Annual Comprehensive Financial Reports ACFR-2021

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                         CITY OF MUSKEGON,
                              MICHIGAN




                         COMPREHENSIVE
                     ANNUAL FINANCIAL REPORT
                       FOR THE YEAR ENDED
                          JUNE 30, 2021




                             Prepared By

                    FINANCIAL SERVICES DIVISION




Kenneth D. Grant                             James Maurer
Finance Director                             Information Systems Director

Jessica Rabe                                 Hayden Nickell
Assistant Finance Director                   Management Assistant

Sarah Wilson
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 (Deficits) ........................................................................................................ 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 Net Position .............................................................................................................. 43
      Statement of Changes in Net Position ........................................................................................... 44
 Discretely Presented Component Units
   Statement of Net Position ................................................................................................................. 45
   Statement of Activities ...................................................................................................................... 46
   Notes to Financial Statements .............................................................................................................. 47
Required Supplementary Information
 Budgetary Comparison Schedule—General Fund ............................................................................... 86
 Budgetary Comparison Schedule—Major Street and Trunkline Fund ................................................ 91
 Schedule of Changes in Net Pension Liability and Related Ratios ...................................................... 92
 Pension System Schedule of Contributions ......................................................................................... 93
 Retiree Healthcare System Schedule of Changes in the
  Net OPEB Liability and Related Ratios ............................................................................................. 94
 Retiree Healthcare System Schedule of Contributions ........................................................................ 95
 Retiree Healthcare System Schedule of Investment Returns ............................................................... 96

                                                                                   1
                                                                     City of Muskegon

                                                                TABLE OF CONTENTS


Other Supplemental Information
 Other Governmental Funds
   Description of Other Governmental Funds ....................................................................................... 98
   Combining Balance Sheet ............................................................................................................... 100
   Combining Statement of Revenues, Expenditures and Changes in
      Fund Balances (Deficits) ............................................................................................................. 101
   Other Special Revenue Funds
      Combining Balance Sheet............................................................................................................ 102
      Combining Statement of Revenues, Expenditures and Changes in
        Fund Balances .......................................................................................................................... 103
      Budgetary Comparison Schedule—Other Special Revenue Funds ............................................. 104
   Other Capital Projects Funds
      Combining Balance Sheet............................................................................................................ 108
      Combining Statement of Revenues, Expenditures and Changes in
        Fund Balances (Deficits) .......................................................................................................... 109
 Internal Service Funds
   Description of Internal Service Funds ............................................................................................ 111
   Combining Statement of Net Position ............................................................................................ 112
   Combining Statement of Revenues, Expenses and
      Changes in Fund Net Position ..................................................................................................... 113
   Combining Statement of Cash Flows.............................................................................................. 114
 Fiduciary Funds
   Description of Fiduciary Funds....................................................................................................... 115
   Custodial Funds
      Combining Statement of Net Position ......................................................................................... 116
      Combining Statement of Changes in Net Position ...................................................................... 117
 Discretely Presented Component Units
   Description of Discretely Presented Component Units .................................................................. 119
   Combining Balance Sheet ............................................................................................................... 120
   Reconciliation of the Governmental Funds Balance Sheet
      to the Statement of Net Position .................................................................................................. 121
   Combining Statement of Revenues, Expenditures and Changes
      in Fund Balances (Deficits) ......................................................................................................... 122
   Reconciliation of the Governmental Funds Statement of Revenues,
      Expenditures and Changes in Fund Balances (Deficits) to the Statement
      of Activities ................................................................................................................................. 123
 Schedule of Indebtedness ................................................................................................................... 125




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                                                                   City of Muskegon

                                                              TABLE OF CONTENTS


STATISTICAL SECTION

Financial Trends
  Net Assets/Net Position by Component ............................................................................................. 130
  Changes in Net Assets/Net Position ................................................................................................... 131
  Fund Balances of Governmental Funds ............................................................................................. 133
  Changes in Fund Balances of Governmental Funds .......................................................................... 134
Revenue Capacity
  Governmental Activities Revenues by Source ................................................................................... 135
  Taxable, Assessed and Equalized and Estimated Actual Valuation of Property................................ 136
  Principal Property Taxpayers ............................................................................................................. 137
  Property Tax Rates – Direct and Overlapping Government Units ..................................................... 138
  Property Tax Levies and Collections ................................................................................................. 139
  Total Income Tax Collected and Number of Returns Filed ............................................................... 140
Debt Capacity
  Ratio of Outstanding Debt by Type ................................................................................................... 142
  Direct and Overlapping Debt ............................................................................................................. 143
  Legal Debt Margin Information ......................................................................................................... 144
  Revenue Bond Coverage .................................................................................................................... 145
Demographic and Economic Information
  Demographic and Economic Statistics ............................................................................................... 146
  Principal Employers ........................................................................................................................... 147
Operation Information
  Full-time Equivalent Government Employees ................................................................................... 148
  Operating Indicators by Function/Program ........................................................................................ 149
  Capital Asset Statistics by Function/Program .................................................................................... 150

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 .................................................................................................... 152
Independent Auditor’s Report on Compliance for Each Major
   Program and on Internal Control over Compliance Required by
   the Uniform Guidance .................................................................................................................... 154
Schedule of Expenditures of Federal Awards ..................................................................................... 156
Notes to Schedule of Expenditures of Federal Awards ....................................................................... 159
Schedule of Findings and Questioned Costs ....................................................................................... 160
Client Documents
   Summary Schedule of Prior Audit Findings ................................................................................... 162
   Corrective Action Plan ................................................................................................................... 163




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                   4
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 9, 2021
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 statements.
Technology
(231)724-4126         This report is published to fulfill that requirement for the fiscal year ended June 30,
FAX (231)722-4301     2021.
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 internal
Finance
(231)724-6713         control that it has established for this purpose. Because the cost of internal control
FAX (231)726-2325     should not exceed anticipated benefits, the objective is to provide reasonable, rather
Fire Department       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, 2021. 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 be
Planning/Zoning       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 and
Public Works
(231)724-4100         provides a full range of traditional municipal services. Policy-making and legislative
FAX (231)722-4188     authority are vested in the governing board (Commission) consisting of the mayor and
SafeBuilt             six commissioners. Two commissioners are elected at large and each of the four ward
(Inspections)
(231)724-6715
                      commissioners is elected by the voters of their respective wards. Commission
FAX (231)728-4371     members serve four-year terms, with the two at large members elected every four years
Treasurer             in odd years and the four ward commissioners elected every four years in even years.
(231)724-6720         The Mayor is also elected at-large for a four-year term. The Mayor and Commission
FAX (231)724-6768
                      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 2020 census population of
37,633, 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 has been the eastern terminus for the high-speed cross-lake ferry connecting
       Muskegon with Milwaukee, Wisconsin since 2004. The Lake Express service ferries
       100,000-plus passengers each season between the two cities.
      Muskegon has been home to the annual Miss Michigan pageant since 1950.
      Pere Marquette beach is nationally recognized as one of the best beaches in the nation,
       and welcomes hundreds of thousands of visitors.
      Muskegon is home to successful summertime festivals that attract more than 100,000
       visitors to the community annually. These include Taste of Muskegon, the Discover
       Muskegon Festival, Bike Time and Rebel Road, the Unity Christian Music Festival, the
       Shoreline Jazz Festival, the Great Lakes Surf Festival, the Burning Foot Beer Festival,
       the Muskegon Polish Festival, and the Michigan Irish Music Festival.




                                                 6
      Muskegon is the cultural hub for west Michigan with numerous museums and live
       performance venues: The Muskegon Museum of Art has one of the largest premier art
       collections in the Midwest, while the Lakeshore Museum Center provides insight into the
       area’s storied past. The Lakeshore Museum Center’s attractions include the Muskegon
       Heritage Museum, the former residences of lumber barons Charles H. Hackley and
       Thomas Hume, the Fire Barn Museum, and the Scolnik Depression Era House.
       Frauenthal Center for the Performing Arts operates throughout the year, hosting the West
       Michigan Symphony Orchestra and the Muskegon Civic Theater.
      Muskegon’s downtown is home to dozens of monumental public art pieces, and new
       pieces are acquired each year. In 2021, local philanthropist Patrick O’Leary provided a
       $100,000 fund to provide for the maintenance of the City’s public art collection.
      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. While many of 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 2022.

The City fully recognizes the difficulties it faces as an older urban community. Thus, we have
attempted to position ourselves as a leader in fiscal stability and sustainability, while making key
investments in areas that grow the city’s financial resources over the long-term.




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Long-term financial planning and major initiatives
Unassigned fund balance in the General Fund at year end was 30.8% 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, while
accounting for identifiable factors, recent trends, and management’s judgment as to future
developments.

Among the City's major initiatives and accomplishments in fiscal year 2020-21 were the
following:
      Downtown Muskegon experienced the commencement and/or completion of a number of
       development projects. The 1021 Jefferson project is complete and now provides low-
       and moderate-income workforce housing adjacent to city hall in a mixed-use setting; the
       Leonard Building mixed use building is nearing completion, and the five story structure is
       set to open in January 2022; Samaritas broke ground on a 50+ unit senior affordable
       apartment building, and they expect to open in 2022.
      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. An agreement has been reached to allow the City to
       acquire the site and convert much of the corridor into pedestrian and bike trails.
      The City completed construction on the $24 Million convention center. The center is
       connected to the both the Delta Marriott hotel and the Mercy Health Arena. A naming-
       rights partnership was identified and implemented, resulting in the naming of the facility
       the VanDyk Mortgage Convention Center, and generating $150,000 in fees.
      Construction of Midtown Square Phase 2, which consists of 10 townhouses and 6 single
       family homes in the Nelson neighborhood, was started in 2019. The City sold the last
       house in October 2021. In total, nearly 100 new homes have been constructed in the City
       over the past three years.
      Developer broke ground on the Hartshorn Marina Village Development, the Adelaide
       Point Development, and the Viridian Shores Development. These three waterfront
       developments will feature more than $200 Million in investments and create hundreds of
       new housing opportunities.



                                                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, 2019. This was the 33rd consecutive year that the City has received this award. The City
has submitted the June 30, 2020 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,




Franklin Peterson                              Kenneth D. Grant
City Manager                                   Finance Director




                                              10
11
                                      Organizational Structure 2020-21
                                                          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, 2021




                                          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. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Kenneth D. Grant




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                   14
FINANCIAL SECTION




        15
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                                    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, 2021, 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, 2021, 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 32 and 86 through 96 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 9, 2021




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                   20
2021 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, 2021. 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 $102,344,375 as of June 30, 2021. The City has a deficit in unrestricted net
position of $29,938,870. 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 increased by $12,905,583 during the year ended June 30, 2021.

The City’s governmental funds reported combined ending fund balance of $16,292,528, a decrease of
$5,279,036 (24%) from the prior year.

The City’s General Fund reported a total fund balance of $11,197,840, an increase of $3,295,985 from
the prior year balance of $7,901,855.

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 net
    position and a statement of changes in 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
    four 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), which is comprised of six designated brownfield areas.
    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 $102,344,375 as of June 30, 2021. This is an increase of
$12,905,583 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
                                                         6/30/2021 6/30/2020         6/30/2021 6/30/2020       6/30/2021 6/30/2020         Change


Current and other assets                                   $40,446      $32,662        $8,568     $4,899        $49,014      $37,561         30.49%
Capital assets                                             102,697       88,046        63,314     51,152        166,011      139,198         19.26%
Total Assets                                               143,143      120,708        71,882     56,051        215,025      176,759         21.65%
Deferred outflow s of resources                               2,006          4,278        139            297      2,145           4,575      -53.11%
Total Assets and Deferred Outflow s of Resources           145,149      124,986        72,021     56,348        217,170      181,334         19.76%


Long-term liabilities                                       71,213       67,333        10,793       8,880        82,006       76,213           7.60%
Other liabilities                                           22,650       10,208         6,804       4,624        29,454       14,832         98.58%
Total Liabilities                                           93,863       77,541        17,597     13,504        111,460       91,045         22.42%
Deferred inflow s of resources                                3,147           795         219            55       3,366            850      296.00%
Total Liabilities and Deferred Outflow s of Resources       97,010       78,336        17,816     13,559        114,826       91,895         24.95%


Net Position                                                                                                          `
    Net investment in capital assets                        72,201       70,275        54,257     44,543        126,458      114,818         10.14%
    Restricted                                                5,003          4,460        822            599      5,825           5,059      15.14%
    Unrestricted                                            -29,065     -28,085          -874      -2,353       -29,939       -30,438         -1.64%
Total Net Position                                         $48,139      $46,650       $54,205    $42,789       $102,344      $89,439         14.43%



The bulk of the City’s net position $126,457,976 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 $5,825,269 of the City’s net position are legally restricted as to use. The City has a deficit in
unrestricted net position of $29,938,870. 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
improved $499,707 during the year.




                                                                   24
Changes in net position. The City’s total revenues were $77,714,171 for the year ended June 30, 2021.
This represents a 27.3% increase over total revenues collected during the prior fiscal year.
Approximately 33.6% of the City’s revenue stream came from charges to users of specific services such
as water or sewer. Another 18.3% came from grants from the state and federal governments and 23.7%
was from local property and income taxes. The remainder was comprised of state revenues and other
sources such as franchise fees and investment income.

The total cost of all City programs and services for the year ended June 30, 2021 was $64,843,588. This
represents a 12.7% decrease from reported expenses for the last fiscal year ended June 30, 2020. 73.4%
of the City’s expenses were for governmental activities such as police and fire protection, streets, parks,
and general administration. The remaining 26.6% 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 increased $1,489,017 and the net position for
business-type activities increased by $11,416,566. For governmental activities, most of these changes
are related to the changes in net pension liability and net other postemployment benefits liability. For
business-type activities, the changes represent forgiveness of State Revolving Fund debt




                                                    25
                                          Changes in City’s Net Position
                                            (In thousands of dollars)
                                                   Governmental             Business-Type
                                                      Activities               Activities                    Total           Percentage
                                              6/30/2021 6/30/2020        6/30/2021 6/30/2020      6/30/2021 6/30/2020         Change


Program revenues


 Charges for services                            $7,951      $7,980        $18,229   $16,789       $26,180      $24,769           5.70%
 Operating grants and contributions               9,839        7,398             -          94       9,839           7,492      31.33%
 Capital grants and contributions                 2,901        4,064        10,354            -     13,255           4,064     226.16%
General revenues
 Property taxes                                   8,813        8,467             -            -      8,813           8,467        4.09%
 Income taxes                                     9,609        9,437             -            -      9,609           9,437        1.82%
 State shared revenues                            6,427        5,276             -            -      6,427           5,276      21.82%
 All other                                        3,580        1,508           10            9       3,590           1,517     136.65%
Total revenues                                   49,120      44,130         28,593     16,892       77,713       61,022         27.35%


Governmental activities expenses
 Public representation                            1,604        1,501             -            -      1,604           1,501        6.86%
 Administrative services                            826            962           -            -        826            962       -14.14%
 Financial services                               5,040        3,007             -            -      5,040           3,007      67.61%
 Public safety                                   18,249      25,982              -            -     18,249       25,982         -29.76%
 Public w orks                                    4,026        4,582             -            -      4,026           4,582      -12.13%
 Highw ays, streets and bridges                   6,863        7,593             -            -      6,863           7,593       -9.61%
 Community and economic development               5,000        5,359             -            -      5,000           5,359       -6.70%
 Culture and recreation                           4,507        5,270             -            -      4,507           5,270      -14.48%
 General administration                             404            390           -            -        404            390         3.59%
 Interest on long-term debt                        1112            732           -            -      1,112            732       51.91%
Business-type activities expenses
 Sew er                                                -             -       8,085      9,902        8,085           9,902      -18.35%
 Water                                                 -             -       8,612      8,438        8,612           8,438        2.06%
 Marina and launch ramp                                -             -        515           529        515            529        -2.65%
Total expenses                                   47,631      55,378         17,212     18,869       64,843       74,247         -12.67%


Change in net position before transfers           1,489    (11,248)         11,381    (1,977)       12,870      (13,225)       -197.32%

Transfers                                              -             -         35             -         35               -             -
Change in net position                            1,489    (11,248)         11,416    (1,977)       12,905      (13,225)       -197.58%


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

Net position at end of year                    $48,139      $46,650        $54,205   $42,789      $102,344      $89,439         14.43%




                                                 26
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, 2021 was
     $47,613,260.
•    The net cost that City taxpayers paid for these activities through local property taxes and income
     taxes was $18,422,373, or about 38% 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
                                       6/30/2021    6/30/2020      % Change      6/30/2021    6/30/2020     % Change
Governmental activities
 Public safety                            $18,249      $25,982        -29.76%      $14,257      $23,528       -39.40%
 Public w orks                              4,026         4,581       -12.12%         3,131        3,746      -16.42%
 Highw ays, streets and bridges             6,863         7,593        -9.61%           864         897         -3.68%
 Community and economic development         5,000         5,359        -6.70%          (78)         (38)     105.26%
 Culture and recreation                     4,507         5,270       -14.48%         2,102        2,853      -26.32%
 All other                                  8,986         6,593       36.30%          6,664        4,950        34.63%
Total governmental activities             $47,631      $55,378        -13.99%      $26,940      $35,936       -25.03%



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, 2021, the City’s total business-type activities realized an
overall increase in net position of $11,416,566.

Sewer Fund net position increased $10,849,375 primarily as result of forgiveness of debt. The Water
Fund saw a net position increase of $1,052,490. Marina and Launch Ramp Fund net position decreased
$326,924.




                                                       27
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, 2021 were the General Fund, the Major
Street and Trunkline Fund, the State Grants 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 considering 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
 Year Ended      Unassigned
                Fund Balance         Change               Revenues          Prior Year Revenues
                                                                            (Policy Target=13%)

  6/30/2021         $9,121,955         54.06%                $29,653,448           30.76%
  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        19.10%                 25,821,114           23.81%

For the year ended June 30, 2021, General Fund revenues were $1,571,480 higher than the final
amended budget estimate due to higher than anticipated income taxes and revenue sharing.
General Fund expenditures were $903,355 lower than projected in the final amended budget.
Major Street and Trunkline, State Grant, 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, 2021, the fund balance of the Major Street and Trunkline Fund increased $156,869.
The State Grants Fund received $11,440,947 in funding from the American Rescue Plan Act (ARPA)
which will be expended over the next few years.
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. The Convention Center Construction
Fund has a fund deficit of $1,892,438 as of June 30, 2021.




                                                   28
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of June 30, 2021, the City had invested $166,011,106 in a variety of capital assets, including land,
streets, equipment, buildings, water and sewer lines, and vehicles. This is an increase of $26,813,518
from capital assets reported as of June 30, 2020. 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, 2021, the City had $42,109,969 in bonds and other                        powers) were upgraded by Standard &
long-term obligations outstanding. This represents a 20.32%                          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
improvements to the City central fire station and water and
                                                                                     “AA-“ in 2021. The City’s Water System
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
                                    6/30/2021   6/30/2020          6/30/2021     6/30/2020        6/30/2021       6/30/2020        Change
 Due within one year                  $1,526       $1,340             $1,312           $803             $2,838           $2,143      32.43%

 Due in more than one year            31,257       26,793              8,015          6,061             39,272           32,854      19.53%

 Total bonds & other obligations     $32,783      $28,133             $9,327         $6,864            $42,110      $34,997          20.32%

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 $1,352,248 at year-end
as shown in the table below. This represents a decrease of 23.18% 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)

                                                            Local Development
                                                                                                       Total                      Percentage
                                                             Finance Authority
                                                         6/30/2021    6/30/2020           6/30/2021            6/30/2020             Change
 Due within one year                                          $245         $395                $245                 $395            -37.97%
 Due in more than one year                                    1,107        1,365               1,107               1,365            -18.90%
 Total bonds & other obligations                             $1,352      $1,760               $1,352              $1,760
                                                                                                                                    -23.18%



                                                              29
ECONOMIC FACTORS AND NEXT YEAR’S BUDGETS AND RATES
The City’s fiscal year 2021-22 capital budget anticipates spending $20,734,537 for capital projects,
consisting of street improvements, water and sewer system improvements, scheduled equipment
replacements, the rehab of houses in a city neighborhood and the replacement of fire department
rescue equipment.

From an operating standpoint, the City’s 2021-22 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 approximately 257.5.
•   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 1.3% from $9,137,714 for the year ended June 30, 2020 to $9,256,826
for the year ended June 30, 2021. For 2021-22, the City has estimated income tax revenue to be
$9,100,000.



                          Year         City Income Tax Revenues     Percent Change
                       6/30/2021                         $9,256,826      1.3%
                       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%




                                                     30
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 2021-22, the City tax levy will be at 10 mills for general operations and 3 mills for sanitation service.
We project that $7,705,754 in total property tax revenue will be collected during fiscal year 2021-22.

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 13% 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

                     6/30/2021                  $4,733,888              14.9%
                     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%


For 2021-22, the City projects $4,399,008 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:

                                             Street Revenues from    Percent
                                   Year              State           Change

                                 6/30/2021             $5,961,524     9.4%
                                 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%




                                                      31
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 2021-22 up
to $5,624,629.

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 $17,581,112 during the year ended June 30, 2021. 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, 2021 water rates increased by 4%. Water rates will
increase by 4% in each of the next two 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).




