit pension plan to its employees through Municipal Employees Retirement
  System (MERS). The City records a net pension liability for the difference between the total pension liability
  calculated by the actuary and the Plan’s fiduciary net position. For purposes of measuring the net pension
  liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension
  expense, information about the fiduciary net position of the Plan and additions to/deductions from the Plan’s
  fiduciary net position have been determined on the same basis as they are reported by MERS. For this
  purpose, benefit payments (including refunds of employee contributions) are recognized when due and
  payable in accordance with the benefit terms. Investments are reported at fair value.

  Other Postemployment Benefit Costs
  The City offers a defined benefit retiree healthcare benefits to retirees. The City records a net other
  postemployment benefit (OPEB) liability for the difference between the total OPEB liability calculated by the
  actuary and the OPEB Plan’s fiduciary net position. For purposes of measuring the net OPEB liability,
  deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense,
  information about the fiduciary net position of the OPEB Plan and additions to/deductions from the OPEB
  Plan’s fiduciary net position have been determined on the same basis as they are reported by the OPEB Plan.
  For this purpose, benefit payments (including refunds of employee contributions) are recognized when due
  and payable in accordance with the benefit terms. Investments are reported at fair value.

  Deferred Outflows/Inflows of Resources
  In addition to assets, the Statement of Net Position will sometimes report a separate section for deferred
  outflows of resources. This separate financial statement element, deferred outflows of resources, represents a
  consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of
  resources (expense/expenditures) until then.

  In addition to liabilities, the Statement of Net Position will sometimes report a separate section for deferred
  inflows of resources. This separate financial statement element, deferred inflows of resources, represents an
  acquisition of net position that applies to a future period(s) and so will not be recognized as an inflow of
  resources (revenue) until that time.




                                                       52
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position/Fund Balance—Continued

  Net Position Flow Assumption
  Sometimes the government will fund outlays for a particular purpose from both restricted (e.g., restricted
  bond or grant proceeds) and unrestricted resources. In order to calculate the amounts of net position to report
  as restricted and unrestricted in the government-wide and proprietary fund financial statements, a flow
  assumption must be made about the order in which the resources are considered to be applied. It is the City’s
  policy to consider restricted net position to have been depleted before unrestricted net position is applied.

  Fund Balance Flow Assumptions
  Sometimes the City will fund outlays for a particular purpose from both restricted and unrestricted resources
  (the total of committed, assigned, and unassigned fund balance). In order to calculate the amounts to report as
  restricted, committed, assigned, and unassigned fund balance in the governmental fund financial statements a
  flow assumption must be made about the order in which the resources are considered to be applied. It is the
  City’s policy to consider restricted fund balance to have been depleted before using any of the components of
  unrestricted fund balance. Further, when the components of unrestricted fund balance can be used for the
  same purpose, committed fund balance is depleted first, followed by assigned fund balance. Unassigned fund
  balance is applied last.

  Fund Balance Policies
  Fund balance of governmental funds is reported in various categories based on the nature of any limitations
  requiring the use of resources for specific purposes. The City itself can establish limitation on the use of
  resources through either a commitment (committed fund balance) or an assignment (assigned fund balance).

  The committed fund balance classification includes amounts that can be used only for the specific purposes
  determined by a formal action of the City’s highest level of decision-making authority. The City Commission
  is the highest level of decision-making authority for the City that can, by adoption of a resolution prior to the
  end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the resolution remains
  in place until a similar action is taken (the adoption of another resolution) to remove or revise the limitation.

  Amounts in the assigned fund balance classification are intended to be used by the City for specific purposes
  but do not meet the criteria to be classified as committed. The City Commission has by resolution authorized
  the city manager to assign fund balance. The City Commission may also assign fund balance as it does when
  appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent
  year’s appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other
  words, an additional action does not normally have to be taken for the removal of an assignment. Conversely,
  as discussed above, an additional action is essential to either remove or revise a commitment.

  The City has a minimum fund balance policy requiring unassigned fund balance of the General Fund be at
  least 13 percent of prior year actual revenues.

  Revenues and Expenditures/Expenses

  Program Revenues
  Amounts reported as 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 (including special assessments) that are restricted to meeting the operational or capital
  requirements of a particular function or segment. All taxes, including those dedicated for specific purposes,
  and other internally dedicated resources are reported as general revenues rather than as program revenues.



                                                       53
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

  Revenues and Expenditures/Expenses—Continued

  Property Taxes
  All trade and property tax receivables are shown net of allowance for uncollectibles.

  The City bills and collects its own property taxes and also collects taxes for the county, school and State of
  Michigan. Taxes are levied and liened on December 1 on the taxable valuation of property (as defined by
  state statutes) located in the Local Governmental Unit as of the preceding December 31. Uncollected real
  property taxes as of the following March 1 are turned over by the City to the County for collection. The
  County advances the City all of these delinquent real property taxes. The delinquent personal property taxes
  remain the responsibility of the City. The City recognizes all available revenue from the current tax levy.
  Available means collected within the current period or expected to be collected soon enough thereafter to be
  used to pay liabilities of the current period (60 days).

  The 2019 state taxable value for real/personal property of the City totaled approximately $573,830,000 of
  which approximately $31,817,000 was captured by the component units. The ad valorem taxes levied
  consisted of 10.0, 3.0 and .0865 mills for the City’s general operating, sanitation and community promotion
  purposes. These amounts are recognized in the General Fund with captured amounts shown in the TIFA,
  LDFA SmartZone, DDA, BRA I, BRA II, BRA III, and BRA IV component units.

  Compensated Absences
  City employees are granted vacation and sick leave in varying amounts based on length of service and
  employee group. Unused vacation and sick leave days are paid to employees upon termination under limits
  that vary by employee group. The liability for these compensated absences is accrued when incurred in the
  government-wide and proprietary fund financial statements. The current portion of this debt is estimated
  based on historical trends. A liability for these amounts is reported in the governmental funds only if they
  have matured, for example, as a result of employee resignations and retirements.

  Proprietary Funds Operating and Nonoperating Revenues and Expenses
  Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues
  and expenses generally result from providing services and producing and delivering goods in connection with
  a proprietary fund's principal ongoing operations. The principal operating revenues are charges to customers
  for sales and services. The enterprise funds also recognize as operating revenue the portion of tap fees
  intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise
  funds and internal service funds include the cost of sales and services, administrative expenses, and
  depreciation on capital assets. All revenues and expenses not meeting this definition are reported as
  nonoperating revenues and expenses.

  Comparative Data
  Comparative total data for the prior year have been presented in selected sections of the accompanying
  financial statements in order to provide an understanding of changes in the City’s financial position and
  operations. However, comparative (i.e. presentation of prior year’s totals by fund type) data has not been
  presented in each of the statements since its inclusion would make the statements unduly complex and
  difficult to read. In addition, certain items in the 2019 financial statements have been reclassified to conform
  to the 2020 presentation.




                                                       54
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE B—STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY

  Budgetary Information
  Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the
  General Fund and special revenue funds.

  The appropriated budget is prepared by fund, function and department. The City Manager and department
  heads may make transfers of appropriations within a department. Transfers of appropriations between
  departments require the approval of the City Commission. The legal level of budgetary control is the
  department level for the General Fund and the total expenditure or “fund” level for all other funds.

  Appropriations in all budgeted funds lapse at the end of the fiscal year.

  Excess of Expenditures Over Appropriations
  During the year ended June 30, 2020, actual expenditures exceeded appropriations for:

                                                                       Final
                                                                      Budget              Actual
            General Fund
               Administrative Services
                   Clerk                                          $     547,208      $     621,603
               Public safety
                   Police department                                  10,190,969         10,445,491
                   Fire department                                     3,847,106          4,353,377
               Public works
                   General sanitation                                  1,969,345          2,216,029
               Culture and recreation
                   Parks maintenance                                   1,624,617          1,873,339
               Other governmental functions
                   Insurance premiums                                   287,041             340,189
               Transfers out                                            485,000           1,132,500
            Major Streets Fund
               Principal                                                       -           215,000
            Mercy Health Arena Fund
               Culture and recreation                                  1,511,843          1,994,840

  These overexpenditures were funded with available fund balance.

  Fund Deficit
  As of June 30, 2020, the City’s Sewer Fund, Engineering Services Fund, and Public Service Building Fund
  had unrestricted fund net position deficits of $3,595,965, $17,034, and $656,261, respectively. The Public
  Improvement Fund had an unassigned fund deficit of $1,601,331. These deficits will be eliminated through
  future operations or an interfund transfer.




                                                       55
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE C—DEPOSITS AND INVESTMENTS
  As of June 30, 2020, the City had the following investments:
                                                                  Weighted
                                                                   Average
                                                                  Maturity
                                                Fair Value        (Months)             S&P           Percent
  Investment Type
  Money market funds                           $    1,150,557                1        AAA                   5.5 %
  Negotiable certificates of deposit                2,998,531               28       not rated             14.1
  US agency obligations                             5,821,900              248         AA+                 27.4
  Local units of government obligations               616,582               20         AA                   2.9
  External investment pool                         10,643,286                2        AAA                  50.1
         Total fair value                      $ 21,230,856                                              100.0 %
      Portfolio weighted average maturity                                   74

  The City voluntarily invests certain excess funds in an external investment pool (Pool). The Pool is an
  external investment pool of "qualified" investments for Michigan municipalities. The Pool is not regulated nor
  registered with the SEC. The fair value of the City's investments is the same as the value of the Pool’s shares.
  Deposit and Investment Risks
  Interest rate risk
  The City has a formal investment policy that limits investment maturities as a means of managing its
  exposure to fair value losses arising from increasing interest rates. At least 10 percent of the City’s total
  portfolio must be in instruments maturing in 30 days.
  Credit risk
  State law limits investments in commercial paper and corporate bonds to the two highest classifications issued
  by nationally recognized statistical rating organizations. The City has no investment policy that would further
  limit its investment choices.
  Concentration of credit risk
  Concentration of credit risk is the risk of loss attributed to the magnitude of the City investment in a single
  issuer, by diversifying the investment portfolio so that the impact of potential losses from any one type of
  security or issuer will be minimized. The City has a concentration of credit risk policy that limits investment
  in commercial paper, eligible bankers’ acceptances and time certificates of deposit to 25 percent each of the
  total portfolio. The City has more than 5 percent of its investments in the following securities:

                                                                                 Percent of
                                    Security                                  Total Investments
            Federal Home Loan Mortgage Corporation obligations                         6.1%
            Government National Mortgage Association obligations                      20.9%

  Custodial credit risk - deposits
  In the case of deposits, this is the risk that in the event of a bank failure, the City's deposits may not be
  returned to it. As of June 30, 2020, $5,557,860 of the City’s bank balance of $6,057,860 was exposed to
  custodial credit risk because it was uninsured and uncollateralized. The City’s investment policy sets certain
  credit requirements that a bank must meet for the City to deposit funds in it.


                                                         56
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE C—DEPOSITS AND INVESTMENTS—Continued
  Deposit and Investment Risks—Continued
  Custodial credit risk - investments
  This is the risk that, in the event of the 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 an outside party. The City has a
  custodial credit risk policy for investments that requires that all investments that are held with a third-party
  for safekeeping be in the City’s name.
  Foreign currency risk
  The City is not authorized to invest in investments which have this type of risk.
  Restricted Assets
  Restrictions are placed on assets by bond ordinance and City Commission action. At June 30, 2020, restricted
  cash and investments in the Water Fund of $595,500 were restricted by bond ordinance.

NOTE D—ASSETS MANAGED BY OTHERS
  As allowed by MCL 123.874 and MCL 128.4, the City is permitted to place monies in community
  foundations.
  The Funds
  The City has six funds with the Community Foundation of Muskegon County (Community Foundation).
    Lakeshore Trails Improvement Fund
    The Lakeshore Trails Improvement Fund was established by the City primarily to be used for the general
    support of the bike trails, which are located in the City of Muskegon. The agreement with the Community
    Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
    policy and principal in certain circumstances.
    Cemetery Perpetual Care Fund
    The City of Muskegon Cemetery Perpetual Care Fund was established by the City primarily to be used for the
    care and maintenance of the cemeteries that are operated by the City. The agreement with the Community
    Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s spending
    policy and principal in certain circumstances.
    Pere Marquette and Margaret Drake Elliot Park Fund
    The Pere Marquette and Margaret Drake Elliot Park Fund (Marquette and Elliot Park Fund) was established by
    the City to be used for capital improvements at Pere Marquette and Margaret Drake Elliot Parks. The
    agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
    Community Foundation’s spending policy and principal in certain circumstances.
    Darl and Kathleen Staley Charity Fund
    The Darl and Kathleen Staley Charity Fund (Staley Charity Fund) was established after the City received
    monies from the Staley’s estate. The Fund is to be used for capital improvements needs at City parks. The
    agreement with the Community Foundation allows the use of the Fund’s income in accordance with the
    Community Foundation’s spending policy and principal in certain circumstances.
    City of Muskegon Parks Fund
    The City of Muskegon Parks Fund (Muskegon Parks Fund) was established by the City to primarily be used
    for general maintenance and improvements to parks located in the City of Muskegon. The agreement with the
    Community Foundation allows the use of the Fund’s income in accordance with the Community Foundation’s
    spending policy and principal in certain circumstances.
    City of Muskegon Events and Sponsorships Fund
    The City of Muskegon Events and Sponsorships Fund (Events and Sponsorships Fund) was established after
    the Community Foundation received monies from donors intended to be used for various events within the City
    of Muskegon. The agreement with the Community Foundation allows the use of the Fund’s income in
    accordance with the Community Foundation’s spending policy and principal in certain circumstances.

                                                        57
                                                          City of Muskegon
                                          NOTES TO FINANCIAL STATEMENTS
                                                     June 30, 2020


NOTE D—ASSETS MANAGED BY OTHERS—Continued

  The Funds—Continued
  The Community Foundation invests the contributions to the funds in various types of marketable equity and debt
  securities, U.S. Treasuries, commercial paper, and certificates of deposit. The majority of investments are
  uninsured and uncollateralized.

  Reporting of the Assets of the Funds
  The investments held at the Community Foundation, which were contributed by the City to the funds along with
  the earnings on these investments, are reported at fair value as assets of the City. The contributions to these funds
  made by third party donors directly to the Community Foundation have been excluded from the assets of the City.

  Summary of the Community Foundation Funds
  A summary of revenues, expenses, and changes in the assets at fair value of the funds for the year ended June 30,
  2020 follows:

                                       Lakeshore
                                         Trails       Cemetery        Marquette        Staley          Muskegon        Events and
                                      Improvement     Perpetual       and Elliot       Charity          Parks         Sponsorships
                                         Fund         Care Fund       Park Fund         Fund            Fund             Fund             Totals
  Revenues
     Contributions                    $       600     $          -    $           -    $          -    $        -     $      6,100    $       6,700
     Dividends and interest                 1,370           17,086            2,674           9,272           515               60           30,977
     Realized and unrealized gain
      (loss) on investments                   760            9,739            1,532          5,293            296                -           17,620
                                            2,730           26,825            4,206         14,565            811            6,160           55,297

  Expenses
     Grants and scholarships                    -                -                                          1,548           10,000           11,548
     Administration fees                      431            8,877            1,823           4,867           162              500           16,660

     Revenues over expenses                  2,299          17,948            2,383           9,698          (899)          (4,340)          27,089

  Total assets at beginning of year        57,165         1,216,789        112,488         389,244         23,099            9,125         1,807,910

  Total assets at end of year              59,464         1,234,737        114,871         398,942         22,200            4,785         1,834,999

  Less assets recorded as those
   of the Foundation                       (41,049)               -        (114,871)       (398,942)       (13,747)         (4,785)        (573,394)

  Assets reported on the Balance
   Sheet/Statement of Net Position    $    18,415     $ 1,234,737     $           -    $          -    $    8,453     $          -    $ 1,261,605


  The Board of Trustees of the Community Foundation has the power to modify any restriction or condition on the
  distribution of funds for any specified charitable purpose or to a specified organization if, in the sole judgment of
  the Board, such restriction or condition becomes, in effect, unnecessary, incapable of fulfillment, or inconsistent
  with the charitable needs of the community served. The authority to modify restrictions is sometimes referred to
  as “variance power” and is a legal standard imposed on all community foundations.




                                                                      58
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE E—FAIR VALUE MEASUREMENTS

  The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs to valuation
  techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in
  active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level
  3). The three levels of the fair value hierarchy are described below:

      Level 1    Inputs to the valuation methodology are unadjusted quoted prices for identical
                 assets or liabilities in active markets that the City the ability to access.

      Level 2    Inputs to the valuation methodology include the following:

                 -   Quoted prices for similar assets or liabilities in active markets;
                 -   Quoted prices for identical or similar assets or liabilities in inactive markets;
                 -   Inputs other than quoted prices that are observable for the asset or liability;
                 -   Inputs that are derived principally from or corroborated by observable
                     market data by correlation or other means.

                 If the asset or liability has a specified (contractual) term, the level 2 input must be
                 observable for substantially the full term of the asset or liability.

      Level 3    Inputs to the valuation methodology are unobservable and significant to the fair
                 value measurement.

  The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest
  level of any input that is significant to the fair value measurement. Valuation techniques used need to
  maximize the use of observable inputs and minimize the use of unobservable inputs.

  Following is a description of the valuation methodologies used for assets measured at fair value. There have
  been no changes in the methodologies used at June 30, 2020.

      Money market funds: Valued at amortized cost, which approximates fair value.

      Negotiable certificates of deposit, US agency obligations, and local units of government obligations:
      Valued at the closing price reported on the active market on which the individual securities are traded.




                                                        59
                                               City of Muskegon
                                  NOTES TO FINANCIAL STATEMENTS
                                             June 30, 2020


NOTE E—FAIR VALUE MEASUREMENTS—Continued

      External investment pools and assets managed by others: The assets are valued based upon the City’s
      allocable share of the Michigan CLASS and Community Foundation of Muskegon County (Pools) pooled
      investment portfolios. The allocable shares are based on the value of the underlying assets owned by the
      Pools, minus their liabilities.

      The assets managed by others are valued monthly by the Pools and are allocated based upon each
      organization’s calculated share of the Pools’ pooled investment portfolios. Each entity with an interest
      within the pooled investments receives statements from the Pools indicating the additions to the
      investments (via contributions), withdrawals from the investments (via grants), and the investment returns
      allocated via a unitization process. The City calculates the fair value of its share of the pooled investment
      assets held by the Pools based on the estimated fair value of the underlying assets. The Pools control the
      investments and make all management and investment decisions.

  The preceding methods described may produce a fair value calculation that may not be indicative of net
  realizable value or reflective of future fair values. Furthermore, while the City believes its valuation methods
  are appropriate and consistent with other market participants, the use of different methodologies or
  assumptions to determine the fair value of certain financial instruments could result in a different fair value
  measurement at the reporting date.

  The following table sets forth by level, within the fair value hierarchy, the City’s assets at fair value on a
  recurring basis as of June 30, 2020:

                                                    Assets at Fair Value as of June 30, 2020
                                            Level 1         Level 2           Level 3                   Total

  Money market funds                    $            -        $    1,150,557      $         -       $    1,150,557
  Negotiable certificates of deposit         2,998,531                     -                -            2,998,531
  US agency obligations                      5,821,900                     -                -            5,821,900
  Local units of government
   obligations                                 616,582                     -                -              616,582
  External investment pools                          -            10,643,286                -           10,643,286
  Assets managed by others                           -             1,261,605                -            1,261,605

  Total assets at fair value            $ 9,437,013           $ 13,055,448        $         -       $ 22,492,461




                                                         60
                                                   City of Muskegon
                                       NOTES TO FINANCIAL STATEMENTS
                                                  June 30, 2020


NOTE F—CAPITAL ASSETS

  Capital asset activity for the year ended June 30, 2020 was as follows:
                                                      Balance                                               Balance
                                                    July 1, 2019          Additions      Deductions      June 30, 2020
  Governmental activities:
    Capital assets, not being depreciated:
       Land                                         $ 14,652,328      $       466,564    $     860,048   $ 14,258,844
       Construction in progress                        4,202,992           18,205,789        3,678,895     18,729,886
     Total capital assets, not being depreciated         18,855,320        18,672,353        4,538,943        32,988,730
     Capital assets, being depreciated:
       Land improvements                                  5,310,030           136,274                -         5,446,304
       Leasehold improvements                               534,821                 -                -           534,821
       Buildings and improvements                        24,994,642         4,919,910                -        29,914,552
       Furniture, vehicles and equipment                 16,001,743           592,271          220,162        16,373,852
       Infrastructure                                    75,636,254         1,478,675        2,357,288        74,757,641
       Shared improvements                                6,905,293                 -                -         6,905,293
     Total capital assets, being depreciated            129,382,783         7,127,130        2,577,450       133,932,463
     Less accumulated depreciation:
       Land improvements                                  2,091,463           161,390                -         2,252,853
       Leasehold improvements                               485,708             6,002                -           491,710
       Buildings and improvements                        17,783,281           462,372                -        18,245,653
       Furniture, vehicles and equipment                 12,214,180           676,506          184,340        12,706,346
       Infrastructure                                    38,784,813         3,603,550        2,357,288        40,031,075
       Shared improvements                                4,802,050           345,265                -         5,147,315
     Total accumulated depreciation                      76,161,495         5,255,085        2,541,628        78,874,952
     Total capital assets, being
        depreciated, net                                 53,221,288         1,872,045          35,822         55,057,511
     Capital assets, net                            $ 72,076,608      $ 20,544,398       $ 4,574,765     $ 88,046,241
  Business-type activities:
    Capital assets, not being depreciated:
       Land                                         $       142,250   $             -    $           -   $       142,250
       Construction in progress                           3,724,614         6,276,289        1,058,020         8,942,883
     Total capital assets, not being depreciated          3,866,864         6,276,289        1,058,020         9,085,133
     Capital assets, being depreciated:
       Land improvements                                  1,951,913                 -                -         1,951,913
       Buildings, improvements and systems               94,650,625         1,065,340                -        95,715,965
       Machinery and equipment                            3,247,079            16,333                -         3,263,412
     Total capital assets, being depreciated             99,849,617         1,081,673                -       100,931,290
     Less accumulated depreciation:
       Land improvements                                  1,831,076             9,522                -         1,840,598
       Buildings, improvements and systems               51,817,850         2,365,908                -        54,183,758
       Machinery and equipment                            2,780,889            59,831                -         2,840,720
     Total accumulated depreciation                      56,429,815         2,435,261                -        58,865,076
     Total capital assets, being
        depreciated, net                                 43,419,802        (1,353,588)               -        42,066,214
     Capital assets, net                            $ 47,286,666      $ 4,922,701        $ 1,058,020     $ 51,151,347




                                                             61
                                            City of Muskegon
                                    NOTES TO FINANCIAL STATEMENTS
                                               June 30, 2020


NOTE F—CAPITAL ASSETS—Continued

  Depreciation
  Depreciation expense was charged to functions as follows:

   Governmental activities:
     Public representation services                                                          $       2,518
     Adminstrative services                                                                          2,485
     Public safety                                                                                 132,669
     Public works                                                                                    2,126
     Highways, streets and bridges                                                               4,078,423
     Community and economic development                                                             75,717
     Culture and recreation                                                                        418,820
     General administration                                                                         18,402
     Internal Service Fund depreciation                                                            523,925
                                                                                             $ 5,255,085
   Business-type activities:
     Sewer                                                                                   $     462,846
     Water                                                                                       1,866,375
     Marina and Launch Ramp                                                                        106,040
                                                                                             $ 2,435,261

                                                 Balance                                       Balance
                                               July 1, 2019     Additions       Deductions   June 30, 2020
   Component units:
     Capital assets, not being depreciated:
       Land                                     $    400,000    $          -    $       -    $     400,000
      Capital assets, being depreciated:
        Building and improvements                   3,798,258              -            -        3,798,258
      Less accumulated depreciation:
        Building and improvements                   2,690,433       172,648             -        2,863,081
      Total capital assets, being
         depreciated, net                           1,107,825       (172,648)           -          935,177
      Capital assets, net                       $ 1,507,825     $ (172,648)     $       -    $ 1,335,177

  Depreciation
  Depreciation expense was charged to economic development.




                                                     62
                                              City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS
  The composition of interfund balances as of June 30, 2020 is as follows:

    Due To/From Other Funds:
            Receivable Fund                  Payable Fund                                         Amount
            General Fund                     Mercy Health Arena Fund                          $      398,371
            General Fund                     Public Improvement Fund                                 341,125
            General Fund                     Lead Abatement Fund                                      38,766
            General Fund                     HOME Rehabilitation Fund                                  6,338
            General Fund                     Sewer Fund                                            1,299,012
            General Fund                     General Insurance Fund                                  394,517
                                                                                              $ 2,478,129

  The outstanding balances between funds result from the payable funds having negative positions in the City’s
  cash and investment pool.
  Component Unit Advance:
  The Cemetery Perpetual Care Fund, Equipment Fund, and General Insurance Fund advanced the BRA I
  $721,831 to enable the BRA I to retire a redevelopment commitment early. The advance will be repaid with
  future tax captures.

  Interfund Transfers:
     Transfers In                            Amount           Transfers Out                        Amount
     State Grant Fund                    $      10,000        General Fund                     $      10,000
     Nonmajor Governmental Funds
       Local Streets Fund                      250,000        General Fund                          1,102,500
       Mercy Health Arena Fund                 800,000
       Farmers Market and
        Kitchen 242 Fund                        45,000
       Tree Replacement Fund                     7,500
                                              1,102,500                                             1,102,500
     Internal Service Funds
         Engineering Fund                       20,000        General Fund                            20,000

                                                              Convention Center
     Public Improvement Fund                   881,860         Construction Fund                     881,860
     Nonmajor Governmental Funds                              Nonmajor Governmental Funds
                                                                Community Development Block
        HOME Rehabilitation Fund                22,717           Grant Fund                           22,717
                                         $ 2,037,077                                           $ 2,037,077


                                                         63
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS—Continued

  The General Fund transferred funds to the Local Streets Fund for capital improvements and to the Mercy
  Health Arena Fund and other funds for operation subsidies. The Convention Center Fund transferred funds to
  the Public Improvement Fund as reimbursement for costs incurred for the convention center project prior to
  debt issuance. Other transfers between funds were made to meet grant matching requirements or other
  operational needs.


NOTE H—SHORT-TERM DEBT

  Summary of Changes in Short-Term Liabilities
  The following is a summary of short-term liabilities activity for the City for the year ended June 30, 2020.

                                         Balance                                            Balance
                                       July 1, 2019           Additions    Deductions     June 30, 2020
  Governmental activities:
    Short-term draw note               $            -        $ 1,102,021   $         -    $ 1,102,021

  The purpose of all short-term borrowings are to provide resources for infill housing within the City of
  Muskegon. The form of financing used is a short-term non-revolving draw note with amounts advanced at
  the City’s discretion. Interest amounts are at a variable interest rate of 1.25 percent above the 30 day LIBOR,
  adjusted monthly. Borrowed amounts will be repaid as infill housing units are sold with final payment being
  due three years from the closing date.




                                                        64
                                              City of Muskegon
                                   NOTES TO FINANCIAL STATEMENTS
                                              June 30, 2020


NOTE I—LONG-TERM DEBT

  Summary of Changes in Long-Term Liabilities
  The following is a summary of long-term liabilities activity for the City for the year ended June 30, 2020.