                                                     32
FINANCIAL STATEMENTS




         33
                                                                           City of Muskegon
                                                                      STATEMENT OF NET POSITION
                                                                             June 30, 2021


                                                                                      Governmental        Business-type                         Component
                                                                                        Activities          Activities          Total             Units
ASSETS
Current assets
  Cash and investments                                                                $    30,258,368     $    2,290,366    $     32,548,734    $     323,582
  Assets managed by others                                                                  1,490,799                  -           1,490,799                -
  Receivables                                                                               4,331,651          3,462,792           7,794,443                -
  Due from other governmental units                                                         2,277,455            942,769           3,220,224                -
  Internal balances                                                                          (674,327)           674,327                   -                -
  Due from component units                                                                    652,132                  -             652,132                -
  Inventories                                                                                   7,318            235,287             242,605                -
  Prepaid items                                                                               555,994            144,657             700,651                -
         Total current assets                                                              38,899,390          7,750,198          46,649,588          323,582
Noncurrent assets
  Restricted cash and investments                                                                    -          818,000             818,000                  -
  Advances to component units                                                                  593,307                -             593,307                  -
  Notes receivable, less amounts due within one year                                           953,966                -             953,966                  -
  Capital assets, net
     Nondepreciable                                                                        43,354,368         12,054,782          55,409,150          400,000
     Depreciable                                                                           59,342,824         51,259,132         110,601,956          762,529
         Total noncurrent assets                                                          104,244,465         64,131,914         168,376,379        1,162,529
            Total assets                                                                  143,143,855         71,882,112         215,025,967        1,486,111
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                                          1,356,700          94,316            1,451,016                 -
  Related to other postemployment benefits                                                      648,880          45,110              693,990                 -
            Total deferred outflows of resources                                              2,005,580         139,426            2,145,006                 -
                Total assets and deferred outflows of resources                           145,149,435         72,021,538         217,170,973        1,486,111
LIABILITIES
Current liabilities
  Accounts payable and accrued liabilities                                                  5,585,663          4,538,040          10,123,703          101,053
  Due to other governmental units                                                              26,549            841,429             867,978                -
  Due to primary government                                                                         -                  -                   -          652,132
  Short-term draw note                                                                      1,108,007                  -           1,108,007                -
  Unearned revenues - unused Farmers Market tokens                                            150,187                  -             150,187                -
  Unearned revenues - expenditure-driven grants                                            14,216,861                  -          14,216,861                -
  Unearned revenues - prepaid events                                                           36,687                  -              36,687                -
  Unearned revenues - prepaid fees                                                                  -            112,994             112,994                -
  Bonds and other obligations, due within one year                                          1,526,100          1,311,750           2,837,850          245,000
         Total current liabilities                                                         22,650,054          6,804,213          29,454,267          998,185
Noncurrent liabilities
  Advances from primary government                                                                  -                  -                   -          593,307
  Bonds and other obligations, less amounts due within one year                            31,256,965          8,015,154          39,272,119        1,107,248
  Net pension liability                                                                    30,755,115          2,138,057          32,893,172                -
  Net other postemployment benefits liability                                               9,200,956            639,639           9,840,595                -
         Total noncurrent liabilities                                                      71,213,036         10,792,850          82,005,886        1,700,555
                Total liabilities                                                          93,863,090         17,597,063         111,460,153        2,698,740
DEFERRED INFLOWS OF RESOURCES
  Related to pension                                                                          2,544,270         176,874            2,721,144                 -
  Related to other postemployment benefits                                                      603,356          41,945              645,301                 -
            Total deferred inflows of resources                                               3,147,626         218,819            3,366,445                 -
                Total liabilities and deferred inflows of resources                        97,010,716         17,815,882         114,826,598        2,698,740
NET POSITION
  Net investment in capital assets                                                         72,200,515         54,257,461         126,457,976         (189,719)
  Restricted
    Highways, streets and bridges                                                             2,483,456               -            2,483,456                 -
    Debt service                                                                                      -         822,000              822,000                 -
    Mercy Health Arena                                                                           54,928               -               54,928                 -
    Law enforcement                                                                              22,229               -               22,229                 -
    Business improvement districts                                                              136,968               -              136,968                 -
    Perpetual care
        Expendable                                                                            597,217                  -             597,217                 -
        Non-expendable                                                                      1,652,408                  -           1,652,408                 -
    Other purposes                                                                             56,063                  -              56,063                 -
  Unrestricted                                                                            (29,065,065)          (873,805)        (29,938,870)       (1,022,910)
                Total net position                                                    $   48,138,719      $ 54,205,656      $   102,344,375     $ (1,212,629)




The accompanying notes are an integral part of this statement.

                                                                                 34
                                                                                                                City of Muskegon
                                                                                                          STATEMENT OF ACTIVITIES
                                                                                                           For the year ended June 30, 2021


                                                                                                                                                                 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                              $     1,603,410   $      280,395          $           -         $              -   $    (1,323,015)   $            -    $    (1,323,015)   $            -
           Administrative services                                             826,344          504,281                      -                  433,580           111,517                 -            111,517                 -
           Financial services                                                5,039,787          988,501                 50,000                        -        (4,001,286)                -         (4,001,286)                -
           Public safety                                                    18,249,379        2,207,996              1,783,920                        -       (14,257,463)                -        (14,257,463)                -
           Public works                                                      4,025,982          828,098                 66,965                        -        (3,130,919)                -         (3,130,919)                -
           Highways, streets and bridges                                     6,862,862          187,478              5,797,955                   13,110          (864,319)                -           (864,319)                -
           Community and economic development                                4,999,907          912,247              2,058,974                2,106,828            78,142                 -             78,142                 -
           Culture and recreation                                            4,507,120        1,976,029                 81,431                  347,658        (2,102,002)                -         (2,102,002)                -
           General administration                                              404,303           65,592                      -                        -          (338,711)                -           (338,711)                -
           Interest on long-term debt                                        1,112,166                -                      -                        -        (1,112,166)                -         (1,112,166)                -
              Total governmental activities                                 47,631,260        7,950,617              9,839,245                2,901,176       (26,940,222)                -        (26,940,222)                -
        Business-type activities
          Sewer                                                              8,084,729        9,298,156                      -                9,568,000                 -        10,781,427        10,781,427                  -
          Water                                                              8,612,574        8,752,570                      -                  780,250                 -           920,246           920,246                  -
          Marina and launch ramp                                               515,025          178,706                      -                    6,294                 -          (330,025)         (330,025)                 -
              Total business-type activities                                17,212,328       18,229,432                      -             10,354,544                   -        11,371,648        11,371,648                  -




35
                  Total primary government                             $ 64,843,588      $ 26,180,049            $ 9,839,245           $ 13,255,720           (26,940,222)       11,371,648        (15,568,574)                -
     Component units
       Local Development Finance Authority - SmartZone                 $       206,969   $            -          $          -          $       350,000                  -                 -                  -           143,031
       Downtown Development Authority                                          580,098                -               168,325                        -                  -                 -                  -          (411,773)
       Tax Increment Finance Authority                                          50,000                -                     -                        -                  -                 -                  -           (50,000)
       Brownfield Redevelopment Authorities                                  1,256,102                -                     -                        -                  -                 -                  -        (1,256,102)
                  Total component units                                $ 2,093,169       $            -          $   168,325           $      350,000                   -                 -                  -        (1,574,844)
     General revenues
        Property taxes                                                                                                                                         8,813,155                 -          8,813,155         1,393,555
        Income taxes                                                                                                                                           9,609,218                 -          9,609,218                 -
        Cable franchise agreement                                                                                                                                374,219                 -            374,219                 -
        Grants and contributions not restricted to specific programs                                                                                           6,427,138                 -          6,427,138            29,359
        Unrestricted investment earnings                                                                                                                         229,177             9,918            239,095             1,760
        Miscellaneous                                                                                                                                            370,268                 -            370,268                 -
        Gain on sale of capital asset                                                                                                                          2,641,064                 -          2,641,064               304
     Transfers                                                                                                                                                   (35,000)           35,000                  -                 -
                  Total general revenues                                                                                                                      28,429,239            44,918         28,474,157         1,424,978
                     Change in net position                                                                                                                     1,489,017        11,416,566        12,905,583          (149,866)
     Net position at beginning of year                                                                                                                        46,649,702         42,789,090        89,438,792         (1,062,763)
     Net position at end of year                                                                                                                          $ 48,138,719       $ 54,205,656      $ 102,344,375      $ (1,212,629)



     The accompanying notes are an integral part of this statement.
                                                                              City of Muskegon
                                                                              BALANCE SHEET
                                                                              Governmental Funds
                                                                                June 30, 2021


                                                                                                                     Convention
                                                                                   Major Street                        Center             Other             Total
                                                                    General       and Trunkline     State Grants     Construction      Governmental      Governmental
                                                                     Fund             Fund              Fund            Fund              Funds             Funds
ASSETS
  Cash and investments                                          $     9,992,054   $    2,359,634    $ 12,990,641     $     162,646     $    2,943,588    $   28,448,563
  Assets managed by others                                                    -                -               -                 -          1,490,800         1,490,800
  Receivables
     Accounts and loans (net of allowance for uncollectibles)           231,419          38,019            18,859                -          1,749,722         2,038,019
     Property taxes                                                      58,670               -                 -                -                  -            58,670
     Income taxes                                                     1,578,153               -                 -                -                  -         1,578,153
  Due from other governmental units                                     904,628         840,915            49,628           12,036            470,248         2,277,455
  Due from other funds                                                1,050,377               -                 -                -                  -         1,050,377
  Due from component units                                              652,132               -                 -                -                  -           652,132
  Advances to component units                                                 -               -                 -                -            202,227           202,227
  Prepaid items                                                         259,920          30,716                 -                -             35,876           326,512
            Total assets                                        $ 14,727,353      $   3,269,284     $ 13,059,128     $    174,682      $   6,892,461     $ 38,122,908

LIABILITIES
  Accounts payable                                              $     2,250,444   $     844,089     $       32,562   $   1,067,120     $      235,717    $    4,429,932
  Accrued liabilities                                                   524,363          13,579                  -               -             46,580           584,522
  Due to other governmental units                                        20,519           3,563                  -               -              2,466            26,548
  Due to other funds                                                          -               -                  -               -            627,636           627,636
  Short-term draw note                                                        -               -                  -               -          1,108,007         1,108,007
  Unearned revenues - unused Farmers Market tokens                            -               -                  -               -            150,187           150,187
  Unearned revenues - expenditure-driven grants                          84,187               -         13,025,018       1,000,000            107,656        14,216,861
  Unearned revenues - prepaid events                                          -               -                  -               -             36,687            36,687
         Total liabilities                                            2,879,513         861,231         13,057,580       2,067,120          2,314,936        21,180,380

DEFERRED INFLOWS OF RESOURCES
  Unavailable revenues - income taxes                                  650,000                  -                -                -                 -          650,000

FUND BALANCES (DEFICITS)
  Nonspendable
    Prepaid items                                                      259,920             30,716                -                -            35,876           326,512
    Perpetual care                                                      10,000                  -                -                -         1,642,408         1,652,408
  Restricted
    Highways, streets and bridges                                        66,965        2,377,337                -                 -         1,181,198         3,625,500
    Mercy Health Arena                                                        -                -                -                 -            26,490            26,490
    Law enforcement                                                           -                -                -                 -            22,229            22,229
    Business improvement districts                                            -                -                -                 -           136,968           136,968
    Perpetual care                                                            -                -                -                 -           597,217           597,217
    Other purposes                                                            -                -                -                 -            56,063            56,063
  Committed for social equity program                                    39,000                -                -                 -                 -            39,000
  Assigned for capital projects and public improvements               1,700,000                -            1,548                 -         1,906,042         3,607,590
  Unassigned                                                          9,121,955                -                -        (1,892,438)       (1,026,966)        6,202,551
         Total fund balances (deficits)                              11,197,840        2,408,053            1,548        (1,892,438)        4,577,525        16,292,528
            Total liabilities, deferred inflows of
             resources and fund balances (deficits)             $ 14,727,353      $   3,269,284     $ 13,059,128     $    174,682      $   6,892,461     $ 38,122,908




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, 2021


Total fund balance—governmental funds                                                                             $   16,292,528

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                                                                    $ 174,623,761
      Accumulated depreciation                                                                    (74,625,986)        99,997,775

   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                                                                                                      650,000

   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                                                                        (251,700)
      Bonds and notes payable                                                                      (30,496,677)
      Compensated absences                                                                          (2,125,762)
      Net pension liability and related deferred outflows/inflows of resources                     (30,576,152)
      Net other post employment benefits liability and related
       outflows/inflows of resources                                                                (8,763,755)       (72,214,046)

   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                                                    4,125,149
       Internal balances representing the cumulative difference between
        actual costs and amounts charged to business-type activities                                 (712,687)         3,412,462

             Net position of governmental activities                                                              $ 48,138,719




The accompanying notes are an integral part of this statement.

                                                                    37
                                                                   City of Muskegon
        STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
                                        Governmental Funds
                                  For the year ended June 30, 2021


                                                                                                    Convention
                                                                    Major Street                      Center              Other             Total
                                                    General        and Trunkline    State Grants    Construction       Governmental      Governmental
                                                     Fund              Fund             Fund           Fund               Funds             Funds
REVENUES
  Taxes                                         $   17,700,658      $           -   $           -   $             -    $            -    $   17,700,658
  Licenses and permits                               2,246,375                  -               -                 -                 -         2,246,375
  Intergovernmental revenues
     Federal                                         1,667,916                  -               -                -         1,811,560          3,479,476
     State                                           5,752,393          4,573,237       1,518,800                -         1,391,287         13,235,717
     Local                                              50,000                  -               -          790,749           575,151          1,415,900
  Charges for services                               3,672,008             11,521               -                -         1,214,796          4,898,325
  Fines and forfeitures                                584,471                  -               -                -            10,342            594,813
  Investment earnings and rental income                198,408             10,039             373            6,509            33,036            248,365
  Income from assets managed by others                       -                  -               -                -           229,194            229,194
  Other                                              1,184,254             27,003               -          202,500         1,012,769          2,426,526
         Total revenues                             33,056,483          4,621,800       1,519,173          999,758         6,278,135         46,475,349

EXPENDITURES
  Current
    Public representation services                   1,556,327                  -               -                 -                -          1,556,327
    Administrative services                            783,403                  -               -                 -                -            783,403
    Financial services                               4,810,339                  -               -                 -                -          4,810,339
    Public safety                                   14,641,568                  -               -                 -                -         14,641,568
    Public works                                     3,442,980                  -               -                 -          161,742          3,604,722
    Highways, streets and bridges                            -          4,234,631               -                 -        1,336,973          5,571,604
    Community and economic development                 838,868                  -               -                 -                -            838,868
    Culture and recreation                           1,949,114                  -               -                 -        1,886,678          3,835,792
    Other governmental functions                       380,232                  -               -                 -                -            380,232
  Debt service
    Principal                                        2,285,300           220,000                -           175,000          133,504          2,813,804
    Interest and fees                                  250,991            10,300                -           615,749           66,176            943,216
    Bond issuance costs                                140,750                 -                -                 -                -            140,750
  Capital outlay                                     4,358,050                 -        1,518,801        10,473,442        4,884,443         21,234,736
         Total expenditures                         35,437,922          4,464,931       1,518,801        11,264,191        8,469,516         61,155,361

Excess of revenues over (under) expenditures         (2,381,439)         156,869             372        (10,264,433)       (2,191,381)       (14,680,012)

OTHER FINANCING SOURCES (USES)
  Proceeds from sale of capital assets                        -                 -               -                 -        2,908,552           2,908,552
  Long-term debt issued                               4,325,000                 -               -                 -                -           4,325,000
  Refunding bonds issued                              2,055,000                 -               -                 -                -           2,055,000
  Premium on bonds issued                               772,424                 -               -                 -                -             772,424
  Transfers in                                                -                 -               -                 -          895,000             895,000
  Transfers out                                      (1,475,000)                -               -           (40,000)         (40,000)         (1,555,000)
         Total other financing sources (uses)        5,677,424                  -               -           (40,000)       3,763,552           9,400,976

Net change in fund balances (deficits)               3,295,985           156,869             372        (10,304,433)       1,572,171          (5,279,036)
Fund balances at beginning of year                   7,901,855          2,251,184          1,176          8,411,995        3,005,354         21,571,564
Fund balances (deficits) at end of year         $ 11,197,840        $ 2,408,053     $      1,548    $   (1,892,438)    $ 4,577,525       $ 16,292,528




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, 2021


Net change in fund balances—total governmental funds                                                        $   (5,279,036)

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                                                                 $ (4,737,533)
       Capital outlay                                                                         19,695,829        14,958,296

   Revenues reported in the Statement of Activities that do not provide current
   financial resources are not reported as revenues in the governmental funds.
       Income taxes                                                                               50,000
       Special assessments                                                                        (7,520)          42,480

   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                                                              (6,380,000)
      Premium on long-term debt issued                                                          (772,424)
      Repayment of principal on long-term debt                                                 2,813,804        (4,338,620)
       Changes in accrual of interest and amortization of premiums and discounts
         Change in accrued interest payable                                                      (53,700)
         Amortization of premiums and discounts                                                   25,500           (28,200)

   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                                                           (302,519)
       Change in net pension liability and related deferred outflows/inflows of resources     (4,060,345)
       Change in net other post employment benefits liability
        and related deferred outflows/inflows of resources                                       192,483        (4,170,381)

   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                                      146,103
       Change in internal balances representing the current year difference
        between actual costs and amounts charged to business-type activities                     158,375          304,478
              Change in net position of governmental activities                                             $   1,489,017




The accompanying notes are an integral part of this statement.

                                                                  39
                                                                             City of Muskegon
                                                                       STATEMENT OF NET POSITION
                                                                             Proprietary Funds
                                                                               June 30, 2021


                                                                                                                                                         Governmental
                                                                                                                                                          Activitie s -
                                                                                        Business-type Activitie s - Ente rprise Funds                      Internal
                                                                                                                  Marina and                               Service
                                                                                  Sewer          Water           Launch Ramp          Total                 Funds
ASSETS
Current assets
  Cash and investments                                                        $             -    $     2,290,366    $           -     $     2,290,366    $    1,809,803
  Receivables                                                                       1,838,310          1,586,042           38,440           3,462,792         1,610,774
  Due from other governmental units                                                   729,884            212,885                -             942,769                 -
  Inventories                                                                          30,234            205,053                -             235,287             7,318
  Prepaid items                                                                        59,943             82,257            2,457             144,657           229,482
          Total current assets                                                      2,658,371          4,376,603           40,897           7,075,871         3,657,377
Noncurrent assets
  Restricted cash and investments                                                    101,000            717,000                  -           818,000                 -
  Advances to component units                                                              -                  -                  -                 -           391,080
  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                                           30,903,618         74,043,369         2,322,488        107,269,475         1,668,215
     Machinery and equipment                                                          157,622          3,101,790            60,620          3,320,032         9,750,170
     Construction in progress                                                       5,843,401          5,999,917            69,214         11,912,532                 -
        Less accumulated depreciation                                             (12,050,218)       (45,779,289)       (3,452,781)       (61,282,288)       (9,085,683)
          Net capital assets                                                      24,870,611         37,532,235           911,068          63,313,914         2,699,417
          Total noncurrent assets                                                 24,971,611         38,249,235           911,068          64,131,914         3,090,497
             Total assets                                                         27,629,982         42,625,838           951,965          71,207,785         6,747,874
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                                  21,765             72,551                  -             94,316           58,040
  Related to other postemployment benefits                                            10,410             34,700                  -             45,110           27,760
             Total deferred outflows of resources                                     32,175            107,251                  -           139,426            85,800
                 Total assets and deferred outflows of resources                  27,662,157         42,733,089           951,965          71,347,211         6,833,674
LIABILITIES
Current liabilities
  Accounts payable                                                                  2,237,687          2,065,484           62,948           4,366,119          269,193
  Accrued liabilities                                                                  47,008            122,930            1,983             171,921           50,316
  Due to other governmental units                                                     831,845              9,584                -             841,429                -
  Due to other funds                                                                   29,970                  -            8,390              38,360          384,381
  Unearned revenues - prepaid fees                                                          -                  -          112,994             112,994                -
  Bonds and other obligations, due within one year                                    284,400          1,026,050            1,300           1,311,750           26,700
          Total current liabilities                                                 3,430,910          3,224,048          187,615           6,842,573          730,590

Noncurrent liabilities
  Bonds and other obligations, less amounts due within one year                     2,429,718          5,578,663            6,773           8,015,154           133,925
  Net pension liability                                                               493,398          1,644,659                -           2,138,057         1,315,727
  Net other postemployment benefits liability                                         147,609            492,030                -             639,639           393,624
          Total noncurrent liabilities                                              3,070,725          7,715,352            6,773          10,792,850         1,843,276
             Total liabilities                                                      6,501,635        10,939,400           194,388          17,635,423         2,573,866
DEFERRED INFLOWS OF RESOURCES
  Related to pension                                                                  40,817            136,057                  -           176,874           108,846
  Related to other postemployment benefits                                             9,680             32,265                  -            41,945            25,813
             Total deferred inflows of resources                                      50,497            168,322                  -           218,819           134,659
                 Total liabilities and deferred inflows of resources                6,552,132        11,107,722           194,388          17,854,242         2,708,525
NET POSITION
  Net investment in capital assets                                                22,231,078         31,115,315           911,068          54,257,461         2,699,417
  Restricted for debt service                                                        101,000            721,000                 -             822,000                 -
  Unrestricted                                                                    (1,222,053)          (210,948)         (153,491)         (1,586,492)        1,425,732
                 Total net position                                           $ 21,110,025       $ 31,625,367       $    757,577           53,492,969    $ 4,125,149

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                                                                       712,687
Net position of business-type activities                                                                                              $ 54,205,656