                                       Balance                                              Balance      Due Within
                                     July 1, 2019        Additions       Deductions      June 30, 2020    One Year
  Governmental activities:
    Public placement debt
       General obligation debt       $   5,065,000   $ 19,420,000        $    505,000    $ 23,980,000    $    690,000
       Discount                                  -       (145,650)             (2,500)       (143,150)              -
       Premium                             257,903              -              35,000         222,903               -
    Direct borrowings and
     direct placements
       Intergovernmental obligations       19,699                    -         19,699                -              -
       Installment purchase
         agreements                              -         2,417,390           293,586       2,123,804        324,944
    Compensated absences                 1,758,789         1,428,024         1,237,378       1,949,435        324,900
        Governmental activities
          long-term liabilities     $ 7,101,391      $ 23,119,764        $ 2,088,163     $ 28,132,992    $ 1,339,844

  Business-type activities:
    Public placement debt
       Revenue obligations          $    5,545,000   $     1,807,956     $    745,000    $   6,607,956   $   760,000
    Compensated absences                   209,568           221,474          175,330          255,712        42,600
        Business-type activities
           long-term liabilities    $ 5,754,568      $ 2,029,430         $ 920,330       $ 6,863,668     $   802,600

  Component units:
    Public placement debt
       General obligation debt       $   2,110,000   $               -   $    390,000    $   1,720,000   $   395,000
       Premium                              57,419                   -         17,042           40,377             -
    Direct borrowings and
     direct placements
       Intergovernmental obligations     1,000,000                   -       1,000,000               -              -
        Component unit long-
          term liabilities          $ 3,167,419      $               -   $ 1,407,042     $ 1,760,377     $   395,000




                                                         65
                                               City of Muskegon
                                  NOTES TO FINANCIAL STATEMENTS
                                             June 30, 2020


NOTE I—LONG-TERM DEBT—Continued

  Public Placement Debt

  General Obligation Debt
  The City has issued general obligation debt to provide funds for the acquisition and construction of major
  capital facilities. General obligation debt is a direct obligation and pledges the full faith and credit of the City.
  This debt is generally issued as serial bonds with varying amounts of principal maturing each year. Certain
  debt issued by the City’s component units is also backed by the full faith and credit of the City if there is a
  shortfall in tax increment revenues. General obligation debt outstanding as of June 30, 2020 is as follows:

                                                       Original                         Date of
                                                      Borrowing       Interest Rate     Maturity           Balance
  General obligation debt:
    Governmental activities:
       2011 Capital Improvement Bonds                $    2,000,000      2.98%        September 2021   $      450,000
       2016 Limited Tax General Obligation
           Refunding Bonds                                4,535,000      3% - 4%     October 2032           4,110,000
       2019 Capital Improvement Bonds                    19,420,000   1.83% - 3.58% December 2049          19,420,000
                                                                                                       $ 23,980,000

     Component units:
       2012 LDFA Tax Increment Refunding Bonds       $    4,100,000     3% - 4%       November 2025    $ 1,720,000

  Revenue Obligations
  The City has issued bonds where the income derived from the acquired or constructed assets is pledged to pay
  debt service. Revenue obligations outstanding as of June 30, 2020 are as follows:

                                                       Original                         Date of
                                                      Borrowing       Interest Rate     Maturity           Balance
  Revenue obligations:
    Business-type activities:
       2004 Drinking Water State Revolving Fund      $ 13,900,000        2.13%         October 2025    $    4,800,000
       2019 Water Supply System Junior Lien Bond          263,217         2%           October 2025           263,217
       2019 Sanitary Sewer System Junior Lien Bond      1,544,739         2%           October 2033         1,544,739
                                                                                                       $ 6,607,956

  The City has pledged future water customer revenues, net of specified operating expenses, to repay the 2004
  Drinking Water State Revolving Fund Loan. Proceeds from the issuance were used to make improvements to
  the City’s water supply system. The bond is payable solely from water customer net revenues and is payable
  through 2025. Annual principal and interest payments on the bond are expected to require less than 35
  percent of net revenues through 2025. The total principal and interest remaining to be paid on the bond is
  $5,112,058. Principal and interest paid for the year ended June 30, 2020 and total customer net revenues were
  $854,916 and $2,043,738, respectively.

  The total amount of the 2019 Water Supply System Junior Lien Bond and 2019 Sanitary Sewer System Junior
  Lien Bond are $2,000,000 and $11,500,000, respectively, with the City expecting to draw the remaining
  amount in the upcoming year. If certain conditions are met, principal amounts of up to $400,000 and
  $8,625,000, respectively, of these balances may be forgiven.

  The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2020.


                                                         66
                                                City of Muskegon
                                     NOTES TO FINANCIAL STATEMENTS
                                                June 30, 2020


NOTE I—LONG-TERM DEBT—Continued

  Direct Borrowings and Direct Placements

  Installment Purchase Agreements
  The City has entered into an installment agreement for capital improvements to the Mercy Health Arena in
  2020. The installment purchase agreement is secured by the equipment purchase and if the City defaults
  under the agreement, the lessor has the right to demand payment in full of the unpaid balance or recover
  possession of any or all items of secured equipment. Installment purchase agreements outstanding as of June
  30, 2020 are as follows:

                                                           Original                            Date of
                                                          Borrowing        Interest Rate       Maturity          Balance
  Installment purchase agreements:
     Governmental activities:
         2019 Capital Improvement Installment Loan    $        2,417,000   4.42% - 5.32%       April 2026    $ 2,123,804

  For governmental activities, pension liabilities (i.e. net pension and OPEB liabilities), claims and judgments
  and compensated absences are generally liquidated by the General Fund.

  In 2005, the County of Muskegon began making improvements to the regional sewer treatment facilities. The
  project was funded with $17,500,000 bonds issued through the State of Michigan Clean Water Revolving
  Fund Loan Program. The County operates the system and makes payments on the bonds with user charges to
  the local units. The City has pledged its limited tax full faith and credit for the payment of its portion of the
  debt should user charges collected by the County be insufficient to make the debt payments. The City’s
  portion of the debt on June 30, 2020 was approximately $2,497,572. The City is unaware of any
  circumstances that would cause a shortfall in the near future.

  Annual debt service requirements to maturity for public placement debt and for direct borrowings and direct
  placements outstanding as of June 30, 2020 follow:

                                      Governmental Activites
                                                     Direct Borrowings and                     Business-type Activities
   Year Ending          Public Placement Debt          Direct Placements                        Public Placement Debt
    June 30,           Principal       Interest     Principal      Interest                    Principal      Interest
      2021         $       690,000    $     776,856   $        324,944     $    90,299     $       760,000   $     183,425
      2022                 740,000          757,613            340,307          75,277             960,000         165,916
      2023                 550,000          740,885            356,217          59,367             980,000         145,588
      2024                 600,000          725,140            372,871          42,713           1,005,000         124,738
      2025                 640,000          706,645            390,306          25,278           1,008,217         103,466
    2026-2030            3,540,000        3,219,790            339,159           7,159           1,510,000         214,425
    2031-2035            3,520,000        2,634,359                  -               -             384,739          90,100
    2036-2040            3,405,000        2,116,883                  -               -                   -               -
    2041-2045            4,475,000        1,447,983                  -               -                   -               -
    2046-2050            5,820,000          542,370                  -               -                   -               -
                   $ 23,980,000       $ 13,668,524    $ 2,123,804          $ 300,093       $ 6,607,956       $ 1,027,658




                                                          67
                                            City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE I—LONG-TERM DEBT—Continued

                            Component Units
   Year Ending           Public Placement Debt
    June 30,            Principal      Interest
      2021          $      395,000    $      50,100
      2022                 245,000           37,300
      2023                 255,000           28,575
      2024                 265,000           20,775
      2025                 275,000           12,675
    2026-2030              285,000            4,275
    2031-2035                    -                -
    2036-2040                    -                -
    2041-2045                    -                -
    2046-2050                    -                -
                    $ 1,720,000       $    153,700

  Annual debt service requirements to maturity by type of debt as of June 30, 2020 follow:

                                                                            Installment
                                                             Revenue         Purchase
                     General Obligation Debt                Obligations     Agreements
   Year Ending     Governmental    Component               Business-type   Governmental
    June 30,         Activities       Units                  Activities      Activities
      2021          $     1,466,856    $    445,100        $     943,425   $      415,243
      2022                1,497,613         282,300            1,125,916          415,584
      2023                1,290,885         283,575            1,125,588          415,584
      2024                1,325,140         285,775            1,129,738          415,584
      2025                1,346,645         287,675            1,111,683          415,584
    2026-2030             6,759,790         289,275            1,724,425          346,318
    2031-2035             6,154,359               -              474,839                -
    2036-2040             5,521,883               -                    -                -
    2041-2045             5,922,983               -                    -                -
    2046-2050             6,362,370               -                    -                -
                    $ 37,648,524       $ 1,873,700         $ 7,635,614     $ 2,423,897




                                                      68
                                               City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE J—OTHER INFORMATION

  Risk Management
  The City is exposed to various risks of loss related to torts; theft of, damage to and destruction of assets;
  errors and omissions; injuries to employees and natural disasters. The City manages its liability and property
  risk by participating in the Michigan Municipal Risk Management Authority (MMRMA), a public entity risk
  pool providing property and liability coverage to its participating members. The City pays an annual
  premium to MMRMA for its insurance coverage. The MMRMA is self-sustaining through member
  premiums and provides, subject to certain deductibles, occurrence-based casualty coverage for each incident
  and occurrence-based property coverage to its members by internally assuring certain risks and reinsuring
  risks through commercial companies. A $150,000 deductible is maintained to place the responsibility for
  small charges with the City. Settled claims resulting from these risks have not exceeded insurance coverage
  in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2020 and 2019 were as
  follows:

                                                     Current Year
                                  Balance             Claims and                                      Balance
                               at Beginning           Changes in                Claims                at End
    Year Ended                    of Year             Estimates                Payments               of Year
  June 30, 2020                 $    224,580          $     94,465         $       185,681        $     133,364
  June 30, 2019                       78,289               227,646                  81,355              224,580

  The City manages its workers' compensation risk by participating in the Michigan Municipal Workers'
  Compensation Fund (MMWCF), a public entity risk pool providing workers' compensation coverage to its
  participating members. The City pays an annual premium to MMWCF for its workers' compensation
  coverage. The MMWCF is self-sustaining through member premiums and provides statutory workers'
  compensation coverage to its members by internally assuring certain risks and reinsuring risks through
  commercial companies. Settled claims resulting from these risks have not exceeded insurance coverage in
  any of the past three fiscal years.

  The City is self-insured for employee health care benefits for those employees selecting the City plan over
  other options. Under this plan, the General Insurance Fund provides coverage for up to a maximum of up to
  $500,000 per covered individual’s lifetime. As of June 30, 2020, the claims liability including incurred but
  not reported claims was $111,410. A liability was recorded in the accompanying financial statements for the
  estimated claims liability. The claims liability was based on past experience, a review of pending claims and
  other social and economic factors. The above estimate was not discounted and there were no outstanding
  claims for which annuity contracts have been purchased in the claimant’s name. No significant reductions in
  insurance coverage were made in the last fiscal year. Settled claims have not exceeded the commercial
  coverage in any of the past three fiscal years. Changes in the fund’s claim liability amount in 2020 and 2019
  were as follows:

                                                    Current Year
                                  Balance            Claims and                                      Balance
                               at Beginning          Changes in                 Claims               at End
    Year Ended                    of Year            Estimates                 Payments              of Year
  June 30, 2020                 $     51,401         $ 2,267,390           $     2,207,381       $     111,410
  June 30, 2019                       33,784           1,643,632                 1,626,015              51,401



                                                      69
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE J—OTHER INFORMATION—Continued
  Contingencies
  Amounts received or receivable from grant agencies are subject to audit and adjustment by grantor agencies,
  principally the federal government. Any disallowed claims, including amounts already collected, may
  constitute a liability to the applicable funds. The amount, if any, of expenditures that may be disallowed by
  the grantor cannot be determined at this time, although the City expects such amounts, if any, to be
  immaterial.
  The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently
  determinable, in the opinion of the City's counsel the resolution of these matters will not have a material
  adverse effect on the financial condition of the City.
  Commitments
  The City has several contracts for street projects including water and sewer system improvements as of June
  30, 2020 with a remaining amount of approximately $27,027,000. Approximately $238,000 of the
  commitments in the Water Fund are being financed by a grant and approximately $9,955,000 and $1,737,000
  of the commitments in the Sewer and Water funds, respectively, are being financed by long-term debt with
  the remainder being paid out of available funds as follows:

                Fund                                                                    Amount
          Major Street and Trunkline                                               $     4,439,000
          Local Street                                                                      57,000
          Sewer                                                                          9,231,000
          Water                                                                         13,300,000
                                                                                   $ 27,027,000

  Leases
  The City leases an office facility under a noncancelable operating lease that expires June 2022 with the option
  by the tenant to renew the term of the lease for two successive periods of five years each. The City received
  rental income (including pro-rata utility usage) of $56,772 for the year ended June 30, 2020. The future
  minimum rental income for this lease is as follows:
           Year Ending
            June 30,                                                                    Amount
               2021                                                                 $       55,463
               2022                                                                         55,584
                                                                                    $     111,047


NOTE K—TAX ABATEMENTS
  Industrial Facilities Exemption
  The City entered into property tax abatement agreements with local businesses under the Plant Rehabilitation
  and Industrial Developments Act, (known as the Industrial Facilities Exemptions or IFTs) PA 198 of 1974, as
  amended. The IFTs provides a tax incentive to manufacturers to enable renovation and expansion of aging
  facilities, assist in the building of new facilities, and to promote the establishment of high tech facilities.
  Properties qualifying for IFT status are taxed at half the local property tax millage rate applicable to other real
  and personal property in the City for a term of one to twelve years as determined by the City.
  For the year ended June 30, 2020, the City abated property taxes revenues totaling $63,532 under this
  program.



                                                        70
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE K—TAX ABATEMENTS—Continued

  Brownfield Redevelopment Authority
  The City entered into property tax abatement agreements with local businesses under the Brownfield
  Redevelopment Act, PA 381 of 1996, as amended. Brownfield properties are those in which the
  redevelopment or reuse of property may be complicated by the presence or perception of contamination.
  Brownfields use tax increment financing where growth in taxable value above the initial value of the
  Brownfield is captured and used to repay the developer for remediation costs.

  For the year ended June 30, 2020, the City abated property taxes revenues totaling $150,073 under this
  program.

  Payment in Lieu of Taxes (PILOT)
  The City uses the State Housing Development Authority Act, PA 346 of 1966, as amended, to enter into
  agreements that provide for a service charge in lieu of taxes to encourage the development of housing of its
  elderly citizens of low and moderate income.

  For the year ended June 30, 2020, the City abated property taxes revenues totaling $131,151 under this
  program.


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN

  Defined Benefit Pension Plan

  Plan Description
  The City participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an
  agent multiple-employer, statewide public employee pension plan established by the Michigan Legislature
  under Public Act 135 of 1945 and administered by a nine member Retirement Board. MERS issues a publicly
  available financial report that includes financial statements and required supplementary information. This
  report may be obtained accessing the MERS website at www.mersofmich.com.

  Benefits Provided
  The City’s defined benefit pension plan provides certain retirement, disability and death benefits to plan
  members and beneficiaries. Public Act 427 of 1984, as amended, established and amends the benefit
  provisions of the participants in MERS. The Plan covers all full-time employees hired prior to January 2005.
  Beginning in January 2005, the various employee divisions began to be closed. By July 2006, all employee
  divisions were closed.




                                                      71
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Benefit Pension Plan—Continued

  Benefits Provided—Continued
  Benefits provided are based on the following by employee division:

                                                                Normal                           Reduced
                                                  Vesting      Retirement       Early              Early
                                  Mulitplier      Period          Age         Retirement        Retirement
   Non-Union General               2.25%*         5 years           60           55/25         50/25 or 55/15
   Non-Union Police                3.00%          10 years          55           53/25             50/25
   Clerical                        2.25%*         5 years           60           55/25         50/25 or 55/15
   Department of Public Works      2.25%*         10 years          60           55/30         50/25 or 55/15
   Police Patrol                   3.00%*         10 years          55           50/25         Not applicable
   Police Command                  3.00%          10 years          55           50/25         Not applicable
   Fire                            2.75%          10 years          55           53/25             50/25

  *Effective January 2017, the multiplier for Non-Union General and Department of Public Works was changed
  to 2.00% and the multiplier for Police Patrol was changed to 2.675%. Effective December 2018, the
  multiplier for Clerical was changed to 2.00%.

  Final average compensation is calculated based on 3 years.

  Employees Covered by Benefit Terms
  At December 31, 2019 valuation date, the following employees were covered by the benefit terms:

   Inactive employees or beneficiaries currently receiving benefits              326
   Inactive employees entitled to but not yet receiving benefits                  39
   Active employees                                                               85
       Total employees covered by MERS                                           450

  Contributions
  The City is required to contribute amounts at least equal to the actuarially determined rate, as established by
  the MERS Retirement Board. The actuarially determined rate is the estimated amount necessary to finance
  the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded
  accrued liability. The City may establish contribution rates to be paid by its covered employees.

  For the year ended June 30, 2020, the City had a flat-dollar employer contribution to the Plan of $1,855,248
  in lieu of a percentage of covered employee payroll, as the Plan is closed to new employees. Member
  contributions range from 4 percent to 6.5 percent.

  Net Pension Liability
  The City’s net pension liability was measured as of December 31, 2019, and the total pension liability used to
  calculate the net pension liability was determined by an annual actuarial valuation as of that date.




                                                       72
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Benefit Pension Plan—Continued

  Actuarial Assumptions
  The total pension liability in the December 31, 2019 actuarial valuation was determined using the following
  actuarial assumptions, applied to all periods included in the measurement:

   Inflation                       2.5 percent
   Salary increases                3.75 percent changed to 3.0 percent in the long-term
                                    effective with the December 31, 2019 valuation
   Investment rate of return       7.75 percent changed to 7.35 percent, net of administrative and
                                    investment expenses effective with the December 31, 2019
                                    valuation

  Although no specific price inflation assumptions are needed for the valuation, the 2.5 percent long-term wage
  inflation assumption would be consistent with a price inflation of 3-4 percent. Mortality rates used were
  based on the RP-2014 Group Annuity Mortality Table of a 50 percent Male and 50 percent Female blend.

  The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience
  study of 2009 through 2013.

  The long-term expected rate of return on pension plan investments was determined using a model method in
  which the best-estimate ranges of expected future real rates of return (expected returns, net of investment and
  administrative expenses and inflation) are developed for each major asset class. These ranges are combined
  to produce the long-term expected rate of return by weighting the expected future real rates of return by the
  target asset allocation percentage and by adding expected inflation. The target allocation and best estimates
  of arithmetic real rates of return for each major asset class are summarized in the following table:

                                                Target           Long-Term                         Long-Term
                                              Allocation          Expected                          Expected
                                Target       Gross Rate of       Gross Rate       Inflation        Real Rate
  Asset Class                  Allocation       Return            of Return      Assumption         of Return

  Global equity                    60.0%              7.75%            4.65%            2.50%            3.15%
  Global fixed income              20.0%              3.75%            0.75%            2.50%            0.25%
  Private assets                   20.0%              9.75%            1.95%            2.50%            1.45%
  Total                          100.0%                               7.35%                             4.85%

  Discount Rate
  The discount rate used to measure the total pension liability was 7.60 percent for 2019. The projection of
  cash flows used to determine the discount rate assumed that employee contributions will be made at the
  current contribution rate and that City contributions will be made at rates equal to the difference between
  actuarially determined contribution rates and the employee rate. Based on those assumptions, the pension
  plan's fiduciary net position was projected to be available to pay all projected future benefit payments of
  current active and inactive employees. Therefore, the long-term expected rate of return on pension plan
  investments was applied to all periods of projected benefit payments to determine the total pension liability.
  The discount rate used to calculate the liability at the beginning of the year was 8.00 percent.


                                                       73
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Benefit Pension Plan—Continued

  Changes in the Net Pension Liability

                                                                  Increase (Decrease)
                                                                          Plan        Net Pension
                                                   Total Pension        Fiduciary       Liability
                                                    Liability (a)      Position (b)      (a)-(b)
  Balance at beginning of year                     $ 112,728,195       $ 83,140,099   $ 29,588,096

  Changes for the year
    Service cost                                            732,228                   -            732,228
    Interest                                              8,718,797                   -          8,718,797
    Difference between expected and
       actual experience                                  1,830,804                  -           1,830,804
    Changes in assumptions                                4,134,788                  -           4,134,788
    Contributions - employer                                      -          2,712,204          (2,712,204)
    Contributions - employee                                      -            491,814            (491,814)
    Net investment income                                         -         11,059,388         (11,059,388)
    Administrative expenses                                       -           (190,108)            190,108
    Benefit payments including refund of
       employee contributions                            (8,218,689)         (8,218,689)                  -
         Net changes                                      7,197,928          5,854,609           1,343,319
  Balance at end of year                           $ 119,926,123         $ 88,994,708         $30,931,415

  Sensitivity of the Net Pension Liability to Changes in the Discount Rate
  The following presents the net pension liability of the City, calculated using the discount rate of 7.6 percent,
  as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-
  percentage-point lower (6.6 percent) or 1-percentage-point higher (8.6 percent) than the current rate:

                                       1% Decrease            Current Discount             1% Increase
                                         (6.6%)                 Rate (7.6%)                  (8.6%)

  City's net pension liability     $        43,459,409        $        30,931,415     $         20,307,360

  Note: The current discount rate shown for GASB 68 purposes is higher than the MERS assumed rate of
  return. This is because for GASB 68 purposes, the discount rate must be gross of administrative expenses,
  whereas for funding purposes, it is net of administrative expense.




                                                         74
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Benefit Pension Plan—Continued

  Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions
  For the year ended June 30, 2020, the City recognized pension expense of $11,833,767. At June 30, 2020, the
  City reported deferred outflows of resources and deferred inflows of resources related to pensions from the
  following sources:

                                               Deferred Outflows         Deferred Inflows
                                                 of Resources             of Resources

  Net differences between projected
     and actual net investment income          $            287,519       $               -
  Contributions subsequent to the
     measurement date*                                     1,017,295                      -
        Total                                  $        1,304,814         $               -

  *The amount reported as deferred outflows of resources resulting from contributions subsequent to the
  measurement date will be recognized as a reduction in the net pension liability for the year ending June 30,
  2021.

  Amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will
  be recognized in pension expense as follows:

                               Year Ending
                                June 30,                                Amount
                                    2021                               $ (251,301)
                                    2022                                   290,703
                                    2023                                 1,175,325
                                    2024                                  (927,208)

  Payables to the Pension Plan
  At June 30, 2020, the City reported a payable of $264,472 for the outstanding amount of contributions to the
  pension plan required for the year ended June 30, 2020.




                                                      75
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Contribution Pension Plan
  The City also maintains a defined contribution plan offered by MERS for its full-time employees hired after
  the defined benefit plan was closed to new participants.

  Benefit terms, including contribution requirements, for the MERS defined contribution plan are established
  and may be amended by the City Commission as determined by negotiated labor contracts. The City is
  required to contribute 3 percent to 13 percent of a qualified employees’ annual compensation each year
  depending on employee group. Qualified employees are required to contribute 0 percent to 6 percent of
  annual compensation depending on employee group. For the year ended June 30, 2020, City and employee
  contributions were $849,470 and $383,608, respectively.

  Employees are immediately vested in their own contributions and earnings on those contributions and become
  vested in City contributions and earnings on City contributions by 20 percent for each full year of service,
  leaving employees fully vested after five years of service. Nonvested City contributions are forfeited upon
  termination of employment. Such forfeitures are used to cover a portion of the pension plan’s administrative
  expenses. For the year ended June 30, 2020, forfeitures reduced the City’s pension expense by $51,556.

  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 full-time employees at their option, permits participants to defer
  a portion of their salary until future years. Payments from the deferred compensation plan are not available to
  participants until termination, retirement, death, or unforeseeable emergency. Active participants are allowed
  to borrow from their accumulated assets for limited purposes such as family education costs, medical costs, or
  down payment for a new home. The City must approve program loans.

  The Plan has created a trust for the exclusive benefit of the Plan’s participants and beneficiaries under rules
  provided by Internal Revenue Code Section 401(f).


NOTE M—OTHER POSTEMPLOYMENT BENEFITS

  Retiree Healthcare Plan

  Plan Description
  The City’s defined benefit OPEB Plan, the City of Muskegon Retiree Healthcare Plan (OPEB Plan), provides
  healthcare benefits to certain employees and their spouses upon retirement. The Plan is a defined benefit plan
  administered by the City Commission. The benefits are provided under collective bargaining agreements and
  at the discretion of the City Commission. The OPEB Plan does not issue a publicly available report.




                                                       76
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—CONTINUED

  Retiree Healthcare Plan—Continued

  Benefits Provided
  The OPEB Plan provides medical and dental insurances for eligible retirees and spouses who meet the
  following criteria:

                                                                              Normal
                                                                  Vesting    Retirement        Early
                                           Eligibility             Period       Age          Retirement
  Non-Union General               Hired before January 1, 2011     5 years       60             55/25
  Non-Union Police                Hired before January 1, 2011    10 years       55             53/25
  Clerical                        Hired before January 1, 2009    10 years       60             55/30
  Department of Public Works      Hired before January 1, 2011    10 years       60             55/30
  Police Patrol                   Hired before January 1, 2012    10 years       55             50/25
  Police Command                  Hired before January 1, 2010    10 years       55             50/25
  Fire                            Hired before January 1, 2010    10 years       55             53/25

  Benefits are provided through a third party insurer.

  Employees Covered by Benefit Terms
  At the December 31, 2019 valuation, the following employees were covered by the benefit terms:

                  Active members                                                       109
                  Inactive members                                                      40
                  Retirees and beneficiaries                                           302
                      Total employees covered by OPEB Plan                             451

  Contributions
  The OPEB Plan’s funding policy is that the City will make contributions equal to the recommended annual
  contribution. There are no long-term contracts for contributions to the OPEB Plan. The OPEB Plan has no
  legally required reserves. For the year ended June 30, 2020, the City made payments for postemployment
  healthcare benefits of $1,233,505.

  Net OPEB Liability
  The City’s net OPEB liability was measured as of December 31, 2019, and the total OPEB liability used to
  calculate the net OPEB liability was determined by an actuarial valuation as December 31, 2019.




                                                         77
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued

  Retiree Healthcare Plan—Continued

  Actuarial Assumptions
  The total OPEB liability in the December 31, 2019 actuarial valuation was determined using the following
  actuarial assumptions, applied to all periods included in the measurement:

  Inflation                       2.5 percent
  Salary increases                3.0 percent
  Investment rate of return       6.24 percent (including inflation), net of administrative
                                   and investment expenses
  Healthcare cost trend rates     Pre-Medicare: 8.25 percent graded down to 4.5 percent by .25 percent per year
                                  Post-Medicare: 6.5 percent graded down to 4.5 percent by .25 percent per year

  Mortality
  Mortality rates for police and fire were as set forth in the Public Safety 2010 Employee and Healthy Retiree,
  headcount weighted, MP-2018 improvement scale. Mortality rates for others were as set forth in the Public
  General 2010 Employee and Healthy Retiree, headcount weighted, MP-2018 improvement scale.