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, 2021


                                                                                                                                           Governmental
                                                                                                                                            Activities -
                                                                                 Business-type Activities - Enterprise Funds                 Internal
                                                                                                          Marina and                          Service
                                                                           Sewer           Water         Launch Ramp         Total             Funds
OPERATING REVENUES
  Charges for services                                                $     9,139,883    $    8,441,229   $    178,286    $   17,759,398   $   8,889,155
  Other                                                                       158,273           311,341            420           470,034          97,102
           Total operating revenues                                         9,298,156         8,752,570        178,706        18,229,432       8,986,257

OPERATING EXPENSES
  Administration                                                              593,928         1,263,568          8,119         1,865,615         791,527
  Insurance premiums and claims                                                     -                 -              -                 -       4,839,612
  Wastewater treatment                                                      5,271,658                 -              -         5,271,658               -
  Wastewater maintenance                                                    1,615,456                 -              -         1,615,456               -
  Filtration plant operations                                                       -         2,419,539              -         2,419,539               -
  Water distribution                                                                -         2,798,889              -         2,798,889               -
  Other operations                                                                  -                 -        397,807           397,807       3,400,274
  Depreciation                                                                450,685         1,860,487        106,040         2,417,212         542,440
           Total operating expenses                                         7,931,727         8,342,483        511,966        16,786,176       9,573,853

           Operating income (loss)                                          1,366,429          410,087        (333,260)        1,443,256        (587,596)

NONOPERATING REVENUES (EXPENSES)
  Investment earnings                                                             138            9,738              42            9,918           24,721
  Gain on sale of capital assets                                                    -                -               -                -           83,978
  Interest expense                                                             (6,452)        (112,860)              -         (119,312)               -
  Bond issuance costs                                                         (78,740)         (69,725)              -         (148,465)               -
           Total nonoperating revenue (expenses)                              (85,054)        (172,847)             42         (257,859)         108,699

           Income (loss) before capital contributions and transfers         1,281,375          237,240        (333,218)        1,185,397        (478,897)

CAPITAL CONTRIBUTIONS AND TRANSFERS
  Capital grants and contributions                                          9,568,000          780,250           6,294        10,354,544               -
  Transfers in                                                                      -           35,000               -            35,000         625,000
           Total capital contributions and transfers                        9,568,000          815,250           6,294        10,389,544         625,000

           Change in net position                                          10,849,375         1,052,490       (326,924)       11,574,941         146,103

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

Net position at end of year                                           $ 21,110,025       $ 31,625,367     $   757,577                      $ 4,125,149

Adjustment for the net effect of the current year activity between
 the internal service funds and the enterprise funds                                                                           (158,375)
Change in net position of business-type activities                                                                        $ 11,416,566




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, 2021


                                                                                                                                                              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                                                             $     8,057,091    $    7,938,041    $    259,133    $ 16,254,265       $       53,808
  Receipts from interfund services provided                                                    57,183           155,775               -          212,958           7,297,489
  Other receipts                                                                                    -                 -               -                -           1,502,594
  Payments to suppliers                                                                    (6,275,093)       (3,483,675)       (277,989)     (10,036,757)         (6,671,503)
  Payments to employees                                                                      (721,796)       (1,999,003)        (38,550)      (2,759,349)         (1,336,543)
  Payments for interfund services used                                                       (620,526)         (822,809)        (29,140)      (1,472,475)           (868,416)
         Net cash provided by (used for) operating activities                                496,859         1,788,329          (86,546)         2,198,642          (22,571)
CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
  Transfers in                                                                                      -           35,000                -             35,000          625,000
  Interfund borrowing                                                                      (1,269,042)               -            8,390         (1,260,652)         (10,136)
  Advances to component units                                                                       -                -                -                  -           90,140
         Net cash provided by (used for) noncapital financing activities                   (1,269,042)          35,000            8,390         (1,225,652)         705,004
CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
  Proceeds from long-term debt                                                             10,662,794         2,893,953               -         13,556,747                -
  Issuance costs on long-term debt                                                            (78,740)          (69,725)              -           (148,465)               -
  Capital contributions                                                                     9,568,000           780,250           6,294         10,354,544                -
  Purchases of capital assets                                                              (9,707,858)       (3,222,070)        (14,214)       (12,944,142)        (322,030)
  Principal paid on capital debt                                                           (9,568,000)       (1,540,250)              -        (11,108,250)               -
  Interest paid on capital debt                                                                (3,151)         (107,860)              -           (111,011)               -
  Proceeds from sale of capital assets                                                              -                 -               -                  -          170,913
         Net cash provided by (used for) capital and related financing activities            873,045         (1,265,702)         (7,920)         (400,577)         (151,117)
CASH FLOW FROM INVESTING ACTIVITIES
  Investment earnings                                                                            138             9,738              42              9,918            24,721
         Net increase (decrease) in cash and investments                                     101,000           567,365          (86,034)          582,331           556,037
Cash and investments at beginning of year                                                           -        2,440,001          86,034           2,526,035        1,253,766
Cash and investments at end of year                                                   $     101,000      $ 3,007,366       $          -    $ 3,108,366        $ 1,809,803
Reconciliation of cash and investments to the Statement of Net Position
  Cash and investments                                                                $            -     $   2,290,366     $          -    $     2,290,366    $   1,809,803
  Restricted cash and investments                                                            101,000           717,000                -            818,000                -
                                                                                      $     101,000      $ 3,007,366       $          -    $ 3,108,366        $ 1,809,803
Reconciliation of operating income (loss) to net cash provided by (used for)
  operating activities
     Operating income (loss)                                                          $     1,366,429    $     410,087     $   (333,260)   $     1,443,256    $    (587,596)
     Adjustments to reconcile operating income (loss) to net cash provided by
         (used for) operating activities
             Depreciation expense                                                            450,685         1,860,487         106,040           2,417,212          542,440
         Change in assets and liabilities
             Receivables                                                                   (1,183,882)        (658,754)        (26,384)         (1,869,020)        (132,366)
             Inventories                                                                      (14,729)         (95,949)              -            (110,678)          (1,285)
             Prepaid items                                                                     (1,748)          (4,889)          1,818              (4,819)          14,393
             Accounts payable                                                                (201,319)          44,882          51,120            (105,317)         (77,132)
             Unearned revenues                                                                      -                -         106,811             106,811                -
             Accrued liabilities                                                               81,423          232,465           7,309             321,197          218,975
                Net cash provided by (used for) operating activities                  $     496,859      $ 1,788,329       $   (86,546)    $ 2,198,642        $    (22,571)




The accompanying notes are an integral part of this statement.

                                                                                      42
                                                    City of Muskegon
                                         STATEMENT OF NET POSITION
                                               Fiduciary Funds
                                                June 30, 2021


                                                                       Other Post-
                                                                       Employment
                                                                         Benefits         Custodial
                                                                        Trust Fund         Funds
ASSETS
  Cash and investments                                                 $ 25,146,235   $      842,960
  Accounts receivable                                                             -          145,552
          Total assets                                                   25,146,235          988,512

LIABILITIES
  Accounts payable                                                                -          125,849
  Due to other governmental units                                                 -          763,408
  Deposits held for others                                                        -           99,255
          Total liabilities                                                       -          988,512

NET POSITION
  Restricted for other post-employment benefits                        $ 25,146,235   $               -




The accompanying notes are an integral part of this statement.

                                                                 43
                                                    City of Muskegon
                               STATEMENT OF CHANGES IN NET POSITION
                                              Fiduciary Funds
                                     For the year ended June 30, 2021


                                                                           Other Post-
                                                                           Employment
                                                                             Benefits      Custodial
                                                                            Trust Fund      Funds
ADDITIONS
  Tax collections for other governments                                $               -   $ 22,844,643
  Other collections for third parties                                                  -      1,268,438
  Employer contributions                                                       1,270,526              -
  Net investment income                                                        4,279,670              -
       Total additions                                                         5,550,196       24,113,081

DEDUCTIONS
  Payment of taxes to other governments                                                -       22,844,643
  Other payments to third parties                                                      -        1,268,438
  Benefit payments                                                             1,622,024                -
  Administrative expenses                                                         45,288                -
       Total deductions                                                        1,667,312       24,113,081

          Change in net position                                               3,882,884                -

Net position at beginning of year, as restated                                21,263,351                -

Net position at end of year                                            $     25,146,235    $            -




The accompanying notes are an integral part of this statement.

                                                                 44
                                                             City of Muskegon
                                                     STATEMENT OF NET POSITION
                                                     Discretely Presented Component Units
                                                                 June 30, 2021


                                                          Local
                                                       Development                             Tax
                                                         Finance          Downtown         Increment       Brownfield
                                                        Authority -      Development         Finance     Redevelopment
                                                        SmartZone         Authority         Authority     Authorities           Total
ASSETS
Current assets
  Cash and investments                                  $     40,168         $   159,587    $   17,885    $     105,942     $     323,582

Noncurrent assets
  Capital assets, net
     Nondepreciable                                          400,000                   -             -                 -          400,000
     Depreciable                                             762,529                   -             -                 -          762,529
         Total noncurrent assets                            1,162,529                  -             -                 -        1,162,529
                Total assets                                1,202,697            159,587        17,885          105,942         1,486,111

LIABILITIES
Current liabilities
  Accounts payable                                                 -              69,446             -           20,550            89,996
  Accrued liabilities                                          7,000               4,057             -                -            11,057
  Due to primary government                                        -                   -             -          652,132           652,132
  Bonds and other obligations, due within one year           245,000                   -             -                -           245,000
         Total current liabilities                           252,000              73,503             -          672,682           998,185

Noncurrent liabilities
  Advances from primary government                                  -                  -             -          593,307           593,307
  Bonds and other obligations, less amounts due
     within one year                                        1,107,248                  -             -                 -        1,107,248
         Total noncurrent liabilities                       1,107,248                  -             -          593,307         1,700,555
                Total liabilities                           1,359,248             73,503             -        1,265,989         2,698,740

NET POSITION
  Net investment in capital assets                          (189,719)                  -             -                 -          (189,719)
  Unrestricted                                                33,168              86,084        17,885        (1,160,047)       (1,022,910)
                Total net position                      $ (156,551)          $   86,084     $ 17,885      $ (1,160,047)     $ (1,212,629)




The accompanying notes are an integral part of this statement.

                                                                        45
                                                                                           City of Muskegon
                                                                                   STATEMENT OF ACTIVITIES
                                                                                  Discretely Presented Component Units
                                                                                    For the year ended June 30, 2021


                                                                                                                             Net (Expense) Revenue and Changes in Net Position
                                                                                                             Local
                                                                                 Program Revenue          Development                               Tax
                                                                             Operating      Capital         Finance             Downtown        Increment        Brownfield
                                                                             Grants and    Grants and      Authority -         Development        Finance      Redevelopment
     Functions/Programs                                      Expenses       Contributions Contributions    SmartZone            Authority        Authority       Authorities          Total
     Local Development Finance Authority - SmartZone
       Community and economic development                   $    172,648     $         -    $         -    $    (172,648)       $          -    $         -     $            -    $    (172,648)
       Interest on long-term debt                                 34,321               -        350,000          315,679                   -              -                  -          315,679
           Total Local Development Finance
            Authority - SmartZone                                206,969               -        350,000         143,031                    -              -                  -          143,031

     Downtown Development Authority
       Economic development                                      580,098         168,325              -                  -          (411,773)             -                  -         (411,773)

     Tax Increment Finance Authority
       Community and economic development                         50,000               -              -                  -                 -        (50,000)                 -          (50,000)




46
     Brownfield Redevelopment Authorities
        Community and economic development                      1,233,732              -              -                  -                 -              -         (1,233,732)       (1,233,732)
        Interest on long-term debt                                 22,370              -              -                  -                 -              -            (22,370)          (22,370)
           Total Brownfield Redevelopment Authorities           1,256,102              -              -                  -                 -              -         (1,256,102)       (1,256,102)
              Total discretely presented component units    $ 2,093,169      $ 168,325      $ 350,000           143,031             (411,773)       (50,000)        (1,256,102)       (1,574,844)

     General revenues
       Property taxes                                                                                            99,568             490,931         42,184            760,872         1,393,555
       Grants and contributions not restricted to specific programs                                               3,349                   -          9,744             16,266            29,359
       Unrestricted investment income                                                                               205                 579             69                907             1,760
       Miscellaneous                                                                                                  -                   -              -                304               304
              Total general revenues                                                                            103,122             491,510         51,997            778,349         1,424,978

                  Change in net position                                                                        246,153              79,737          1,997           (477,753)         (149,866)

     Net position at beginning of year                                                                          (402,704)              6,347        15,888           (682,294)        (1,062,763)

     Net position at end of year                                                                           $   (156,551)        $    86,084     $   17,885      $ (1,160,047)     $ (1,212,629)




     The accompanying notes are an integral part of this statement.
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 six separate designated areas under the aegis of the
  BRA – the Betten-Henry Street site, the former downtown mall site, the Terrace Point site, the Pigeon Hill
  site, the Hartshorn Marina site, and the scattered housing 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.




                                                       47
                                                 City of Muskegon
                                   NOTES TO FINANCIAL STATEMENTS
                                              June 30, 2021


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, 2021, 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)




                                                        48
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


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




                                                      49
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE A—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES—Continued

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

  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 Other Post-Employment Benefit Trust Funds are used to report resources that are administered
      through irrevocable trusts for the benefit of City employees and retirees.

      The Custodial Funds are used to report fiduciary activities that are not required to be reported in pension
      (and other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

  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.




                                                       50
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 and fiduciary funds are reported using the economic resources measurement focus and the
  accrual basis of accounting.

  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.




                                                       51
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 Other Post-Employment Benefit Trust Fund is held in trust by the Municipal Employees’ Retirement
  System (MERS) and is subject to the investment policies of MERS and State of Michigan statutes allowing
  diverse investments in stocks, corporate and government bonds, mortgages, real estate, and other investments.

  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 acquisition value.

  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:




                                                        52
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 single-employer, 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.




                                                       53
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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.



                                                       54
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 2020 state taxable value for real/personal property of the City totaled approximately $599,786,000 of
  which approximately $33,468,000 was captured by the component units. The ad valorem taxes levied
  consisted of 9.993, 2.9979 and .0824 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, and BRA 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 2020 financial statements have been reclassified to conform
  to the 2021 presentation.




                                                       55
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2021, actual expenditures exceeded appropriations for:

                                                                        Final
                                                                       Budget          Actual
                General Fund
                   Public representation services
                      City attorney                                $    380,000    $    431,961
                   Public safety
                      Police department                                9,707,553       9,862,730
                   Transfers out                                       1,205,000       1,475,000
                Mercy Health Arena Fund
                   Culture and recreation                              1,465,881       1,715,865
                Downtown BID Fund
                   Public works                                         113,681         159,762

  These overexpenditures were funded with available fund balance.

  Fund Deficits
  As of June 30, 2021, the City’s Sewer Fund, Water Fund, Marina and Launch Ramp, and Public Service
  Building Fund had unrestricted fund net position deficits of $1,222,053, $210,948, $153,491, and $383,186,
  respectively. The Public Improvement Fund and the Convention Center Construction Fund had unassigned
  fund deficits of $1,026,966 and $1,892,438, respectively. These deficits will be eliminated through future
  operations or an interfund transfer.




                                                       56
                                                City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE C—DEPOSITS AND INVESTMENTS
  As of June 30, 2021, the City had the following investments:
                                                                Weighted
                                                                 Average
                                                                Maturity
                                               Fair Value       (Months)            S&P           Percent
  Investment Type
  Money market funds                        $      517,687                1        AAA                   1.1 %
  Negotiable certificates of deposit             1,774,038               30       not rated              3.7
  US agency obligations                          8,264,742              297         AA+                 17.2
  Local units of government obligations            510,105               10         AA                   1.1
  External investment pool                      11,758,887                3        AAA                  24.5
  MERS investment funds                         25,146,235              N/A       not rated             52.4
         Total fair value                   $ 47,971,694                                              100.0 %
      Portfolio weighted average maturity                               112

  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                        5.2%
            Government National Mortgage Association obligations                     11.8%

  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, 2021, $11,842,021 of the City’s bank balance of $12,342,021 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.



                                                        57
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2021, restricted
  cash and investments in the Sewer and Water Fund of $101,000 and $717,000, respectively, 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.


                                                        58
                                                          City of Muskegon
                                          NOTES TO FINANCIAL STATEMENTS
                                                     June 30, 2021


NOTE D—ASSETS MANAGED BY OTHERS—Continued

  The Funds—Continued

    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.

  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,
  2021 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                    $      1,652    $          -    $           -    $          -    $        -     $     10,000    $      11,652
     Dividends and interest                  1,467          17,807            2,315           9,632           537                3           31,761
     Realized and unrealized gain
      (loss) on investments                16,561          201,378          25,602         109,044          6,074                -          358,659
     Other income                               -           12,843               -               -              -                -           12,843
                                           19,680          232,028          27,917         118,676          6,611           10,003          414,915

  Expenses
     Grants and scholarships                    -                -          25,534                -             -               -            25,534
     Administration fees                      601           10,149           1,916            5,068           214             100            18,048

     Revenues over expenses                19,079          221,879             467         113,608          6,397            9,903          371,333

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

  Total assets at end of year              78,543         1,456,616        115,338         512,550         28,597           14,688         2,206,332

  Less assets recorded as those
   of the Foundation                       (54,845)               -        (115,338)       (512,550)       (18,111)        (14,688)        (715,532)

  Assets reported on the Balance
   Sheet/Statement of Net Position    $    23,698     $ 1,456,616     $           -    $          -    $ 10,486       $          -    $ 1,490,800


  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.


                                                                      59
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2021.

      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.




                                                        60
                                               City of Muskegon
                                  NOTES TO FINANCIAL STATEMENTS
                                             June 30, 2021


NOTE E—FAIR VALUE MEASUREMENTS—Continued

      External investment pools, MERS investment funds, and assets managed by others: The assets are
      valued based upon the City’s allocable share of the Michigan CLASS, MERS, 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, 2021:

                                                    Assets at Fair Value as of June 30, 2021
                                            Level 1         Level 2           Level 3                   Total

  Money market funds                    $            -        $     517,687       $         -       $      517,687
  Negotiable certificates of deposit         1,774,038                    -                 -            1,774,038
  US agency obligations                      8,264,742                    -                 -            8,264,742
  Local units of government
   obligations                                 510,105                     -                -              510,105
  External investment pools                          -            11,758,887                -           11,758,887
  MERS investment funds                              -            25,146,235                -           25,146,235
  Assets managed by others                           -             1,477,957                -            1,477,957

  Total assets at fair value            $ 10,548,885          $ 38,900,766        $         -       $ 49,449,651




                                                         61
                                                   City of Muskegon
                                       NOTES TO FINANCIAL STATEMENTS
                                                  June 30, 2021


NOTE F—CAPITAL ASSETS

  Capital asset activity for the year ended June 30, 2021 was as follows:
                                                      Balance                                              Balance
                                                    July 1, 2020          Additions     Deductions       June 30, 2021
  Governmental activities:
    Capital assets, not being depreciated:
       Land                                         $ 14,258,844      $             -   $            -   $    14,258,844
       Construction in progress                       18,729,886           17,265,687        6,900,049        29,095,524
     Total capital assets, not being depreciated         32,988,730        17,265,687        6,900,049        43,354,368
     Capital assets, being depreciated:
       Land improvements                                  5,446,304                 -               -          5,446,304
       Leasehold improvements                               534,821                 -               -            534,821
       Buildings and improvements                        29,914,552         2,192,125               -         32,106,677
       Furniture, vehicles and equipment                 16,373,852           868,200         450,369         16,791,683
       Infrastructure                                    74,757,641         6,512,074               -         81,269,715
       Shared improvements                                6,905,293                 -               -          6,905,293
     Total capital assets, being depreciated            133,932,463         9,572,399         450,369        143,054,493
     Less accumulated depreciation:
       Land improvements                                  2,252,853           160,917               -          2,413,770
       Leasehold improvements                               491,710             5,674               -            497,384
       Buildings and improvements                        18,245,653           552,034               -         18,797,687
       Furniture, vehicles and equipment                 12,706,346           750,583         443,256         13,013,673
       Infrastructure                                    40,031,075         3,465,500               -         43,496,575
       Shared improvements                                5,147,315           345,265               -          5,492,580
     Total accumulated depreciation                      78,874,952         5,279,973         443,256         83,711,669
     Total capital assets, being
        depreciated, net                                 55,057,511         4,292,426           7,113         59,342,824
     Capital assets, net                            $ 88,046,241      $ 21,558,113      $ 6,907,162      $ 102,697,192
  Business-type activities:
    Capital assets, not being depreciated:
       Land                                         $       142,250   $             -   $            -   $       142,250
       Construction in progress                           8,942,883        14,891,135       11,921,486        11,912,532
     Total capital assets, not being depreciated          9,085,133        14,891,135       11,921,486        12,054,782
     Capital assets, being depreciated:
       Land improvements                                  1,951,913                 -                -         1,951,913
       Buildings, improvements and systems               95,715,965        11,553,510                -       107,269,475
       Machinery and equipment                            3,263,412            56,620                -         3,320,032
     Total capital assets, being depreciated            100,931,290        11,610,130                -       112,541,420
     Less accumulated depreciation:
       Land improvements                                  1,840,598             9,522                -         1,850,120
       Buildings, improvements and systems               54,183,758         2,343,340                -        56,527,098
       Machinery and equipment                            2,840,720            64,350                -         2,905,070
     Total accumulated depreciation                      58,865,076         2,417,212                -        61,282,288
     Total capital assets, being
        depreciated, net                                 42,066,214         9,192,918                -        51,259,132
     Capital assets, net                            $ 51,151,347      $ 24,084,053      $ 11,921,486     $ 63,313,914




                                                             62
                                            City of Muskegon
                                    NOTES TO FINANCIAL STATEMENTS
                                               June 30, 2021


NOTE F—CAPITAL ASSETS—Continued

  Depreciation
  Depreciation expense was charged to functions as follows:

   Governmental activities:
     Public representation services                                                          $       4,007
     Adminstrative services                                                                          2,484
     Public safety                                                                                 133,741
     Public works                                                                                    8,280
     Highways, streets and bridges                                                               3,940,374
     Community and economic development                                                             70,993
     Culture and recreation                                                                        553,583
     General administration                                                                         24,071
     Internal Service Fund depreciation                                                            542,440
                                                                                             $ 5,279,973
   Business-type activities:
     Sewer                                                                                   $     450,685
     Water                                                                                       1,860,487
     Marina and Launch Ramp                                                                        106,040
                                                                                             $ 2,417,212

                                                 Balance                                       Balance
                                               July 1, 2020     Additions       Deductions   June 30, 2021
   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                   2,863,081       172,648             -        3,035,729
      Total capital assets, being
         depreciated, net                            935,177        (172,648)           -          762,529
      Capital assets, net                       $ 1,335,177     $ (172,648)     $       -    $ 1,162,529

  Depreciation expense was charged to economic development.