  Investment Rate of Return
  The long-term rate of return on retirement plan investments was determined using a building-block method in
  which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB Plan
  investment expense and inflation) are developed for each major asset class. These ranges are combined to
  produce the long-term expected rate of return by weighting the expected future real rates of return by the
  target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of
  return for each major asset class included in the OPEB Plan’s target asset allocation are summarized in the
  following table:

                                              Target          Long-Term                       Long-Term
                                            Allocation         Expected                        Expected
                               Target      Gross Rate of      Gross Rate       Inflation       Real Rate
  Asset Class                 Allocation      Return           of Return      Assumption       of Return

  Total market portfolio          55.0%             7.35%           4.04%           2.50%            2.67%
  Est market port (60/40)         25.0%             6.70%           1.68%           2.50%            1.05%
  Divers bond port (0/100)        16.0%             3.00%           0.48%           2.50%            0.08%
  Short-term income                4.0%             1.00%           0.04%           2.50%           -0.06%
  Total                         100.0%                             6.24%                            3.74%

  Discount Rate
  The discount rate used to measure the total OPEB liability was 6.24 percent. The projection of cash flows
  used to determine the discount rate assumed that the City will make future contributions at the same level as
  2019. Based on this assumption, the OPEB plan’s fiduciary net position was projected to be sufficient to
  make projected future benefit payments of current plan members. For projected benefits that are covered by
  projected assets, the long-term expected rate was used to discount the projected benefits. From the year that
  benefit payments were not projected be covered by the projected assets (the “depletion date”), projected
  benefits were discounted at a discount rate reflecting a 20-year AA/Aa tax-exempt municipal bond yield. A
  single equivalent discount rate that yields the same present value of benefits is calculated. This discount rate
  is used to determine the total OPEB liability. As of December 31, 2018 the discount rate used to value OPEB
  liabilities was 7.75 percent.



                                                       78
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued

  Retiree Healthcare Plan—Continued

  Changes in the Net OPEB Liability

                                                                     Increase (Decrease)
                                                                                              Net OPEB
                                                  Total OPEB           Plan Fiduciary          Liability
                                                   Liability (a)         Position (b)           (a)-(b)
  Balance at January 1, 2019                      $ 29,100,636          $ 19,578,969         $ 9,521,667

  Changes for the year
     Service cost                                          165,306                  -              165,306
     Interest                                            2,191,233                  -            2,191,233
     Difference between expected and
         actual experience                            (2,119,868)                   -           (2,119,868)
     Changes of assumptions                            6,288,823                    -            6,288,823
     Contributions - employer                                  -            1,001,447           (1,001,447)
     Net investment income                                     -            2,660,470           (2,660,470)
     Administrative expenses                                   -              (41,397)              41,397
     Benefit payments including refund of
         employee contributions                       (1,983,928)          (1,983,928)                    -
          Net changes                                    4,541,566          1,636,592            2,904,974
  Balance at December 31, 2019                    $ 33,642,202          $ 21,215,561         $ 12,426,641

  Sensitivity of the Net OPEB Liability to Changes in the Discount Rate
  The following presents the net OPEB liability of the City, calculated using the discount rate of 6.24 percent,
  as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1-
  percentage-point lower (5.24 percent) or 1-percentage-point higher (7.24 percent) than the current rate:

                                      1% Decrease             Current Discount              1% Increase
                                        (5.24%)                Rate (6.24%)                   (7.24%)

  City's net OPEB liability       $         16,257,461        $        12,426,641       $        9,245,708




                                                         79
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2020


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued

  Retiree Healthcare Plan—Continued

  Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate
  The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate for
  pre-Medicare of 8.25 percent, decreasing to 4.5 percent and post-Medicare of 6.5 percent decreasing to 4.5
  percent, as well as what the City’s net OPEB liability would be if it were calculated using healthcare cost
  trend rates that are 1-percentage-point lower (7.25 percent decreasing to 3.5 percent or 5.5 percent decreasing
  to 3.5 percent) or 1-percentage-point higher (9.25 percent decreasing to 5.5 percent or 7.5 percent decreasing
  to 5.5 percent) than the current rate:

                                                                     Current
                                                                  Healthcare Cost
                                      1% Decrease                  Trend Rate             1% Increase

  City's net OPEB liability       $          9,226,377            $      12,426,641   $        16,257,103

  OPEB Plan Fiduciary Net Position
  Detailed information about the OPEB Plan’s fiduciary net position is not available in a separately issued
  financial report. For purposes of measuring the net OPEB liability, deferred outflows of resources and
  deferred inflows of resources related to OPEB, and OPEB expenses, information about the fiduciary net
  position of the OPEB Plan and additions to/deductions from the City’s fiduciary net position have been
  determined on the same basis as they are reported by the City. For these purposes, benefit payments
  (including refunds of employee contributions) are recognized when due and payable in accordance with the
  benefit terms. Investments are reported at fair value.

  OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB
  For the year ended June 30, 2020, the City recognized OPEB expense of $4,011,969. At June 30, 2020, the
  City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the
  following sources:

                                                              Deferred Outflows of    Deferred Inflows of
                                                                  Resources               Resources
  Differences in experience                                   $                 -     $          850,486
  Changes in assumptions                                                2,523,061                      -
  Net difference between projected
   and actual net investment income                                         168,793                         -
  Contributions subsequent to the
   measurement date*                                                        578,303                         -
        Total                                                 $          3,270,157        $       850,486

  *The amount reported as deferred outflows of resources resulting from contributions subsequent to the
  measurement date will be recognized as a reduction in the net pension liability for the year ending June 30,
  2021.




                                                         80
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued

  Retiree Healthcare Plan—Continued

  OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to
  OPEB—Continued
  Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will
  be recognized in OPEB expense as follows:

                                 Year Ending
                                  June 30,                              Amount

                                     2021                             $ 1,764,465
                                     2022                                  91,892
                                     2023                                 221,566
                                     2024                                (236,555)

  Payables to the OPEB Plan
  At June 30, 2020, the City did not have a payable to the OPEB Plan.

  Healthcare Savings Plan
  The City also maintains a defined contribution OPEB Plan (Health Care Savings Plan or HCSP) which
  provides certain health care benefits to plan member and legal dependents upon termination of employment.
  The HCSP covers all City employees hired after July 1, 2012 in lieu of the traditional retiree healthcare plan.
  The City participates in the Municipal Employees Retirement System (MERS) of Michigan. MERS is an
  agent multiple employer, statewide public employee defined contribution OPEB Plan established by the
  Michigan Legislature under Public Act 135 of 1945 and administered by a nine-member Retirement Board.
  Public Act 427 of 1984, as amended, establishes and amends the benefit provisions of the participants in
  MERS. MERS issues a publicly available financial report that includes financial statements and required
  supplementary information. This report may be obtained accessing the MERS website at
  www.mersofmich.com.

  Depending on employee group, the Plan covers all qualified City employees hired after January 2009 to
  December 2012 in lieu of the traditional retiree healthcare plan. The City is required to contribute 1 or 2
  percent of a qualified employees’ annual compensation each year depending on employee group. Qualified
  employees are also required to contribute 1 or 2 percent of annual compensation. Qualified employees are
  also required to contribute 1 or 2 percent of annual compensation. Additionally, some employees, regardless
  of hire date, may make voluntary contributions to the HCSP.

  Employees are immediately vested in all contributions and earnings of those contributions.

  For the year ended June 30, 2020, City and employee contributions were $158,374 and $207,067,
  respectively.




                                                       81
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2020


NOTE N—UPCOMING ACCOUNTING PRONOUNCEMENTS

  GASB Statement 84—Fiduciary Activities was issued by the GASB in January 2017 and will be effective for
  the City’s 2021 fiscal year. The objective of this Statement is to improve guidance regarding the
  identification of fiduciary activities for accounting and financial reporting purposes and how those activities
  should be reported. This Statement establishes criteria for identifying fiduciary activities for all state and
  local governments. The focus on the criteria generally is on (1) whether a government is controlling the
  assets of the fiduciary activity and (2) the beneficiaries with whom a fiduciary relationship exists. An activity
  meeting the criteria should be reported in a fiduciary fund in the basic financial statements.

  GASB Statement 87—Leases was issued by the GASB in June 2017 and will be effective for the City’s 2022
  fiscal year. The objective of this Statement is to better meet the information needs of financial statement
  users by improving accounting and financial reporting for leases by governments. This Statement increases
  the usefulness of governments' financial statements by requiring recognition of certain lease assets and
  liabilities for leases that previously were classified as operating leases and recognized as inflows of resources
  or outflows of resources based on the payment provisions of the contract. It establishes a single model for
  lease accounting based on the foundational principle that leases are financings of the right to use an
  underlying asset. Under this Statement, a lessee is required to recognize a lease liability and an intangible
  right-to-use lease asset, and a lessor is required to recognize a lease receivable and a deferred inflow of
  resources, thereby enhancing the relevance and consistency of information about governments' leasing
  activities.


NOTE O—SUBSEQUENT EVENTS

  The COVID-19 pandemic that the world is experiencing is unprecedented. It is nearly impossible to fully
  understand the impact that it will have on the economy and on the City’s operations. As of December 22,
  2020, the City is in the process of implementing risk mitigation tactics including all aspects of the City’s
  business transactions with customers, vendors and human interaction within and outside of the City.

  On September 30, 2020, the City issued Revenue Bonds for the Sewer Fund of $4,715,000 and the Water
  Fund of $4,225,000 for improvements to the sewer and drinking water systems.

  On November 12, 2020, the City issued Capital Improvement Bonds of $4,325,000 and $2,055,000 for
  various capital improvement projects including public safety equipment, improvements to the Muskegon
  Central Dispatch 9-1-1 facility and City central fire station, improvements to the Hartshorn Marina Village,
  and improvements to the Mercy Health Arena.




                                                       82
REQUIRED SUPPLEMENTARY INFORMATION




                83
                                                              City of Muskegon
                                                BUDGETARY COMPARISON SCHEDULE
                                                                 General Fund
                                                       For the year ended June 30, 2020
                                       (with comparative actual amounts for the year ended June 30, 2019)


                                                                                            2020                                    2019
                                                                                                                Variance with
                                                                                                                Final Budget-
                                                                 Budgeted Amounts                                  Positive
                                                                Original     Final                 Actual        (Negative)        Actual
REVENUES
  Taxes
    City income taxes                                         $ 8,650,000    $ 8,650,000      $ 9,137,714       $     487,714    $ 8,691,673
    Property taxes                                              7,251,000      7,251,000        7,373,617             122,617      7,168,126
    Industrial facilities taxes                                    76,468         76,468          128,212              51,744        106,297
    Payments in lieu of taxes                                     566,877        566,877          614,314              47,437        615,934
              Total taxes                                       16,544,345     16,544,345          17,253,857         709,512      16,582,030

   Licenses and permits
      Business licenses                                             75,000         75,000             42,520          (32,480)        52,345
      Liquor licenses                                               55,000         55,000             49,557           (5,443)        55,467
      Marihuana facilities licenses                                 95,000         95,000            143,300           48,300        115,700
      Cable TV fees                                                370,000        370,000            361,405           (8,595)       380,343
      Rental property registration                                 397,500        397,500            354,830          (42,670)       363,915
      Burial permits                                                80,000         80,000             76,615           (3,385)        68,275
      Building permits                                           1,000,000      1,000,000            911,057          (88,943)       933,745
      Electrical permits                                           190,000        190,000            172,531          (17,469)       169,690
      Plumbing permits                                              80,000         80,000            103,139           23,139        102,101
      Mechanical permits                                           125,000        125,000            144,730           19,730        137,826
      Vacant building fees                                          40,000         40,000             60,570           20,570         72,665
      Other inspections                                                  -              -                350              350            735
              Total licenses and permits                         2,507,500      2,507,500           2,420,604         (86,896)      2,452,807

   Intergovernmental revenues
      Federal grants                                                40,000         40,000            147,191          107,191         57,894

      State
         Grants                                                    776,000        776,000             913,590         137,590         862,839
         State shared revenue                                    4,376,711      4,376,711           4,117,935        (258,776)      4,271,438
              Total intergovernmental revenues - State           5,152,711      5,152,711           5,031,525        (121,186)      5,134,277

      Local                                                        142,000         42,000             40,000           (2,000)        40,000




                                                                      84
                                                              City of Muskegon
                                    BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                             General Fund
                                                   For the year ended June 30, 2020
                                   (with comparative actual amounts for the year ended June 30, 2019)


                                                                                               2020                                    2019
                                                                                                                  Variance with
                                                                                                                  Final Budget-
                                                                   Budgeted Amounts                                  Positive
                                                                  Original     Final                  Actual       (Negative)          Actual
Charges for services
  Tax administration fees                                     $      327,000   $     327,000     $      350,742   $      23,742    $     340,217
  Utility administration fees                                        310,000         310,000            310,000               -          310,000
  Reimbursement for elections                                              -               -             50,142          50,142           13,455
  Brownfield authority admin fee                                     162,000         162,000            180,000          18,000          162,000
  Indirect cost reimbursements                                     1,175,719       1,175,719          1,066,967        (108,752)       1,114,735
  Site plan review fee                                                 6,000           6,000              7,600           1,600            6,900
  Sale of cemetery lots                                               25,000          25,000             28,440           3,440           31,159
  Police miscellaneous                                               137,301         137,301            116,108         (21,193)         143,322
  Police impound fees                                                 35,000          35,000             38,293           3,293           39,470
  Landlord's alert fee                                                30,000          30,000             25,990          (4,010)          30,323
  Fire protection - state property                                    81,750         173,718            173,718               -           81,766
  Zoning fees                                                         15,000          15,000             29,855          14,855           19,070
  Muskegon Heights zoning                                              6,000           6,000              5,670            (330)          10,465
  Clerk fees                                                           5,000           5,000              1,329          (3,671)           5,432
  Clerk fees - passport fees                                          80,000          80,000             63,520         (16,480)          82,662
  Tax abatement application fees                                       6,000           6,000              8,890           2,890            3,802
  Treasurer fees                                                      67,000          67,000             67,177             177           84,289
  False alarm fees                                                     9,000           9,000              6,780          (2,220)          10,365
  Miscellaneous cemetery income                                       16,000          16,000             16,383             383           14,547
  Fire miscellaneous                                                   9,500           9,500              1,681          (7,819)          14,506
  Sanitation stickers                                                396,100         396,100            336,827         (59,273)         249,043
  Lot cleanup fees                                                    39,500          39,500             31,566          (7,934)          35,697
  Reimbursements - lot mowing and demolitions                          5,000           5,000                124          (4,876)           1,067
  Special events reimbursements                                       55,000          55,000             61,625           6,625           26,505
  Recreation program fees                                              4,500           4,500              8,634           4,134           11,029
  Parking                                                                  -               -            146,821         146,821                -
  Other charges for services                                               -               -                400             400                -
         Total charges for services                                3,003,370       3,095,338          3,135,282          39,944        2,841,826

Fines and forfeitures
   Income tax - penalty and interest                                200,000         200,000             201,614           1,614          207,424
   Late fees on current taxes                                        20,000          20,000              18,123          (1,877)          16,790
   Interest on late invoices                                         11,000          11,000              11,006               6           11,516
   Parking fines                                                     55,000          55,000              76,543          21,543           57,782
   Court fines                                                      120,000         120,000              83,061         (36,939)         137,732
   Civil infractions                                                 16,500          16,500              21,978           5,478           30,876
         Total fines and forfeitures                                422,500         422,500             412,325         (10,175)         462,120

Investment earnings and rental income
   Interest income                                                  100,000         100,000             153,093          53,093          108,155
   Net increase (decrease) in the fair value of investments               -               -             193,005         193,005          344,122
   City right of way rental                                           6,800           6,800               6,800               -            6,800
   Fire station lease - Central Dispatch                             54,000          54,000              56,772           2,772           45,292
   Parking rentals                                                   68,750          68,750              48,500         (20,250)          68,500
   Great Lakes Naval Memorial lease                                  15,000          15,000                   -         (15,000)               -
   McGraft Park rentals                                              97,000          97,000              44,637         (52,363)          96,084
   Other park rentals                                                55,000          55,000              34,858         (20,142)          47,964
         Total investment earnings and rental income                396,550         396,550             537,665         141,115          716,917


                                                                       85
                                                              City of Muskegon
                                        BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                                 General Fund
                                                       For the year ended June 30, 2020
                                       (with comparative actual amounts for the year ended June 30, 2019)


                                                                                                 2020                                      2019
                                                                                                                     Variance with
                                                                                                                     Final Budget-
                                                                    Budgeted Amounts                                    Positive
                                                                   Original     Final                   Actual        (Negative)          Actual
   Other
      Police sale and auction proceeds                         $       1,000    $       1,000      $       28,818    $      27,818    $           -
      CDBG program reimbursements                                    534,167          548,967             482,833          (66,134)         332,857
      Fisherman's Landing reimbursement                               17,500           17,500              24,842            7,342                -
      Contributions                                                   20,000           20,000              22,227            2,227            2,046
      Contributions - Veteran's Park maintenance                      18,500           18,500              16,811           (1,689)               -
      Community Foundation for Muskegon County                        10,000           10,000               9,982              (18)          24,892
      Miscellaneous and sundry                                        83,000           83,000              89,486            6,486          100,106
            Total other                                              684,167          698,967             674,999          (23,968)         459,901
            Total revenues                                         28,893,143       28,899,911          29,653,448         753,537        28,747,772

EXPENDITURES
  Current
    Public representation services
        City commission                                               85,936           85,936              93,898           (7,962)          88,892
        City promotions and public relations                          88,000           88,000              92,409           (4,409)          81,890
        City manager                                                 419,762          419,762             432,401          (12,639)         379,819
        Contributions to outside agencies                            424,513          424,513             386,779           37,734          384,968
        City attorney                                                360,000          360,000             373,919          (13,919)         345,538
            Total public representation services                    1,378,211        1,378,211           1,379,406          (1,195)        1,281,107

      Administrative services
        City clerk                                                   547,208          547,208             621,603          (74,395)         542,248
        Civil service                                                210,412          210,412             222,645          (12,233)         195,275
        Affirmative action                                                 -                -                  22              (22)           1,778
            Total administrative services                            757,620          757,620             844,270          (86,650)         739,301

      Financial services
         Finance administration                                      611,136          615,136             587,625           27,511          570,805
         Assessing                                                   332,000          332,000             258,238           73,762          335,977
         Arena administration                                              -                -              24,049          (24,049)          13,510
         Income tax administration                                   378,431          378,431             363,889           14,542          362,595
         Information systems                                         492,581          492,581             535,954          (43,373)         550,516
         City treasurer                                              609,617          609,617             589,093           20,524          561,463
            Total financial services                                2,423,765        2,427,765           2,358,848          68,917         2,394,866

      Public safety
        Police department                                          10,190,969       10,190,969          10,445,491        (254,522)        9,880,736
        Fire department                                             3,827,106        3,847,106           4,353,377        (506,271)        3,989,048
        Fire safety inspections                                     2,296,579        2,096,254           1,996,679          99,575         2,224,747
            Total public safety                                    16,314,654       16,134,329          16,795,547        (661,218)       16,094,531




                                                                        86
                                                             City of Muskegon
                                       BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                                General Fund
                                                      For the year ended June 30, 2020
                                      (with comparative actual amounts for the year ended June 30, 2019)


                                                                                               2020                                      2019
                                                                                                                   Variance with
                                                                                                                   Final Budget-
                                                                  Budgeted Amounts                                    Positive
                                                                 Original     Final                   Actual        (Negative)          Actual
      Public works
        Street lighting                                      $      490,000   $      490,000     $       390,116   $      99,884    $      551,818
        Community event support                                     103,159          103,159              81,049          22,110            73,216
        General sanitation                                        1,969,345        1,969,345           2,216,029        (246,684)        2,107,545
        Storm water management                                       14,000           14,000              13,340             660             4,000
        City hall maintenance                                       276,491          276,491             309,388         (32,897)          316,868
        Cemeteries maintenance                                      507,902          507,902             429,404          78,498           440,130
            Total public works                                    3,360,897        3,360,897           3,439,326         (78,429)        3,493,577

      Community and economic development
        Planning, zoning and economic development                  417,911          429,711             405,688           24,023          376,679
        Environmental services                                           -                -               7,413           (7,413)               -
        Edison Landing subsidy                                     360,000          360,000             360,000                -          360,000
            Total community and economic development               777,911          789,711             773,101           16,610          736,679

      Culture and recreation
         Parks maintenance                                        1,624,617        1,624,617           1,873,339        (248,722)        1,676,222
         McGraft Park maintenance                                   120,076          120,076              18,142         101,934           133,573
         General and inner city recreation programs                       -                -               1,928          (1,928)           12,050
         Forestry                                                         -                -                 656            (656)               92
         Parking operations                                               -                -              30,524         (30,524)            2,393
         Farmers market and flea market                                   -                -                 204            (204)              210
            Total culture and recreation                          1,744,693        1,744,693           1,924,793        (180,100)        1,824,540

      Other governmental functions
         Insurance premiums                                        287,041          287,041             340,189          (53,148)         292,037
         Other                                                     100,000          100,000              31,272           68,728          (10,326)
            Total other governmental functions                     387,041          387,041             371,461           15,580          281,711

   Debt service
     Principal                                                     290,000          290,000             290,000                -           65,000
     Interest and fees                                             159,750          159,750             160,811           (1,061)         165,851
         Total debt service                                        449,750          449,750             450,811           (1,061)         230,851

   Capital outlay                                                  895,201          925,001             786,725          138,276          801,483
            Total expenditures                                   28,489,743       28,355,018          29,124,288        (769,270)       27,878,646

Excess of revenues over (under) expenditures                       403,400          544,893             529,160          (15,733)         869,126




                                                                       87
                                                                City of Muskegon
                                      BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                               General Fund
                                                     For the year ended June 30, 2020
                                     (with comparative actual amounts for the year ended June 30, 2019)


                                                                                               2020                                      2019
                                                                                                                    Variance with
                                                                                                                    Final Budget-
                                                                     Budgeted Amounts                                  Positive
                                                                    Original     Final                Actual         (Negative)          Actual
OTHER FINANCING SOURCES (USES)
  Transfers in                                                  $     100,000    $    100,000    $             -    $    (100,000)   $       5,989
  Transfers out                                                      (485,000)       (485,000)        (1,132,500)        (647,500)        (761,486)
            Total other financing sources (uses)                     (385,000)       (385,000)        (1,132,500)        (747,500)        (755,497)

Net change in fund balance                                      $     18,400     $   159,893           (603,340)    $   (763,233)          113,629

Fund balance at beginning of year                                                                     8,505,195                          8,391,566

Fund balance at end of year                                                                      $ 7,901,855                         $ 8,505,195



Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.




                                                                         88
                                                    City of Muskegon
                                      BUDGETARY COMPARISON SCHEDULE
                                          Major Street and Trunkline Fund
                                          For the year ended June 30, 2020


                                                                                                           Variance with
                                                                                                           Final Budget-
                                                           Budgeted Amounts                                   Positive
                                                         Original       Final                Actual         (Negative)
REVENUES
  Intergovernmental revenues
     Federal                                         $    1,460,000     $   1,050,000     $ 1,049,653       $           (347)
     State                                                4,840,774         5,440,774       4,174,142             (1,266,632)
  Charges for services                                            -                 -          18,001                 18,001
  Investment earnings                                        10,000            10,000           9,665                   (335)
  Other                                                           -            40,000          55,016                 15,016
         Total revenues                                   6,310,774         6,540,774        5,306,477            (1,234,297)

EXPENDITURES
  Current
    Highways, streets and bridges                         5,328,443         7,633,443        6,018,144            1,615,299
  Debt service
    Principal                                                     -                 -          215,000             (215,000)
    Interest and fees                                             -                 -           16,873              (16,873)
         Total expenditures                               5,328,443         7,633,443        6,250,017            1,383,426
Net change in fund balance                           $    982,331       $ (1,092,669)         (943,540)     $      149,129
Fund balance at beginning of year                                                            3,194,724
Fund balance at end of year                                                               $ 2,251,184




Note: Both budgets and actual figures are prepared in accordance with generally accepted accounting principles.




                                                             89
                                                                                               City of Muskegon
                                                                                      Required Supplemental Information
                                                           SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS
                                                             Last Ten Fiscal Years (Amounts were determined as of December 31 of each fiscal year)


                                                                                       2019               2018               2017               2016              2015              2014
     TOTAL PENSION LIABILITY
       Service cost                                                               $       732,228    $       806,565    $     1,018,541    $     1,130,408    $    1,194,909    $    1,190,507
       Interest                                                                         8,718,797          8,345,836          8,429,233          8,345,661         8,034,035         7,817,503
       Differences between expected and actual experience                               1,830,804          3,642,392          1,326,122         (1,697,797)         (647,017)                -
       Changes in assumptions                                                           4,134,788                  -                  -                  -         4,779,382                 -
       Benefit payments, including refunds of employee contributions                   (8,218,689)        (7,512,608)        (6,937,544)        (6,417,825)       (6,363,249)       (6,407,932)
       Other changes                                                                            -           (229,967)        (4,485,289)                 -                 -                 -
               Net change in total pension liability                                    7,197,928          5,052,218           (648,937)         1,360,447         6,998,060         2,600,078
     Total pension liability at beginning of year                                     112,728,195        107,675,977        108,324,914        106,964,467        99,966,407        97,366,329
     Total pension liability at end of year (a)                                   $ 119,926,123      $ 112,728,195      $ 107,675,977      $ 108,324,914      $ 106,964,467     $ 99,966,407

     PLAN FIDUCIARY NET POSITION
       Contributions-employer                                                     $     2,712,204    $     2,671,175    $     1,801,016    $     1,996,512    $    1,420,218    $    1,166,652
       Contributions-employee                                                             491,814            848,562            687,391            563,898           566,045           564,409




90
       Net investment income                                                           11,059,388         (3,452,538)        10,964,115          8,890,951        (1,237,895)        5,282,031
       Benefit payments, including refunds or employee contributions                   (8,218,689)        (7,512,608)        (6,937,544)        (6,417,825)       (6,363,249)       (6,407,932)
       Administrative expense                                                            (190,108)          (173,509)          (173,921)          (175,718)         (183,599)         (193,139)
                                                                                                -
               Net change in plan fiduciary net position                                5,854,609         (7,618,918)         6,341,057          4,857,818        (5,798,480)         412,021
     Plan fiduciary net position at beginning of year                                  83,140,099         90,759,017         84,417,960         79,560,142        85,358,622        84,946,601
     Plan fiduciary net position at end of year (b)                               $ 88,994,708       $ 83,140,099       $ 90,759,017       $ 84,417,960       $ 79,560,142      $ 85,358,622

     City's net pension liability at end of year (a)-(b)                          $ 30,931,415       $ 29,588,096       $ 16,916,960       $ 23,906,954       $ 27,404,325      $ 14,607,785

     Plan fiduciary net position as a percentage of the total pension liability          74.21%             73.75%             84.29%             77.93%            74.38%            85.39%

     Covered payroll                                                              $   6,110,950      $   6,565,169      $   7,645,789      $   8,460,078      $   9,108,948     $   9,171,511

     City's net pension liability as a percentage of covered payroll                    506.16%            450.68%            221.26%            282.59%           300.85%           159.27%

     Notes to Schedule
       Additional actuarial data is not available and will be provided in subsequent years.
                                                                                                    City of Muskegon
                                                                                         Required Supplemental Information
                                                                            PENSION SYSTEM SCHEDULE OF CONTRIBUTIONS
                                                                  Last Ten Fiscal Years (Amounts were determined as of June 30 of each fiscal year)


                                                       2020            2019            2018            2017             2016             2015             2014              2013            2012            2011
     Actuarially determined contribution            $ 1,855,248     $ 1,902,696     $ 1,798,140    $ 1,897,158      $ 1,546,440      $ 1,293,996      $ 1,043,040       $ 1,035,772     $ 1,160,870     $   1,211,612
     Contributions in relation to the actuarially
       determined contribution                        2,777,641       2,218,663       1,964,214        2,276,200        1,753,272        1,293,996        1,543,040         1,035,772       1,160,870       2,211,612
     Contribution deficiency (excess)               $ (922,393)     $ (315,967)    $ (166,074)     $ (379,042)      $ (206,832)      $           -    $ (500,000)       $           -   $           -   $ (1,000,000)

     Covered payroll                                $ 6,110,950     $ 6,561,169    $ 7,645,789     $ 8,460,078      $ 9,108,948      $ 9,171,511      $ 9,198,938       $ 10,185,425    $ 10,650,990    $ 11,533,186

     Contributions as percentage of covered
       payroll                                           45.5%           33.8%          25.7%             26.9%            19.2%            14.1%            16.8%            10.2%           10.9%           19.2%

     Notes to Schedule
       Valuation Date:
       Actuarially determined contribution rates are calculated as of December 31, two years prior to the end of the fiscal year in which contributions are reported.