                                                     63
                                              City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS

  The composition of interfund balances as of June 30, 2021 is as follows:

    Due To/From Other Funds:
            Receivable Fund                  Payable Fund                                       Amount
            General Fund                     Mercy Health Arena Fund                        $        204,874
            General Fund                     Public Improvement Fund                                 299,481
            General Fund                     Lead Abatement Fund                                      33,938
            General Fund                     Community Development Block Grant Fund                   89,343
            General Fund                     Sewer Fund                                               29,970
            General Fund                     Marina and Launch Ramp Fund                               8,390
            General Fund                     General Insurance Fund                                  384,381
                                                                                            $ 1,050,377

  The outstanding balances between funds result from the payable funds having negative positions in the City’s
  cash and investment pool. In addition, the Brownfield Redevelopment Authorities owe the General Fund
  $652,132 for having a negative position in the City’s cash and investment pool.

  Interfund Transfers:
     Transfers In                            Amount           Transfers Out                         Amount
     Nonmajor Governmental Funds
       Public Improvement Fund           $      50,000        General Fund                      $     850,000
       Mercy Health Arena Fund                 725,000
       Farmers Market and
        Kitchen 242 Fund                        75,000
                                               850,000                                                850,000
     Internal Service Funds
         Public Service Building Fund          625,000        General Fund                            625,000

     Nonmajor Governmental Funds
       Mercy Health Arena Fund                  40,000        Convention Center Fund                   40,000

     Nonmajor Governmental Funds
       Farmers Market and                                     Nonmajor Governmental Funds
        Kitchen 242 Fund                         5,000          Senior Millage Fund                     5,000

                                                              Nonmajor Governmental Funds
     Water Fund                                 35,000          Senior Millage Fund                    35,000
                                         $ 1,555,000                                            $ 1,555,000



                                                         64
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE G—INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS—Continued

  The General Fund transferred funds to the Mercy Health Arena Fund, Public Service Building Fund, and
  other funds for operation subsidies. The Senior Millage Fund transferred funds to the Farmers Market and
  Kitchen 242 Fund and the Water Fund to provide services to seniors. The Convention Center Fund
  transferred funds to the Mercy Health Arena Fund as reimbursement for upgrades caused by convention
  center construction. 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, 2021.

                                         Balance                                             Balance
                                       July 1, 2020         Additions     Deductions      June 30, 2021
  Governmental activities:
    Short-term draw note              $ 1,102,021        $ 2,494,268      $ 2,488,282      $ 1,108,007

  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.




                                                       65
                                               City of Muskegon
                                   NOTES TO FINANCIAL STATEMENTS
                                              June 30, 2021


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, 2021.

                                       Balance                                              Balance       Due Within
                                     July 1, 2020         Additions       Deductions      June 30, 2021    One Year
  Governmental activities:
    Public placement debt
       General obligation debt      $   23,980,000    $     6,380,000     $    690,000    $ 29,670,000    $   1,145,000
       Discount                           (143,150)                 -           (7,500)       (135,650)               -
       Premium                             222,903            772,424           33,000         962,327                -
    Direct borrowings and
     direct placements
       Installment purchase
         agreements                      2,123,804                  -         2,123,804               -              -
    Compensated absences                 1,949,435          1,601,300         1,264,347       2,286,388        381,100
        Governmental activities
         long-term liabilities      $ 28,132,992      $ 8,753,724         $ 4,103,651     $ 32,783,065    $ 1,526,100

  Business-type activities:
    Public placement debt
       Revenue obligations          $    6,607,956    $ 13,556,747        $ 11,108,250    $   9,056,453   $   1,266,750
    Compensated absences                   255,712         254,094             239,355          270,451          45,000
        Business-type activities
         long-term liabilities      $ 6,863,668       $ 13,810,841        $ 11,347,605    $ 9,326,904     $ 1,311,750

  Component units:
    Public placement debt
       General obligation debt      $    1,720,000    $               -   $    395,000    $   1,325,000   $    245,000
       Premium                              40,377                    -         13,129           27,248              -
        Component unit long-
         term liabilities           $ 1,760,377       $               -   $   408,129     $ 1,352,248     $   245,000




                                                           66
                                               City of Muskegon
                                  NOTES TO FINANCIAL STATEMENTS
                                             June 30, 2021


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.
  During the year ended June 30, 2021, the City issued $2,055,000 of Capital Improvement Bonds, Series
  2020B to redeem the 2019 Capital Improvement Installment Loan. The proceeds from the refunding bond
  were used to pay off the outstanding balance of the 2019 Capital Improvement Installment Loan in full, and
  the liability for that loan has been removed from long-term obligations.
  The City refunded the 2019 Capital Improvement Installment Loan to improve short-term cash flows and
  simplify the structure of their debt service. As a result of the refunding transaction, the City’s total debt
  service payment will increase over the next 20 years by approximately $220,000 and it will recognize an
  economic loss (difference between the present values of the debt service payments on the old and new debt)
  of approximately $26,000.
  General obligation debt outstanding as of June 30, 2021 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   $         230,000
       2016 Limited Tax General Obligation
        Refunding Bonds                                   4,535,000      3% - 4%        October 2032             3,815,000
       2019 Capital Improvement Bonds                    19,420,000   1.83% - 3.58%    December 2049            19,245,000
       2020A Capital Improvement Bonds                    4,325,000     2.5% - 5%       October 2040             4,325,000
       2020B Capital Improvement Bonds                    2,055,000    .68% - 3.2%      October 2041             2,055,000
                                                                                                        $ 29,670,000

     Component units:
       2012 LDFA Tax Increment Refunding Bonds       $    4,100,000     3% - 4%        November 2025    $ 1,325,000

  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, 2021 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       $      4,040,000
       2019 Water Supply System Junior Lien Bond         1,991,874          2%           October 2025              1,591,874
       2019 Sanitary Sewer System Junior Lien Bond      10,809,459          2%           October 2033              2,184,459
       2020 Water Supply System Junior Lien Bond         1,165,296          2%            April 2041                 785,046
       2020 Sanitary Sewer System Junior Lien Bond       1,398,074          2%            April 2041                 455,074
                                                                                                            $ 9,056,453



                                                          67
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE I—LONG-TERM DEBT—Continued

  Revenue Obligations—Continued
  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
  $4,258,133. Principal and interest paid for the year ended June 30, 2021 and total customer net revenues were
  $853,925 and $2,280,312, respectively.

  During the year ended June 30, 2021, revenue obligations were forgiven and recognized as capital grants and
  contributions in the Sewer and Water Funds for $9,568,000 and $780,250, respectively.

  The City was in compliance in all material respects with all the revenue bond ordinances at June 30, 2021.

  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, 2021 was approximately $2,158,000. 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, 2021 follow:

                                     Governmental Activites      Business-type Activities
                 Year Ending                       Public Placement Debt
                  June 30,           Principal     Interest       Principal     Interest
                    2022         $    1,145,000   $      987,637   $    1,266,750   $    190,718
                    2023                970,000          957,231        1,295,000        164,255
                    2024              1,050,000          926,991        1,318,074        137,105
                    2025              1,100,000          892,982        1,190,000        109,572
                    2026              1,140,000          856,998        1,175,296         84,531
                  2027-2031           6,355,000        3,627,560        1,060,000        302,500
                  2032-2036           4,030,000        2,691,759        1,160,000        191,950
                  2037-2041           4,385,000        2,060,507          591,333         42,900
                  2042-2046           4,720,000        1,287,468                -              -
                  2047-2050           4,775,000          352,719                -              -
                                 $ 29,670,000     $ 14,641,852     $ 9,056,453      $ 1,223,531




                                                       68
                                            City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


NOTE I—LONG-TERM DEBT—Continued

                                                      Component Units
                             Year Ending           Public Placement Debt
                              June 30,            Principal      Interest
                                 2022         $        245,000     $        37,300
                                 2023                  255,000              28,575
                                 2024                  265,000              20,775
                                 2025                  275,000              12,675
                                 2026                  285,000               4,275
                               2027-2031                     -                   -
                               2032-2036                     -                   -
                               2037-2041                     -                   -
                               2042-2046                     -                   -
                               2047-2050                     -                   -
                                              $ 1,325,000          $       103,600

  Annual debt service requirements to maturity by type of debt as of June 30, 2021 follow:

                                                                                Revenue
                                       General Obligation Debt                 Obligations
                    Year Ending      Governmental    Component                Business-type
                     June 30,         Activities        Units                  Activities
                        2022          $    2,132,637        $    282,300      $      1,457,468
                        2023               1,927,231             283,575             1,459,255
                        2024               1,976,991             285,775             1,455,179
                        2025               1,992,982             287,675             1,299,572
                        2026               1,996,998             289,275             1,259,827
                      2027-2031            9,982,560                   -             1,362,500
                      2032-2036            6,721,759                   -             1,351,950
                      2037-2041            6,445,507                   -               634,233
                      2042-2046            6,007,468                   -                     -
                      2047-2050            5,127,719                   -                     -
                                      $ 44,311,852          $ 1,428,600       $ 10,279,984




                                                       69
                                               City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


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 2021 and 2020 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, 2021                $     133,364         $     138,186        $      167,904         $     103,646
  June 30, 2020                      224,580                94,465               185,681               133,364

  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, 2021, the claims liability including incurred but
  not reported claims was $63,118. 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 2021 and 2020
  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, 2021                $     111,410         $ 1,676,498          $     1,724,790        $      63,118
  June 30, 2020                       51,401           2,267,390                2,207,381              111,410



                                                      70
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 and state governments. 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, 2021 with a remaining amount of approximately $15,009,000. Approximately $3,630,000 and $3,068,000
  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                                                 $    4,248,000
        Local Street                                                                      350,000
        Public Improvement                                                                100,000
        Sewer                                                                           3,630,000
        Water                                                                           6,681,000
                                                                                   $ 15,009,000

  The City has also committed to allocating 35 percent of local marihuana excise taxes received to their
  Michigan Social Equity Program. As of June 30, 2021, the City has committed approximately $39,000 of
  fund balance in the General Fund to this program.
  Leases
  The City leases an office facility under a noncancellable operating lease that expires December 2045 with the
  option by the tenant to renew the term of the lease for five successive periods of five years each. The City
  received rental income (including pro-rata utility usage) of $101,084 for the year ended June 30, 2021. The
  future minimum rental income for this lease is as follows:
            Year Ending
             June 30,                                                                Amount
                2022                                                             $       481,075
                2023                                                                     463,060
                2024                                                                     464,617
                2025                                                                     463,429
                2026                                                                     464,782
              2027-2031                                                                2,295,708
              2032-2036                                                                  352,832
              2037-2041                                                                  402,902
              2042-2045                                                                  350,419
                                                                                 $ 5,738,824




                                                       71
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2021, the City abated property taxes revenues totaling $109,028 under this
  program.

  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, 2021, the City abated property taxes revenues totaling $167,665 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, 2021, the City abated property taxes revenues totaling $146,690 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.




                                                        72
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2020 valuation date, the following employees were covered by the benefit terms:

   Inactive employees or beneficiaries currently receiving benefits              332
   Inactive employees entitled to but not yet receiving benefits                  37
   Active employees                                                               71
       Total employees covered by MERS                                           440

  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, 2021, the City had a flat-dollar employer contribution to the Plan of $2,902,032
  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, 2020, and the total pension liability used to
  calculate the net pension liability was determined by an annual actuarial valuation as of that date.




                                                       73
                                             City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE L—EMPLOYEE RETIREMENT SYSTEM AND PENSION PLAN—Continued

  Defined Benefit Pension Plan—Continued

  Actuarial Assumptions
  The total pension liability in the December 31, 2020 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 in the long-term
   Investment rate of return      7.35 percent, net of administrative and investment expenses

  Although no specific price inflation assumptions are needed for the valuation, the 3.0 percent long-term wage
  inflation assumption would be consistent with a price inflation of 3-4 percent. Mortality rates used were
  based on a version of Pub-2010 and fully generational MP-2019.

  The actuarial assumptions used in valuation were based on the results of the most recent actuarial experience
  study of 2014 through 2018.

  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%              7.45%            4.47%            2.50%            2.97%
  Global fixed income              20.0%              4.90%            0.98%            2.50%            0.48%
  Private assets                   20.0%              9.50%            1.90%            2.50%            1.40%
  Total                          100.0%                               7.35%                             4.85%

  Discount Rate
  The discount rate used to measure the total pension liability was 7.60 percent for 2020. 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. The projection of cash flows used to determine the discount rate assumed
  that employer and employee contributions will be made at rates agreed upon for employees and the actuarially
  determined rate for employers. 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.




                                                      74
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 January 1, 2020                       $ 119,926,123       $ 88,994,708   $ 30,931,415

  Changes for the year
    Service cost                                            615,293                   -            615,293
    Interest                                              8,787,617                   -          8,787,617
    Difference between expected and
     actual experience                                    2,829,299                  -            2,829,299
    Changes in assumptions                                2,974,495                  -            2,974,495
    Contributions - employer                                      -          2,468,311           (2,468,311)
    Contributions - employee                                      -            374,806             (374,806)
    Net investment income                                         -         10,575,596          (10,575,596)
    Administrative expenses                                       -           (173,766)             173,766
    Benefit payments including refund of
     employee contributions                              (9,214,462)         (9,214,462)                  -
         Net changes                                      5,992,242          4,030,485           1,961,757
  Balance at December 31, 2020                     $ 125,918,365         $ 93,025,193         $32,893,172

  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     $        46,316,744        $        32,893,172     $         21,580,702




                                                         75
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


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, 2021, the City recognized pension expense of $7,438,731. At June 30, 2021, 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            $                   -      $       2,721,144
  Contributions subsequent to the
   measurement date*                                       1,451,016                      -
        Total                                  $        1,451,016         $     2,721,144

  *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,
  2022.

  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
                                    2022                               $ (524,288)
                                    2023                                   360,334
                                    2024                                (1,742,199)
                                    2025                                  (814,991)

  Payables to the Pension Plan
  At June 30, 2021, the City reported a payable of $109,822 for the outstanding amount of contributions to the
  pension plan required for the year ended June 30, 2021.




                                                      76
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2021, City and employee
  contributions were $1,041,141 and $454,302, 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, 2021, forfeitures reduced the City’s pension expense by $60,905.

  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 single-employer
  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.




                                                       77
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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 contribute any required amounts as determined by an
  annual actuarial valuation as a reference but not as a definitive requirement. 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, 2021, the City made payments for postemployment healthcare benefits of $1,206,464.

  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, which was
  rolled forward to December 31, 2020.




                                                         78
                                                  City of Muskegon
                                    NOTES TO FINANCIAL STATEMENTS
                                               June 30, 2021


NOTE M—OTHER POSTEMPLOYMENT BENEFITS—Continued
  Retiree Healthcare Plan—Continued
  Actuarial Assumptions
  The total OPEB liability in the December 31, 2019 actuarial valuation rolled forward to December 31 2020
  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 7.5 percent after one year and
                                  then by .25 percent per year to an ultimate rate of 4.5 percent
                                Post-Medicare: 6.5 percent graded down to 5.75 percent after one year and
                                  then by .25 percent per year to an ultimate rate of 4.5 percent

  Mortality
  Mortality rates for police and fire were as set forth in the Public Safety 2010 Employee and Healthy Retiree,
  headcount weighted, MP-2020 improvement scale. Mortality rates for others were as set forth in the Public
  General 2010 Employee and Healthy Retiree, headcount weighted, MP-2020 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 levels consistent
  with the contributions made in 2019 and 2020. 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,
  2019 the discount rate used to value OPEB liabilities was 6.24 percent.



                                                            79
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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, 2020                      $ 33,642,202          $ 21,215,561         $ 12,426,641

  Changes for the year
     Service cost                                          156,214                  -              156,214
     Interest                                            2,058,432                  -            2,058,432
     Difference between expected and
      actual experience                                 (325,146)                   -             (325,146)
     Changes of assumptions                           (1,152,266)                   -           (1,152,266)
     Contributions - employer                                  -            1,154,926           (1,154,926)
     Net investment income                                     -            2,210,729           (2,210,729)
     Administrative expenses                                   -              (42,375)              42,375
     Benefit payments including refund of
      employee contributions                          (1,621,453)          (1,621,453)                    -
          Net changes                                    (884,219)          1,701,827           (2,586,046)
  Balance at December 31, 2020                    $ 32,757,983          $ 22,917,388         $ 9,840,595

  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       $         13,400,901        $         9,840,595       $        6,868,906




                                                         80
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


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       $          6,583,520         $         9,840,595       $        13,728,259

  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, 2021, the City recognized OPEB expense of $1,055,549. At June 30, 2021, 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
  Net difference between projected
   and actual net investment income                           $                      -       $        645,301
  Contributions subsequent to the
   measurement date*                                                        693,990                            -
        Total                                                 $            693,990           $       645,301

  *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,
  2022.




                                                         81
                                              City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


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

                                     2022                             $     (88,659)
                                     2023                                    41,015
                                     2024                                  (417,106)
                                     2025                                  (180,551)

  Payables to the OPEB Plan
  At June 30, 2021, 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, 2021, City and employee contributions were $183,564 and $202,353,
  respectively.




                                                       82
                                               City of Muskegon
                                 NOTES TO FINANCIAL STATEMENTS
                                            June 30, 2021


NOTE N—RISKS AND UNCERTAINTIES

  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 the City’s operations. As of June 30, 2021, the
  City is continuing to implement risk mitigation tactics including all aspects of the City’s operations.


NOTE O—CHANGE IN ACCOUNTING PRINCIPLE

  The net position of the fiduciary activities and Other Post-Employment Benefit Trust were restated effective
  July 1, 2020 to reflect the implementation of GASB Statement No. 84, Fiduciary Activities.

  GASB Statement 84 was issued by the GASB in January 2017 and is 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
  established 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 on the basic financial statements. Governments with activities meeting the criteria should
  present a statement of fiduciary net position and a statement of changes in fiduciary net position.

                                                                          Other Post-
                                                                       Employment Benefit
                                                                           Trust Fund

                Net position at July 1, 2020                            $                   -
                    Other post-employment benefit trust funds                     21,263,351
                Net position at July 1, 2020, as restated               $        21,263,351



NOTE P—UPCOMING ACCOUNTING PRONOUNCEMENTS

  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.




                                                       83
                                             City of Muskegon
                                NOTES TO FINANCIAL STATEMENTS
                                           June 30, 2021


NOTE P—UPCOMING ACCOUNTING PRONOUNCEMENTS—Continued

  GASB Statement 96—Subscription-Based Information Technology Arrangements was issued by the GASB in
  May 2020 and will be effective for the City’s 2023 fiscal year. This Statement provides guidance on the
  accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for
  government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA
  results in a right-to-use subscription asset—an intangible asset—and a corresponding subscription liability;
  (3) provides the capitalization criteria for outlays other than subscription payments, including implementation
  costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant, the standards
  for SBITAs are based on the standards established in Statement No. 87, Leases, as amended.