        Methods and assumptions used to determine contribution rates:
        Actuarial cost method                 Entry age
        Amortization method                   Level percentage of payroll, Closed




91
        Remaining amortization period         3 to 21 years depending on division
        Asset valuation method                5-year smoothed market
        Inflation                             2.5 percent
        Salary increases                      3.75 percent changed to 3.0 percent in the long-term effective with the December 31, 2019 valuation
        Investment rate of return             7.75 percent changed to 7.35 percent, net of investment and administrative expenses effective with the December 31, 2019 valuation
        Retirement age                        Varies depending on plan adoption
        Mortality                             50 percent Female/50 percent Male RP-2014 Group Annuity Mortality Table
                                                                                 City of Muskegon
                                                        REQUIRED SUPPLEMENTARY INFORMATION
                         RETIREE HEALTHCARE SYSTEM SCHEDULE OF CHANGES IN THE NET OPEB LIABILITY AND RELATED RATIOS
                                        Last Ten Fiscal Years (Amounts were determined as of December 31 of each fiscal year)


                                                                                                        2019              2018              2017
     TOTAL OPEB LIABILITY
       Service cost                                                                                 $      165,306    $      178,243    $      165,423
       Interest                                                                                          2,191,233         2,035,720         1,954,979
       Differences between expected and actual experience                                               (2,119,868)         (992,432)                -
       Changes of assumptions                                                                            6,288,823         2,349,210                 -
       Benefit payments, including refunds of employee contributions                                    (1,983,928)       (1,118,442)       (1,064,376)
               Net change in total OPEB liability                                                        4,541,566         2,452,299         1,056,026
     Total OPEB liability at beginning of year                                                          29,100,636        26,648,337        25,592,311
     Total OPEB liability at end of year (a)                                                        $ 33,642,202      $ 29,100,636      $ 26,648,337

     PLAN FIDUCIARY NET POSITION
       Contributions-employer                                                                       $    1,001,447    $      671,363    $      736,039
       Net investment income                                                                             2,660,470          (699,603)        2,110,019




92
       Benefit payments, including refunds or employee contributions                                    (1,983,928)       (1,118,442)       (1,064,376)
       Administrative expense                                                                              (41,397)          (53,927)          (52,313)
               Net change in plan fiduciary net position                                                 1,636,592        (1,200,609)        1,729,369
     Plan fiduciary net position at beginning of year                                                   19,578,969        20,779,578        19,050,209
     Plan fiduciary net position at end of year (b)                                                 $ 21,215,561      $ 19,578,969      $ 20,779,578

     City's net OPEB liability at end of year (a)-(b)                                               $ 12,426,641      $   9,521,667     $   5,868,759

     Plan fiduciary net position as a percentage of the total OPEB liability                              63.06%            67.28%            77.98%

     Covered payroll                                                                                $   8,952,683     Not Available     $   8,095,840

     City's net OPEB liability as a percentage of covered payroll                                        138.80%      Not Available           72.49%

     Notes to Schedule
       Additional actuarial data is not available and will be provided in subsequent years.
                                                                                                   City of Muskegon
                                                                               REQUIRED SUPPLEMENTARY INFORMATION
                                                                   RETIREE HEALTHCARE SYSTEM SCHEDULE OF CONTRIBUTIONS
                                                                  Last Ten Fiscal Years (Amounts were determined as of June 30 of each fiscal year)


                                                       2020            2019             2018            2017           2016           2015             2014            2013             2012              2011
     Actuarially determined contribution            $ 2,115,188     $ 1,470,562     $    956,532    $    606,506   $    639,428   $    659,451     $    696,634    $    728,863     $    832,891    $ 1,079,000
     Contributions in relation to the actuarially
       determined contribution                        1,233,505        1,260,887         687,642         606,506        639,428        659,451          696,634         728,863          832,891          1,079,000
     Contribution deficiency (excess)               $ 881,683       $ 209,675       $ 268,890       $          -   $          -   $           -    $          -    $           -    $          -    $             -

     Covered payroll                                $ 8,952,683     Not Available   $ 8,095,840     $ 10,830,000   $ 10,830,000   $ 10,005,000     $ 10,005,000    $ 12,365,000     $ 12,365,000    $ 13,293,000

     Contributions as percentage of covered
       payroll                                           13.8%      Not Available          8.5%            5.6%           5.9%            6.6%            7.0%             5.9%            6.7%               8.1%

     Notes to Schedule
       Valuation Date:
       Actuarially determined contribution rates are calculated as of December 31, 2019.

        Methods and assumptions used to determine contribution rates:
        Actuarial cost method                 Entry age normal (level percentage of compensation)
        Amortization method                   Level percentage of payroll, Closed




93
        Remaining amortization period         8 years
        Asset valuation method                Equal to market value of assets
        Inflation                             2.5 percent
        Salary increases                      3.0 percent
        Investment rate of return             6.24 percent (including inflation), net of administrative and investment expenses
        Retirement age                        55 - 60 years of age
        Mortality                             Mortality rates for police and fire were as set forth in the Public Safety 2010 Employee and Healthy Retiree, headcount weighted, 2018 improvement scale.
                                                Mortality rates for others were as set forth in the Public General 2010 Employee and Healthy Retiree, headcount weighted, 2018 improvement scale.
[This page was intentionally left blank.]




                   94
OTHER SUPPLEMENTAL INFORMATION




              95
                                            DESCRIPTION OF
                                      OTHER GOVERNMENTAL FUNDS

                                              Special Revenue Funds

The special revenue funds are used to account for the proceeds of special revenue sources that are legally
restricted to expenditures for specific purposes.

Local Street – to account for gas and weight allocations to the City by the Michigan Department of Transportation
for construction and maintenance of local streets within the City.

Mercy Health Arena – to account for revenues received for the operation and maintenance of Mercy Health
Arena.

Criminal Forfeitures – to account for receipts generated through the sale of assets seized through criminal court
proceedings.

Downtown BID – to account for the collection of special assessment revenue in the downtown to be used for
improvement and maintenance of downtown public infrastructure.

Tree Replacement – to account for contributions and other revenues earmarked for tree replacement throughout
the City.

Farmers Market and Kitchen 242 – to account for revenues received for the City’s Farmers Market and Kitchen
242.

                                              Capital Projects Funds

Capital projects funds are used to account for financial resources to be used for the acquisition or construction of
major capital assets other than those financed by proprietary funds and trust funds.

Michcon Remediation – to account for reimbursements received from Michcon Gas Company for environmental
remediation of their former downtown site.

EDC Revolving Loan – to account for funds received upon repayment of Urban Development Action Grant loans
and subsequently reloaned to small business enterprises.

Community Development Block Grant – to account for categorical grants received from the U. S. Department of
Housing and Urban Development for the construction of major city public improvements and the rehabilitation of
residential housing and other qualifying expenditures.




                                                         96
                                        DESCRIPTION OF
                             OTHER GOVERNMENTAL FUNDS—CONTINUED


                                       Capital Projects Funds—Continued

HOME Rehabilitation – to account for grant revenues received from the U. S. Department of Housing and Urban
Development for the purpose of providing housing assistance to low and moderate income households in the City.

Lead Abatement – to account for grant revenues received from the U. S. Department of Health and Human
Services for the purpose of abatement of lead from homes in the City.

Senior Millage – to account for proceeds from the County millage for senior services that were distributed to the
City for specific projects.

                                                 Permanent Funds

Permanent funds are used to report resources that are legally restricted to the extent that only earnings, not
principal, may be used for purposes that support the reporting government’s programs.

Cemetery Perpetual Care – to account for charges for services collected and investment income earned and to
account for transfers to the General Fund to partially cover cemetery care expenses.




                                                          97
                                                          City of Muskegon
                                                     COMBINING BALANCE SHEET
                                                       Other Governmental Funds
                                                             June 30, 2020


                                                                                       Other            Other           Permanent
                                                                  Total Other          Special         Capital            Fund -
                                                                 Governmental         Revenue          Projects         Cemetery
                                                                    Funds              Funds            Funds         Perpetual Care
ASSETS
  Cash and investments                                           $    2,851,259   $    1,281,084   $    1,085,722      $     484,453
  Assets managed by others                                            1,234,737                -                -          1,234,737
  Receivables
     Accounts and loans (net of allowance for uncollectibles)          730,967           442,981          286,996               990
     Special assessments                                                 2,072             2,072                -                 -
  Due from other governmental units                                    256,364           153,237          103,127                 -
  Advances to component units                                          240,611                 -                -           240,611
  Prepaid items                                                         35,929            35,929                -                 -
            Total assets                                         $ 5,351,939      $ 1,915,303      $ 1,475,845         $ 1,960,791

LIABILITIES
  Accounts payable                                               $     164,756    $       96,249   $       68,507      $           -
  Accrued liabilities                                                   25,284            14,567           10,717                  -
  Due to other governmental units                                        2,140             2,052               88                  -
  Due to other funds                                                   443,475           398,371           45,104                  -
  Unearned revenues - unused Farmers Market tokens                     107,527           107,527                -                  -
         Total liabilities                                             743,182           618,766          124,416                  -

DEFERRED INFLOWS OF RESOURCES
  Unavailable revenues - special assessments                             2,072             2,072                  -                -

FUND BALANCES
  Nonspendable
    Prepaid items                                                        35,929           35,929                  -                -
    Perpetual care                                                    1,595,620                -                  -        1,595,620
  Restricted
    Highways, streets and bridges                                     1,061,222        1,061,222                -                 -
    Mercy Health Arena                                                    2,524            2,524                -                 -
    Law enforcement                                                      11,844           11,844                -                 -
    Downtown BID                                                        176,813          176,813                -                 -
    Perpetual care                                                      365,171                -                -           365,171
    Other purposes                                                        6,133            6,133                -                 -
  Assigned for capital projects and public improvements               1,351,429                -        1,351,429                 -
         Total fund balances                                          4,606,685        1,294,465        1,351,429          1,960,791
            Total liabilities, deferred inflows of
             resources and fund balances                         $ 5,351,939      $ 1,915,303      $ 1,475,845         $ 1,960,791




                                                                 98
                                                    City of Muskegon
       COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
                                   Other Governmental Funds
                                 For the year ended June 30, 2020


                                                                       Other             Other          Permanent
                                                 Total Other           Special          Capital           Fund -
                                                Governmental          Revenue           Projects        Cemetery
                                                   Funds               Funds             Funds        Perpetual Care
REVENUES
  Intergovernmental revenues
     Federal                                    $    1,833,603    $            -    $    1,833,603     $          -
     State                                           1,276,078         1,276,078                 -                -
  Charges for services                               1,387,945         1,353,505             6,000           28,440
  Fines and forfeitures                                    250               250                 -                -
  Investment earnings                                   24,620             4,215             9,286           11,119
  Income from assets managed by others                  17,948                 -                 -           17,948
  Other                                                648,752           213,861           434,891                -
         Total revenues                              5,189,196         2,847,909         2,283,780           57,507

EXPENDITURES
  Current
    Public safety                                       24,809            24,809                 -                 -
    Public works                                       112,629           112,629                 -                 -
    Highways, streets and bridges                    1,405,870         1,405,870                 -                 -
    Culture and recreation                           2,207,827         2,207,827                 -                 -
  Capital outlay                                     2,682,820            52,664         2,630,156                 -
         Total expenditures                          6,433,955         3,803,799         2,630,156                 -

Excess of revenues over (under) expenditures        (1,244,759)         (955,890)         (346,376)          57,507

OTHER FINANCING SOURCES (USES)
  Proceeds from sale of capital assets                  43,706                 -            43,706                 -
  Transfers in                                       1,125,217         1,102,500            22,717                 -
  Transfers out                                        (22,717)                -           (22,717)                -
         Total other financing sources (uses)        1,146,206         1,102,500            43,706                 -

Net change in fund balances                            (98,553)          146,610          (302,670)          57,507

Fund balances at beginning of year                   4,705,238         1,147,855         1,654,099         1,903,284
Fund balances at end of year                    $ 4,606,685       $ 1,294,465       $ 1,351,429        $ 1,960,791




                                                           99
                                                                             City of Muskegon
                                                                    COMBINING BALANCE SHEET
                                                                      Other Special Revenue Funds
                                                                             June 30, 2020


                                                             Total Other                                                                               Farmers
                                                           Special Revenue       Local       Mercy Health    Criminal     Downtown         Tree       Market and
                                                                Funds            Street        Arena        Forfeitures     BID         Replacement   Kitchen 242
      ASSETS
        Cash and investments                                $   1,281,084    $    969,978     $         -   $    11,844   $   176,813   $     1,019   $   121,430
        Receivables
           Accounts                                               442,981           7,549         432,628             -             -             -         2,804
           Special assessments                                      2,072           2,072               -             -             -             -             -
        Due from other governmental units                         153,237         153,237               -             -             -             -             -
        Prepaid items                                              35,929           6,893          29,036             -             -             -             -
                  Total assets                              $ 1,915,303      $ 1,139,729      $ 461,664     $   11,844    $ 176,813     $    1,019    $ 124,234

      LIABILITIES
        Accounts payable                                    $      96,249    $     60,223     $    25,868   $         -   $         -   $         -   $    10,158
        Accrued liabilities                                        14,567           9,319           3,813             -             -             -         1,435
        Due to other governmental units                             2,052               -           2,052             -             -             -             -




100
        Due to other funds                                        398,371               -         398,371             -             -             -             -
        Unearned revenues - unused Farmers Market tokens          107,527               -               -             -             -             -       107,527
               Total liabilities                                  618,766          69,542         430,104             -             -             -       119,120

      DEFERRED INFLOWS OF RESOURCES
        Unavailable revenues - special assessments                  2,072           2,072               -             -             -             -             -

      FUND BALANCES
        Nonspendable - prepaid items                               35,929           6,893          29,036             -             -             -             -
        Restricted
          Highways, streets and bridges                         1,061,222        1,061,222              -             -             -             -             -
          Mercy Health Arena                                        2,524                -          2,524             -             -             -             -
          Law enforcement                                          11,844                -              -        11,844             -             -             -
          Downtown BID                                            176,813                -              -             -       176,813             -             -
          Other purposes                                            6,133                -              -             -             -         1,019         5,114
               Total fund balances                              1,294,465        1,068,115         31,560        11,844       176,813         1,019         5,114
                  Total liabilities, deferred inflows of
                   resources and fund balances              $ 1,915,303      $ 1,139,729      $ 461,664     $   11,844    $ 176,813     $    1,019    $ 124,234
                                                                            City of Muskegon
                                     COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
                                                                Other Special Revenue Funds
                                                               For the year ended June 30, 2020


                                                       Total Other                                                                                 Farmers
                                                     Special Revenue       Local        Mercy Health      Criminal      Downtown         Tree     Market and
                                                          Funds            Street         Arena          Forfeitures      BID         Replacement Kitchen 242
      REVENUES
        Intergovernmental revenues - State            $   1,276,078    $    1,276,078   $           -    $        -     $         -    $        -    $         -
        Charges for services                              1,353,505             5,298       1,240,200             -               -         2,500        105,507
        Fines and forfeitures                                   250                 -               -           250               -             -              -
        Investment earnings                                   4,215             3,286               -            66             581             2            280
        Other                                               213,861               380          12,228             -         151,067         4,803         45,383
               Total revenues                             2,847,909         1,285,042       1,252,428           316         151,648         7,305        151,170

      EXPENDITURES
        Current
          Public safety                                      24,809                 -               -         24,809              -             -              -
          Public works                                      112,629                 -               -              -        112,629             -              -




101
          Highways, streets and bridges                   1,405,870         1,405,870               -              -              -             -              -
          Culture and recreation                          2,207,827                 -       1,994,840              -              -        15,707        197,280
        Capital outlay                                       52,664                 -          52,664              -              -             -              -
               Total expenditures                         3,803,799         1,405,870       2,047,504         24,809        112,629        15,707        197,280

      Excess of revenues over (under) expenditures         (955,890)        (120,828)       (795,076)        (24,493)        39,019        (8,402)       (46,110)

      OTHER FINANCING SOURCES
        Transfers in                                      1,102,500          250,000           800,000             -              -         7,500         45,000

      Net change in fund balances                           146,610          129,172             4,924       (24,493)        39,019         (902)         (1,110)

      Fund balances at beginning of year                  1,147,855          938,943            26,636        36,337        137,794         1,921          6,224
      Fund balances at end of year                    $ 1,294,465      $ 1,068,115      $      31,560    $   11,844     $ 176,813      $   1,019     $    5,114
                                                                      City of Muskegon
                                                     BUDGETARY COMPARISON SCHEDULE
                                                          Other Special Revenue Funds
                                                         For the year ended June 30, 2020


                                                                      Local Street                                  Mercy Health Arena
                                                                                       Variance -                                        Variance -
                                                          Final                         Positive            Final                         Positive
                                                         Budget          Actual        (Negative)          Budget           Actual       (Negative)
      REVENUES
        Intergovernmental revenues - State           $ 1,374,952       $ 1,276,078     $    (98,874)   $           -    $           -    $          -
        Charges for services                              15,000             5,298           (9,702)       1,277,000        1,240,200         (36,800)
        Investment earnings                                3,500             3,286             (214)               -                -               -
        Other                                              2,000               380           (1,620)           4,000           12,228           8,228
               Total revenues                            1,395,452        1,285,042        (110,410)       1,281,000        1,252,428         (28,572)

      EXPENDITURES
        Current




102
          Highways, streets and bridges                  1,719,723        1,405,870        313,853                 -                -               -
          Culture and recreation                                 -                -              -         1,511,843        1,994,840        (482,997)
        Capital outlay                                           -                -              -            50,000           52,664          (2,664)
               Total expenditures                        1,719,723        1,405,870        313,853         1,561,843        2,047,504        (485,661)

      Excess of revenues over (under) expenditures        (324,271)        (120,828)       203,443          (280,843)        (795,076)       (514,233)

      OTHER FINANCING SOURCES
        Transfers in                                      250,000          250,000                -         235,000          800,000         565,000

      Net change in fund balances                    $    (74,271)         129,172     $ 203,443       $    (45,843)            4,924    $   50,767

      Fund balances at beginning of year                                   938,943                                            26,636

      Fund balances at end of year                                     $ 1,068,115                                      $    31,560
                                                            City of Muskegon
                                          BUDGETARY COMPARISON SCHEDULE─CONTINUED
                                                     Other Special Revenue Funds
                                                   For the year ended June 30, 2020


                                                        Criminal Forfeitures                               Downtown BID
                                                                            Variance -                                      Variance -
                                                  Final                      Positive          Final                         Positive
                                                 budget       Actual        (Negative)        Budget            Actual      (Negative)
      REVENUES
        Fines and forfeitures                $      1,000    $      250     $     (750)   $          -      $           -   $         -
        Investment earnings                           400            66           (334)              -                581           581
        Other                                           -             -              -         161,647            151,067       (10,580)
               Total revenues                       1,400           316         (1,084)        161,647            151,648        (9,999)

      EXPENDITURES
        Current
          Public safety                            28,314         24,809         3,505               -                  -            -
          Public works                                  -              -             -         161,647            112,629       49,018




103
               Total expenditures                  28,314         24,809         3,505         161,647            112,629       49,018

      Net change in fund balances            $ (26,914)          (24,493)   $   2,421     $            -           39,019   $   39,019

      Fund balance at beginning of year                           36,337                                          137,794

      Fund balance at end of year                            $   11,844                                     $    176,813
                                                                          City of Muskegon
                                                     BUDGETARY COMPARISON SCHEDULE─CONTINUED
                                                                Other Special Revenue Funds
                                                              For the year ended June 30, 2020


                                                                        Tree Replacement                        Farmers Market and Kitchen 242
                                                                                             Variance -                                 Variance -
                                                            Final                             Positive          Final                    Positive
                                                           Budget              Actual        (Negative)        Budget      Actual       (Negative)
      REVENUES
        Charges for services                           $      5,000        $      2,500    $     (2,500)   $    159,000   $   105,507    $   (53,493)
        Investment earnings                                       -                   2               2             200           280             80
        Other                                                     -               4,803           4,803          80,500        45,383        (35,117)
               Total revenues                                 5,000               7,305           2,305         239,700       151,170        (88,530)

      EXPENDITURES
        Current
          Culture and recreation                              5,000              15,707         (10,707)        200,306       197,280          3,026




104
      Excess of revenues over (under) expenditures                  -            (8,402)         (8,402)         39,394       (46,110)       (85,504)

      OTHER FINANCING SOURCES
        Transfers in                                                -             7,500           7,500               -        45,000        45,000

      Net change in fund balances                      $            -              (902)   $      (902)    $     39,394        (1,110)   $ (40,504)

      Fund balance at beginning of year                                           1,921                                         6,224

      Fund balance at end of year                                          $     1,019                                    $    5,114
                                                                                         City of Muskegon
                                                                                   COMBINING BALANCE SHEET
                                                                                     Other Capital Projects Funds
                                                                                            June 30, 2020


                                                                 Total Other                           EDC            Community
                                                                Capital Projects    Michcon          Revolving       Development     HOME             Lead           Senior
                                                                    Funds          Remediation         Loan          Block Grant   Rehabilitation   Abatement        Millage
      ASSETS
        Cash and investments                                     $    1,085,722     $   226,411      $    769,408     $    6,670   $           -    $        -   $      83,233
          Accounts and loans (net of
              allowance for uncollectibles)                            286,996                 -          275,739         11,257               -             -                 -
        Due from other governmental units                              103,127                 -                -         11,131           7,417        84,579                 -

                  Total assets                                   $ 1,475,845        $ 226,411        $ 1,045,147      $   29,058   $      7,417     $   84,579   $      83,233

      LIABILITIES
        Accounts payable                                         $      68,507      $          -     $      2,323     $   21,385   $         290    $   44,360   $         149
        Accrued liabilities                                             10,717                 -                -          7,585             789         1,453             890
        Due to other governmental units                                     88                 -                -             88               -             -               -
        Due to other funds                                              45,104                 -                -              -           6,338        38,766               -
               Total liabilities                                       124,416                 -            2,323         29,058           7,417        84,579           1,039




105
      FUND BALANCES
        Assigned for capital projects and public improvements         1,351,429         226,411          1,042,824             -               -             -          82,194
                  Total liabilities and fund balances            $ 1,475,845        $ 226,411        $ 1,045,147      $   29,058   $      7,417     $   84,579   $      83,233
                                                                                  City of Muskegon
                                           COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
                                                                       Other Capital Projects Funds
                                                                     For the year ended June 30, 2020


                                                       Total Other                        EDC             Community
                                                      Capital Projects    Michcon       Revolving        Development       HOME             Lead            Senior
                                                          Funds          Remediation      Loan           Block Grant     Rehabilitation   Abatement         Millage
      REVENUES
        Intergovernmental revenues - Federal           $   1,833,603     $         -    $          -     $    967,046    $    199,633     $   666,924   $           -
        Charges for services                                   6,000               -           6,000                -               -               -               -
        Investment earnings                                    9,286           1,129           8,141                6               -               -              10
        Other                                                434,891               -          50,038            3,000               -               -         381,853
               Total revenues                              2,283,780           1,129          64,179          970,052         199,633         666,924         381,863

      EXPENDITURES
        Capital outlay                                     2,630,156               -         217,592          985,501         460,470         666,924         299,669

      Excess of revenues over (under) expenditures          (346,376)          1,129        (153,413)         (15,449)        (260,837)             -          82,194

      OTHER FINANCING SOURCES (USES)




106
        Proceeds from sale of capital assets                  43,706               -                 -         38,166            5,540              -                 -
        Transfers in                                          22,717               -                 -              -           22,717              -                 -
        Transfers out                                        (22,717)              -                 -        (22,717)               -              -                 -
               Total other financing sources (uses)           43,706               -                 -         15,449           28,257              -                 -

      Net change in fund balances                           (302,670)          1,129        (153,413)               -         (232,580)             -          82,194

      Fund balances at beginning of year                   1,654,099         225,282        1,196,237               -         232,580               -                 -
      Fund balances at end of year                     $ 1,351,429       $ 226,411      $ 1,042,824      $          -    $           -    $         -   $     82,194
                                             DESCRIPTION OF
                                         INTERNAL SERVICE FUNDS


Internal service funds are used to account for the financing of goods or services provided by one department to
other departments of a governmental unit or to other governments on a cost-reimbursement basis.

A list and description of internal service funds maintained by the City follows:

Engineering Services – to account for salary, benefit and other costs related to the provision of internal
engineering services for City projects; to account for charges to the user funds and projects to cover those
expenses.

Equipment – to account for the purchase, operation, maintenance and depreciation of all City-owned vehicles and
equipment; to account for charges to the user funds and departments to cover those expenses.

General Insurance – to account for the payment of claims and benefits, excess liability premiums and operating
expenses; to account for charges to other funds and departments to cover the expenses.

Public Service Building – to account for the operation, maintenance and depreciation of the City's Public Service
Building; to account for charges to the user funds and departments to cover these expenses.