                                                      84
REQUIRED SUPPLEMENTARY INFORMATION




                85
                                                                  City of Muskegon
                                                    BUDGETARY COMPARISON SCHEDULE
                                                                     General Fund
                                                           For the year ended June 30, 2021
                                           (with comparative actual amounts for the year ended June 30, 2020)


                                                                                                2021                                    2020
                                                                     Budgeted Amounts                               Variance with
                                                                    Original     Final                 Actual       Final Budget       Actual
REVENUES
  Taxes
    City income taxes                                             $ 7,750,000    $ 8,650,000      $     9,256,826   $     606,826    $ 9,137,714
    Property taxes                                                  7,566,060      7,550,017            7,624,483          74,466      7,373,617
    Industrial facilities taxes                                        76,468         76,468              211,811         135,343        128,212
    Payments in lieu of taxes                                         566,877        566,877              607,538          40,661        614,314
              Total taxes                                           15,959,405     16,843,362          17,700,658         857,296      17,253,857

   Licenses and permits
      Business licenses                                                 75,000         42,000             45,415            3,415         42,520
      Liquor licenses                                                   50,000         50,000             45,808           (4,192)        49,557
      Marihuana facilities licenses                                     90,000        100,000            189,200           89,200        143,300
      Cable TV fees                                                    370,000        370,000            374,219            4,219        361,405
      Rental property registration                                     397,500        360,500            397,236           36,736        354,830
      Burial permits                                                    80,000         80,000             74,435           (5,565)        76,615
      Building permits                                               1,100,000        705,000            683,883          (21,117)       911,057
      Electrical permits                                               196,000        196,000            194,056           (1,944)       172,531
      Plumbing permits                                                  95,000         95,000             99,165            4,165        103,139
      Mechanical permits                                               143,500        143,500            136,858           (6,642)       144,730
      Vacant building fees                                              40,000          3,500              6,100            2,600         60,570
      Other inspections                                                      -              -                  -                -            350
              Total licenses and permits                             2,637,000      2,145,500           2,246,375         100,875       2,420,604

   Intergovernmental revenues
      Federal grants                                                    40,000      1,646,586           1,667,916          21,330        147,191

      State
         Grants                                                        776,000        941,004           1,018,505          77,501         913,590
         State shared revenue                                        4,130,818      4,347,882           4,733,888         386,006       4,117,935
              Total intergovernmental revenues - State               4,906,818      5,288,886           5,752,393         463,507       5,031,525

      Local                                                             50,000         50,000             50,000                -         40,000




                                                                          86
                                                              City of Muskegon
                                    BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                             General Fund
                                                   For the year ended June 30, 2021
                                   (with comparative actual amounts for the year ended June 30, 2020)


                                                                                               2021                                      2020
                                                                   Budgeted Amounts                                 Variance with
                                                                  Original     Final                  Actual        Final Budget         Actual
Charges for services
  Tax administration fees                                     $      327,000   $     327,000     $       369,323    $      42,323    $     350,742
  Utility administration fees                                        310,000         310,000             310,000                -          310,000
  Reimbursement for elections                                              -               -                  75               75           50,142
  Brownfield authority admin fee                                     175,000         200,000             175,000          (25,000)         180,000
  Indirect cost reimbursements                                     1,302,797       1,302,797           1,278,590          (24,207)       1,066,967
  Site plan review fee                                                 6,500           6,000               8,900            2,900            7,600
  Sale of cemetery lots                                               25,000          30,900              47,339           16,439           28,440
  Police miscellaneous                                               143,500         130,000             130,990              990          116,108
  Police impound fees                                                 37,000          40,000              46,309            6,309           38,293
  Landlord's alert fee                                                30,000          30,000              25,766           (4,234)          25,990
  Fire protection - state property                                   173,718         119,574             119,574                -          173,718
  Zoning fees                                                         15,000          21,000              21,580              580           29,855
  Muskegon Heights zoning                                             11,000           9,000              11,270            2,270            5,670
  Clerk fees                                                           5,000             750               1,387              637            1,329
  Clerk fees - passport fees                                          40,000           2,000               5,555            3,555           63,520
  Tax abatement application fees                                       6,000           1,000               4,085            3,085            8,890
  Treasurer fees                                                      67,000          24,000              57,618           33,618           67,177
  False alarm fees                                                     7,000           7,000               5,880           (1,120)           6,780
  Miscellaneous cemetery income                                       16,000          25,000              34,956            9,956           16,383
  Senior transit program fees                                              -           4,231               7,281            3,050                -
  Fire miscellaneous                                                   9,500          12,500              16,334            3,834            1,681
  Sanitation stickers                                                396,100         405,100             435,659           30,559          336,827
  Lot cleanup fees                                                    39,500          42,000              34,615           (7,385)          31,566
  Reimbursements - lot mowing and demolitions                          5,000           5,000                   -           (5,000)             124
  Special events reimbursements                                       15,000               -             (34,762)         (34,762)          61,625
  Recreation program fees                                              4,500          13,550              14,890            1,340            8,634
  Parking                                                            200,000         500,000             543,794           43,794          146,821
  Other charges for services                                               -               -                   -                -              400
         Total charges for services                                3,367,115       3,568,402           3,672,008          103,606        3,135,282

Fines and forfeitures
   Income tax - penalty and interest                                200,000         280,000             286,818             6,818          201,614
   Late fees on current taxes                                        20,000          20,000              15,574            (4,426)          18,123
   Interest on late invoices                                         11,000          17,000              16,179              (821)          11,006
   Parking fines                                                     55,000         140,000             149,864             9,864           76,543
   Court fines                                                      120,000          90,000              97,979             7,979           83,061
   Civil infractions                                                 16,000          15,000              18,057             3,057           21,978
         Total fines and forfeitures                                422,000         562,000             584,471            22,471          412,325

Investment earnings and rental income
   Interest income                                                  100,000         100,000              98,623            (1,377)         153,093
   Net increase (decrease) in the fair value of investments               -        (100,000)           (163,278)          (63,278)         193,005
   City right of way rental                                           6,800           6,800               2,000            (4,800)           6,800
   Fire station lease - Central Dispatch                             54,000          96,319             101,084             4,765           56,772
   Parking rentals                                                   68,750          68,750              61,935            (6,815)          48,500
   Great Lakes Naval Memorial lease                                  15,000               -                   -                 -                -
   McGraft Park rentals                                              97,000          55,000              48,016            (6,984)          44,637
   Other park rentals                                                55,000          31,000              50,028            19,028           34,858
         Total investment earnings and rental income                396,550         257,869             198,408           (59,461)         537,665




                                                                       87
                                                              City of Muskegon
                                        BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                                 General Fund
                                                       For the year ended June 30, 2021
                                       (with comparative actual amounts for the year ended June 30, 2020)


                                                                                                 2021                                      2020
                                                                    Budgeted Amounts                                 Variance with
                                                                   Original     Final                   Actual       Final Budget         Actual
   Other
      Police sale and auction proceeds                         $       1,000    $       1,000      $          385    $        (615)   $      28,818
      CDBG program reimbursements                                    548,967          461,984             495,554           33,570          482,833
      Fisherman's Landing reimbursement                               17,500           17,500              23,706            6,206           24,842
      Contributions                                                   20,000          503,380             558,945           55,565           22,227
      Contributions - Veteran's Park maintenance                      18,500           18,500              12,904           (5,596)          16,811
      Community Foundation for Muskegon County                        10,000           35,534              10,144          (25,390)           9,982
      Miscellaneous and sundry                                        83,000           84,500              82,616           (1,884)          89,486
            Total other                                              698,967         1,122,398           1,184,254          61,856          674,999
            Total revenues                                         28,477,855       31,485,003          33,056,483        1,571,480       29,653,448

EXPENDITURES
  Current
    Public representation services
        City commission                                               85,642           94,600              96,287           (1,687)          93,898
        City promotions and public relations                          58,000           58,000              56,041            1,959           92,409
        City manager                                                 442,010          427,800             430,424           (2,624)         432,401
        Contributions to outside agencies                            425,363          568,000             541,614           26,386          386,779
        City attorney                                                380,000          380,000             431,961          (51,961)         373,919
            Total public representation services                    1,391,015        1,528,400           1,556,327         (27,927)        1,379,406

      Administrative services
        City clerk                                                   622,802          585,500             569,368           16,132          621,603
        Civil service                                                224,437          234,100             214,035           20,065          222,645
        Affirmative action                                                 -                -                   -                -               22
            Total administrative services                            847,239          819,600             783,403           36,197          844,270

      Financial services
         Finance administration                                      640,541           647,000             643,392           3,608          587,625
         Assessing                                                   349,000           349,000             348,753             247          258,238
         Arena administration                                              -                 -              10,797         (10,797)          24,049
         Income tax administration                                   400,220           413,837             400,206          13,631          363,889
         Information systems                                         530,926           527,963             524,565           3,398          535,954
         City treasurer                                              625,823           637,377             615,675          21,702          589,093
         Pension administration                                            -         2,267,000           2,266,951              49                -
            Total financial services                                2,546,510        4,842,177           4,810,339          31,838         2,358,848

      Public safety
        Police department                                          10,766,690        9,707,553           9,862,730        (155,177)       10,445,491
        Fire department                                             3,360,760        3,198,615           2,908,093         290,522         4,353,377
        Fire safety inspections                                     2,349,360        1,983,915           1,870,745         113,170         1,996,679
            Total public safety                                    16,476,810       14,890,083          14,641,568         248,515        16,795,547




                                                                        88
                                                             City of Muskegon
                                       BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                                General Fund
                                                      For the year ended June 30, 2021
                                      (with comparative actual amounts for the year ended June 30, 2020)


                                                                                                 2021                                        2020
                                                                  Budgeted Amounts                                    Variance with
                                                                 Original     Final                     Actual        Final Budget          Actual
      Public works
        Street lighting                                      $      350,000    $      350,000      $       382,729    $     (32,729)    $      390,116
        Community event support                                      91,539            97,642              100,206           (2,564)            81,049
        General sanitation                                        2,267,799         2,267,262            2,285,497          (18,235)         2,216,029
        Storm water management                                       14,000            14,000                4,000           10,000             13,340
        City hall maintenance                                       295,402           315,750              310,492            5,258            309,388
        Cemeteries maintenance                                      498,897           473,433              360,056          113,377            429,404
            Total public works                                    3,517,637         3,518,087            3,442,980           75,107          3,439,326

      Community and economic development
        Planning, zoning and economic development                  441,257           480,000              488,691             (8,691)         405,688
        Environmental services                                           -                 -                  177               (177)           7,413
        Edison Landing subsidy                                     350,000           350,000              350,000                  -          360,000
            Total community and economic development               791,257           830,000              838,868             (8,868)         773,101

      Culture and recreation
         Parks maintenance                                        1,832,600         1,800,004            1,665,740          134,264          1,873,339
         McGraft Park maintenance                                   122,975           130,100              131,222           (1,122)            18,142
         General and inner city recreation programs                       -                 -                  305             (305)             1,928
         Forestry                                                         -            61,000               56,567            4,433                656
         Parking operations                                               -            86,200               89,542           (3,342)            30,524
         Farmers market and flea market                                   -                 -                   99              (99)               204
         Social district                                                  -                 -                5,639           (5,639)                 -
            Total culture and recreation                          1,955,575         2,077,304            1,949,114          128,190          1,924,793

      Other governmental functions
         Insurance premiums                                        360,000           363,180              351,344            11,836           340,189
         Other                                                     100,000           100,000               28,888            71,112            31,272
            Total other governmental functions                     460,000           463,180              380,232            82,948           371,461

   Debt service
     Principal                                                     194,100          2,294,000            2,285,300            8,700           290,000
     Interest and fees                                             251,000            251,000              250,991                9           160,811
     Bond issuance costs                                                 -            141,000              140,750              250                 -
         Total debt service                                        445,100          2,686,000            2,677,041            8,959           450,811

   Capital outlay                                                   50,000          4,686,446            4,358,050          328,396           786,725
            Total expenditures                                   28,481,143        36,341,277           35,437,922          903,355         29,124,288

Excess of revenues over (under) expenditures                         (3,288)       (4,856,274)          (2,381,439)        2,474,835          529,160




                                                                       89
                                                                City of Muskegon
                                       BUDGETARY COMPARISON SCHEDULE—CONTINUED
                                                                General Fund
                                                      For the year ended June 30, 2021
                                      (with comparative actual amounts for the year ended June 30, 2020)


                                                                                                 2021                                        2020
                                                                     Budgeted Amounts                                 Variance with
                                                                    Original     Final                  Actual        Final Budget          Actual
OTHER FINANCING SOURCES (USES)
  Long-term debt issued                                         $           -    $ 3,243,399       $     4,325,000    $    1,081,601    $            -
  Refunding bonds issued                                                    -       2,055,000            2,055,000                 -                 -
  Premium on bonds issued                                                   -         770,000              772,424             2,424                 -
  Transfers in                                                              -         225,000                    -          (225,000)                -
  Transfers out                                                      (390,000)     (1,205,000)          (1,475,000)         (270,000)       (1,132,500)
            Total other financing sources (uses)                     (390,000)       5,088,399          5,677,424           589,025         (1,132,500)

Net change in fund balance                                      $ (393,288)      $   232,125            3,295,985     $   3,063,860          (603,340)

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

Fund balance at end of year                                                                        $ 11,197,840                         $ 7,901,855



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




                                                                         90
                                                    City of Muskegon
                                      BUDGETARY COMPARISON SCHEDULE
                                          Major Street and Trunkline Fund
                                          For the year ended June 30, 2021


                                                           Budgeted Amounts                                Variance with
                                                         Original       Final                 Actual       Final Budget
REVENUES
  Intergovernmental revenues
     Federal                                         $      385,824     $           -     $           -     $            -
     State                                                5,191,586         4,476,000         4,573,237             97,237
  Charges for services                                            -                 -            11,521             11,521
  Investment earnings                                        10,000            10,000            10,039                 39
  Other                                                           -                 -            27,003             27,003
         Total revenues                                   5,587,410         4,486,000         4,621,800            135,800

EXPENDITURES
  Current
    Highways, streets and bridges                         4,737,046         4,531,273         4,234,631            296,642
  Debt service
    Principal                                              220,000           220,000           220,000                   -
    Interest and fees                                       11,000            11,000            10,300                 700
         Total expenditures                               4,968,046         4,762,273         4,464,931            297,342

Excess of revenues over (under) expenditures               619,364           (276,273)         156,869             433,142

OTHER FINANCING SOURCES
  Transfers in                                                    -          715,222                   -           (715,222)
Net change in fund balance                           $    619,364       $   438,949            156,869      $     (282,080)
Fund balance at beginning of year                                                             2,251,184
Fund balance at end of year                                                               $ 2,408,053




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




                                                             91
                                                                                                         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)


                                                                                       2020                2019               2018               2017               2016              2015              2014
     TOTAL PENSION LIABILITY
       Service cost                                                               $       615,293    $        732,228    $       806,565    $     1,018,541    $     1,130,408    $    1,194,909    $    1,190,507
       Interest                                                                         8,787,617           8,718,797          8,345,836          8,429,233          8,345,661         8,034,035         7,817,503
       Differences between expected and actual experience                               2,829,299           1,830,804          3,642,392          1,326,122         (1,697,797)         (647,017)                -
       Changes in assumptions                                                           2,974,495           4,134,788                  -                  -                  -         4,779,382                 -
       Benefit payments, including refunds of employee contributions                   (9,214,462)         (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                                    5,992,242           7,197,928          5,052,218          (648,937)          1,360,447         6,998,060         2,600,078
     Total pension liability at beginning of year                                     119,926,123         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)                                   $ 125,918,365      $ 119,926,123       $ 112,728,195      $ 107,675,977      $ 108,324,914      $ 106,964,467     $ 99,966,407

     PLAN FIDUCIARY NET POSITION
       Contributions-employer                                                     $     2,468,311    $      2,712,204    $     2,671,175    $     1,801,016    $     1,996,512    $    1,420,218    $    1,166,652
       Contributions-employee                                                             374,806             491,814            848,562            687,391            563,898           566,045           564,409
       Net investment income                                                           10,575,596          11,059,388         (3,452,538)        10,964,115          8,890,951        (1,237,895)        5,282,031




92
       Benefit payments, including refunds or employee contributions                   (9,214,462)         (8,218,689)        (7,512,608)        (6,937,544)        (6,417,825)       (6,363,249)       (6,407,932)
       Administrative expense                                                            (173,766)           (190,108)          (173,509)          (173,921)          (175,718)         (183,599)         (193,139)
                                                                                                -                   -
               Net change in plan fiduciary net position                                4,030,485           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                                  88,994,708          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)                               $ 93,025,193       $ 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)                          $ 32,893,172       $ 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          73.88%              74.21%             73.75%             84.29%             77.93%            74.38%            85.39%

     Covered payroll                                                              $   5,408,268      $     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                    608.20%             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)


                                                        2021              2020          2019            2018            2017             2016             2015             2014           2013            2012
     Actuarially determined contribution            $ 2,902,032        $ 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
     Contributions in relation to the actuarially
       determined contribution                          2,902,032        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
     Contribution deficiency (excess)               $           -      $ (922,393)   $ (315,967)     $ (166,074)    $ (379,042)      $ (206,832)      $           -     $ (500,000)   $           -   $           -

     Covered payroll                                $ 5,408,268        $ 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

     Contributions as percentage of covered
      payroll                                             53.7%             45.5%          33.8%          25.7%            26.9%            19.2%            14.1%           16.8%          10.2%           10.9%

     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




93
        Remaining amortization period         18 years
        Asset valuation method                5-year smoothed market
        Inflation                             2.5 percent
        Salary increases                      3.0 percent in the long-term
        Investment rate of return             7.35 percent, net of administrative and investment expenses
        Retirement age                        Varies depending on plan adoption
        Mortality                             Based on a version of Pub-2010 and fully generational MP-2019
                                                                                          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)


                                                                                                                 2020              2019              2018              2017
     TOTAL OPEB LIABILITY
       Service cost                                                                                          $      156,214    $      165,306    $      178,243    $      165,423
       Interest                                                                                                   2,058,432         2,191,233         2,035,720         1,954,979
       Differences between expected and actual experience                                                          (325,146)       (2,119,868)         (992,432)                -
       Changes of assumptions                                                                                    (1,152,266)        6,288,823         2,349,210                 -
       Benefit payments, including refunds of employee contributions                                             (1,621,453)       (1,983,928)       (1,118,442)       (1,064,376)
               Net change in total OPEB liability                                                                  (884,219)        4,541,566         2,452,299         1,056,026
     Total OPEB liability at beginning of year                                                                   33,642,202        29,100,636        26,648,337        25,592,311
     Total OPEB liability at end of year (a)                                                                 $ 32,757,983      $ 33,642,202      $ 29,100,636      $ 26,648,337

     PLAN FIDUCIARY NET POSITION
       Contributions-employer                                                                                $    1,154,926    $    1,001,447    $      671,363    $      736,039
       Net investment income                                                                                      2,210,729         2,660,470          (699,603)        2,110,019




94
       Benefit payments, including refunds or employee contributions                                             (1,621,453)       (1,983,928)       (1,118,442)       (1,064,376)
       Administrative expense                                                                                       (42,375)          (41,397)          (53,927)          (52,313)
               Net change in plan fiduciary net position                                                          1,701,827         1,636,592        (1,200,609)        1,729,369
     Plan fiduciary net position at beginning of year                                                            21,215,561        19,578,969        20,779,578        19,050,209
     Plan fiduciary net position at end of year (b)                                                          $ 22,917,388      $ 21,215,561      $ 19,578,969      $ 20,779,578

     City's net OPEB liability at end of year (a)-(b)                                                        $   9,840,595     $ 12,426,641      $   9,521,667     $   5,868,759

     Plan fiduciary net position as a percentage of the total OPEB liability                                       69.96%            63.06%            67.28%            77.98%

     Covered payroll                                                                                         $   7,848,543     $   8,952,683     Not Available     $   8,095,840

     City's net OPEB liability as a percentage of covered payroll                                                 125.38%           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)


                                                       2021             2020           2019             2018           2017           2016            2015            2014             2013            2012
     Actuarially determined contribution            $ 2,289,405     $ 2,115,188    $ 1,470,562      $    956,532   $    606,506   $    639,428    $    659,451    $    696,634     $    728,863    $    832,891
     Contributions in relation to the actuarially
      determined contribution                         1,206,464        1,233,505      1,260,887          687,642        606,506        639,428         659,451         696,634          728,863         832,891
     Contribution deficiency (excess)               $ 1,082,941     $ 881,683      $ 209,675        $ 268,890      $          -   $          -    $          -    $           -    $          -    $           -

     Covered payroll                                $ 7,848,543     $ 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

     Contributions as percentage of covered
      payroll                                            15.4%            13.8%    Not Available           8.5%           5.6%           5.9%            6.6%             7.0%            5.9%               6.7%

     Notes to Schedule
       Valuation Date:
       Actuarially determined contribution rates are calculated as of December 31, 2020.

        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




95
        Remaining amortization period         7 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, MP-2020 improvement scale.
                                                Mortality rates for others were as set forth in the Public General 2010 Employee and Healthy Retiree, headcount weighted, MP-2020 improvement scale.
                                                                                   City of Muskegon
                                                                  REQUIRED SUPPLEMENTARY INFORMATION
                                                   RETIREE HEALTHCARE SYSTEM SCHEDULE OF INVESTMENT RETURNS
                                                     Last Ten Fiscal Years (Amounts were determined as of June 30 of each fiscal year)


                                                                                                        2021                 2020        2019       2018

     Annual money-weighted rate of return, net of investment expense                                       10.55%               13.95%     -3.41%     11.19%

     Notes to Schedule
      Additional data is not available and will be provided in subsequent years




96
OTHER SUPPLEMENTAL INFORMATION




              97
                                            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.

Lakeshore BID – to account for the collection of special assessment revenue in the lakeshore area to be used for
improvement and maintenance of lakeshore 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.




                                                         98
                                        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.

Public Improvement Fund – to account for grants, private contributions, sale of property, and other resources used
to finance various capital 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.