                                                         107
                                                                      City of Muskegon
                                                  COMBINING STATEMENT OF NET POSITION
                                                            Internal Service Funds
                                                                 June 30, 2020


                                                                       Total Internal    Engineering                       General        Public Service
                                                                       Service Funds      Services      Equipment         Insurance         Building
ASSETS
Current assets
  Cash and investments                                                 $    1,253,766    $    11,975    $     798,045     $           -   $     443,746
  Accounts receivable                                                       1,478,408            484            9,120         1,468,804               -
  Inventories                                                                   6,033              -            6,033                 -               -
  Prepaid items                                                               243,875          2,645           64,558           169,948           6,724
         Total current assets                                               2,982,082         15,104          877,756         1,638,752         450,470
Noncurrent assets
  Advances to component units                                                 481,220              -          240,610          240,610                 -
  Capital assets
     Land                                                                      65,000              -                 -                -           65,000
     Land improvements                                                        301,715              -                 -                -          301,715
     Buildings and improvements                                             1,668,215              -                 -                -        1,668,215
     Machinery and equipment                                                9,878,509         51,346         9,732,799                -           94,364
     Construction in progress                                                  79,822              -            79,822                -                -
        Less accumulated depreciation                                      (8,986,499)       (28,646)       (7,202,341)               -       (1,755,512)
         Net capital assets                                                 3,006,762         22,700        2,610,280                 -         373,782
         Total noncurrent assets                                            3,487,982         22,700        2,850,890          240,610          373,782
            Total assets                                                    6,470,064         37,804        3,728,646         1,879,362         824,252
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                           52,192              -           19,572                 -          32,620
  Related to other postemployment benefits                                    130,806              -           49,052                 -          81,754
            Total deferred outflows of resources                              182,998              -           68,624                 -         114,374
                Total assets and deferred outflows of resources             6,653,062         37,804        3,797,270         1,879,362         938,626
LIABILITIES
Current liabilities
  Accounts payable                                                            345,205            633           46,316          244,774           53,482
  Accrued liabilities                                                          38,641          8,683           12,623            1,357           15,978
  Due to other governmental units                                               1,120              -                -            1,120                -
  Due to other funds                                                          394,517              -                -          394,517                -
  Bonds and other obligations, due within one year                             21,000          3,800            8,600              900            7,700
         Total current liabilities                                            800,483         13,116           67,539          642,668           77,160
Noncurrent liabilities
  Bonds and other obligations, less amounts due within one year               105,191         19,022           42,711            4,726           38,732
  Net pension liability                                                     1,237,257              -          463,972                -          773,285
  Net other postemployment benefits liability                                 497,066              -          186,400                -          310,666
         Total noncurrent liabilities                                       1,839,514         19,022          693,083            4,726        1,122,683
                Total liabilities                                           2,639,997         32,138          760,622          647,394        1,199,843
DEFERRED INFLOWS OF RESOURCES
  Related to other postemployment benefits                                     34,019              -           12,757                 -          21,262
                Total liabilities and deferred inflows of resources         2,674,016         32,138          773,379          647,394        1,221,105
NET POSITION
  Net investment in capital assets                                          3,006,762         22,700        2,610,280                 -         373,782
  Unrestricted                                                                972,284        (17,034)         413,611         1,231,968        (656,261)
                Total net position                                     $   3,979,046     $    5,666     $ 3,023,891       $ 1,231,968     $   (282,479)




                                                                             108
                                                           City of Muskegon
                  COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION
                                             Internal Service Funds
                                        For the year ended June 30, 2020


                                                   Total Internal    Engineering                      General        Public Service
                                                   Service Funds      Services        Equipment      Insurance         Building
OPERATING REVENUES
  Charges for services                             $    9,362,324    $    276,605     $ 2,364,948    $ 5,671,637     $    1,049,134
  Other                                                   115,171          30,453          84,718              -                  -
          Total operating revenues                      9,477,495         307,058       2,449,666      5,671,637          1,049,134

OPERATING EXPENSES
  Administration                                          304,305          41,253          89,706         49,323            124,023
  Insurance premiums and claims                         5,455,327               -               -      5,455,327                  -
  Other operations                                      3,753,969         368,442       1,996,524         68,717          1,320,286
  Depreciation                                            523,925           2,291         478,464              -             43,170
          Total operating expenses                     10,037,526         411,986       2,564,694      5,573,367          1,487,479

          Operating income (loss)                       (560,031)         (104,928)      (115,028)        98,270           (438,345)

NONOPERATING REVENUES (EXPENSES)
  Investment earnings                                     27,071              124          13,180         10,980              2,787
  Gain (loss) on sale of capital assets                   (8,161)               -          (8,161)             -                  -
          Total nonoperating revenues (expenses)          18,910              124           5,019         10,980              2,787

          Income (loss) before transfers                (541,121)         (104,804)      (110,009)       109,250           (435,558)

TRANSFERS
  Transfers in                                            20,000           20,000               -                -                -

          Change in net position                        (521,121)          (84,804)      (110,009)       109,250           (435,558)

Net position at beginning of year                       4,500,167          90,470       3,133,900      1,122,718            153,079
Net position at end of year                        $ 3,979,046       $      5,666     $ 3,023,891    $ 1,231,968     $    (282,479)




                                                                    109
                                                                                            City of Muskegon
                                                                                 COMBINING STATEMENT OF CASH FLOWS
                                                                                            Internal Service Funds
                                                                                       For the year ended June 30, 2020


                                                                                                  Total Internal    Engineering                              General        Public Service
                                                                                                  Service Funds      Services           Equipment           Insurance         Building
      CASH FLOWS FROM OPERATING ACTIVITIES
        Receipts from customers                                                                   $      106,659    $     30,379    $         76,280    $              -    $            -
        Receipts from interfund services provided                                                      7,303,632         276,605           2,364,948           3,612,945         1,049,134
        Other receipts                                                                                 1,867,451               -                   -           1,867,451                 -
        Payments to suppliers                                                                         (6,680,206)        (84,638)           (921,306)         (5,324,172)         (350,090)
        Payments to employees                                                                         (1,503,546)       (215,797)           (391,137)           (248,228)         (648,384)
        Payments for interfund services used                                                            (828,757)        (95,910)           (607,434)             (3,571)         (121,842)
               Net cash provided by (used for) operating activities                                      265,233         (89,361)           521,351             (95,575)           (71,182)
      CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
        Transfers in                                                                                      20,000          20,000                  -                   -                  -
        Interfund borrowing                                                                               40,954               -                  -              40,954                  -
        Collections on advances to component units                                                        87,282               -             43,641              43,641                  -
               Net cash provided by (used for) noncapital financing activities                           148,236          20,000             43,641              84,595                  -
      CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
        Purchases of capital assets                                                                     (622,533)        (24,991)          (488,661)                    -         (108,881)




110
        Proceeds from sale of capital assets                                                              27,661               -             27,661                     -                -
               Net cash provided by (used for) capital and related financing activities                 (594,872)        (24,991)          (461,000)                    -         (108,881)
      CASH FLOW FROM INVESTING ACTIVITIES
        Investment earnings                                                                               27,071            124              13,180              10,980              2,787
               Net increase (decrease) in cash and investments                                          (154,332)        (94,228)           117,172                     -         (177,276)
      Cash and investments at beginning of year                                                        1,408,098         106,203            680,873                     -          621,022
      Cash and investments at end of year                                                         $   1,253,766     $    11,975     $      798,045      $               -   $     443,746
      Reconciliation of operating income (loss) to net cash provided by (used for)
        operating activities
           Operating income (loss)                                                                $     (560,031)   $   (104,928)   $      (115,028)    $        98,270     $     (438,345)
           Adjustments to reconcile operating income (loss) to net cash provided by
               (used for) operating activities
                   Depreciation expense                                                                  523,925           2,291            478,464                     -           43,170
               Change in assets and liabilities
                   Receivables                                                                          (199,753)            (74)            (8,438)           (191,241)                 -
                   Inventories                                                                             3,292               -              3,292                   -                  -
                   Prepaid items                                                                          28,985          (1,081)            (2,814)             34,182             (1,302)
                   Accounts payable                                                                      (21,014)           (397)           (20,375)            (37,955)            37,713
                   Accrued liabilities                                                                   489,829          14,828            186,250               1,169            287,582
                     Net cash provided by (used for) operating activities                         $     265,233     $   (89,361)    $      521,351      $      (95,575)     $     (71,182)
                                               DESCRIPTION OF
                                              FIDUCIARY FUNDS

Fiduciary funds are used to account for assets held by a government in a trustee capacity for individuals, private
organizations, other governments or other funds.

A list and description of the fiduciary funds maintained by the City follows:

AGENCY FUNDS are used to account for assets held as an agent for another organization or individual.

Collector – to account for the collections and disbursement of funds to other entities and individuals and to
account for payroll withholdings and their remittance to the appropriate governmental agencies.

Current Tax – to account for levy, collection and payment of taxes levied for the general and other funds of the
City, county, public school districts, and other governmental entities.

Rehab Loan Escrow – to account for deposits made by housing rehabilitation program participants and their
expenditures for the intended purposes.




                                                        111
                                         City of Muskegon
                         COMBINING STATEMENT OF ASSETS AND LIABILITIES
                                         Agency Funds
                                         June 30, 2020


                                        Total                               Current       Rehab Loan
                                     Agency Funds          Collector          Tax           Escrow
ASSETS
  Cash and investments               $     927,093     $      926,712   $             -   $     381
  Accounts receivable                       73,203             73,203                 -           -
         Total assets                $   1,000,296     $ 999,915        $             -   $     381

LIABILITIES
  Accounts payable                   $     327,077     $      326,696   $             -   $     381
  Due to other governmental units          511,793            511,793                 -           -
  Deposits held for others                 161,426            161,426                 -           -
         Total liabilities           $   1,000,296     $ 999,915        $             -   $     381




                                                 112
                                                    City of Muskegon
                                    STATEMENT OF CHANGES IN ASSETS AND LIABILITIES
                                                        Agency Funds
                                               For the year ended June 30, 2020


                                                        Balance                                                 Balance
                                                        July 1,                                                 June 30,
COLLECTOR FUND                                           2019              Additions       Deductions            2020
ASSETS
  Cash and investments                              $      944,157     $ 10,193,707        $   10,211,152   $     926,712
  Accounts receivable                                       30,521          391,465               348,783          73,203
      Total assets                                  $     974,678      $ 10,585,172        $ 10,559,935     $    999,915

LIABILITIES
  Accounts payable                                  $      333,297     $     5,242,831     $    5,249,432   $     326,696
  Due to other governmental units                          446,320           2,546,025          2,480,552         511,793
  Deposits held for others                                 195,061           2,882,774          2,916,409         161,426
      Total liabilities                             $     974,678      $ 10,671,630        $ 10,646,393     $    999,915

CURRENT TAX FUND
ASSETS
  Cash and investments                              $             -    $ 22,484,149        $ 22,484,149     $              -

LIABILITIES
  Due to other governmental units                   $             -    $ 22,412,489        $   22,412,489   $              -
  Due to component units                                          -       1,603,563             1,603,563                  -
  Deposits held for others                                        -         107,522               107,522                  -
      Total liabilities                             $             -    $ 24,123,574        $ 24,123,574     $              -

REHAB LOAN ESCROW FUND
ASSETS
  Cash and investments                              $         381      $               -   $            -   $        381

LIABILITIES
  Accounts payable                                  $         381      $               -   $            -   $        381

ALL AGENCY FUNDS
ASSETS
  Cash and investments                              $      944,538     $ 32,677,856        $   32,695,301   $     927,093
  Accounts receivable                                       30,521          391,465               348,783          73,203
      Total assets                                  $     975,059      $ 33,069,321        $ 33,044,084     $ 1,000,296

LIABILITIES
  Accounts payable                                  $      333,678     $     5,242,831     $    5,249,432   $     327,077
  Due to other governmental units                          446,320          24,958,514         24,893,041         511,793
  Due to component units                                         -           1,603,563          1,603,563               -
  Deposits held for others                                 195,061           2,990,296          3,023,931         161,426
      Total liabilities                             $     975,059      $ 34,795,204        $ 34,769,967     $ 1,000,296




                                                            113
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                  114
                                        DESCRIPTION OF
                            DISCRETELY PRESENTED COMPONENT UNITS

A list and description of the discretely presented component units maintained by the City are as follows:

Downtown Development Authority – to account for the collection of tax increment revenues, the issuance and
repayment of debt and the construction of public facilities to promote and facilitate economic growth in the
downtown.

Local Development Finance Authority - SmartZone – to account for the collection of tax increment revenues and
the construction of public facilities to promote and facilitate economic growth in the SmartZone Hi-Tech Park.

Tax Increment Finance Authority – to account for the collection of tax increment revenues, the issuance and
repayment of debt to promote and facilitate economic growth in a sub section of the downtown.

Brownfield Redevelopment Authority – to account for the collection of tax increment revenues for environmental
remediation in designated brownfield areas. Currently there are four designated brownfield areas capturing tax
increments.

      Area I – Betten-Henry Street brownfield site.
      Area II – Former downtown mall brownfield site.
      Area III – Terrace Point brownfield site.
      Area IV – Pigeon Hill brownfield site.




                                                         115
                                                                                  City of Muskegon
                                                                          COMBINING BALANCE SHEET
                                                                         Discretely Presented Component Units
                                                                                     June 30, 2020


                                                                  Local
                                              Total Discretely Development
                                                Presented        Finance       Downtown     Tax Increment   Brownfield    Brownfield    Brownfield    Brownfield
                                                Component       Authority -   Development      Finance    Redevelopment Redevelopment Redevelopment Redevelopment
                                                   Units        SmartZone      Authority      Authority     Authority I  Authority II  Authority III Authority IV
      ASSETS
        Cash and investments                   $     99,100     $   32,146    $   11,529    $    15,888    $      3,450     $   13,115   $   22,972   $        -

      LIABILITIES
        Accounts payable                       $         806    $        -    $       806   $          -   $          -     $        -   $        -   $        -
        Accrued liabilities                            4,376             -          4,376              -              -              -            -            -
        Advances from primary government             721,831             -              -              -        721,831              -            -            -
              Total liabilities                      727,013             -          5,182              -        721,831              -            -            -

      FUND BALANCES (DEFICITS)
        Unassigned                                  (627,913)       32,146          6,347         15,888        (718,381)       13,115       22,972            -




116
                 Total liabilities and fund
                  balances (deficits)          $     99,100     $   32,146    $   11,529    $    15,888    $      3,450     $   13,115   $   22,972   $        -
                                                   City of Muskegon
                        RECONCILIATION OF THE GOVERNMENTAL FUNDS
                      BALANCE SHEET TO THE STATEMENT OF NET POSITION
                                Discretely Presented Component Units
                                            June 30, 2020


Total fund balances (deficits)—governmental funds                                                   $    (627,913)

Amounts reported for governmental activities in the Statement of Net Position
are different because:

   Capital assets used in governmental activities are not current financial
   resources and, therefore, are not reported in the governmental funds.
      Cost of capital assets                                                         $ 4,198,258
      Accumulated depreciation                                                        (2,863,081)       1,335,177

   Long-term liabilities in governmental activities are not due and payable in the
   current period and, therefore, are not reported in the governmental funds.
      Accrued interest payable                                                            (9,650)
      Bonds and notes payable                                                         (1,760,377)       (1,770,027)

         Net position of governmental activities                                                    $ (1,062,763)




                                                           117
                                                                                        City of Muskegon
                              COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
                                                          Discretely Presented Component Units
                                                            For the year ended June 30, 2020


                                                                            Local
                                                      Total Discretely   Development
                                                        Presented          Finance       Downtown Tax Increment   Brownfield    Brownfield    Brownfield    Brownfield
                                                       Component          Authority -   Development  Finance    Redevelopment Redevelopment Redevelopment Redevelopment
                                                           Units          SmartZone      Authority  Authority     Authority I  Authority II  Authority III Authority IV
      REVENUES
        Property taxes                                 $    1,653,545    $     98,643   $    924,457    $   35,383   $    138,401     $   168,248    $   281,642   $   6,771
        Intergovernmental revenues
           State                                              25,821            3,311              -         7,270           6,822          8,418             -            -
           Local                                             494,072          360,000        134,072             -               -              -             -            -
        Investment earnings                                    1,246               95            280            54              44            382           391            -
               Total revenues                               2,176,684         462,049       1,060,809       42,707        145,267         177,048        282,033       6,771

      EXPENDITURES
        Current
          Community and economic development                 636,466                -        134,919        40,000               -        180,000        274,776       6,771
        Debt service




118
          Principal                                         1,390,000         390,000       1,000,000            -              -               -              -           -
          Interest and fees                                    92,459          65,800               -            -         26,659               -              -           -
               Total expenditures                           2,118,925         455,800       1,134,919       40,000         26,659         180,000        274,776       6,771

      Net change in fund balances (deficits)                  57,759            6,249        (74,110)        2,707        118,608          (2,952)         7,257           -

      Fund balances (deficits) at beginning of year          (685,672)         25,897         80,457        13,181        (836,989)        16,067         15,715           -

      Fund balances (deficits) at end of year          $    (627,913)    $    32,146    $      6,347    $   15,888   $   (718,381)    $   13,115     $   22,972    $       -
                                                    City of Muskegon
                  RECONCILIATION OF THE GOVERNMENTAL FUNDS STATEMENT OF
                REVENUES, EXPENDITURES AND CHANGE IN FUND BALANCES (DEFICITS)
                               TO THE STATEMENT OF ACTIVITIES
                                 Discretely Presented Component Units
                                   For the year ended June 30, 2020


Net change in fund balances—total governmental funds                                               $     57,759

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

   Governmental funds report outlays for capital assets as expenditures. However,
   in the Statement of Activities, the cost of these assets is allocated over their
   estimated useful lives and reported as depreciation expense.
       Depreciation expense                                                                            (172,648)

   The issuance of long-term debt provides current financial resources to
   governmental funds, but increases liabilities in the Statement of Net Position.
   Repayment of debt is an expenditure in the governmental funds, but reduces
   long-term liabilities in the Statement of Net Position.
      Repayment of principal on long-term debt                                                         1,390,000
      Changes in accrual of interest and amortization of premiums and discounts
        Change in accrued interest payable                                            $    2,600
        Amortization of premiums                                                          17,042         19,642
             Change in net position of governmental activities                                     $ 1,294,753




                                                             119
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                  120
SCHEDULE OF INDEBTEDNESS




           121
                                                                                            City of Muskegon

                                                                               SCHEDULE OF INDEBTEDNESS

                                                                                              June 30, 2020

                                                                                                                                                                                Annual
                                                                          Date            Amount           Interest    Date of                                                  Interest
                                                                        of Issue          of Issue           Rate      Maturity         6/30/2019           6/30/2020           Payable

Business-Type Activities Bonds and Loans Payable:

 Drinking Water State Revolving                                          3/2/2004 $        13,900,000          2.13%     10/01/19 $          745,000    $              -    $            -
  Fund                                                                                                         2.13%     10/01/20            760,000             760,000            93,925
                                                                                                               2.13%     10/01/21            775,000             775,000            77,616
    Type of debt: state loan                                                                                   2.13%     10/01/22            790,000             790,000            60,988
    Revenue pledged: water system net revenues                                                                 2.13%     10/01/23            810,000             810,000            43,988
                                                                                                               2.13%     10/01/24            825,000             825,000            26,616
                                                                                                               2.13%     10/01/25            840,000             840,000             8,925
                                                                                                                                           5,545,000           4,800,000           312,058


 Drinking Water State Revolving Fund*                                   8/30/2019            $563,700          2.00%     10/01/20                   -                   -           32,000
                                                                                                               2.00%     10/01/21                   -            65,000             32,000
   Type of debt: state loan                                                                                    2.00%     10/01/22                   -            70,000             30,700
    Revenue Pledged: water system net revenues                                                                 2.00%     10/01/23                   -            70,000             29,300
    Forgiveness: 20%                                                                                           2.00%     10/01/24                   -            58,217             27,900
                                                                                                               2.00%     10/01/25                   -                 -                  -
                                                                                                               2.00%     10/01/26                   -                 -                  -
                                                                                                               2.00%     10/01/27                   -                 -                  -
                                                                                                               2.00%     10/01/28                   -                 -                  -
                                                                                                               2.00%     10/01/29                   -                 -                  -
                                                                                                               2.00%     10/01/30                   -                 -                  -
                                                                                                               2.00%     10/01/31                   -                 -                  -
                                                                                                               2.00%     10/01/32                   -                 -                  -
                                                                                                               2.00%     10/01/33                   -                 -                  -
                                                                                                               2.00%     10/01/34                   -                 -                  -
                                                                                                               2.00%     10/01/35                   -                 -                  -
                                                                                                               2.00%     10/01/36                   -                 -                  -
                                                                                                               2.00%     10/01/37                   -                 -                  -
                                                                                                               2.00%     10/01/38                   -                 -                  -
                                                                                                               2.00%     10/01/39                   -                 -                  -
                                                                                                               2.00%     10/01/40                   -                 -                  -
                                                                                                                                                    -           263,217            151,900


 Sanitary Sewer State Revolving Fund*                                   8/30/2019          $1,544,739          2.00%     10/01/20                   -                   -           57,500
                                                                                                               2.00%     10/01/21                   -            120,000            56,300
   Type of debt: state loan                                                                                    2.00%     10/01/22                   -            120,000            53,900
   Revenue Pledged: sanitary sewer system net revenues                                                         2.00%     10/01/23                   -            125,000            51,450
   Forgiveness: 75%                                                                                            2.00%     10/01/24                   -            125,000            48,950
                                                                                                               2.00%     10/01/25                   -            130,000            46,400
                                                                                                               2.00%     10/01/26                   -            130,000            43,800
                                                                                                               2.00%     10/01/27                   -            135,000            41,150
                                                                                                               2.00%     10/01/28                   -            135,000            38,450
                                                                                                               2.00%     10/01/29                   -            140,000            35,700
                                                                                                               2.00%     10/01/30                   -            140,000            32,900
                                                                                                               2.00%     10/01/31                   -            145,000            30,050
                                                                                                               2.00%     10/01/32                   -             99,739            27,150
                                                                                                               2.00%     10/01/33                   -                  -                 -
                                                                                                               2.00%     10/01/34                   -                  -                 -
                                                                                                               2.00%     10/01/35                   -                  -                 -
                                                                                                               2.00%     10/01/36                   -                  -                 -
                                                                                                               2.00%     10/01/37                   -                  -                 -
                                                                                                               2.00%     10/01/38                   -                  -                 -
                                                                                                               2.00%     10/01/39                   -                  -                 -
                                                                                                               2.00%     10/01/40                   -                  -                 -
                                                                                                                                                    -          1,544,739           563,700

TOTAL BUSINESS TYPE ACTIVITIES BONDS AND LOAN PAYABLE:                                                                              $      5,545,000    $      6,607,956    $    1,027,658

*The total amount of the 2019 Water Supply System Junior Lien Bond and 2019 Sanitary Sewer
System Junior Lien Bond are $2,000,000 and $11,500,000 respectively, with the City expecting to
draw the remaining amount in the upcoming year. If certain conditions are met, the principal
amounts of up to $400,000 and $8,625,000, respectively, of the balances may be forgiven.




                                                                                                     122
                                                                       City of Muskegon

                                                              SCHEDULE OF INDEBTEDNESS

                                                                         June 30, 2020

                                                                                                                                                          Annual
                                                         Date         Amount           Interest    Date of                                                Interest
                                                       of Issue       of Issue           Rate      Maturity       6/30/2019           6/30/2020           Payable

Governmental Activities Bonds and Loan Payable:

 Capital Improvement refunding bonds of 2016             3/8/2016 $     4,815,000          2.00%     10/01/19 $        290,000    $              -    $            -
 ($222,903 unamortized premium)                                                            3.00%     10/01/20          295,000             295,000           150,975
                                                                                           3.00%     10/01/21          305,000             305,000           141,975
   Type of debt: limited G.O. bonds                                                        3.00%     10/01/22          300,000             300,000           132,900
   Revenue pledge: General Fund                                                            3.00%     10/01/23          300,000             300,000           122,400
                                                                                           4.00%     10/01/24          320,000             320,000           110,000
                                                                                           4.00%     10/01/25          325,000             325,000            97,100
                                                                                           4.00%     10/01/26          325,000             325,000            84,100
                                                                                           4.00%     10/01/27          325,000             325,000            71,100
                                                                                           4.00%     10/01/28          325,000             325,000            58,100
                                                                                           4.00%     10/01/29          325,000             325,000            45,100
                                                                                           4.00%     10/01/30          325,000             325,000            32,100
                                                                                           4.00%     10/01/31          320,000             320,000            19,200
                                                                                           4.00%     10/01/32          320,000             320,000             6,400
                                                                                                                     4,400,000           4,110,000         1,071,450


 Capital improvement bonds                             9/30/2011 $      2,000,000          2.98%     09/01/19         215,000                   -                  -
  of 2011 (streets)                                                                        2.98%     09/01/20         220,000             220,000             10,132
                                                                                           2.98%     09/01/21         230,000             230,000              3,427
   Type of debt: limited G.O. bond                                                                                    665,000             450,000             13,559
   Revenue pledged: gas tax, general revenues


 Capital Improvement Bonds of 2019                     10/9/2019 $    19,420,000           1.90%     10/01/20                 -            175,000           615,749
  Convention Center                                                                        1.83%     10/01/21                 -            205,000           612,211
 ($143,150 unamortized discount)                                                           1.88%     10/01/22                 -            250,000           607,985
                                                                                           1.93%     10/01/23                 -            300,000           602,740
   Type of debt: limited G.O. bonds                                                        2.00%     10/01/24                 -            320,000           596,645
   Revenue Pledged: excise tax on hotel rooms levied by the                                2.10%     10/01/25                 -            340,000           589,875
   County of Muskegon pursuant to Act 263                                                  2.24%     10/01/26                 -            360,000           582,273
                                                                                           2.34%     10/01/27                 -            380,000           573,795
                                                                                           2.43%     10/01/28                 -            405,000           564,429
                                                                                           2.60%     10/01/29                 -            430,000           553,918
                                                                                           2.60%     10/01/30                 -            455,000           542,412
                                                                                           2.68%     10/01/31                 -            480,000           530,066
                                                                                           2.78%     10/01/32                 -            510,000           516,544
                                                                                           2.83%     10/01/33                 -            540,000           501,815
                                                                                           2.93%     10/01/34                 -            570,000           485,822
                                                                                           3.30%     10/01/35                 -            605,000           467,399
                                                                                           3.30%     10/01/36                 -            640,000           446,670
                                                                                           3.30%     10/01/37                 -            680,000           424,692
                                                                                           3.30%     10/01/38                 -            720,000           401,382
                                                                                           3.30%     10/01/39                 -            760,000           376,740
                                                                                           3.48%     10/01/40                 -            800,000           350,166
                                                                                           3.48%     10/01/41                 -            845,000           321,543
                                                                                           3.48%     10/01/42                 -            895,000           291,267
                                                                                           3.48%     10/01/43                 -            940,000           259,338
                                                                                           3.48%     10/01/44                 -            995,000           225,669
                                                                                           3.58%     10/01/45                 -          1,045,000           189,651
                                                                                           3.58%     10/01/46                 -          1,105,000           151,165
                                                                                           3.58%     10/01/47                 -          1,160,000           110,622
                                                                                           3.58%     10/01/48                 -          1,225,000            67,931
                                                                                           3.58%     10/01/49                 -          1,285,000            23,001
                                                                                                                              -         19,420,000        12,583,515


 State of Michigan                                     6/18/2010 $       500,000           2.00%     03/18/20          19,699                     -                  -
  environmental assessment loan                                                                                        19,699                     -                  -
   Type of debt: state loan
   Revenue pledged: general revenues




                                                                                 123
                                                                     City of Muskegon

                                                            SCHEDULE OF INDEBTEDNESS

                                                                       June 30, 2020

                                                                                                                                                            Annual
                                                       Date         Amount            Interest     Date of                                                  Interest
                                                     of Issue       of Issue            Rate       Maturity         6/30/2019           6/30/2020           Payable

Governmental Activities Bonds and Loan Payable—Continued:

 Installment Purchase Agreements                                $     2,417,390      4.4% - 5.3%     04/22/21 $                 -   $        324,944    $       90,299
  Mercy Health Arena                                                                 4.4% - 5.3%     04/22/22                   -            340,307            75,277
   Type of debt: installment purchase                                                4.4% - 5.3%     04/22/23                   -            356,217            59,367
   Revenue pledged: general revenues                                                 4.4% - 5.3%     04/22/24                   -            372,871            42,713
                                                                                     4.4% - 5.3%     04/22/25                   -            390,306            25,278
                                                                                     4.4% - 5.3%     04/22/26                   -            339,159             7,159
                                                                                                                                -          2,123,804           300,093

TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE                                                           $      5,084,699    $     26,103,804    $   13,968,617

TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE                                                                $     10,629,699    $     32,711,760    $   14,996,275




Discretely Presented Component Unit Bonds and Loans Payable:

 Downtown Development Authority                      8/10/1989 $      1,000,000           0.00%      08/30/19 $        1,000,000    $               -   $              -
  promissory note to Muskegon County                                                                                   1,000,000                    -                  -

   Type of debt: intergovernmental note
   Revenue pledged: DDA tax increments


 Local Development Finance Authority                 3/20/2012 $      4,100,000           4.00%      11/01/19            390,000                   -                 -
 Smartzone Refunding Bonds                                                                4.00%      11/01/20            395,000             395,000            50,100
 ($40,377 unamortized premium)                                                            4.00%      11/01/21            245,000             245,000            37,300
                                                                                          3.00%      11/01/22            255,000             255,000            28,575
   Type of debt: limited G.O. bond                                                        3.00%      11/01/23            265,000             265,000            20,775
   Revenue pledged: LDFA tax increments, general revenues                                 3.00%      11/01/24            275,000             275,000            12,675
                                                                                          3.00%      11/01/25            285,000             285,000             4,275
                                                                                                                       2,110,000           1,720,000           153,700

TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE                                               $      3,110,000    $      1,720,000    $      153,700


TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE                                                                  $     13,739,699    $     34,431,760    $   15,149,975




                                                                               124
                                       Statistical Section
This part of the City of Muskegon’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                                                                                            Page

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.                                  126


Revenue Capacity

These schedules contain information to help the reader assess the factors affecting
the City’s ability to generate its property and sales taxes.                                         131


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.                                                                                  138


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.                                   142


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.                                          144



Sources: Unless otherwise noted, the information in these schedules is derived form the Comprehensive Annual
Financial Reports for the relevant year.