                                                          99
                                                          City of Muskegon
                                                     COMBINING BALANCE SHEET
                                                       Other Governmental Funds
                                                             June 30, 2021


                                                                                             Other            Other           Permanent
                                                                      Total Other            Special         Capital            Fund -
                                                                     Governmental           Revenue          Projects         Cemetery
                                                                        Funds                Funds            Funds         Perpetual Care
ASSETS
  Cash and investments                                                $   2,943,588     $    1,376,197   $      990,386      $     577,005
  Assets managed by others                                                1,490,800                  -           34,184          1,456,616
  Accounts and loans receivable (net of allowance for uncollectibles)     1,749,722            337,501        1,408,444              3,777
  Due from other governmental units                                         470,248            197,019          273,229                  -
  Advances to component units                                               202,227                  -                -            202,227
  Prepaid items                                                              35,876             35,876                -                  -
            Total assets                                             $ 6,892,461        $ 1,946,593      $ 2,706,243         $ 2,239,625

LIABILITIES
  Accounts payable                                                   $      235,717     $       62,413   $      173,304      $           -
  Accrued liabilities                                                        46,580             33,496           13,084                  -
  Due to other governmental units                                             2,466                112            2,354                  -
  Due to other funds                                                        627,636            204,874          422,762                  -
  Short-term draw note                                                    1,108,007                  -        1,108,007                  -
  Unearned revenues - unused Farmers Market tokens                          150,187            150,187                -                  -
  Unearned revenues - expenditure-driven grants                             107,656                  -          107,656                  -
  Unearned revenues - prepaid events                                         36,687             36,687                -                  -
         Total liabilities                                                2,314,936            487,769        1,827,167                  -

FUND BALANCES
  Nonspendable
    Prepaid items                                                            35,876             35,876                  -                -
    Perpetual care                                                        1,642,408                  -                  -        1,642,408
  Restricted
    Highways, streets and bridges                                          1,181,198         1,181,198                 -                -
    Mercy Health Arena                                                        26,490            26,490                 -                -
    Law enforcement                                                           22,229            22,229                 -                -
    Business improvement districts                                           136,968           136,968                 -                -
    Perpetual care                                                           597,217                 -                 -          597,217
    Other purposes                                                            56,063            56,063                 -                -
  Assigned for capital projects and public improvements                    1,906,042                 -         1,906,042                -
  Unassigned                                                              (1,026,966)                -        (1,026,966)               -
         Total fund balances                                              4,577,525          1,458,824          879,076          2,239,625
            Total liabilities, deferred inflows of
             resources and fund balances                             $ 6,892,461        $ 1,946,593      $ 2,706,243         $ 2,239,625




                                                                  100
                                                    City of Muskegon
 COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
                                  Other Governmental Funds
                               For the year ended June 30, 2021


                                                                       Other             Other           Permanent
                                                 Total Other           Special          Capital            Fund -
                                                Governmental          Revenue           Projects         Cemetery
                                                   Funds               Funds             Funds         Perpetual Care
REVENUES
  Intergovernmental revenues
     Federal                                    $    1,811,560    $            -    $    1,811,560      $          -
     State                                           1,391,287         1,391,287                 -                 -
     Local                                             575,151                 -           575,151                 -
  Charges for services                               1,214,796         1,128,975            39,033            46,788
  Fines and forfeitures                                 10,342            10,342                 -                 -
  Investment earnings                                   33,036             5,550            17,318            10,168
  Income from assets managed by others                 229,194                 -             7,316           221,878
  Other                                              1,012,769           199,343           813,426                 -
         Total revenues                              6,278,135         2,735,497         3,263,804           278,834

EXPENDITURES
  Current
    Public works                                       161,742           161,742                   -                -
    Highways, streets and bridges                    1,336,973         1,336,973                   -                -
    Culture and recreation                           1,886,678         1,886,678                   -                -
  Debt service
    Principal                                          133,504                 -           133,504                  -
    Interest and fees                                   66,176                 -            66,176                  -
  Capital outlay                                     4,884,443            30,745         4,853,698                  -
         Total expenditures                          8,469,516         3,416,138         5,053,378                  -

Excess of revenues over (under) expenditures        (2,191,381)         (680,641)       (1,789,574)          278,834

OTHER FINANCING SOURCES (USES)
  Proceeds from sale of capital assets               2,908,552                 -         2,908,552                  -
  Transfers in                                         895,000           845,000            50,000                  -
  Transfers out                                        (40,000)                -           (40,000)                 -
         Total other financing sources (uses)        3,763,552           845,000         2,918,552                  -

Net change in fund balances (deficits)               1,572,171           164,359         1,128,978           278,834

Fund balances (deficits) at beginning of year        3,005,354         1,294,465          (249,902)         1,960,791
Fund balances at end of year                    $ 4,577,525       $ 1,458,824       $     879,076       $ 2,239,625




                                                          101
                                                                                      City of Muskegon
                                                                             COMBINING BALANCE SHEET
                                                                               Other Special Revenue Funds
                                                                                      June 30, 2021


                                                             Total Other                                                                                             Farmers
                                                           Special Revenue        Local       Mercy Health    Criminal     Downtown      Lakeshore       Tree       Market and
                                                                Funds             Street        Arena        Forfeitures     BID           BID        Replacement   Kitchen 242
      ASSETS
        Cash and investments                                $   1,376,197     $    998,052     $         -   $    22,229   $   132,988   $    3,980   $    13,680   $   205,268
        Accounts receivable                                       337,501           11,518         321,798             -             -            -             -         4,185
        Due from other governmental units                         197,019          197,019               -             -             -            -             -             -
        Prepaid items                                              35,876            7,438          28,438             -             -            -             -             -
                 Total assets                               $ 1,946,593       $ 1,214,027      $ 350,236     $   22,229    $ 132,988     $   3,980    $   13,680    $ 209,453

      LIABILITIES
        Accounts payable                                    $      62,413     $      7,192     $    40,495   $         -   $         -   $        -   $         -   $    14,726
        Accrued liabilities                                        33,496           18,199          13,140             -             -            -             -         2,157
        Due to other governmental units                               112                -             112             -             -            -             -             -
        Due to other funds                                        204,874                -         204,874             -             -            -             -             -
        Unearned revenues - unused Farmers Market tokens          150,187                -               -             -             -            -             -       150,187
        Unearned revenues - prepaid events                         36,687                -          36,687             -             -            -             -             -




102
              Total liabilities                                   487,769           25,391         295,308             -             -            -             -       167,070

      FUND BALANCES
        Nonspendable - prepaid items                               35,876            7,438          28,438             -             -            -             -             -
        Restricted
          Highways, streets and bridges                         1,181,198         1,181,198              -             -             -            -             -             -
          Mercy Health Arena                                       26,490                 -         26,490             -             -            -             -             -
          Law enforcement                                          22,229                 -              -        22,229             -            -             -             -
          Business improvement districts                          136,968                 -              -             -       132,988        3,980             -             -
          Other purposes                                           56,063                 -              -             -             -            -        13,680        42,383
              Total fund balances                               1,458,824         1,188,636         54,928        22,229       132,988        3,980        13,680        42,383
                 Total liabilities, deferred inflows of
                  resources and fund balances               $ 1,946,593       $ 1,214,027      $ 350,236     $   22,229    $ 132,988     $   3,980    $   13,680    $ 209,453
                                                                                    City of Muskegon
                                       COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES
                                                                  Other Special Revenue Funds
                                                                 For the year ended June 30, 2021


                                                       Total Other                                                                                             Farmers
                                                     Special Revenue       Local        Mercy Health     Criminal     Downtown       Lakeshore       Tree     Market and
                                                          Funds            Street         Arena         Forfeitures     BID            BID        Replacement Kitchen 242
      REVENUES
        Intergovernmental revenues - State            $   1,391,287    $    1,388,287   $          -    $         -   $         -    $        -    $    3,000   $         -
        Charges for services                              1,128,975             2,349        995,142              -             -             -        14,300       117,184
        Fines and forfeitures                                10,342                 -              -         10,342             -             -             -             -
        Investment earnings                                   5,550             4,502              -             43           631             1            45           328
        Other                                               199,343            62,356          9,836              -       115,306         5,959         5,886             -
               Total revenues                             2,735,497         1,457,494       1,004,978        10,385       115,937         5,960        23,231       117,512

      EXPENDITURES
        Current
          Public works                                      161,742                 -               -             -       159,762         1,980             -             -
          Highways, streets and bridges                   1,336,973         1,336,973               -             -             -             -             -             -
          Culture and recreation                          1,886,678                 -       1,715,865             -             -             -        10,570       160,243




103
        Capital outlay                                       30,745                 -          30,745             -             -             -             -             -
               Total expenditures                         3,416,138         1,336,973       1,746,610             -       159,762         1,980        10,570       160,243

      Excess of revenues over (under) expenditures         (680,641)         120,521        (741,632)        10,385       (43,825)        3,980        12,661       (42,731)

      OTHER FINANCING SOURCES
        Transfers in                                        845,000                 -        765,000              -             -             -             -        80,000

      Net change in fund balances                           164,359          120,521          23,368         10,385       (43,825)        3,980        12,661        37,269

      Fund balances at beginning of year                  1,294,465         1,068,115         31,560         11,844       176,813             -         1,019         5,114
      Fund balances at end of year                    $ 1,458,824      $ 1,188,636      $    54,928     $   22,229    $ 132,988      $   3,980     $   13,680   $   42,383
                                                                    City of Muskegon
                                                     BUDGETARY COMPARISON SCHEDULE
                                                          Other Special Revenue Funds
                                                         For the year ended June 30, 2021


                                                                    Local Street                                 Mercy Health Arena
                                                       Final                                             Final
                                                      Budget           Actual          Variance         Budget           Actual           Variance
      REVENUES
        Intergovernmental revenues - State           $ 1,390,000     $ 1,388,287    $     (1,713)   $          -     $          -     $           -
        Charges for services                                   -           2,349           2,349         798,876          995,142           196,266
        Investment earnings                                3,500           4,502           1,002               -                -                 -
        Other                                             60,000          62,356           2,356           5,700            9,836             4,136
               Total revenues                          1,453,500        1,457,494          3,994         804,576         1,004,978          200,402

      EXPENDITURES
        Current
          Highways, streets and bridges                1,719,140        1,336,973        382,167                -                -                 -




104
          Culture and recreation                               -                -              -        1,465,881        1,715,865          (249,984)
        Capital outlay                                         -                -              -           35,930           30,745             5,185
               Total expenditures                      1,719,140        1,336,973        382,167        1,501,811        1,746,610          (244,799)

      Excess of revenues over (under) expenditures      (265,640)        120,521         386,161         (697,235)        (741,632)          (44,397)

      OTHER FINANCING SOURCES
        Transfers in                                     100,000                -       (100,000)        740,000          765,000            25,000

      Net change in fund balances                    $ (165,640)         120,521    $ 286,161       $     42,765           23,368     $     (19,397)

      Fund balances at beginning of year                                1,068,115                                          31,560

      Fund balances at end of year                                   $ 1,188,636                                     $    54,928
                                                              City of Muskegon
                                           BUDGETARY COMPARISON SCHEDULE─CONTINUED
                                                      Other Special Revenue Funds
                                                    For the year ended June 30, 2021


                                                          Criminal Forfeitures                                   Downtown BID
                                                  Final                                              Final
                                                 Budget           Actual         Variance           Budget            Actual       Variance
      REVENUES
        Fines and forfeitures                $      7,407     $     10,342     $     2,935      $          -      $           -    $         -
        Investment earnings                            40               43               3                 -                631            631
        Other                                           -                -               -           113,681            115,306          1,625
               Total revenues                       7,447           10,385           2,938           113,681            115,937          2,256

      EXPENDITURES
        Current
          Public works                                    -                -                -        113,681            159,762        (46,081)
      Net change in fund balances            $     7,447            10,385     $    2,938       $            -          (43,825)   $ (43,825)




105
      Fund balances at beginning of year                            11,844                                              176,813

      Fund balances at end of year                            $    22,229                                         $    132,988
                                                                  City of Muskegon
                                             BUDGETARY COMPARISON SCHEDULE─CONTINUED
                                                        Other Special Revenue Funds
                                                      For the year ended June 30, 2021


                                                                 Lakeshore BID                                   Tree Replacement
                                                     Final                                             Final
                                                    Budget             Actual        Variance         Budget            Actual      Variance
      REVENUES
        Intergovernmental revenues - State      $            -     $          -     $        -    $      3,000      $      3,000    $        -
        Charges for services                                 -                -              -               -            14,300        14,300
        Investment earnings                                  -                1              1               -                45            45
        Other                                                -            5,959          5,959          14,800             5,886        (8,914)
               Total revenues                                -            5,960          5,960          17,800            23,231         5,431

      EXPENDITURES
        Current
          Public works                                       -            1,980         (1,980)              -                 -             -
          Culture and recreation                             -                -              -          14,800            10,570         4,230
                                                                              -              -




106
               Total expenditures                            -            1,980         (1,980)         14,800            10,570         4,230

      Net change in fund balances               $            -            3,980     $   3,980     $     3,000             12,661    $   9,661

      Fund balances at beginning of year                                        -                                          1,019

      Fund balances at end of year                                 $     3,980                                      $    13,680
                                              City of Muskegon
                            BUDGETARY COMPARISON SCHEDULE─CONTINUED
                                       Other Special Revenue Funds
                                     For the year ended June 30, 2021


                                                            Farmers Market and Kitchen 242
                                                            Final
                                                           Budget      Actual       Variance
      REVENUES
        Intergovernmental revenues - State             $          -     $         -    $         -
        Charges for services                                115,500         117,184          1,684
        Investment earnings                                     170             328            158
        Other                                                 6,710               -         (6,710)
               Total revenues                               122,380         117,512         (4,868)

      EXPENDITURES
        Current
          Culture and recreation                            211,953         160,243        51,710




107
      Excess of revenues over (under) expenditures           (89,573)       (42,731)       46,842

      OTHER FINANCING SOURCES
        Transfers in                                        105,000          80,000        (25,000)

      Net change in fund balance                       $     15,427          37,269    $   21,842

      Fund balance at beginning of year                                       5,114

      Fund balance at end of year                                       $   42,383
                                                                                                         City of Muskegon
                                                                                                COMBINING BALANCE SHEET
                                                                                                  Other Capital Projects Funds
                                                                                                         June 30, 2021


                                                                    Total Other                                EDC           Community
                                                                   Capital Projects     Michcon              Revolving      Development         HOME             Lead           Senior         Public
                                                                       Funds           Remediation             Loan         Block Grant       Rehabilitation   Abatement        Millage     Improvement
      ASSETS
        Cash and investments                                       $       990,386     $    227,545      $        624,078   $             -   $     110,635    $        -   $      28,128   $           -
        Assets managed by others                                            34,184                -                     -                 -               -             -               -          34,184
        Receivables
          Accounts and loans (net of
            allowance for uncollectibles)                                 1,408,444                  -            935,911          11,773                 -             -               -         460,760
        Due from other governmental units                                   273,229                  -                  -         108,067             1,781        56,290         101,556           5,535

                  Total assets                                     $    2,706,243      $   227,545       $     1,559,989    $    119,840      $    112,416     $   56,290   $    129,684    $    500,479

      LIABILITIES
        Accounts payable                                           $        173,304    $             -   $        116,887   $      21,442     $         400    $   17,849   $       4,425   $      12,301
        Accrued liabilities                                                  13,084                  -                  -           9,055             1,452         2,149             428               -
        Due to other governmental units                                       2,354                  -                  -               -                 -         2,354               -               -
        Due to other funds                                                  422,762                  -                  -          89,343                 -        33,938               -         299,481
        Short-term draw note                                              1,108,007                  -                  -               -                 -             -               -       1,108,007
        Unearned revenues - expenditure-driven grants                       107,656                  -                  -               -                 -             -               -         107,656
               Total liabilities                                          1,827,167                  -            116,887         119,840             1,852        56,290           4,853       1,527,445




108
      FUND BALANCES (DEFICITS)
        Assigned for capital projects and public improvements             1,906,042         227,545             1,443,102                 -         110,564             -         124,831              -
        Unassigned                                                       (1,026,966)              -                     -                 -               -             -               -       (1,026,966)
               Total fund balances (deficits)                              879,076          227,545             1,443,102                 -         110,564             -         124,831       (1,026,966)
                  Total liabilities and fund balances (deficits)   $    2,706,243      $   227,545       $     1,559,989    $    119,840      $    112,416     $   56,290   $    129,684    $    500,479
                                                                                                City of Muskegon
                                            COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
                                                                            Other Capital Projects Funds
                                                                          For the year ended June 30, 2021


                                                       Total Other                                EDC            Community
                                                      Capital Projects     Michcon              Revolving       Development       HOME             Lead            Senior          Public
                                                          Funds           Remediation             Loan          Block Grant     Rehabilitation   Abatement         Millage      Improvement
      REVENUES
        Intergovernmental revenues
           Federal                                    $      1,811,560    $          -      $              -    $   1,069,842   $      55,069    $   681,114   $           -    $        5,535
           Local                                               575,151               -                     -                -               -              -               -           575,151
        Charges for services                                    39,033               -                 6,000                -               -              -               -            33,033
        Investment earnings                                     17,318           1,134                15,853                -               -              -             331                 -
        Income from assets managed by others                     7,316               -                     -                -               -              -               -             7,316
        Other                                                  813,426               -               405,448            6,838               -              -         200,266           200,874
               Total revenues                                3,263,804           1,134               427,301        1,076,680          55,069        681,114         200,597           821,909

      EXPENDITURES
        Debt service
          Principal                                            133,504                  -                  -                -              -               -               -            133,504
          Interest and fees                                     66,176                  -                  -                -              -               -               -             66,176
        Capital outlay                                       4,853,698                  -             27,023        1,128,054        244,597         681,114         117,960          2,654,950
               Total expenditures                            5,053,378                  -             27,023        1,128,054        244,597         681,114         117,960          2,854,630




109
      Excess of revenues over (under) expenditures          (1,789,574)          1,134               400,278         (51,374)        (189,528)             -          82,637         (2,032,721)

      OTHER FINANCING SOURCES (USES)
        Proceeds from sale of capital assets                 2,908,552                  -                   -         51,374         300,092               -               -          2,557,086
        Transfers in                                            50,000                  -                   -              -               -               -               -             50,000
        Transfers out                                          (40,000)                 -                   -              -               -               -         (40,000)                 -
               Total other financing sources (uses)          2,918,552                  -                   -         51,374         300,092               -         (40,000)         2,607,086

      Net change in fund balances (deficits)                 1,128,978           1,134               400,278                -        110,564               -          42,637           574,365

      Fund balances (deficits) at beginning of year           (249,902)        226,411             1,042,824                -               -              -          82,194         (1,601,331)
      Fund balances (deficits) at end of year         $      879,076      $   227,545       $     1,443,102     $           -   $   110,564      $         -   $    124,831     $   (1,026,966)
[This page was intentionally left blank.]




                  110
                                             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.




                                                         111
                                                                      City of Muskegon
                                                  COMBINING STATEMENT OF NET POSITION
                                                            Internal Service Funds
                                                                 June 30, 2021


                                                                       Total Internal    Engineering                       General        Public Service
                                                                       Service Funds      Services      Equipment         Insurance         Building
ASSETS
Current assets
  Cash and investments                                                 $    1,809,803    $    56,580    $     915,651     $           -   $     837,572
  Accounts receivable                                                       1,610,774          3,122           49,776         1,557,876               -
  Inventories                                                                   7,318              -            7,318                 -               -
  Prepaid items                                                               229,482          1,777           66,936           154,300           6,469
         Total current assets                                               3,657,377         61,479        1,039,681         1,712,176         844,041
Noncurrent assets
  Advances to component units                                                 391,080              -          195,540          195,540                 -
  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                                                9,750,170         51,346         9,604,460                -           94,364
        Less accumulated depreciation                                      (9,085,683)       (31,145)       (7,267,497)               -       (1,787,041)
         Net capital assets                                                 2,699,417         20,201        2,336,963                 -         342,253
         Total noncurrent assets                                            3,090,497         20,201        2,532,503          195,540          342,253
            Total assets                                                    6,747,874         81,680        3,572,184         1,907,716       1,186,294
DEFERRED OUTFLOWS OF RESOURCES
  Related to pension                                                           58,040              -           21,765                 -          36,275
  Related to other postemployment benefits                                     27,760              -           10,410                 -          17,350
            Total deferred outflows of resources                               85,800              -           32,175                 -          53,625
                Total assets and deferred outflows of resources             6,833,674         81,680        3,604,359         1,907,716       1,239,919
LIABILITIES
Current liabilities
  Accounts payable                                                            269,193          5,237           62,665          167,253           34,038
  Accrued liabilities                                                          50,316         10,827           16,613            1,405           21,471
  Due to other funds                                                          384,381              -                -          384,381                -
  Bonds and other obligations, due within one year                             26,700          4,900            8,800              900           12,100
         Total current liabilities                                            730,590         20,964           88,078          553,939           67,609
Noncurrent liabilities
  Bonds and other obligations, less amounts due within one year               133,925         24,658           43,866            4,664           60,737
  Net pension liability                                                     1,315,727              -          493,398                -          822,329
  Net other postemployment benefits liability                                 393,624              -          147,609                -          246,015
         Total noncurrent liabilities                                       1,843,276         24,658          684,873            4,664        1,129,081
                Total liabilities                                           2,573,866         45,622          772,951          558,603        1,196,690
DEFERRED INFLOWS OF RESOURCES
  Related to pension                                                          108,846              -           40,817                 -          68,029
  Related to other postemployment benefits                                     25,813              -            9,680                 -          16,133
            Total deferred inflows of resources                               134,659              -           50,497                 -          84,162
                Total liabilities and deferred inflows of resources         2,708,525         45,622          823,448          558,603        1,280,852
NET POSITION
  Net investment in capital assets                                          2,699,417         20,201        2,336,963                 -         342,253
  Unrestricted                                                              1,425,732         15,857          443,948         1,349,113        (383,186)
                Total net position                                     $   4,125,149     $   36,058     $ 2,780,911       $ 1,349,113     $    (40,933)




                                                                             112
                                                           City of Muskegon
                  COMBINING STATEMENT OF REVENUE, EXPENSES AND CHANGES IN NET POSITION
                                             Internal Service Funds
                                        For the year ended June 30, 2021