                                                     125
                                                                                                                     City of Muskegon

                                                                                                   NET ASSETS/NET POSITION BY COMPONENT

                                                                                                                    Last Ten Fiscal Years




                                                                                   2011             2012             2013 (a)          2014            2015 (b)          2016             2017            2018 (c)          2019             2020

      Governmental Activities
      Net Investment in Capital Assets                                        $   67,944,957   $   66,862,806   $    63,842,092   $   63,731,255   $   63,514,691   $   64,326,891 $     62,520,466 $     61,267,518 $ 66,734,006 $ 70,274,679
      Restricted                                                                   3,656,410        3,526,343         4,572,848        4,023,895        4,807,531        4,140,342        3,777,410        6,138,596     5,519,207    4,459,799
      Unrestricted                                                                12,598,197       12,836,573        13,299,523       12,811,852          491,914       (4,142,119)      (5,566,349)      (8,350,634)  (14,355,143) (28,084,776)
      Total Governmental Net Assets/Net Position                              $   84,199,564   $   83,225,722   $    81,714,463   $   80,567,002   $   68,814,136   $   64,325,114 $     60,731,527 $     59,055,480 $ 57,898,070 $ 46,649,702



      Business-type Activities
      Net Investment in Capital Assets                                        $   40,419,728   $   40,147,600   $    40,032,858   $   39,365,043   $   39,231,223   $   39,013,529   $   38,114,686   $   38,549,547   $   41,741,666   $   44,543,391
      Restricted                                                                     672,000          672,000           599,500          599,500          599,500          599,500          599,500          599,500          599,500          599,500
      Unrestricted                                                                 9,211,610        8,961,713         8,491,848        8,377,093        6,423,540        5,762,272        6,382,906        6,041,091        2,424,616       (2,353,801)
      Total Business-type Activities Net Assets/Net Position                  $   50,303,338   $   49,781,313   $    49,124,206   $   48,341,636   $   46,254,263   $   45,375,301   $   45,097,092   $   45,190,138   $   44,765,782   $   42,789,090



      Primary Government
      Net Investment in Capital Assets                                        $ 108,364,685    $ 107,010,406    $ 103,874,950     $ 103,096,298    $ 102,745,914    $ 103,340,420    $ 100,635,152    $  99,817,065 $ 108,475,672 $ 114,818,070
      Restricted                                                                  4,328,410        4,198,343        5,172,348         4,623,395        5,407,031        4,739,842        4,376,910        6,738,096     6,118,707     5,059,299
      Unrestricted                                                               21,809,807       21,798,286       21,791,371        21,188,945        6,915,454        1,620,153          816,557       (2,309,543)  (11,930,527)  (30,438,577)
      Total Primary Government Net Assets/Net Position                        $ 134,502,902    $ 133,007,035    $ 130,838,669     $ 128,908,638    $ 115,068,399    $ 109,700,415    $ 105,828,619    $ 104,245,618 $ 102,663,852 $ 89,438,792




126
      (a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.
      (b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
      (c) In 2018, the City implemented GASB 75 which changed how governments measure and report other postemployment benefit liabilities.
      SOURCE: The information in these schedules (unless otherwise
      noted) is derived from the comprehensive annual financial reports for
      the relevant year.
                                                                                         City of Muskegon

                                                                        CHANGES IN NET ASSETS/NET POSITION

                                                                                        Last Ten Fiscal Years




                                                                                                                                Year Ended June 30
                                                       2011             2012             2013 (a)           2014             2015 (b)          2016             2017            2018 (c)          2019             2020

      EXPENSES
      Governmental Activities
      Public representation                       $      854,249   $      866,809   $        893,981   $     1,030,006   $      939,907   $    1,107,551   $    1,113,897   $    1,347,618   $    1,336,014   $    1,501,079
      Administrative services                            645,585          566,161            565,307           543,425          614,757          663,077          679,139          507,275          800,887          962,981
      Financial services                               2,373,141        2,399,147          2,241,061         2,171,958        2,547,766        2,331,236        2,483,519        1,995,426        2,700,775        3,007,018
      Public safety                                   13,390,888       13,213,251         12,987,842        12,946,466       14,243,233       17,118,742       16,910,473       12,404,126       20,433,642       25,982,246
      Public works                                     3,471,051        2,958,367          3,201,806         3,361,422        3,183,627        3,109,454        3,551,230        3,471,618        4,438,358        4,581,526
      Highways, streets and bridges                    7,013,216        6,568,448          6,672,374         7,053,326        7,165,703        7,251,882        6,996,540        6,917,260        7,185,642        7,593,019
      Community and economic development               2,830,867        2,447,373          2,499,404         2,417,518        2,712,131        5,223,431        3,738,566        5,015,160        2,890,216        5,359,282
      Culture and recreation                           1,524,331        1,601,316          1,592,358         1,671,185        1,806,790        3,551,692        3,918,814        3,994,582        4,541,739        5,269,578
      General administration                             794,115          791,197            322,348           366,634          389,248          326,452          301,287          376,112          302,582          389,863
      Interest on long-term debt                         272,940          283,186            291,535           277,345          271,607          248,223          172,591          165,023          151,304          732,065
      Total Governmental Activities Expenses          33,170,383       31,695,255         31,268,016        31,839,285       33,874,769       40,931,740       39,866,056       36,194,200       44,781,159       55,378,657

      Business-type Activities
      Water                                            5,869,241        5,974,173          6,228,788         6,016,192        6,047,244        6,750,826        7,206,564        7,090,770        7,752,703        8,437,862
      Sewer                                            5,288,622        6,202,359          7,226,839         7,582,602        8,460,509        8,669,469        8,876,690        8,093,752        9,119,941        9,902,515
      Marina and launch ramp                             292,889          310,174            426,553           503,997          305,990          327,832          336,912          377,614          430,431          529,007
      Total Business-type Activities Expenses         11,450,752       12,486,706         13,882,180        14,102,791       14,813,743       15,748,127       16,420,166       15,562,136       17,303,075       18,869,384
      Total Primary Government Expenses           $   44,621,135   $   44,181,961   $     45,150,196   $    45,942,076   $   48,688,512   $   56,679,867   $   56,286,222   $   51,756,336   $   62,084,234   $   74,248,041




127
      PROGRAM REVENUES
      Governmental Activities
      Charges for Services
        Public representation                     $      196,886   $      196,886   $        173,739   $       189,444   $      188,638   $      226,559   $      228,767   $      232,736   $      250,931   $      253,511
        Administrative services                          263,473          270,886            268,535           325,937          415,308          474,737          572,739          539,178          604,290          538,791
        Financial services                               879,905          881,229            830,919           871,632          823,547          925,474          895,924          903,322          921,748          913,968
        Public safety                                  1,109,659        1,136,942          1,133,666         1,407,722        1,218,644        1,248,911        1,824,114        2,794,347        2,292,158        2,290,640
        Public works                                     642,082          480,487            671,494           796,739          571,426          379,877          646,876          743,110          691,312          835,149
        Highways, streets and bridges                    451,473          230,241            245,609           351,962          258,475          234,861          256,190          188,248          191,883          193,267
        Community and economic development               457,952          617,379            432,240           477,486          576,863          444,632          706,195          348,933          786,120          769,860
        Culture and recreation                           300,367          315,010            606,818           535,211          368,168        1,229,067        1,463,839        1,651,304        1,853,547        2,124,968
        General administration                           116,690          116,690            287,729            50,728           48,764           52,512           37,892           38,549           40,400           59,537
      Operating grants and contributions               5,425,165        4,651,576          4,681,345         4,664,098        5,071,239        5,330,825        5,208,818        6,478,526        6,892,530        7,398,202
      Capital grants and contributions                 2,257,163        1,568,005            886,108         1,408,424        3,496,623        3,804,656          862,074        2,305,620        4,015,097        4,064,216
      Total Governmental Program Revenues             12,100,815       10,465,331         10,218,202        11,079,383       13,037,695       14,352,111       12,703,428       16,223,873       18,540,016       19,442,109

      Business-type Activities
      Water                                            5,454,760        5,254,095          5,890,614         6,099,480        6,375,869        7,485,013        7,430,314        7,445,669        7,946,983        8,316,552
      Sewer                                            6,652,851        6,455,634          7,058,315         6,633,911        6,363,808        6,305,554        7,620,208        8,217,497        8,098,828        8,397,838
      Marina and launch ramp                             194,311          208,370            234,229           228,339          255,638          287,547          278,753          325,917          298,312           74,659
      Operating grants and contributions                       -                -              6,188                 -                -                -            2,436           42,531          510,533           94,462
      Capital grants and contributions                    20,074                -             88,046           327,240          474,681          765,363          784,969                -                -                -
      Total Business-type program revenues            12,321,996       11,918,099         13,277,392        13,288,970       13,469,996       14,843,477       16,116,680       16,031,614       16,854,656       16,883,511
      Total Primary Government program revenues   $   24,422,811   $   22,383,430   $     23,495,594   $    24,368,353   $   26,507,691   $   29,195,588   $   28,820,108   $   32,255,487   $   35,394,672   $   36,325,620

      NET (EXPENSE) REVENUE
      Governmental Activities                     $   (21,069,568) $   (21,229,924) $    (21,049,814) $    (20,759,902) $    (20,837,074) $   (26,579,629) $   (27,162,628) $   (19,970,327) $   (26,241,143) $   (35,936,548)
      Business-type Activities                            871,244         (568,607)         (604,788)         (813,821)       (1,343,747)        (904,650)        (303,486)         469,478         (448,419)      (1,985,873)
      Total Primary Government net expense        $   (20,198,324) $   (21,798,531) $    (21,654,602) $    (21,573,723) $    (22,180,821) $   (27,484,279) $   (27,466,114) $   (19,500,849) $   (26,689,562) $   (37,922,421)
                                                                                                                              City of Muskegon

                                                                                                             CHANGES IN NET ASSETS/NET POSITION

                                                                                                                             Last Ten Fiscal Years




                                                                                                                                                                     Year Ended June 30
                                                                                           2011              2012             2013 (a)           2014             2015 (b)          2016            2017             2018 (c)          2019              2020

      GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS/NET POSITION
      Governmental Activities
      Property taxes                                                $                       8,844,004   $    8,383,224   $      7,592,847    $    7,383,236   $    7,894,189   $    8,366,212   $    8,389,243   $    8,450,103    $    8,230,573   $    8,466,886
      Income taxes                                                                          6,866,967        7,663,534          8,057,145         7,762,719        8,478,231        8,386,775        8,707,279        8,995,294         8,939,887        9,437,451
      Franchise fees                                                                          362,103          342,376            358,785           358,754          369,965          372,117          378,955          368,495           380,343          361,405
      Grants and contributions not restricted for specific programs                         3,846,859        3,577,848          3,700,871         3,813,221        3,989,178        4,051,050        4,630,111        4,955,168         5,102,602        5,276,036
      Unrestricted investment earnings                                                        193,435          100,073             73,157           146,590           99,733          189,408          106,653           92,771           546,533          568,408
      Miscellaneous                                                                           432,880          154,531            102,388           124,085          805,432          626,014          512,738          545,536           550,381          577,677
      Gain on sale of capital asset                                                            25,815           34,496             44,899            23,836           20,302           99,031          844,062          712,415         1,333,414              317
      Total Governmental Program Revenues                                                  20,572,063       20,256,082         19,930,092        19,612,441       21,657,030       22,090,607       23,569,041       24,119,782        25,083,733       24,688,180

      Business-type Activities
      Unrestricted investment earnings                                                         23,959           46,582             33,148            31,251           29,879           25,688           25,277           28,550            24,063            9,181
      Total Primary Government program revenues                                        $   20,596,022   $   20,302,664   $     19,963,240    $   19,643,692   $   21,686,909   $   22,116,295   $   23,594,318   $   24,148,332    $   25,107,796   $   24,697,361

      CHANGE IN NET ASSETS/NET POSITION
      Governmental Activities                                                          $     (497,505) $      (973,842) $      (1,119,722) $     (1,147,461) $        819,956 $    (4,489,022) $    (3,593,587) $      4,149,455   $   (1,157,410) $    (11,248,368)
      Business-type Activities                                                                895,203         (522,025)          (571,640)         (782,570)       (1,313,868)       (878,962)        (278,209)          498,028         (424,356)       (1,976,692)
      Total Primary Government                                                         $      397,698 $     (1,495,867) $      (1,691,362) $     (1,930,031) $       (493,912) $   (5,367,984) $    (3,871,796) $      4,647,483   $   (1,581,766) $    (13,225,060)


      (a) In 2013, the City implemented GASB 63 and 65 which changed the elements of the financial statements.




128
      (b) In 2015, the City implemented GASB 68 and 71 which changed how governments measure and report pension liabilities.
      (c) In 2018, the City implemented GASB 75 which changed how governments measure and report other postemployment benefit liabilities.

      SOURCE: The information in these schedules (unless otherwise noted) is
      derived from the comprehensive annual financial reports for the relevant year.
                                                                                                  City of Muskegon

                                                                             FUND BALANCE OF GOVERNMENTAL FUNDS

                                                                                               Last Ten Fiscal Years




                                                           2011 (a)        2012            2013            2014            2015            2016            2017            2018            2019            2020

      General fund
      Nonspendable                                     $     251,173   $     178,468   $     447,341   $     300,952   $     220,178   $     232,332   $     209,353   $     222,458   $     241,684   $     280,986
      Assigned                                             2,385,728       2,075,738       2,292,495       1,700,000       1,700,000       1,700,000       1,700,000       1,700,000       1,700,000       1,700,000
      Unassigned                                           3,374,481       4,265,839       4,613,722       5,495,145       5,883,318       6,098,977       6,148,292       6,469,108       6,563,511       5,920,869
      Total general fund                               $   6,011,382   $   6,520,045   $   7,353,558   $   7,496,097   $   7,803,496   $   8,031,309   $   8,057,645   $   8,391,566   $   8,505,195   $   7,901,855

      All other governmental funds
      Nonspendable                                     $   1,704,256 $     1,568,318 $     1,547,793 $     1,556,347 $     2,073,747   $   1,597,371   $   1,716,825   $   1,589,699   $   1,624,737   $  1,663,979
      Restricted                                           1,375,779       3,485,073       2,749,396       2,305,385       3,159,130       2,995,610       2,726,754       5,130,188       4,621,126      3,842,461
      Assigned                                             2,073,027       2,055,904       2,087,359       1,729,457       2,146,050       1,373,669       3,510,747       2,619,342       1,823,959      9,764,600
      Unassigned                                            (238,104)       (191,282)        (82,048)       (100,054)              -               -               -               -               -     (1,601,331)
      Total all other governmental funds               $   4,914,958 $     6,918,013 $     6,302,500 $     5,491,135 $     7,378,927   $   5,966,650   $   7,954,326   $   9,339,229   $   8,069,822   $ 13,669,709


      SOURCE: The information in these schedules
      (unless otherwise noted) is derived from the
      comprehensive annual financial reports for the




129
      relevant year.
                                                                                                  City of Muskegon

                                                                     CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

                                                                                                Last Ten Fiscal Years




                                                              2011            2012              2013              2014            2015            2016            2017              2018            2019             2020

      Revenues
      Taxes                                                $ 15,146,430    $ 15,506,668    $ 14,832,027      $ 14,954,904      $ 15,830,137    $ 16,178,761    $ 16,667,272    $ 16,877,055      $ 16,582,030    $ 17,253,857
      Intergovernmental                                      11,525,749       9,899,379       9,403,554         9,945,065        12,301,594      11,711,788      10,743,434      13,488,014        15,776,333      16,777,402
      Charges for services                                    2,769,204       2,596,328       2,769,227         2,569,335         2,468,889       3,468,938       3,918,217       4,229,797         4,430,419       4,563,652
      Other                                                   3,461,292       3,237,189       2,795,952         3,256,324         4,003,105       3,868,958       4,005,126       5,251,208         5,312,773       5,745,006
      Total revenues                                         32,902,675      31,239,564      29,800,760        30,725,628        34,603,725      35,228,445      35,334,049      39,846,074        42,101,555      44,339,917

      Expenditures
      Public representation                                     851,918         867,762           892,113         1,031,984         930,788       1,064,503       1,080,032         1,383,573       1,281,107       1,379,406
      Administrative services                                   586,328         515,988           508,130           497,025         554,330         577,454         624,284           537,913         739,301         844,270
      Financial services                                      2,352,709       2,407,131         2,196,917         2,197,651       2,476,740       2,068,208       2,236,941         2,191,245       2,394,866       2,358,848
      Public safety                                          13,087,976      12,963,122        12,724,094        12,987,898      13,285,004      13,476,557      14,086,619        15,156,977      16,131,196      16,820,356
      Public works                                            3,079,342       2,835,000         2,878,328         2,918,305       2,876,576       2,864,878       3,206,050         3,377,174       4,176,904       4,187,956
      Highways, streets and bridges                           3,226,377       2,756,010         2,815,337         3,011,611       2,986,909       3,102,391       3,096,875         4,554,968       2,963,498       2,965,598
      Community and economic development                      3,109,693       2,850,593         2,578,073         2,687,933       2,957,071       5,415,436       3,878,547         3,962,759       2,930,725       4,986,000
      Culture and recreation                                  1,197,020       1,265,743         1,248,174         1,308,481       1,444,471       3,100,338       3,523,178         3,713,177       4,050,986       4,662,534
      Other governmental functions                            1,775,128         770,910           299,812           643,666         369,408         305,807         280,416           355,241         281,711         371,461
      Debt service




130
       Principal                                              1,345,183         289,597           395,211           402,492         417,842         428,199         283,563           288,934         294,313         818,285
       Interest                                                 267,258         268,315           292,554           278,412         272,946         257,516         211,242           197,723         189,905         543,740
       Issuance costs                                                 -               -                 -                 -               -          97,578               -                 -               -          70,525
      Capital outlay                                          3,301,273       2,948,610         3,230,586         3,577,837       3,992,111       3,867,579       2,328,615         3,134,369       9,363,862      21,498,055
      Total expenditure                                      34,180,205      30,738,781        30,059,329        31,543,295      32,564,196      36,626,444      34,836,362        38,854,053      44,798,374      61,507,034

      Excess of revenues over (under) expenditures           (1,277,530)       500,783           (258,569)         (817,667)      2,039,529      (1,397,999)       497,687           992,021       (2,696,819)     (17,167,117)

      Other financing sources (uses)
      Transfers in                                            1,348,694         510,907         1,356,229           743,035         853,910       1,563,094       1,805,000         1,370,000       1,210,236       2,017,077
      Transfers out                                          (1,376,740)       (613,953)         (784,275)         (771,081)       (942,933)     (1,638,094)     (1,818,000)       (1,385,000)     (1,210,236)     (2,037,077)
      Bonds issued                                                    -       2,000,000                 -                 -               -          97,578               -                 -               -      21,691,740
      Sale of capital assets                                    120,118         113,981           190,263           176,887         244,685         190,957       1,529,325           741,803       1,541,041         491,924
      Total other financing sources (uses)                       92,072       2,010,935           762,217           148,841         155,662         213,535       1,516,325           726,803       1,541,041      22,163,664

      Net change in fund balances                          $ (1,185,458) $    2,511,718    $     503,648     $     (668,826) $    2,195,191    $ (1,184,464) $    2,014,012    $    1,718,824    $ (1,155,778) $    4,996,547

      Debt service as a percentage of noncapital
      expenditures                                                5.22%           2.01%             2.56%             2.43%           2.42%           2.09%           1.52%             1.36%           1.37%            3.40%




      SOURCE: The information in these schedules (unless
      otherwise noted) is derived from the comprehensive
      annual financial reports for the relevant year.
                                                                                                                   City of Muskegon

                                                                                          GOVERNMENTAL ACTIVITIES REVENUES BY SOURCE

                                                                                                                Last Ten Fiscal Years




      Fiscal    Property      % of        Income       % of       Intergo-        % of     Charges for     % of       Licenses        % of       Fines        % of       Interest    % of                  % of                     %
      Year        Tax         Total         Tax        Total     vernmental       Total     Service        Total     and Permits      Total     and Fees      Total     and Rent     Total     Other       Total     Total        Change

      2011     $ 8,546,677    26.0% $     6,599,753    20.1% $      11,525,749    35.0% $     2,769,204     8.4% $      1,179,639      3.6% $     447,254      1.4% $      412,498    1.3% $   1,421,901    4.3% $   32,902,675    66.6%
      2012       8,093,864    25.9%       7,412,804    23.7%         9,899,379    31.7%       2,596,328     8.3%        1,223,034      3.9%       459,401      1.5%        307,891    1.0%     1,246,863    4.0%     31,239,564    -5.1%
      2013       7,325,555    24.6%       7,506,472    25.2%         9,403,554    31.6%       2,769,227     9.3%        1,238,285      4.2%       435,893      1.5%        267,397    0.9%       854,377    2.9%     29,800,760    -4.6%
      2014       7,123,481    23.2%       7,831,423    25.5%         9,945,065    32.4%       2,569,335     8.4%        1,570,137      5.1%       418,691      1.4%        352,153    1.1%       915,343    3.0%     30,725,628     3.1%
      2015       7,555,471    21.8%       8,274,666    23.9%        12,301,594    35.5%       2,468,889     7.1%        1,361,721      3.9%       452,004      1.3%        343,105    1.0%     1,846,275    5.3%     34,603,725    12.6%
      2016       8,026,859    22.8%       8,151,902    23.1%        11,711,788    33.2%       3,468,938     9.8%        1,443,144      4.1%       459,181      1.3%        455,671    1.3%     1,510,962    4.3%     35,228,445     1.8%
      2017       8,056,460    22.8%       8,610,812    24.4%        10,743,434    30.4%       3,918,217    11.1%        1,884,341      5.3%       494,369      1.4%        290,578    0.8%     1,335,838    3.8%     35,334,049     0.3%
      2018       8,118,381    20.4%       8,758,674    22.0%        13,488,014    33.9%       4,229,797    10.6%        2,965,599      7.4%       457,172      1.1%        212,069    0.5%     1,616,368    4.1%     39,846,074    12.8%
      2019       7,890,357    18.7%       8,691,673    20.6%        15,776,333    37.5%       4,430,419    10.5%        2,452,807      5.8%       488,578      1.2%        757,911    1.8%     1,613,477    3.8%     42,101,555     5.7%
      2020       8,116,143    18.3%       9,137,714    20.6%        16,777,402    37.8%       4,563,652    10.3%        2,420,604      5.5%       412,575      0.9%        742,567    1.7%     2,169,260    4.9%     44,339,917     5.3%




      SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.