                                                   Total Internal    Engineering                    General        Public Service
                                                   Service Funds      Services      Equipment      Insurance         Building
OPERATING REVENUES
  Charges for services                             $    8,889,155    $    503,187   $ 2,212,782    $ 5,067,567     $    1,105,619
  Other                                                    97,102          32,586        64,516              -                  -
          Total operating revenues                      8,986,257         535,773     2,277,298      5,067,567          1,105,619

OPERATING EXPENSES
  Administration                                          791,527         101,932       171,867         46,806            470,922
  Insurance premiums and claims                         4,839,612               -             -      4,839,612                  -
  Other operations                                      3,400,274         400,980     1,936,098         74,644            988,552
  Depreciation                                            542,440           2,499       508,412              -             31,529
          Total operating expenses                      9,573,853         505,411     2,616,377      4,961,062          1,491,003

          Operating income (loss)                       (587,596)          30,362      (339,079)       106,505           (385,384)

NONOPERATING REVENUES (EXPENSES)
  Investment earnings                                     24,721              30         12,121         10,640              1,930
  Gain (loss) on sale of capital assets                   83,978               -         83,978              -                  -
          Total nonoperating revenues (expenses)         108,699              30         96,099         10,640              1,930

          Income (loss) before transfers                (478,897)          30,392      (242,980)       117,145           (383,454)

TRANSFERS
  Transfers in                                           625,000                -             -                -          625,000

          Change in net position                         146,103           30,392      (242,980)       117,145            241,546

Net position at beginning of year                       3,979,046           5,666     3,023,891      1,231,968           (282,479)
Net position at end of year                        $ 4,125,149       $    36,058    $ 2,780,911    $ 1,349,113     $     (40,933)




                                                                    113
                                                                                            City of Muskegon
                                                                                 COMBINING STATEMENT OF CASH FLOWS
                                                                                            Internal Service Funds
                                                                                       For the year ended June 30, 2021


                                                                                                  Total Internal    Engineering                                General        Public Service
                                                                                                  Service Funds      Services             Equipment           Insurance         Building
      CASH FLOWS FROM OPERATING ACTIVITIES
        Receipts from customers                                                                   $       53,808    $     29,948      $         23,860    $              -    $            -
        Receipts from interfund services provided                                                      7,297,489         503,187             2,212,782           3,475,901         1,105,619
        Other receipts                                                                                 1,502,594               -                     -           1,502,594                 -
        Payments to suppliers                                                                         (6,671,503)       (164,578)           (1,005,157)         (4,794,074)         (707,694)
        Payments to employees                                                                         (1,336,543)       (228,949)             (364,830)           (226,006)         (516,758)
        Payments for interfund services used                                                            (868,416)        (95,033)             (655,123)             (3,989)         (114,271)
               Net cash provided by (used for) operating activities                                      (22,571)         44,575              211,532             (45,574)          (233,104)
      CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES
        Transfers in                                                                                     625,000                  -                 -                   -            625,000
        Interfund borrowing                                                                              (10,136)                 -                 -             (10,136)                 -
        Collections on advances to component units                                                        90,140                  -            45,070              45,070                  -
               Net cash provided by (used for) noncapital financing activities                           705,004                  -            45,070              34,934            625,000
      CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES
        Purchases of capital assets                                                                     (322,030)                 -          (322,030)                    -                -
        Proceeds from sale of capital assets                                                             170,913                  -           170,913                     -                -




114
               Net cash provided by (used for) capital and related financing activities                 (151,117)                 -          (151,117)                    -                -
      CASH FLOW FROM INVESTING ACTIVITIES
        Investment earnings                                                                               24,721             30                12,121              10,640              1,930
               Net increase (decrease) in cash and investments                                           556,037          44,605              117,606                     -          393,826
      Cash and investments at beginning of year                                                        1,253,766          11,975              798,045                     -          443,746
      Cash and investments at end of year                                                         $   1,809,803     $    56,580       $      915,651      $               -   $     837,572
      Reconciliation of operating income (loss) to net cash provided by (used for)
        operating activities
           Operating income (loss)                                                                $     (587,596)   $     30,362      $      (339,079)    $       106,505     $     (385,384)
           Adjustments to reconcile operating income (loss) to net cash provided by
               (used for) operating activities
                   Depreciation expense                                                                  542,440           2,499              508,412                     -           31,529
               Change in assets and liabilities
                   Receivables                                                                          (132,366)         (2,638)             (40,656)            (89,072)                 -
                   Inventories                                                                            (1,285)              -               (1,285)                  -                  -
                   Prepaid items                                                                          14,393             868               (2,378)             15,648                255
                   Accounts payable                                                                      (77,132)          4,604               16,349             (78,641)           (19,444)
                   Accrued liabilities                                                                   218,975           8,880               70,169                 (14)           139,940
                     Net cash provided by (used for) operating activities                         $     (22,571)    $    44,575       $      211,532      $      (45,574)     $    (233,104)
                                               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:

CUSTODIAL FUNDS are used to report fiduciary activities that are not required to be reported in pension (and
other employee benefit) trust funds, investment trust funds, or private-purpose trust funds.

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.




                                                        115
                                                     City of Muskegon
                                   COMBINING STATEMENT OF NET POSITION
                                               Custodial Funds
                                                June 30, 2021


                                                    Total                                   Current       Rehab Loan
                                               Custodial Funds             Collector          Tax           Escrow
ASSETS
  Cash and investments                         $       842,960         $      842,579   $             -   $      381
  Accounts receivable                                  145,552                145,552                 -            -
          Total assets                                 988,512                988,131                 -          381

LIABILITIES
  Accounts payable                                     125,849                125,468                 -          381
  Due to other governmental units                      763,408                763,408                 -            -
  Deposits held for others                              99,255                 99,255                 -            -
          Total liabilities                            988,512                988,131                 -          381

NET POSITION
  Restricted for individuals, organizations,
   and other governments                       $             -         $            -   $             -   $        -




                                                                 116
                                                      City of Muskegon
                                   COMBINING STATEMENT OF CHANGES IN NET POSITION
                                                        Custodial Funds
                                               For the year ended June 30, 2021


                                                     Total                                   Current       Rehab Loan
                                                 Custodial Funds         Collector            Tax            Escrow
ADDITIONS
  Tax collections for other governments          $    22,844,643     $      406,974      $ 22,437,669      $       -
  Other collections for third parties                  1,268,438          1,268,438                 -              -
      Total additions                                 24,113,081          1,675,412          22,437,669            -

DEDUCTIONS
  Payment of taxes to other governments               22,844,643            406,974          22,437,669            -
  Other payments to third parties                      1,268,438          1,268,438                   -            -
      Total deductions                                24,113,081          1,675,412          22,437,669            -

          Change in net position                               -                     -                 -           -

Net position at beginning of year, as restated                 -                     -                 -           -

Net position at end of year                      $             -     $               -   $             -   $       -




                                                             117
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                  118
                                        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 Authorities – to account for the collection of tax increment revenues for
environmental remediation in designated brownfield areas. Currently there are six 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.
      Area V – Hartshore Marina site.
      Area VI – Scattered housing site.




                                                         119
                                                                City of Muskegon
                                                       COMBINING BALANCE SHEET
                                                      Discretely Presented Component Units
                                                                  June 30, 2021


                                                                       Local
                                              Total Discretely      Development
                                                Presented             Finance            Downtown      Tax Increment     Brownfield
                                               Component             Authority -        Development       Finance      Redevelopment
                                                   Units             SmartZone           Authority       Authority      Authorities
      ASSETS
        Cash and investments                  $      323,582       $       40,168       $    159,587   $     17,885    $     105,942

      LIABILITIES
        Accounts payable                      $        89,996      $               -    $     69,446   $           -   $       20,550
        Accrued liabilities                             4,057                      -           4,057               -                -
        Due to primary government                     652,132                      -               -               -          652,132
        Advances from primary government              593,307                      -               -               -          593,307




120
              Total liabilities                     1,339,492                      -          73,503               -        1,265,989

      FUND BALANCES (DEFICITS)
        Unassigned                                  (1,015,910)             40,168            86,084          17,885        (1,160,047)
                 Total liabilities and fund
                  balances (deficits)         $      323,582       $       40,168       $    159,587   $     17,885    $     105,942
                                                   City of Muskegon
                        RECONCILIATION OF THE GOVERNMENTAL FUNDS
                      BALANCE SHEET TO THE STATEMENT OF NET POSITION
                                Discretely Presented Component Units
                                            June 30, 2021


Total fund balances (deficits)—governmental funds                                                   $ (1,015,910)

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                                                        (3,035,729)      1,162,529

   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                                                            (7,000)
      Bonds and notes payable                                                         (1,352,248)     (1,359,248)

         Net position of governmental activities                                                    $ (1,212,629)




                                                           121
                                                                         City of Muskegon
                       COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES (DEFICITS)
                                                   Discretely Presented Component Units
                                                     For the year ended June 30, 2021


                                                                               Local
                                                      Total Discretely      Development
                                                        Presented             Finance         Downtown      Tax Increment     Brownfield
                                                        Component            Authority -     Development       Finance      Redevelopment
                                                           Units             SmartZone        Authority       Authority       Authorities
      REVENUES
        Property taxes                                $     1,393,555      $        99,568   $    490,931   $      42,184   $      760,872
        Intergovernmental revenues
           State                                               29,359               3,349               -           9,744           16,266
           Local                                              400,000             350,000          50,000               -                -
        Investment earnings                                     1,760                 205             579              69              907
        Other                                                 118,629                   -         118,325               -              304
               Total revenues                               1,943,303             453,122         659,835          51,997          778,349




122
      EXPENDITURES
        Current
          Community and economic development                1,863,830                    -        580,098          50,000         1,233,732
        Debt service
          Principal                                           395,000             395,000               -               -                -
          Interest and fees                                    72,470              50,100               -               -           22,370
               Total expenditures                           2,331,300             445,100         580,098          50,000         1,256,102

      Net change in fund balances (deficits)                 (387,997)               8,022         79,737           1,997         (477,753)

      Fund balances (deficits) at beginning of year          (627,913)              32,146          6,347          15,888         (682,294)

      Fund balances (deficits) at end of year         $   (1,015,910)      $       40,168    $    86,084    $     17,885    $   (1,160,047)
                                                    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, 2021


Net change in fund balances (deficits)—total governmental funds                                    $   (387,997)

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                                                         395,000
      Changes in accrual of interest and amortization of premiums and discounts
        Change in accrued interest payable                                            $    2,650
        Amortization of premiums                                                          13,129        15,779
             Change in net position of governmental activities                                     $ (149,866)




                                                             123
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                  124
SCHEDULE OF INDEBTEDNESS




           125
                                                                                            City of Muskegon

                                                                               SCHEDULE OF INDEBTEDNESS

                                                                                              June 30, 2021

                                                                                                                                                                                Annual
                                                                          Date             Amount           Interest    Date of                                                 Interest
                                                                        of Issue           of Issue           Rate      Maturity         6/30/2020           6/30/2021          Payable

Business-Type Activities Bonds and Loans Payable:

 Drinking Water State Revolving                                           3/2/2004 $        13,900,000          2.13%     10/01/20 $          760,000    $              -   $            -
  Fund                                                                                                          2.13%     10/01/21            775,000             775,000           77,616
                                                                                                                2.13%     10/01/22            790,000             790,000           60,988
    Type of debt: state loan                                                                                    2.13%     10/01/23            810,000             810,000           43,988
    Revenue pledged: water system net revenues                                                                  2.13%     10/01/24            825,000             825,000           26,616
                                                                                                                2.13%     10/01/25            840,000             840,000            8,925
                                                                                                                                            4,800,000           4,040,000          218,133


 Drinking Water State Revolving Fund*                                   8/30/2019           $1,600,000          2.00%     10/01/21            65,000               65,000           32,000
                                                                                                                2.00%     10/01/22            70,000               70,000           30,700
   Type of debt: state loan                                                                                     2.00%     10/01/23            70,000               70,000           29,300
    Revenue Pledged: water system net revenues                                                                  2.00%     10/01/24            58,217               70,000           27,900
    Forgiveness: 20%                                                                                            2.00%     10/01/25                 -               70,000           26,500
                                                                                                                2.00%     10/01/26                 -               75,000           25,100
                                                                                                                2.00%     10/01/27                 -               75,000           23,600
                                                                                                                2.00%     10/01/28                 -               75,000           22,100
                                                                                                                2.00%     10/01/29                 -               75,000           20,600
                                                                                                                2.00%     10/01/30                 -               80,000           19,100
                                                                                                                2.00%     10/01/31                 -               80,000           17,500
                                                                                                                2.00%     10/01/32                 -               80,000           15,900
                                                                                                                2.00%     10/01/33                 -               85,000           14,300
                                                                                                                2.00%     10/01/34                 -               85,000           12,600
                                                                                                                2.00%     10/01/35                 -               85,000           10,900
                                                                                                                2.00%     10/01/36                 -               90,000            9,200
                                                                                                                2.00%     10/01/37                 -               90,000            7,400
                                                                                                                2.00%     10/01/38                 -               90,000            5,600
                                                                                                                2.00%     10/01/39                 -               95,000            3,800
                                                                                                                2.00%     10/01/40                 -               86,874            1,900
                                                                                                                                             263,217            1,591,874          356,000


 Sanitary Sewer State Revolving Fund*                                   8/30/2019           $2,875,000          2.00%     10/01/21            120,000             120,000           56,300
                                                                                                                2.00%     10/01/22            120,000             120,000           53,900
   Type of debt: state loan                                                                                     2.00%     10/01/23            125,000             125,000           51,450
   Revenue Pledged: sanitary sewer system net revenues                                                          2.00%     10/01/24            125,000             125,000           48,950
   Forgiveness: 75%                                                                                             2.00%     10/01/25            130,000             130,000           46,400
                                                                                                                2.00%     10/01/26            130,000             130,000           43,800
                                                                                                                2.00%     10/01/27            135,000             135,000           41,150
                                                                                                                2.00%     10/01/28            135,000             135,000           38,450
                                                                                                                2.00%     10/01/29            140,000             140,000           35,700
                                                                                                                2.00%     10/01/30            140,000             140,000           32,900
                                                                                                                2.00%     10/01/31            145,000             145,000           30,050
                                                                                                                2.00%     10/01/32             99,739             145,000           27,150
                                                                                                                2.00%     10/01/33                  -             150,000           24,200
                                                                                                                2.00%     10/01/34                  -             150,000           21,200
                                                                                                                2.00%     10/01/35                  -             155,000           18,150
                                                                                                                2.00%     10/01/36                  -             139,459           15,000
                                                                                                                                            1,544,739           2,184,459          584,750


 Drinking Water State Revolving Fund*                                   9/30/2020 $          3,844,750          2.00%     10/01/21                   -           154,750            15,701
                                                                                                                2.00%     10/01/22                   -           160,000            12,606
   Type of debt: state loan                                                                                     2.00%     10/01/23                   -           165,000             9,406
    Revenue Pledged: water system net revenues                                                                  2.00%     10/01/24                   -           170,000             6,106
    Forgiveness: 9%                                                                                             2.00%     10/01/25                   -           135,296             2,706
                                                                                                                                                     -           785,046            46,525


 Sanitary Sewer State Revolving Fund*                                   9/30/2020 $          3,772,000          2.00%     10/01/21                   -           152,000             9,101
                                                                                                                2.00%     10/01/22                   -           155,000             6,061
   Type of debt: state loan                                                                                     2.00%     10/01/23                   -           148,074             2,961
    Revenue Pledged: water system net revenues                                                                  2.00%     10/01/24                   -                 -                 -
    Forgiveness: 20%                                                                                            2.00%     10/01/25                   -                 -                 -
                                                                                                                                                     -           455,074            18,123

TOTAL BUSINESS TYPE ACTIVITIES BONDS AND LOAN PAYABLE                                                                                $      6,607,956    $      9,056,453   $    1,223,531

*If certain conditions are met, a portion of the principal amount on these debts may be forgiven.




                                                                                                      126
                                                                      City of Muskegon

                                                              SCHEDULE OF INDEBTEDNESS

                                                                        June 30, 2021

                                                                                                                                                          Annual
                                                        Date         Amount            Interest     Date of                                               Interest
                                                      of Issue       of Issue            Rate       Maturity       6/30/2020          6/30/2021           Payable

Governmental Activities Bonds and Loan Payable:

 Capital Improvement refunding bonds of 2016            3/8/2016 $    4,815,000            3.00%      10/01/20 $        295,000   $              -    $            -
 ($189,903 unamortized premium)                                                            3.00%      10/01/21          305,000            305,000           141,975
                                                                                           3.00%      10/01/22          300,000            300,000           132,900
   Type of debt: limited G.O. bonds                                                        3.00%      10/01/23          300,000            300,000           122,400
   Revenue pledged: general revenues                                                       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
                                                                                                                      4,110,000          3,815,000           920,475


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


 Installment Purchase Agreements                                 $    2,417,390       4.4% - 5.3%     04/22/21          324,944                   -                  -
  Mercy Health Arena                                                                  4.4% - 5.3%     04/22/22          340,307                   -                  -
   Type of debt: installment purchase                                                 4.4% - 5.3%     04/22/23          356,217                   -                  -
   Revenue pledged: general revenues                                                  4.4% - 5.3%     04/22/24          372,871                   -                  -
                                                                                      4.4% - 5.3%     04/22/25          390,306                   -                  -
                                                                                      4.4% - 5.3%     04/22/26          339,159                   -                  -
                                                                                                                      2,123,804                   -                  -


 Capital Improvement Bonds of 2019                     10/9/2019 $   19,420,000            1.90%      10/01/20         175,000                   -                 -
  Convention Center                                                                        1.83%      10/01/21         205,000             205,000           612,211
 ($135,650 unamortized discount)                                                           1.88%      10/01/22         250,000             250,000           607,985
                                                                                           1.93%      10/01/23         300,000             300,000           602,740
   Type of debt: limited G.O. bonds                                                        2.00%      10/01/24         320,000             320,000           596,645
   Revenue Pledged: excise tax on hotel rooms levied by the                                2.10%      10/01/25         340,000             340,000           589,875
   County of Muskegon pursuant to Act 263                                                  2.24%      10/01/26         360,000             360,000           582,273
                                                                                           2.34%      10/01/27         380,000             380,000           573,795
                                                                                           2.43%      10/01/28         405,000             405,000           564,429
                                                                                           2.60%      10/01/29         430,000             430,000           553,918
                                                                                           2.60%      10/01/30         455,000             455,000           542,412
                                                                                           2.68%      10/01/31         480,000             480,000           530,066
                                                                                           2.78%      10/01/32         510,000             510,000           516,544
                                                                                           2.83%      10/01/33         540,000             540,000           501,815
                                                                                           2.93%      10/01/34         570,000             570,000           485,822
                                                                                           3.30%      10/01/35         605,000             605,000           467,399
                                                                                           3.30%      10/01/36         640,000             640,000           446,670
                                                                                           3.30%      10/01/37         680,000             680,000           424,692
                                                                                           3.30%      10/01/38         720,000             720,000           401,382
                                                                                           3.30%      10/01/39         760,000             760,000           376,740
                                                                                           3.48%      10/01/40         800,000             800,000           350,166
                                                                                           3.48%      10/01/41         845,000             845,000           321,543
                                                                                           3.48%      10/01/42         895,000             895,000           291,267
                                                                                           3.48%      10/01/43         940,000             940,000           259,338
                                                                                           3.48%      10/01/44         995,000             995,000           225,669
                                                                                           3.58%      10/01/45       1,045,000           1,045,000           189,651
                                                                                           3.58%      10/01/46       1,105,000           1,105,000           151,165
                                                                                           3.58%      10/01/47       1,160,000           1,160,000           110,622
                                                                                           3.58%      10/01/48       1,225,000           1,225,000            67,931
                                                                                           3.58%      10/01/49       1,285,000           1,285,000            23,001
                                                                                                                    19,420,000          19,245,000        11,967,766




                                                                                127
                                                                    City of Muskegon

                                                            SCHEDULE OF INDEBTEDNESS

                                                                      June 30, 2021

                                                                                                                                                        Annual
                                                      Date         Amount           Interest    Date of                                                 Interest
                                                    of Issue       of Issue           Rate      Maturity         6/30/2020           6/30/2021          Payable

Governmental Activities Bonds and Loan Payable—Continued:

 Capital Improvement Bonds of 2020                 11/12/2020 $     4,325,000           4.00%     10/01/21 $                 -   $        320,000   $      183,900
 Series 2020A                                                                           4.00%     10/01/22                   -            335,000          170,800
 ($772,424 unamortized premium)                                                         4.00%     10/01/23                   -            360,000          156,900
                                                                                        4.00%     10/01/24                   -            370,000          142,300
   Type of debt: limited G.O. bonds                                                     4.00%     10/01/25                   -            385,000          127,200
   Revenue pledged: general revenues                                                    5.00%     10/01/26                   -            405,000          109,375
                                                                                        5.00%     10/01/27                   -            420,000           88,750
                                                                                        5.00%     10/01/28                   -            445,000           67,125
                                                                                        5.00%     10/01/29                   -            470,000           44,250
                                                                                        5.00%     10/01/30                   -            485,000           20,375
                                                                                        2.50%     10/01/31                   -             30,000            7,875
                                                                                        2.50%     10/01/32                   -             30,000            7,125
                                                                                        2.50%     10/01/33                   -             30,000            6,375
                                                                                        2.50%     10/01/34                   -             30,000            5,625
                                                                                        2.50%     10/01/35                   -             35,000            4,813
                                                                                        2.50%     10/01/36                   -             35,000            3,937
                                                                                        2.50%     10/01/37                   -             35,000            3,063
                                                                                        2.50%     10/01/38                   -             35,000            2,187
                                                                                        2.50%     10/01/39                   -             35,000            1,313
                                                                                        2.50%     10/01/40                   -             35,000              437
                                                                                                                             -          4,325,000        1,153,725