131
                                                                                                                                            City of Muskegon

                                                                                                     Taxable, Assessed and Equalized and Estimated Actual Valuation of Property

                                                                                                                                          Last Ten Fiscal Years




                                                                                                                                Taxable Valuation of Property

                                                            Ad Valorem Assessment Roll                                                                            Industrial and Commercial Facilities Assessment Roll

                                                                                                Total                                                       Industrial         Industrial          Commercial                                   Total                              Taxable Value
                                                                                                 Real            Personal             Total                    Real             Personal              Real                 Total              Taxable              Total           As a Percent
         Year        Residential      Agriculture      Commercial           Industrial         Property          Property           Ad Valorem               Property           Property            Property            IFT and CFT           Valuation            City               Actual

         2010      $ 332,105,030     $            -   $ 144,721,736     $   109,507,141    $   586,333,907   $   104,029,037    $    690,362,944        $      4,111,154   $      9,129,000    $                -   $      13,240,154     $   703,603,098         12.0680              94.04%
         2011        331,901,631                  -     144,675,509          87,261,346        563,838,486        93,465,537         657,304,023               3,071,654          9,129,000                     -          12,200,654         669,504,677         12.0749              94.95%
         2012        312,930,252                  -     134,635,427          81,575,476        529,141,155        91,750,891         620,892,046               3,587,223          6,161,900                     -           9,749,123         630,641,169         12.0789              96.40%
         2013        310,252,865                  -     118,856,014          76,331,458        505,440,337        91,730,093         597,170,430               6,677,737          7,472,900                     -          14,150,637         611,321,067         12.0865              96.97%
         2014        312,031,296                  -     115,070,943          61,196,955        488,299,194        91,020,452         579,319,646               3,874,303          6,512,600                     -          10,386,903         589,706,549         13.0875              96.26%
         2015        314,055,244                  -     116,448,947          54,898,389        485,402,580        95,098,912         580,501,492               3,149,352          7,772,000                     -          10,921,352         591,422,844         13.0869              95.28%
         2016        314,299,363                  -     114,855,236          50,232,295        479,386,894        74,155,243         553,542,137               3,628,098          5,690,600                     -           9,318,698         562,860,835         13.0905              93.60%
         2017        319,768,625                  -     113,497,599          50,381,292        483,647,516        67,760,237         551,407,753               3,692,357          4,627,400                     -           8,319,757         559,727,510         13.0908              91.38%
         2018        331,347,976                  -     113,370,852          48,272,032        492,990,860        65,728,440         558,719,300               3,990,263          3,739,800                     -           7,730,063         566,449,363         13.0899              89.69%
         2019        346,233,797                  -     120,836,165          48,156,907        515,226,869        61,993,800         577,220,669               6,561,033          3,146,800                     -           9,707,833         586,928,502         13.0865              87.80%



                                                                                                                    Assessed and Equalized Valuation of Property

                                                            Ad Valorem Assessment Roll                                                                            Industrial and Commercial Facilities Assessment Roll

                                                                                                Total                                                       Industrial         Industrial          Commercial                                   Total            Estimated
                                                                                                 Real            Personal             Total                    Real             Personal              Real                 Total              Assessed            Actual
         Year        Residential      Agriculture      Commercial           Industrial         Property          Property           Ad Valorem               Property           Property            Property            IFT and CFT           Valuation            Value




132
         2010      $ 354,044,700     $            -   $ 154,185,000     $   122,703,400    $   630,933,100   $   104,020,200    $    734,953,300        $      4,120,400   $      9,129,000    $                -   $      13,249,400     $   748,202,700    $ 1,496,405,400
         2011        354,307,945                  -     154,700,200          90,467,700        599,475,845        93,456,700         692,932,545               3,080,900          9,129,000                     -          12,209,900         705,142,445      1,410,284,890
         2012        327,226,000                  -     141,238,834          84,084,000        552,548,834        91,740,800         644,289,634               3,719,300          6,161,900                     -           9,881,200         654,170,834      1,308,341,668
         2013        321,604,220                  -     123,831,400          79,037,400        524,473,020        91,720,300         616,193,320               6,766,000          7,472,900                     -          14,238,900         630,432,220      1,260,864,440
         2014        326,690,900                  -     120,803,800          63,704,200        511,198,900        91,004,400         602,203,300               3,877,300          6,512,600                     -          10,389,900         612,593,200      1,225,186,400
         2015        335,445,400                  -     122,235,800          57,024,100        514,705,300        95,084,900         609,790,200               3,149,800          7,772,000                     -          10,921,800         620,712,000      1,241,424,000
         2016        342,767,600                  -     122,574,300          52,323,600        517,665,500        74,140,100         591,805,600               3,851,200          5,690,600                     -           9,541,800         601,347,400      1,202,694,800
         2017        363,318,800                  -     120,587,210          52,278,900        536,184,910        67,745,200         603,930,110               3,957,900          4,639,600                     -           8,597,500         612,527,610      1,225,055,220
         2018        382,994,200                  -     124,938,600          50,130,470        558,063,270        65,713,100         623,776,370               4,017,100          3,739,800                     -           7,756,900         631,533,270      1,263,066,540
         2019        409,745,000                  -     135,884,102          51,070,400        596,699,502        61,981,500         658,681,002               6,649,100          3,146,800                     -           9,795,900         668,476,902      1,336,953,804


      Property is assessed at 50% of true cash value. The assessed and equalized valuation of taxable property is determined as of December 31st of each year and is the basis upon which taxes are levied during the succeeding fiscal year. The passage of Proposal A in May, 1994 altered
      how tax values are determined. Beginning in the 1995-1996 fiscal year, property taxes are based on taxable value instead of state equalized value. Proposal A also capped taxable value of each parcel of property, adjusted for additions and losses, at the previous year's rate of inflation
      or 5% whichever is less, until the property is sold or transferred. When ownership of a parcel of property is transferred, the taxable value becomes 50% of true cash value, or the state equalized valuation. The Industrial and Commercial Facilities Tax Acts permit certain property to be
      taxed at one-half the tax rate for a period up to twelve years.
                                                                       City of Muskegon

                                                             Principal Property Taxpayers

                                                                        June 30, 2020


                                                              6/30/2020                                             6/30/2010
                                                                               Percent of                                          Percent of
                                               Taxable                      Total Taxable             Taxable                   Total Taxable
                   Taxpayer                   Valuation          Rank          Valuation             Valuation        Rank         Valuation

      Consumers Energy                    $     18,131,539         1                      3.0%   $    78,615,856        1                 10.1%
      DTE Gas Company                           10,288,149         2                      1.7%         5,852,200        6                  0.7%
      Muskegon SC Holdings LLC                   5,955,780         3                      1.0%
      Michigan Electric Transmission             5,075,300         4                      0.8%
      Mercy Health                               3,769,741         5                      0.6%
      Glen Oaks Apartments LLC                   3,504,178         6                      0.6%         4,776,500        7
      Muskegon Investments I LLC                 2,782,120         7                      0.5%
      Core Sherman LLC                           2,718,309         8                      0.5%                                             0.0%




133
      Hinman Lake LLC                            2,865,457         9                      0.5%
      Broadstone PC Michigan LLC                 2,390,309        10                      0.4%
      Sappi (S.D. Warren Co.)                                                                          31,205,687       2                  4.0%
      Johnson Technology                                                                                7,679,263       3                  1.0%
      Adac Plastics                                                                                     7,379,563       4                  0.9%
      Esco Company                                                                                      6,578,855       5                  0.8%
      Honeywell Inc                                                                                     4,738,900       8                  0.6%
      Faram Muskegon LLC                                                                                4,570,300       9                  0.6%
      Lorin Industries                                                                                  4,318,889      10                  0.6%

      Total - 10 Largest                        57,480,882                             9.6%          155,716,013                          19.9%
      Total - All Other                        542,557,212                            90.4%          624,819,939                          80.1%
                                          $    600,038,094                           100.0%      $   780,535,952                         100.0%




      Source: Muskegon County Equalization Department; City of Muskegon Treasurer's Office
                                       City of Muskegon

           Property Tax Rates - Direct and Overlapping Government Units
                        Property Tax Rates Per $1,000 Taxable Valuation
                                     Last Ten Fiscal Years




                                        City-Wide Rates
                                                    Total             Library      Library
Year   Operating     Promotion      Sanitation       City             District      Debt

2010       9.5000         0.0680            2.5000         12.0680       2.4000        -
2011       9.5000         0.0749            2.5000         12.0749       2.4000        -
2012       9.5000         0.0789            2.5000         12.0789       2.4000        -
2013       9.5000         0.0865            2.5000         12.0865       2.4000        -
2014      10.0000         0.0875            3.0000         13.0875       2.4000        -
2015      10.0000         0.0869            3.0000         13.0869       2.4000       0.5611
2016      10.0000         0.0905            3.0000         13.0905       2.4000       0.4962
2017      10.0000         0.0908            3.0000         13.0908       2.4000       0.4999
2018      10.0000         0.0899            3.0000         13.0899       2.4000       0.4866
2019      10.0000         0.0865            3.0000         13.0865       2.4000       0.4522

                                       Overlapping - County-Wide Rates

       Muskegon     Intermediate     Special           Vocational    Community     MAISD       Community
Year    County         School       Education          Education      College      Gen Ed      College Debt

2010       6.6957         0.4597            2.2987          0.9996       2.2037        -                -
2011       6.6957         0.4597            2.2987          0.9996       2.2037        -                -
2012       6.6957         0.4597            2.2987          0.9996       2.2037        -                -
2013       6.6957         0.4597            2.2987          0.9996       2.2037        -                -
2014       6.6557         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400
2015       6.6357         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400
2016       6.8957         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400
2017       6.8957         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400
2018       6.8957         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400
2019       6.8957         0.4597            2.2987          0.9996       2.2037       1.0000           0.3400


            Overlapping - School District                                               Grand Total

                                                         State                                   Non-
Year   Operating        Debt           Total           Education                  Homestead    Homestead

2010      18.0000         5.7500        23.7500             6.0000                   38.8754          56.8754
2011      18.0000         6.2500        24.2500             6.0000                   39.3823          57.3823
2012      18.0000         7.1000        25.1000             6.0000                   40.2363          58.2363
2013      18.0000         7.1000        25.1000             6.0000                   40.2439          58.2439
2014      18.0000         7.6000        25.6000             6.0000                   43.0449          61.0449
2015      18.0000         6.8000        24.8000             6.0000                   42.7854          60.7854
2016      18.0000         6.3500        24.3500             6.0000                   42.5341          60.5341
2017      18.0000         7.6800        25.6800             6.0000                   43.8681          61.8681
2018      18.0000         8.3600        26.3600             6.0000                   44.5339          62.5339
2019      18.0000         8.3600        26.3600             6.0000                   44.4961          62.4961



                                                 134
                                                                                  City of Muskegon

                                                                 PROPERTY TAX LEVIES AND COLLECTIONS

                                                                             Last Ten Fiscal Years




                                                                                                              Charge backs
                   Total            Current       Percent      Delinquent                        Total Tax    On Uncollected   Outstanding   Outstanding    Percent of
      Fiscal        Tax                Tax        Of Levy          Tax            Total Tax     Collections    Delinquent      Delinquent    Delinquent     Delinquent
      Year         Levy            Collections   Collected     Collections       Collections   as % of Levy       Taxes         Personal      Specific     Taxes to Levy

       2010    $   8,945,500   $     7,784,052       87.0% $     1,077,056   $     8,861,108          99.1% $         58,027   $    70,745   $    13,647          1.59%
       2011        8,583,284         7,457,610       86.9%       1,030,902         8,488,512          98.9%           54,707        80,068        12,935          1.72%
       2012        7,872,541         6,882,534       87.4%         915,950         7,798,484          99.1%           27,163        68,945         5,113          1.29%
       2013        7,668,166         6,703,147       87.4%         912,362         7,615,509          99.3%          102,713        45,361         7,296          2.03%
       2014        8,032,955         7,069,804       88.0%         917,806         7,987,610          99.4%           57,680        41,074         2,788          1.26%
       2015        8,132,782         7,247,701       89.1%         848,266         8,095,967          99.5%           62,345        33,407         1,862          1.20%
       2016        7,719,829         6,828,816       88.5%         853,639         7,682,455          99.5%           42,063        23,671         1,365          0.87%
       2017        7,633,290         6,776,856       88.8%         795,164         7,572,020          99.2%           51,584        43,665        11,728          1.40%
       2018        9,545,232         8,631,502       90.4%         839,208         9,470,710          99.2%                -        53,873        13,529          0.71%
       2019        9,737,757         8,873,258       91.1%         821,601         9,694,859          99.6%                -        20,987        15,355          0.37%




135
      SOURCE: City of Muskegon Treasurer' Office
                                                                                                                                          City of Muskegon
                                                                                    Total Income Tax Collected and Number of Returns Filed - Graphical
                                                                                                                                       Last Ten Fiscal Years


                                                                                                                              Income Tax 2010 - 2020
                      $5,000,000

                      $4,500,000

                      $4,000,000

                      $3,500,000

                      $3,000,000

                      $2,500,000

                      $2,000,000




      INCOME TAX $
                      $1,500,000

                      $1,000,000

                        $500,000

                              $-
                                           2010 - 2011          2011 - 2012                2012 - 2013                 2013 - 2014               2014 - 2015            2015 - 2016          2016 - 2017        2017 - 2018      2018 - 2019     2019 - 2020
                      Resident             $2,566,198            $2,755,079                $2,692,211                  $2,849,530                $3,070,581             $2,925,036           $3,284,777         $3,278,759       $3,457,902      $3,655,458
                      Non-Resident          3,136,464               3,367,318              3,290,480                   3,482,760                 3,752,932              3,575,045            4,014,691          4,007,372        4,226,325       4,467,781
                      Other                 897,091                 1,290,407              1,523,781                   1,499,133                 1,451,153              1,651,821            1,311,374          1,472,517        1,007,446       1,014,475

                                                                                                                                        FISCAL YEAR




136
                                                                                                             NUMBER OF RETURNS 2010 - 2020
                     25,000




                     20,000
                                        1,750
                                                            1,750
                                                                                   1,750                    1,750                     1,750                    1,750                1,750                              1,650
                                                                                                                                                                                                     1,650
                     15,000                                                                                                                                                                                                           1,650


                                       11,612                                                                                                                                                                                                     Other
                                                           11,259                                          11,009
                                                                                  10,997                                             10,631                    10,713            10,578              10,278           10,256                      Non-Resident




      RETURNS
                     10,000
                                                                                                                                                                                                                                      9,426       Resident




                      5,000

                                        6,326               5,690                  5,110                    5,463                     5,458                    5,337                5,464            5,352             5,493          4,852


                         -
                                     2010 - 2011         2011 - 2012            2012 - 2013              2013 - 2014               2014 - 2015           2015 - 2016           2016 - 2017        2017 - 2018      2018 - 2019     2019 - 2020

                                                                                                                                        FISCAL YEAR
                                                                  City of Muskegon
                                        Total Income Tax Collected and Number of Returns Filed - Data
                                                                Last Ten Fiscal Years

                                                                Income Tax 2010 - 2020
      Year             2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
      Resident         $ 2,566,198 $ 2,755,079 $ 2,692,211 $ 2,849,530 $ 3,070,581 $ 2,925,036 $ 3,284,777 $ 3,278,759 $ 3,457,902 $ 3,655,458
      Non-Resident       3,136,464   3,367,318   3,290,480   3,482,760   3,752,932     3,575,045 4,014,691   4,007,372   4,226,325   4,467,781
      Other                897,091   1,290,407   1,523,781   1,499,133   1,451,153     1,651,821 1,311,374   1,472,517   1,007,446   1,014,475
      Total Income Tax $ 6,599,753 $ 7,412,804 $ 7,506,472 $ 7,831,423 $ 8,274,666 $ 8,151,902 $ 8,610,842 $ 8,758,648 $ 8,691,673 $ 9,137,714

                                                           Number of Returns 2010 - 2020
      Year             2010 - 2011 2011 - 2012 2012 - 2013 2013 - 2014 2014 - 2015 2015 - 2016 2016 - 2017 2017 - 2018 2018 - 2019 2019 - 2020
      Resident               6,326       5,690       5,110       5,463       5,458       5,337       5,464       5,352       5,493       4,852
      Non-Resident         11,612      11,259      10,997      11,009      10,631      10,713      10,578      10,278      10,256        9,426
      Other                  1,750       1,750       1,750       1,750       1,750       1,750       1,750       1,650       1,650       1,650
      Total Returns        19,688      18,699      17,857      18,222      17,839      17,800      17,792      17,280      17,399      15,928




137
                                                                            City of Muskegon

                                                            RATIO OF OUTSTANDING DEBT BY TYPE

                                                                          Last Ten Fiscal Years




                                          Governmental Activities                                   Business-Type Activities
                        General
                       Obligation     Installment                       Total
                      Limited Tax      Purchase                      Governmental            Revenue                     Total Business-       Total Primary     Per
      Year              Bonds         Agreements       State Loans     Activities             Bonds       State Loans    Type Activities       Government       Capita



      2011           $    5,920,000   $           -   $    244,850   $    6,164,850      $    5,415,000   $ 10,955,000   $ 16,370,000      $       22,534,850   $   587
      2012                7,725,000               -        150,253        7,875,253           4,815,000     10,325,000     15,140,000              23,015,253       599
      2013                7,350,000               -        130,042        7,480,042           4,205,000      9,685,000     13,890,000              21,370,042       577
      2014                6,954,535               -        112,550        7,067,085           3,630,728      9,030,000     12,660,728              19,727,813       533
      2015                6,555,436               -         94,708        6,650,144           2,949,368      8,360,000     11,309,368              17,959,512       483




138
      2016                6,243,903               -         76,509        6,320,412           2,246,962      7,675,000      9,921,962              16,242,374       436
      2017                5,940,903               -         57,946        5,998,849           1,523,661      6,980,000      8,503,661              14,502,510       378
      2018                5,633,903               -         39,012        5,672,915             774,614      6,270,000      7,044,614              12,717,529       331
      2019                5,322,903               -         19,699        5,342,602                   -      5,545,000      5,545,000              10,887,602       284
      2020               24,059,753       2,123,804              -       26,183,557                   -      6,607,956      6,607,956              32,791,513       854



      NOTE: None of the debt issued by the City is payable through the levy of property tax millages.


      SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.
                                                        City of Muskegon

                                            DIRECT AND OVERLAPPING DEBT

                                                          June 30, 2020




                                                                     Total Debt                            Debt Supported by City
Name of Governmental Unit                                            Outstanding        Self Supporting     General Revenues

Direct Debt
 City of Muskegon:
   Revenue Bonds                                                $          6,607,956    $     6,607,956   $                      -
   Capital Improvement Bonds                                              24,059,753                  -                 24,059,753
Installment Purchase Agreements                                            2,123,804                  -                  2,123,804
 Component Unit Debt:
   Downtown Development Authority                                                  -                  -                           -
   Local Development Finance Authority                                     1,760,377          1,760,377                           -

Total City Direct Debt                                          $         34,551,890    $     8,368,333   $             26,183,557




                                                                                        City Share as
                                                                        Gross          Percent of Gross              Net
Overlapping Debt
 Muskegon School District                                       $         8,665,000              95.48% $                8,273,342
 Orchard View School District                                            38,990,021              18.69%                  7,287,235
 Reith's Puffer School District                                          64,337,816               0.68%                    437,497
 Hackley Public Library                                                   2,135,000              95.48%                  2,038,498
 Muskegon County                                                        109,272,267              12.57%                 13,735,524
 Muskegon Community College                                              32,050,000              12.57%                  4,028,685

Total Overlapping Debt                                          $       255,450,104                                     35,800,781

Total City Direct and Overlapping Debt                                                                    $             61,984,338



NOTE: None of the debt issued by the City is payable through the levy of property tax millages.

The percentage of overlapping debt is estimated using taxable property values. Applicable percentages were estimated by
determining the portion of the City's taxable value that is within each overalapping government unit's boundaries. Details regarding
the City's outstanding debt can be found in the notes to the financial statements.




SOURCE: Municipal Advisory Council of Michigan and City of Muskegon Finance Department. The information in these schedules
(unless otherwise noted) is derived from the comprehensive annual financial reports for the relevant year.




                                                              139
                                                                                                                        City of Muskegon

                                                                                                      LEGAL DEBT MARGIN INFORMATION

                                                                                                                       Last Ten Fiscal Years




                                                           2011               2012                2013                     2014                2015                2016              2017             2018             2019               2020


      Debt Limit                                       $   78,308,925   $     73,585,150    $      68,555,700      $       61,706,477   $      61,510,980    $     60,962,090    $   61,333,841   $   64,124,907   $   101,083,635    $   108,732,428

      Total net debt applicable to limit                   12,929,850         14,375,253           13,655,042              12,847,550          11,969,708          11,313,794        10,290,785        9,240,855         8,510,021         27,943,934

      Legal debt margin                                $   65,379,075   $     59,209,897    $      54,900,658      $       48,858,927   $      49,541,272    $     49,648,296    $   51,043,056   $   54,884,052   $    92,573,614    $    80,788,494




      Total net debt applicable to the limit as               16.51%               19.54%                 19.92%               20.82%             19.46%               18.56%           16.78%           14.41%               8.42%           25.70%
      a percentage of debt limit

                                                                        Legal Debt Margin Calculation for 2019:

                                                                        Assessed Valuation:                                                                  $   1,087,324,277
                                                                        Legal Debt Limit (10% )                                                                    108,732,428

                                                                        Total Indebtedness:                                             $      34,551,890
                                                                        Debt not Subject to Limitation:
                                                                           Paid by Special Assessment                                                   -
                                                                           Revenue Bonds                                                       (6,607,956)
                                                                        Debt Subject to Limitation                                                                 27,943,934




140
                                                                        Legal Debt Margin                                                                    $     80,788,494




      SOURCE: The information in these schedules
      (unless otherwise noted) is derived from the
      comprehensive annual financial reports for the
      relevant year.
                                                          City of Muskegon
                                                REVENUE BOND COVERAGE

                                                        Last Ten Fiscal Years

                                                      Water Supply System

                                     Direct         Net Revenue
Fiscal             Gross            Operating       Available For                     Debt Service Requirements
Year             Revenue (a)     Expenses (b)         Debt Service        Principal          Interest            Total           Coverage


2011         $      5,467,785   $     3,294,530   $       2,173,255   $     1,195,000   $       451,323     $    1,646,323                 1.32
2012                5,273,720         3,441,078           1,832,642         1,230,000           410,187          1,640,187                 1.12
2013                5,907,784         3,729,276           2,178,508         1,250,000           384,694          1,634,694                 1.33
2014                6,109,144         3,511,477           2,597,667         1,295,000           352,634          1,647,634                 1.58
2015                6,388,474         3,774,508           2,613,966         1,330,000           320,857          1,650,857                 1.58
2016                7,498,376         4,460,076           3,038,300         1,370,000           283,360          1,653,360                 1.84
2017                7,449,646         4,997,912           2,451,734         1,405,000           246,434          1,651,434                 1.48
2018                7,507,323         4,949,807           2,557,516         1,450,000           203,106          1,653,106                 1.55
2019                8,472,413         5,672,522           2,799,891         1,495,000           158,260          1,653,260                 1.69
2020                8,417,771         6,374,033           2,043,738           745,000           109,916            854,916                 2.39



                                                  Sewage Disposal System

                                     Direct         Net Revenue
Fiscal             Gross            Operating       Available For                     Debt Service Requirements
Year             Revenue (a)     Expenses (b)         Debt Service        Principal          Interest            Total           Coverage


2011                                                          No Direct System   Indebtedness
2012                                                          No Direct System   Indebtedness
2013                                                          No Direct System   Indebtedness
2014                                                          No Direct System   Indebtedness
2015                                                          No Direct System   Indebtedness
2016                                                          No Direct System   Indebtedness
2017                                                          No Direct System   Indebtedness
2018                                                          No Direct System   Indebtedness
2019                                                          No Direct System   Indebtedness
2020                8,399,047         9,307,397            (908,350)                  -                 -                  -      #DIV/0!




For years in which "revenue bond coverage" is less than 1.00, the shortfall was made up either by use of net position or by transfer in.

(a) "Gross Revenue" equals total operating revenues plus interest income.
(b) "Direct Operating Expenses" equal total operating expenses net of depreciation expense.




SOURCE: The information in these schedules (unless otherwise noted) is derived from the comprehensive annual financial reports for the
relevant year.




                                                                141
                                                                           City of Muskegon
                                                         DEMOGRAPHIC AND ECONOMIC STATISTICS

                                                                         Last Ten Fiscal Years




      Fiscal                           Personal        Per Capita       Median           Public School               Building Permits
      Year         Population           Income          Income           Age              Enrollment             Number              Value            Unemployment


      2011           38,401       $      737,646,617        19,209        34.1                5,162                835           $      18,829,825         13.8%
      2012           38,225              752,622,470        19,689        34.1                5,428                891                  21,932,738         8.5%
      2013           37,046              747,644,037        20,182        34.1                4,367                826                  24,613,938         12.0%
      2014           37,213              769,789,707        20,686        34.1                4,808               1,108                 54,065,115         9.6%
      2015           37,213              789,034,450        21,203        35.8                4,387               1,102                 46,541,966         10.3%
      2016           37,213              808,760,311        21,733        35.8                4,206               1,112                 58,924,856         8.3%
      2017           38,349              854,285,543        22,277        35.8                3,985               1,075                 78,271,395         4.8%
      2018           38,401              876,830,025        22,834        35.4                3,732               1,202                171,523,877         4.1%
      2019           38,401              898,750,775        23,404        35.4                3,589               1,295                 94,667,004         4.2%




142
      2020           38,401              921,219,545        23,989        36.3                3,625               1,233                 92,319,998         17.7%



      SOURCE: US Census Bureau, Muskegon Area Intermediate School Distrct (MAISD), City of Muskegon Inspections Department, Michigan Department of Technology,
      Management, & Budget
                                                                               City of Muskegon
                                                                         PRINCIPAL EMPLOYERS


                                                                       Current Year and Ten Years Ago



                                                                                      2020                                      2010
                                                                                                  Percentage                                Percentage
                                                                                                    of total                                  of total
                                                                                                     City                                      City
      Employer                                                     Employees          Rank        employment      Employees     Rank        employment


      Mercy General Health Partners*                                      4,674               1           31.1%         3,227          1          19.3%
      County of Muskegon                                                    990               2            6.6%           980          2           5.9%
      ADAC Automotive                                                       911               3            6.1%           400          8           2.4%
      G.E. Aviation (formerly Johnson Technology Inc.)                      850               4            5.7%           474          5           2.8%
      Muskegon Public Schools                                               426               5            2.8%           697          4
      Port City Group Companies                                             425               6            2.8%
      Muskegon Area Intermediate School District                            418               7            2.8%
      Knoll Group                                                           315               8            2.1%          450           6




143
      Betten Automotive Group                                               300               9            2.0%
      Muskegon Community College                                            224              10            1.5%
      State of Michigan                                                                                                  772            3          4.6%
      Verizon                                                                                                            325            9          1.9%
      City of Muskegon                                                                                                   281           10          1.7%
      Baker College                                                                                                      430            7          2.6%



      * Hackley Hospital merged with the former Mercy Hospital to become Mercy General Health Partners.

      SOURCE: City of Muskegon; Muskegon Area First; Michigan Department of Energy, Labor & Economic Growth
                                                                           City of Muskegon

                                                    BUDGETED FULL-TIME CITY GOVERNMENT POSITIONS BY DEPARTMENT

                                                                         Last Ten Fiscal Years




      Department                                        2011      2012      2013          2014     2015     2016     2017     2018     2019     2020
      Administration                                    0.40      0.40      0.40          0.40      -        -        -        -        -        -
      Affirmative Action                                1.10      1.10      1.10          1.10     1.30     1.30     1.46     0.40     1.00     1.00
      Cemetaries                                        2.20      1.75      1.25          1.25     1.25     1.25     1.25     1.25     1.25     2.25
      City Clerk & Elections                            3.00      3.00      3.00          3.00     3.00     3.00     3.54     3.80     3.80     4.80
      City Commission                                   0.25      0.25      0.25          0.25     0.25     0.25     0.25     0.25     0.25     0.25
      City Hall Maintenance                             0.55      0.55      0.55          0.55     0.55     0.55     0.55     0.55     0.55     1.05
      City Manager's Office                             2.25      2.25      2.25          2.25     2.05     2.05     1.75     2.75     2.75     2.75
      City Treasurer's Office                           5.00      5.00      5.00          4.50     5.50     5.50     5.50     5.50     5.50     5.50
      Civil Service                                     1.00       -         -             -        -        -        -        -        -
      Environmental Services                            2.00      5.00      5.00          5.00     2.00     2.00     2.00     2.00      -
      Farmers Market                                    0.05      0.05      0.05          0.05     0.05     0.05      -       0.20     1.20     1.20
      Finance Administration                            3.00      3.00      2.00          2.00     3.00     3.00     3.00     3.60     3.00     3.45
      Fire                                             33.00     35.00     28.00         28.83    32.00    35.00    35.00    35.00    26.00    29.00
      Fire Safety Inspections                           8.00      6.00      6.00          0.83      -        -        -        -        -
      General Recreation                                 -         -         -             -        -        -        -        -        -
      Income Tax Administration                         5.00      5.00      5.00          4.50     3.50     3.50     3.50     3.50     3.50     3.50
      Information Systems                               3.00      3.00      3.00          3.00     3.00     3.00     3.00     3.50     3.50     3.50
      Parks                                             6.00      6.05      6.05          6.00     6.00     6.00     7.05     7.05    10.05    10.05




144
      Planning, Zoning & Economic Development           4.00      3.00      3.00          3.00     3.40     3.40     3.45     3.45     5.45     6.00
      Police                                           88.00     88.00     88.00         87.34    88.00    88.00    88.00    88.00    89.00    89.00
      Sanitation                                        0.30      0.20      0.20          0.20     0.20     0.20     0.20     0.20     0.20     0.20
      Senior Transit                                     -        0.05      0.05          0.05      -        -        -        -        -        -
      MVH-Major Streets                                12.00     11.70     10.70         10.70    10.70    10.70    10.70    10.70    12.20    12.20
      MVH-Local Streets                                 7.00      6.70      6.70          6.70     6.70     6.70     6.70     6.70     7.20     7.20
      Community Development                             4.00      4.00      4.00          4.00     4.00     4.00     4.00     3.55     3.55     4.30
      Home Program                                      0.25       -         -             -        -        -        -        -        -        -
      Lead Program                                      0.75       -         -             -        -        -        -        -        -        -
      Sewer Maintenance                                10.20      9.75      9.75          9.80     9.80     9.80     9.80     9.80     9.80    10.80
      Water Filtration                                 10.00      9.00     10.00         10.00    10.00    10.00    10.00    10.00    10.00    11.00
      Water Maintenance                                12.40     11.75     11.75         11.75    11.75    11.75    11.75    11.75    11.75    12.75
      Hartshorn Marina Fund                             0.05      0.30      0.30          0.30     0.30     0.30     0.30     0.30     0.30     0.30
      Mercy Health Arena                                 -         -         -             -        -        -        -        -        -       3.00
      Public Service Building                           8.05      7.95      8.45          8.45     8.50     8.50     8.50     8.50     8.50     8.75
      Engineering                                       4.95      4.95      4.95          4.95     4.95     4.95     4.95     4.95     5.95     5.20
      Equipment                                         6.25      6.25      6.25          6.25     6.25     6.25     6.25     6.25     6.25     6.25
                                                      244.00    241.00    233.00        227.00   228.00   231.00   232.45   233.50   232.50   245.25




      SOURCE: City of Muskegon Finance Department
                                                                                       City of Muskegon

                                                                        OPERATING INDICATORS BY FUNCTION/PROGRAM

                                                                                    Last Ten Fiscal Years



      Function/Program                                 2011         2012        2013           2014         2015          2016          2017         2018          2019          2020



      Administrative Services
      Elections
      Number of registered voters                        26,330       26,324      26,098        26,025        24,014        24,005        24,612       26,136        25,182        28,127
      Number of votes cast:
         Last general election                            8,106        1,933      13,487         3,029         7,763         2,547        13,179       15,271        11,407         3,105
         Last city election                               8,106        1,933       2,131         3,029         7,763         2,547        13,179        2,254         1,938         3,105
      Percentage of registered voters voting:
         Last general election                                31%          7%          52%            12%          32%           11%           54%          58%           45%           11%
         Last city election                                   31%          7%           8%            12%          32%           11%           54%           9%            8%           11%



      Financial Services
      Property Tax Bills                                 15,351       15,261      15,291        15,211        14,528        14,611        14,243       14,229        14,180        15,090
      Income Tax Returns                                 19,688       18,699      17,857        18,222        17,839        17,800        17,792       17,280        17,399        15,928
      Paper Check Issued to Vendors                       2,986        3,746       1,677         1,404         1,527         1,608         1,675        1,782         1,863         1,946
      Electronic Payments to Vendors                        884        1,334       1,251         1,579         1,471         1,849         1,998        2,104         2,307         2,494




145
      Public Safety
      Fire Protection
         Number of firefighter and officer positions         37           36          41            38            35            35            35           23            29            26
         Number of emergency calls                        4,402        4,676       4,563         4,354         4,881         4,938         4,895        4,948         5,106         5,147
      Police Protection
         Number of sworn officer positions                   79           79          79            76            76            76            75           79            80            80
         Part I (Major) Crimes                            2,859        2,772       2,647         2,240         2,107         1,989         2,816        2,357         1,728         1,621



      Public Works
        Refuse Collected (Tons per Year)                 12,703       10,153       9,958        10,217        10,512        10,994        11,009       10,801        10,753        11,534
        Recyclables Collected (Tons per Year)                 -            -           -             -             -             -             -            -             -           160



      Water & Sewer
      Number of consumers                                 13,037       13,109      13,144        13,086        13,223        13,307        13,248       13,104        13,343        13,422
      Average daily water consumption (GPD)            8,417,000    7,700,000   7,651,000     7,666,000     8,293,570    11,027,945    10,947,233    9,559,304    10,867,590    10,674,712
      Water main breaks repaired                              12            5          11            30            15            16            12           15            11            17
      Sewer flows (Millions Gallons per Year)              1,625        1,695       1,777         1,833         2,013         1,794         1,815        1,832         2,048         2,138
      Sewer Service Calls                                    591          522         508           532           501           521           462          451           443           475




      SOURCE: City of Muskegon Departments
                                                                                     City of Muskegon

                                                             CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

                                                                                    Last Ten Fiscal Years




      Function/Program                       2011         2012         2013               2014              2015         2016         2017         2018         2019


      Public Safety
      Fire Protection
         Number of stations                           3            3            3                  3                 3            3            3            3            3
      Police Protection
         Number of stations                           1            1            1                  1                 1            1            1            1            1

      Highways, Streets and Bridges
      Miles of Streets                         196.95       196.95       196.95             196.95            196.95       196.95       196.95       196.95       197.19
      Number of streetlights                    3,065        2,838        2,838              2,838             2,838        2,900        2,984        2,967        2,930

      Culture and Recreation
      Number of parks (acres)                       701          701          701                701               701          701          701          701          701
      Lake Michigan beaches (acres)                 119          119          119                119               119          119          119          119          119
      Hockey/Entertainment Arena                      1            1            1                  1                 1            1            1            1            1




146
      Sewer
      Sanitary sewers (miles)                  177.04       177.04       177.04             177.04            177.04       177.04       177.04       177.04       177.04
      Storm sewers (miles)                     184.35       184.35       184.35             184.25            184.35       184.35       184.35       184.35       184.35

      Water
      Water mains (miles)                      195.69       195.40       195.95             195.95            195.95       195.95       195.95       195.95       195.27



      SOURCE: City of Muskegon Departments
SINGLE AUDIT OF FEDERAL FINANCIAL ASSISTANCE PROGRAMS




                         147
               INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER
              FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS
                 BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED
                  IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS



City Commission
City of Muskegon
Muskegon, Michigan

We have audited, in accordance with the auditing standards generally accepted in the United States of America
and the standards applicable to financial audits contained in the Government Auditing Standards issued by the
Comptroller General of the United States, the financial statements of the governmental activities, the business-
type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining
fund information of City of Muskegon, as of and for the year ended June 30, 2020, and the related notes to the
financial statements, which collectively comprise City of Muskegon’s basic financial statements, and have issued
our report thereon dated December 22, 2020.

Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of Muskegon’s internal
control over financial reporting (internal control) to determine the audit procedures that are appropriate in the
circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of
expressing an opinion on the effectiveness of City of Muskegon’s internal control. Accordingly, we do not
express an opinion on the effectiveness of City of Muskegon’s internal control.

Our consideration of internal control was for the limited purpose described in the preceding paragraph and was
not designed to identify all deficiencies in internal control that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified.
However, as described in the accompanying Schedule of Findings and Questioned Costs, we identified certain
deficiencies in internal control that we consider to be material weaknesses and significant deficiencies.

A deficiency in internal control exists when the design or operation of a control does not allow management or
employees, in the normal course of performing their assigned functions, to prevent, or detect and correct
misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal
control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements
will not be prevented, or detected and corrected on a timely basis. We consider the deficiency described in the
accompanying Schedule of Findings and Questioned Costs as Finding 2020-001 to be a material weakness.




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                                                         148
BRICKLEY DELONG


City Commission
City of Muskegon
Page 2


Compliance or Other Matters
As part of obtaining reasonable assurance about whether City of Muskegon’s financial statements are free from
material misstatement, we performed tests of its compliance with certain provisions of laws, regulations,
contracts, and grant agreements, noncompliance with which could have a direct and material effect on the
determination of financial statement amounts. However, providing an opinion on compliance with those
provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of
our tests disclosed no instances of noncompliance or other matters that are required to be reported under
Government Auditing Standards.

City of Muskegon’s Response to Findings
City of Muskegon’s response to the findings identified in our audit is described in the accompanying Schedule of
Findings and Questioned Costs. City of Muskegon’s response was not subjected to auditing procedures applied in
the audit of the financial statements and, accordingly, we express no opinion on it.

Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the
results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on
compliance. This report is an integral part of an audit performed in accordance with Government Auditing
Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not
suitable for any other purpose.




Muskegon, Michigan
December 22, 2020




                                                         149
     INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR FEDERAL
    PROGRAM; REPORT ON INTERNAL CONTROL OVER COMPLIANCE; AND REPORT ON
    SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS REQUIRED BY THE UNIFORM
                                  GUIDANCE



City Commission
City of Muskegon
Muskegon, Michigan


Report on Compliance for Each Major Federal Program
We have audited City of Muskegon’s compliance with the types of compliance requirements described in the
OMB Compliance Supplement that could have a direct and material effect on each of City of Muskegon’s major
federal programs for the year ended June 30, 2020. City of Muskegon’s major federal programs are identified in
the Summary of Auditor’s Results section of the accompanying Schedule of Findings and Questioned Costs.

Management’s Responsibility
Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its
federal awards applicable to its federal programs.

Auditor’s Responsibility
Our responsibility is to express an opinion on compliance for each of City of Muskegon’s major federal programs
based on our audit of the types of compliance requirements referred to above. We conducted our audit of
compliance in accordance with auditing standards generally accepted in the United States of America; the
standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller
General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200,
Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform
Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain
reasonable assurance about whether noncompliance with the types of compliance requirements referred to above
that could have a direct and material effect on a major federal program occurred. An audit includes examining, on
a test basis, evidence about City of Muskegon’s compliance with those requirements and performing such other
procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal
program. However, our audit does not provide a legal determination of City of Muskegon’s compliance.




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                                                        150
BRICKLEY DELONG


City Commission
City of Muskegon
Page 2


Opinion on Each Major Federal Program
In our opinion, City of Muskegon complied, in all material respects, with the types of compliance requirements
referred to above that could have a direct and material effect on each of its major federal programs for the year
ended June 30, 2020.

Report on Internal Control Over Compliance
Management of City of Muskegon is responsible for establishing and maintaining effective internal control over
compliance with the types of compliance requirements referred to above. In planning and performing our audit of
compliance, we considered City of Muskegon’s internal control over compliance with the types of requirements
that could have a direct and material effect on each major federal program to determine the auditing procedures
that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major
federal program and to test and report on internal control over compliance in accordance with the Uniform
Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over
compliance. Accordingly, we do not express an opinion on the effectiveness of City of Muskegon’s internal
control over compliance.

A deficiency in internal control over compliance exists when the design or operation of a control over compliance
does not allow management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a
timely basis. A material weakness in internal control over compliance is a deficiency, or a combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility that material
noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and
corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a
combination of deficiencies, in internal control over compliance with a type of compliance requirement of a
federal program that is less severe than a material weakness in internal control over compliance, yet important
enough to merit attention by those charged with governance.

Our consideration of internal control over compliance was for the limited purpose described in the first paragraph
of this section and was not designed to identify all deficiencies in internal control over compliance that might be
material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over
compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not
been identified.

The purpose of this report on internal control over compliance is solely to describe the scope of our testing of
internal control over compliance and the results of that testing based on the requirements of the Uniform
Guidance. Accordingly, this report is not suitable for any other purpose.




Muskegon, Michigan
December 22, 2020




                                                         151
                                                                                   City of Muskegon
                                                         SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
                                                                   For the year ended June 30, 2020


                                                                                                 Accrue d                      Cash or                          Accrued
                                                                     Federal   Program or      (Unearne d)     Adjustme nts Payments In-     Amount of         (Unearne d)       Passed
      Federal Grantor/Pass-Through Grantor/                           CFDA       Award          Re venue           and      Kind Re ce ive d  Grant             Revenue        Through to
        Program or Cluster Title/Identifying Number                  Number     Amount         July 1, 2019     Transfers    (Cash Basis) Expenditure s       June 30, 2020   Subrecipe nts

      U.S. Department of Housing and Urban Development
      Direct programs
         Community Development Block Grants/Entitlement Grants        14.218
            B-14-MC-26-0026                                                    $    897,025    $           -   $        -     $        709    $        709    $          -    $          -
            B-15-MC-26-0026                                                         895,410                -            -              286             286               -               -
            B-16-MC-26-0026                                                         886,662              375            -            8,987           8,612               -               -
            B-17-MC-26-0026                                                         871,542           27,653            -           72,326          44,673               -               -
            B-18-MC-26-0026                                                         937,658          115,079            -          355,205         240,126               -               -
            B-19-MC-26-0026                                                         973,451                -            -          661,509         672,640          11,131               -
            Program Income                                                           18,455                -            -           18,455          18,455               -               -
                  Total Community Development Block Grants/
                   Entitlement Grants                                              5,480,203         143,107            -         1,117,477        985,501          11,131               -

        HOME Investment Partnerships Program                          14.239
          M-15-MC-26-0215                                                            268,639               -            -           13,889          13,889               -          13,889
          M-16-MC-26-0215                                                            264,277          31,459            -           39,641           8,182               -          39,641




152
          M-17-MC-26-0215                                                            249,537               -            -           63,335          63,335               -          37,434
          M-18-MC-26-0215                                                            327,681          63,481            -          158,835          95,354               -               -
          M-19-MC-26-0215                                                            334,818               -            -           11,455          18,872           7,417               -
          Program Income                                                               5,540               -            -            5,540           5,540               -               -
               Total HOME Investment Partnerships Program                          1,450,492          94,940            -          292,695         205,172           7,417          90,964

                   Total U.S. Department of Housing and Urban Development          6,930,695         238,047            -         1,410,172       1,190,673         18,548          90,964
                                                                                            City of Muskegon
                                                    SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
                                                                    For the year ended June 30, 2020


                                                                                                               Accrue d                      Cash or                      Accrue d
                                                                                  Fe deral    Program or      (Une arne d)   Adjustme nts Payments In-    Amount of      (Une arne d)     Passe d
      Fede ral Grantor/Pass-Through Grantor/                                       CFDA         Award          Reve nue          and      Kind Re ceive d  Grant          Re ve nue      Through to
        Program or Cluste r Title/Ide ntifying Number                             Numbe r      Amount         July 1, 2019    Transfe rs   (Cash Basis) Expenditure s   June 30, 2020   Subrecipe nts
      U.S. Department of Justice
      Direct programs
         Coronavirus Emergency Supplemental Funding Program                        16.034
            2020-VD-BX-1081 - COVID                                                           $     65,931    $          -   $        -    $         -   $     32,602   $      32,602   $           -

         Bulletproof Vest Partnership Grant                                        16.607
           2017 Grant                                                                                5,570               -            -            735            735               -               -
           2018 Grant                                                                                8,876               -            -            735          6,248           5,513               -
                                                                                                    14,446               -            -          1,470          6,983           5,513               -
         Edward Byrne Memorial Justice Assistance Grant                            16.738
          Program
           2018-DJ-BX-0619                                                                          37,971               -            -         23,030         34,537          11,507               -
           2019-DJ-BX-0927                                                                          35,195               -            -         20,000         20,463             463               -
                                                                                                    73,166               -            -         43,030         55,000          11,970               -
         Justice and Mental Health Collaboration Program                           16.745
            2019-MO-BX-0006                                                                        100,000               -            -         10,573         12,794           2,221               -

                  Total direct programs                                                            253,543               -            -         55,073        107,379          52,306               -

      Passed through Michigan Department of Health and Human Services




153
        STOP Violence Against Women Grant                                          16.588
           E20203703-00                                                                             73,100               -            -         16,540         21,648           5,108               -

      Passed through Ottawa County
        Edward Byrne Memorial Justice Assistance Grant                             16.738
          Program
           2017-MU-BX-0191                                                                          14,000          14,000            -         14,000              -               -               -
           2019-MU-BX-0061                                                                          15,000               -            -              -         15,000          15,000               -
                                                                                                    29,000          14,000            -         14,000         15,000          15,000               -

                     Total U.S. Department of Justice                                              355,643          14,000            -         85,613        144,027          72,414               -

      U.S. Department of Transportation, National Highway Safety Administration
      Passed through Michigan State Police
        National Priority Safety Programs                                          20.616
           Bicycle and Pedestrian Safety Initiative Grant                                           19,944               -            -          1,393          3,165           1,772               -

      U.S. Department of Health and Human Services
      Passed through Michigan Department of Health and
       Human Services
        Children's Health Insurance Program                                        93.767
           E20192797-001                                                                           880,005          36,712            -        244,907        208,195               -               -
           E20202333-00                                                                            880,005               -            -        374,150        458,729          84,579               -

                     Total Department of Health and Human Services                                1,760,010         36,712            -        619,057        666,924          84,579               -

                     TOTAL FEDERAL ASSISTANCE                                                 $ 9,066,292     $   288,759    $        -    $ 2,116,235   $ 2,004,789    $    177,313    $     90,964


      The accompanying notes are an integral part of this schedule.
                                                                                City of Muskegon
                                              NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
                                                             For the year ended June 30, 2020


      1.   The accompanying Schedule of Expenditures of Federal Awards (the “schedule”) includes the federal award activity of the City under programs of the federal
           government for the year ended June 30, 2020. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal
           Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule
           presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position or change in net position of the City.

      2.   Please see the financial statement footnotes for the significant accounting policies used in preparing this schedule. Expenditures are recognized following the cost
           principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. Negative amounts shown on
           the schedule represent adjustments or credits made in the normal course of business to amounts reported as expenditures in prior years. The City is not using the ten-
           percent de minimis indirect cost rate as allowed under the Uniform Guidance.

      3.   The following is a reconciliation of federal revenues as reported on the Statement of Revenues, Expenditures and Changes in Fund Balances of the City of Muskegon's
           financial statements for the year ended June 30, 2020 and federal expenditures per the Schedule of Expenditures of Federal Awards.

              Federal revenues per City of Muskegon financial statements
                General Fund                                                                                                                        $     147,191
                Major Street and Trunkline Fund                                                                                                         1,049,653
                Other governmental funds                                                                                                                1,833,603




154
                                                                                                                                                        3,030,447
              Plus program income                                                                                                                           23,995
              Less MDOT contracted projects as shown below                                                                                              (1,049,653)
              Federal expenditures per the Schedule of Expenditures of Federal Awards                                                               $ 2,004,789

      4.   The Michigan Department of Transportation (MDOT) requires that cities report all federal and state grants pertaining to their city. During the year ended June 30, 2020
           the federal aid received and expended by the City of Muskegon was $1,049,653 for contracted projects as shown below. Contracted projects are defined as projects
           performed by private contractors and paid for and administrated by MDOT (they are included in MDOT's single audit). Negotiated projects are projects where the City
           of Muskegon administers the grant and either performs the work or contracts it out.
                                                                                                                                    Federal
                                                                                                                                    CFDA             Revenue            Federal
                                                                                                                                    Number          Recognized        Expenditures
           U.S Department of Transportation, Federal Highway Administration (contracted projects)
           Passed through the Michigan Department of Transportation
             Highway Planning and Construction (Federal-Aid Highway Program)                                                          20.205
                Proj 1900(309) Contract 19-5041                                                                                                     $     799,853      $    799,853
                Proj 20A0(056) Contract 19-5543                                                                                                           249,800           249,800
                    Total U.S. Department of Transportation,
                      Federal Highway Administration (contracted projects)                                                                          $ 1,049,653        $ 1,049,653
                                               City of Muskegon
                          SCHEDULE OF FINDINGS AND QUESTIONED COSTS
                                   For the year ended June 30, 2020


SECTION I—SUMMARY OF AUDITOR’S RESULTS
A. Financial Statements
   1.    Type of report the auditor issued on whether the financial statements audited were prepared in accordance
         with GAAP: Unmodified
   2.    Internal control over financial reporting:
            Material weakness(es) identified?                                    X yes             no
            Significant deficiency(ies) identified?                                     yes     X none reported
   3.    Noncompliance material to financial statements noted?                           yes     X no
B. Federal Awards
   1.    Internal control over major federal programs:
            Material weakness(es) identified?                                           yes     X no
            Significant deficiency(ies) identified?                                     yes     X none reported
   2.   Type of auditor’s report issued on compliance for major federal programs: Unmodified
   3.    Any audit findings disclosed that are required to be reported in
         accordance with 2 CFR 200.516(a)?                                               yes     X no
   4.    Identification of major programs:
             CFDA Number(s)                            Name of Federal Program/Cluster
                                                       U.S. Department of Housing and Urban Development
             14.218                                      Community Development Block Grants/Entitlement
                                                          Grants
   5.   Dollar threshold used to distinguish between type A and type B programs: $750,000
   6.   Auditee qualified as low-risk auditee?                                           yes    X no




                                                         155
                                           City of Muskegon
                      SCHEDULE OF FINDINGS AND QUESTIONED COSTS
                               For the year ended June 30, 2020


SECTION II – FINANCIAL STATEMENT FINDINGS

  Finding 2020-001: MATERIAL WEAKNESS—Budgetary Process

  Criteria or Specific Requirement: The Budget Act, Public Act 621 of 1978, an amendment to Public Act 2 of
  1968, requires that all local units of government in Michigan adopt balanced budgets, establishes
  responsibilities and defines the procedures for the preparation, adoption, and maintenance of the budget, and
  requires certain information for the budget process. This includes regular review of the budget and
  amendment as soon as a deviation is apparent.

  Condition: We noted a number of significant budget variances including cost centers that had expenditures in
  excess of the amount budgeted.

  Cause: The City did not amend its budget after the first quarter due to issues surrounding the COVID-19
  pandemic and an oversight in approving proposed third quarter budget amendments.

  Effect: Expenditures exceeded amounts budgeted in a number of cost centers in violation of the Budget Act.

  Context: We noted a number of budget violations while performing budgetary analytical procedures and
  reviewing a draft of the financial statements.

  Repeat Finding: This is not a repeat finding.

  Recommendation: The City should review its budgetary policies and procedures to ensure a regular review of
  the budget is performed and budgets are amended as necessary to ensure compliance with the Budget Act. In
  addition to complying with the Budget Act, this is also a good governance policy to monitor spending and
  ensure that all purchases are properly budgeted and authorized.

  Views of Responsible Officials: The City agrees with the finding.


SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

  There were no findings reported in relation to major federal awards during the single audit for the year ended
  June 30, 2020.




                                                      156
CLIENT DOCUMENTS




       157
Affirmative Action
(231)724-6703
FAX (231)722-1214

Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129

Cemetery/Forestry
(231)724-6783
FAX (231)724-4188

City Manager
(231)724-6724
FAX (231)722-1214

Clerk                                SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
(231)724-6705
FAX (231)724-4178

Comm. & Neigh.
Services              December 22, 2020
(231)724-6717
FAX (231)726-2501

Computer Info.        U.S. Department of Housing and Urban Development
Technology
(231)724-4126
                      Washington, D.C.
FAX (231)722-4301

Engineering
                      City of Muskegon respectfully submits the following summary of the current status of prior audit
(231)724-6707         findings contained in the single audit report for the year ended June 30, 2019 dated December 2, 2019.
FAX (231)727-6904

Finance               SECTION II – FINANCIAL STATEMENT FINDINGS
(231)724-6713
FAX (231)726-2325
                      Finding 2019-001: MATERIAL WEAKNESS—Year-End Closing Procedures for Accounts
Fire Department       Payable
(231)724-6795
FAX (231)724-6985
                      Condition: Certain costs paid after the end of the year were not recorded as payables at year-end.
Human Resources
Co. (Civil Service)
(231)724-6442
                      Recommendation: The City should review its policies and procedures surrounding year-end payables
FAX (231)724-6840     and improve them to ensure that expenditures are recorded in the correct accounting period.
Income Tax
(231)724-6770         Current Status: This recommendation was implemented during the year ended June 30, 2020. No
FAX (231)724-6768     similar finding was reported during the single audit for the year ended June 30, 2020.
Mayor’s Office
(231)724-6701
FAX (231)722-1214     SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
Planning/Zoning
(231)724-6702         There were no findings reported in relation to major federal award programs during the single audit for
FAX (231)724-6790     the year ended June 30, 2019.
Police Department
(231)724-6750
FAX (231)722-5140     Sincerely,
Public Works
(231)724-4100
FAX (231)722-4188

SafeBuilt
(Inspections)
(231)724-6715         Elizabeth Lewis
FAX (231)728-4371     Finance Director
Treasurer
(231)724-6720
FAX (231)724-6768

Water Billing
(231)724-6718
FAX (231)724-6768

Water Filtration             City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106                                       http://www.shorelinecity.com
FAX (231)755-5290                                                 158
Affirmative Action
(231)724-6703
FAX (231)722-1214

Assessor/
Equalization Co.
(231)724-6386
FAX (231)724-1129

Cemetery/Forestry
(231)724-6783
FAX (231)724-4188

City Manager
(231)724-6724
FAX (231)722-1214

Clerk                                               CORRECTIVE ACTION PLAN
(231)724-6705
FAX (231)724-4178

Comm. & Neigh.
Services              December 22, 2020
(231)724-6717
FAX (231)726-2501

Computer Info.        U.S. Department of Housing and Urban Development
Technology
(231)724-4126
                      Washington, D.C.
FAX (231)722-4301

Engineering
(231)724-6707         City of Muskegon respectfully submits the following Corrective Action Plan for the year ended June
FAX (231)727-6904     30, 2020.
Finance
(231)724-6713         Name and address of independent public accounting firm:
FAX (231)726-2325
                               Brickley DeLong, P.C.
Fire Department
(231)724-6795                  P.O. Box 999
FAX (231)724-6985              Muskegon, MI 49443
Human Resources       Audit period: June 30, 2020
Co. (Civil Service)
(231)724-6442
FAX (231)724-6840     The findings from the Schedule of Findings and Questioned Costs for the year ended June 30, 2020 are
Income Tax            discussed below. The findings are numbered consistently with the numbers assigned in the schedule.
(231)724-6770
FAX (231)724-6768
                      SECTION II – FINANCIAL STATEMENT FINDINGS
Mayor’s Office
(231)724-6701         Finding 2020-001: MATERIAL WEAKNESS—Budgetary Process
FAX (231)722-1214

Planning/Zoning       Recommendation: The City should review its budgetary policies and procedures to ensure a regular
(231)724-6702
FAX (231)724-6790     review of the budget is performed and budgets are amended as necessary to ensure compliance with the
                      Budget Act. In addition to complying with the Budget Act, this is also a good governance policy to
Police Department
(231)724-6750         monitor spending and ensure that all purchases are properly budgeted and authorized.
FAX (231)722-5140

Public Works
(231)724-4100
FAX (231)722-4188
                      Action Taken: The City Finance department will ensure that a budget reforecast is submitted and
SafeBuilt             approved by the City Commission each quarter to ensure that all purchases are properly budgeted and
(Inspections)         authorized.
(231)724-6715
FAX (231)728-4371

Treasurer
(231)724-6720
FAX (231)724-6768     Responsible Person and Anticipated Completion Date: Finance Director by June 30, 2021.
Water Billing
(231)724-6718
FAX (231)724-6768

Water Filtration             City of Muskegon, 933 Terrace Street, P.O. Box 536, Muskegon, MI 49443-0536
(231)724-4106                                       http://www.shorelinecity.com
FAX (231)755-5290                                                159
U.S. Department of Housing and Urban Development
December 22, 2020
Page 2


SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

There were no findings reported in relation to major federal awards during the single audit for the year ended June
30, 2020


If the U.S. Department of Housing and Urban Development has questions regarding this plan, please call
Elizabeth Lewis at (231) 724-6917.

Sincerely,




Elizabeth Lewis
Finance Director




                                                        160

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