 Capital Improvement Bonds of 2020                 11/12/2020 $     2,055,000           0.68%     10/01/21                   -             85,000           46,124
 Series 2020B                                                                           0.68%     10/01/22                   -             85,000           45,546
                                                                                        0.68%     10/01/23                   -             90,000           44,951
   Type of debt: limited G.O. bonds                                                     1.35%     10/01/24                   -             90,000           44,038
   Revenue pledged: general revenues                                                    1.35%     10/01/25                   -             90,000           42,823
                                                                                        1.35%     10/01/26                   -             90,000           41,608
                                                                                        2.00%     10/01/27                   -             95,000           40,050
                                                                                        2.00%     10/01/28                   -             95,000           38,150
                                                                                        2.00%     10/01/29                   -             95,000           36,250
                                                                                        2.00%     10/01/30                   -            100,000           34,300
                                                                                        2.60%     10/01/31                   -            100,000           32,000
                                                                                        2.60%     10/01/32                   -            105,000           29,335
                                                                                        2.60%     10/01/33                   -            105,000           26,605
                                                                                        2.60%     10/01/34                   -            110,000           23,810
                                                                                        3.20%     10/01/35                   -            110,000           20,950
                                                                                        3.20%     10/01/36                   -            115,000           17,680
                                                                                        3.20%     10/01/37                   -            120,000           13,920
                                                                                        3.20%     10/01/38                   -            120,000           10,080
                                                                                        3.20%     10/01/39                   -            125,000            6,160
                                                                                        3.20%     10/01/40                   -            130,000            2,080
                                                                                                                             -          2,055,000          596,459

TOTAL GOVERNMENTAL ACTIVITIES BONDS AND LOANS PAYABLE                                                        $    26,103,804     $     29,670,000   $   14,641,852

TOTAL PRIMARY GOVERNMENT BONDS AND LOANS PAYABLE                                                             $    32,711,760     $     38,726,453   $   15,865,383




Discretely Presented Component Unit Bonds and Loans Payable:


 Local Development Finance Authority                 3/20/2012 $    4,100,000           4.00%     11/01/20 $          395,000    $              -   $            -
 Smartzone Refunding Bonds                                                              4.00%     11/01/21            245,000             245,000           37,300
 ($27,248 unamortized premium)                                                          3.00%     11/01/22            255,000             255,000           28,575
                                                                                        3.00%     11/01/23            265,000             265,000           20,775
   Type of debt: limited G.O. bond                                                      3.00%     11/01/24            275,000             275,000           12,675
   Revenue pledged: LDFA tax increments, general revenues                               3.00%     11/01/25            285,000             285,000            4,275
                                                                                                                    1,720,000           1,325,000          103,600

TOTAL DISCRETELY PRESENTED COMPONENT UNIT BONDS AND LOANS PAYABLE                                            $      1,720,000    $      1,325,000   $      103,600

TOTAL REPORTING ENTITY BONDS AND LOANS PAYABLE                                                               $    34,431,760     $     40,051,453   $   15,968,983




                                                                              128
                                       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.                                  130


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.                                         135


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.                                                                                  142


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.                                   146


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.                                          148



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




                                                     129
                                                                                                              City of Muskegon

                                                                                         NET ASSETS/NET POSITION BY COMPONENT

                                                                                                          Last Ten Fiscal Years




                                                                                  2012             2013 (a)           2014            2015 (b)         2016             2017             2018 (c)          2019             2020            2021

      Governmental Activities
      Net Investment in Capital Assets                                        $   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 $    72,200,515
      Restricted                                                                   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       5,003,269
      Unrestricted                                                                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)    (29,065,065)
      Total Governmental Net Assets/Net Position                              $   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 $    48,138,719



      Business-type Activities
      Net Investment in Capital Assets                                        $   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 $    54,257,461
      Restricted                                                                     672,000          599,500           599,500          599,500          599,500          599,500          599,500          599,500          599,500         822,000
      Unrestricted                                                                 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)       (873,805)
      Total Business-type Activities Net Assets/Net Position                  $   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 $    54,205,656



      Primary Government
      Net Investment in Capital Assets                                        $ 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 $ 126,457,976
      Restricted                                                                  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     5,825,269
      Unrestricted                                                               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)  (29,938,870)
      Total Primary Government Net Assets/Net Position                        $ 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 $ 102,344,375




130
      (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




                                                       2012            2013 (a)           2014             2015 (b)           2016             2017            2018 (c)          2019             2020             2021

      EXPENSES
      Governmental Activities
      Public representation                       $      866,809   $      893,981   $      1,030,006   $       939,907   $    1,107,551   $    1,113,897   $    1,347,618   $    1,336,014   $    1,501,079   $    1,603,410
      Administrative services                            566,161          565,307            543,425           614,757          663,077          679,139          507,275          800,887          962,981          826,344
      Financial services                               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        5,039,787
      Public safety                                   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       18,249,379
      Public works                                     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        4,025,982
      Highways, streets and bridges                    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        6,862,862
      Community and economic development               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        4,999,907
      Culture and recreation                           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        4,507,120
      General administration                             791,197          322,348            366,634           389,248          326,452          301,287          376,112          302,582          389,863          404,303
      Interest on long-term debt                         283,186          291,535            277,345           271,607          248,223          172,591          165,023          151,304          732,065        1,112,166
      Total Governmental Activities Expenses          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       47,631,260

      Business-type Activities
      Water                                            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        8,612,574
      Sewer                                            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        8,084,729
      Marina and launch ramp                             310,174          426,553            503,997           305,990          327,832          336,912          377,614          430,431          529,007          515,025
      Total Business-type Activities Expenses         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       17,212,328
      Total Primary Government Expenses           $   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   $   64,843,588


      PROGRAM REVENUES
      Governmental Activities
      Charges for Services
         Public representation                    $      196,886   $      173,739   $        189,444   $       188,638   $      226,559   $      228,767   $      232,736   $      250,931   $      253,511   $      280,395
         Administrative services                         270,886          268,535            325,937           415,308          474,737          572,739          539,178          604,290          538,791          504,281




131
         Financial services                              881,229          830,919            871,632           823,547          925,474          895,924          903,322          921,748          913,968          988,501
         Public safety                                 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        2,207,996
         Public works                                    480,487          671,494            796,739           571,426          379,877          646,876          743,110          691,312          835,149          828,098
         Highways, streets and bridges                   230,241          245,609            351,962           258,475          234,861          256,190          188,248          191,883          193,267          187,478
         Community and economic development              617,379          432,240            477,486           576,863          444,632          706,195          348,933          786,120          769,860          912,247
         Culture and recreation                          315,010          606,818            535,211           368,168        1,229,067        1,463,839        1,651,304        1,853,547        2,124,968        1,976,029
         General administration                          116,690          287,729             50,728            48,764           52,512           37,892           38,549           40,400           59,537           65,592
      Operating grants and contributions               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        9,839,245
      Capital grants and contributions                 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        2,901,176
      Total Governmental Program Revenues             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       20,691,038

      Business-type Activities
      Water                                            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        8,752,570
      Sewer                                            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        9,298,156
      Marina and launch ramp                             208,370          234,229            228,339           255,638          287,547          278,753          325,917          298,312           74,659          178,706
      Operating grants and contributions                       -            6,188                  -                 -                -            2,436           42,531          510,533           94,462                -
      Capital grants and contributions                         -           88,046            327,240           474,681          765,363          784,969                -                -                -       10,354,544
      Total Business-type program revenues            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       28,583,976
      Total Primary Government program revenues   $   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   $   49,275,014

      NET (EXPENSE) REVENUE
      Governmental Activities                     $   (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) $   (26,940,222)
      Business-type Activities                           (568,607)        (604,788)         (813,821)       (1,343,747)         (904,650)        (303,486)         469,478         (448,419)      (1,985,873)      11,371,648
      Total Primary Government net expense        $   (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) $   (15,568,574)
                                                                                                                              City of Muskegon

                                                                                                              CHANGES IN NET ASSETS/NET POSITION

                                                                                                                             Last Ten Fiscal Years




                                                                                           2012             2013 (a)           2014             2015 (b)          2016             2017             2018 (c)          2019              2020            2021

      GENERAL REVENUES AND OTHER CHANGES IN NET ASSETS/NET POSITION
      Governmental Activities
      Property taxes                                                $                       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   $    8,813,155
      Income taxes                                                                          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        9,609,218
      Franchise fees                                                                          342,376          358,785            358,754           369,965          372,117          378,955          368,495           380,343          361,405          374,219
      Grants and contributions not restricted for specific programs                         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        6,427,138
      Unrestricted investment earnings                                                        100,073           73,157            146,590            99,733          189,408          106,653           92,771           546,533          568,408          229,177
      Miscellaneous                                                                           154,531          102,388            124,085           805,432          626,014          512,738          545,536           550,381          577,677          370,268
      Gain on sale of capital asset                                                            34,496           44,899             23,836            20,302           99,031          844,062          712,415         1,333,414              317        2,641,064
      Transfers                                                                                     -                -                  -                 -                -                -                -                 -                -          (35,000)
      Total Governmental Program Revenues                                                  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       28,429,239

      Business-type Activities
      Unrestricted investment earnings                                                         46,582           33,148             31,251            29,879           25,688           25,277           28,550            24,063            9,181            9,918
      Transfers                                                                                     -                -                  -                 -                -                -                -                 -                -           35,000
      Total Business-type program revenues                                                     46,582           33,148             31,251            29,879           25,688           25,277           28,550            24,063            9,181           44,918
      Total Primary Government program revenues                                        $   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   $   28,474,157

      CHANGE IN NET ASSETS/NET POSITION
      Governmental Activities                                                          $     (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) $    1,489,017
      Business-type Activities                                                               (522,025)         (571,640)         (782,570)       (1,313,868)        (878,962)        (278,209)          498,028         (424,356)       (1,976,692)     11,416,566
      Total Primary Government                                                         $   (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) $   12,905,583


      (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.




132
      (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




                                                           2012            2013            2014            2015            2016            2017            2018            2019            2020            2021

      General fund
      Nonspendable                                     $     178,468   $     447,341   $     300,952   $     220,178   $     232,332   $     209,353   $     222,458   $     241,684   $     280,986   $    269,920
      Restricted                                                   -               -               -               -               -               -               -               -               -         66,965
      Committed                                                    -               -               -               -               -               -               -               -               -         39,000
      Assigned                                             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      1,700,000
      Unassigned                                           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      9,121,955
      Total general fund                               $   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   $ 11,197,840

      All other governmental funds
      Nonspendable                                     $   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 $ 1,709,000
      Restricted                                           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    4,397,502
      Assigned                                             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    1,907,590
      Unassigned                                            (191,282)        (82,048)       (100,054)              -               -               -               -               -     (1,601,331)  (2,919,404)
      Total all other governmental funds               $   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 $ 5,094,688


      SOURCE: The information in these schedules
      (unless otherwise noted) is derived from the




133
      comprehensive annual financial reports for the
      relevant year.
                                                                                                             City of Muskegon

                                                                            CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS

                                                                                                           Last Ten Fiscal Years




                                                                       2012              2013              2014            2015            2016            2017              2018            2019             2020            2021

      Revenues
      Taxes                                                       $ 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 $ 17,700,658
      Intergovernmental                                              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   18,131,093
      Charges for services                                           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    4,898,325
      Other                                                          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    5,745,273
      Total revenues                                                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   46,475,349

      Expenditures
      Public representation                                              867,762           892,113         1,031,984         930,788       1,064,503       1,080,032         1,383,573       1,281,107       1,379,406        1,556,327
      Administrative services                                            515,988           508,130           497,025         554,330         577,454         624,284           537,913         739,301         844,270          783,403
      Financial services                                               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        4,810,339
      Public safety                                                   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       14,641,568
      Public works                                                     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        3,604,722
      Highways, streets and bridges                                    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        2,666,529
      Community and economic development                               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        5,281,825
      Culture and recreation                                           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        3,836,817
      Other governmental functions                                       770,910           299,812           643,666         369,408         305,807         280,416           355,241         281,711         371,461          380,232
      Debt service




134
       Principal                                                         289,597           395,211           402,492         417,842         428,199         283,563           288,934         294,313         818,285        2,813,804
       Interest                                                          268,315           292,554           278,412         272,946         257,516         211,242           197,723         189,905         543,740          943,216
       Issuance costs                                                          -                 -                 -               -          97,578               -                 -               -          70,525          140,750
      Capital outlay                                                   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       19,695,829
      Total expenditure                                               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       61,155,361

      Excess of revenues over (under) expenditures                      500,783           (258,569)         (817,667)      2,039,529      (1,397,999)       497,687           992,021       (2,696,819)     (17,167,117)    (14,680,012)

      Other financing sources (uses)
      Transfers in                                                       510,907         1,356,229           743,035         853,910       1,563,094       1,805,000         1,370,000       1,210,236       2,017,077          895,000
      Transfers out                                                     (613,953)         (784,275)         (771,081)       (942,933)     (1,638,094)     (1,818,000)       (1,385,000)     (1,210,236)     (2,037,077)      (1,555,000)
      Bonds issued                                                     2,000,000                 -                 -               -          97,578               -                 -               -      21,691,740        7,152,424
      Sale of capital assets                                             113,981           190,263           176,887         244,685         190,957       1,529,325           741,803       1,541,041         491,924        2,908,552
      Total other financing sources (uses)                             2,010,935           762,217           148,841         155,662         213,535       1,516,325           726,803       1,541,041      22,163,664        9,400,976

      Net change in fund balances                                 $    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     $ (5,279,036)

      Debt service as a percentage of noncapital
      expenditures                                                         2.01%             2.56%             2.43%           2.42%           2.09%           1.52%            1.36%           1.37%            3.40%            9.06%




      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

      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%
      2021       8,443,832    18.2%       9,256,826    19.9%       18,131,093    39.0%       4,898,325    10.5%       2,246,375      4.8%       594,813       1.3%        477,559    1.0%   2,426,526    5.2%   46,475,349     4.8%




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




135
                                                                                                                                            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

         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%
         2020        362,796,641                  -        125,649,743        48,231,815       536,678,199         67,398,400        604,076,599              14,874,922          2,612,700                     -          17,487,622          621,564,221        13.0865              83.40%



                                                                                                                    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




136
         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
         2020        461,026,400                  -        146,950,200        52,388,900       660,365,500         67,388,800        727,754,300              14,929,600          2,612,700                     -          17,542,300         745,296,600      1,490,593,200


      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

                                                           Current Year and Ten Years Ago


                                                                    6/30/2021                                     6/30/2012
                                                                                 Percent of                                    Percent of
                                                      Taxable                   Total Taxable        Taxable                  Total Taxable
                      Taxpayer                       Valuation        Rank        Valuation         Valuation       Rank        Valuation

      Consumers Energy                           $     19,074,754      1                2.99%   $    53,088,067       1                7.9%
      DTE Gas Company                                  12,833,825      2                2.01%         5,026,600       5                0.8%
      James Street Capital Holdings                     9,563,718       3               1.50%
      Muskegon SC Holdings LLC                          6,066,243       4               0.95%         4,503,400       6                0.7%
      Michigan Electric Transmission                    4,871,200       5               0.76%         4,381,900       7                0.7%
      Glen Oaks Apartments LLC                          3,559,381       6               0.56%         4,280,600       8                0.6%
      Mercy Health Partners                             3,327,016       7               0.52%




137
      Core Sherman LLC                                  3,116,500       8               0.49%
      Verplank Port Facility LLC                        2,770,017       9               0.43%
      Hinman Lake LLC                                   2,886,824      10               0.45%
      Adac Plastics                                                                                   5,648,200      4                 0.8%
      Esco Company                                                                                    6,793,300      2                 1.0%
      GE Aviation                                                                                     6,695,200      3                 1.0%
      Sappi (S.D. Warren Co.)                                                                         3,943,179      9                 0.6%
      Lorin Industries                                                                                3,825,278      10                0.6%


      Total - 10 Largest                               68,069,478                      10.67%        98,185,724                       14.7%
      Total - All Other                               570,103,144                      89.33%       571,318,953                       85.3%
                                                 $    638,172,622                      100.0%   $   669,504,677                      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

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
2020       9.9930        0.0824            2.9979         13.0733       2.3997       0.4532

                                      Overlapping - County-Wide Rates

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

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
2020       6.8947        0.4593            2.2968          0.9988       2.2034       0.9992           0.3400


           Overlapping - School District                                               Grand Total

                                                        State                                   Non-
Year   Operating       Debt          Total            Education                  Homestead    Homestead

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
2020      17.9838        8.3581        26.3419             6.0000                   44.4765          62.4603




                                                138
                                                                             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

       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%
       2020        9,943,231       9,114,832       91.7%       749,195        9,864,027          99.2%                -        35,111        31,560          0.67%




139
      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 2011 ‐ 2021
                        $10,000,000

                         $9,000,000

                         $8,000,000

                         $7,000,000

                         $6,000,000

                         $5,000,000

                         $4,000,000




      INCOME TAX $
                         $3,000,000

                         $2,000,000

                         $1,000,000

                                $‐
                                               2010 ‐ 2011            2011 ‐ 2012             2012 ‐ 2013          2013 ‐ 2014         2014 ‐ 2015        2015 ‐ 2016       2016 ‐ 2017      2017 ‐ 2018    2018 ‐ 2019    2019‐20      2020‐21
                     Resident                  $2,566,198             $2,755,079              $2,692,211           $2,892,906          $3,070,581         $2,925,036        $3,284,777       $3,278,759     $3,457,902    $3,655,458   $3,531,695
                     Non‐Resident              3,136,464                 3,367,318            3,290,480             3,535,773          3,752,932          3,575,045         4,014,691        4,007,372      4,226,325     4,467,781    4,316,516
                     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    1,408,615
                     Total Income Tax          $6,599,753             $7,412,804              $7,506,472           $7,927,812          $8,274,666         $8,151,902        $8,610,842       $8,758,648     $8,691,673    $9,137,714   $9,256,826




140
                                                                                                                                       FISCAL YEAR


                                                                                                                   NUMBER OF RETURNS 2011 ‐ 2021
                     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

                                                                                                                                                                                                                            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
                                                                                                                                                                                                                            8,301



                      5,000

                                      6,326                   5,690                  5,110                 5,463            5,458              5,337             5,464            5,352           5,493        4,852        4,302

                         ‐
                                 2010 ‐ 2011               2011 ‐ 2012          2012 ‐ 2013          2013 ‐ 2014         2014 ‐ 2015        2015 ‐ 2016       2016 ‐ 2017      2017 ‐ 2018    2018 ‐ 2019     2019‐20     2020‐21

                                                                                                                                       FISCAL YEAR
                                                                                   City of Muskegon

                                          TOTAL INCOME TAX COLLECTED AND NUMBER OF RETURNS FILED - DATA

                                                                                 Last Ten Fiscal Years

                                                                                 Income Tax 2011 ‐ 2021
      Year               2010 ‐ 2011   2011 ‐ 2012   2012 ‐ 2013   2013 ‐ 2014      2014 ‐ 2015   2015 ‐ 2016   2016 ‐ 2017   2017 ‐ 2018   2018 ‐ 2019     2019‐20       2020‐21
      Resident           $ 2,566,198   $ 2,755,079   $ 2,692,211   $ 2,892,906     $ 3,070,581    $ 2,925,036   $ 3,284,777   $ 3,278,759   $ 3,457,902   $ 3,655,458   $ 3,531,695
      Non‐Resident         3,136,464     3,367,318     3,290,480     3,535,773       3,752,932      3,575,045     4,014,691     4,007,372     4,226,325     4,467,781     4,316,516
      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     1,408,615
      Total Income Tax   $ 6,599,753   $ 7,412,804   $ 7,506,472   $ 7,927,812     $ 8,274,666    $ 8,151,902   $ 8,610,842   $ 8,758,648   $ 8,691,673   $ 9,137,714   $ 9,256,826

                                                                          Number of Returns 2010‐2020
      Year               2010 ‐ 2011   2011 ‐ 2012   2012 ‐ 2013   2013 ‐ 2014      2014 ‐ 2015   2015 ‐ 2016   2016 ‐ 2017   2017 ‐ 2018   2018 ‐ 2019     2019‐20       2020‐21
      Resident                6,326         5,690         5,110         5,463            5,458         5,337         5,464         5,352         5,493         4,852         4,302
      Non‐Resident           11,612        11,259        10,997        11,009           10,631        10,713        10,578        10,278        10,256         9,426         8,301
      Other                   1,750         1,750         1,750         1,750            1,750         1,750         1,750         1,650         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        14,253




141
                                                                            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



      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
      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




142
      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
      2021               30,496,677               -              -       30,496,677                  -      9,056,453      9,056,453              39,553,130    1,051


      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, 2021




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

Direct Debt
 City of Muskegon:
   Revenue Bonds                                              $          9,056,453 $       9,056,453 $                      -
   Capital Improvement Bonds                                            30,496,677                 -               30,496,677
 Component Unit Debt:
   Local Development Finance Authority                                   1,352,248         1,352,248                         -

Total City Direct Debt                                        $         40,905,378 $     10,408,701 $              30,496,677




                                                                                      City Share as
                                                                     Gross           Percent of Gross            Net
Overlapping Debt
 Muskegon School District                                     $        4,965,000             95.65% $               4,749,023
 Orchard View School District                                         37,410,784             17.29%                 6,468,325
 Reeth's Puffer School District                                       62,747,604              0.91%                   571,003
 Hackley Public Library                                                1,960,000             95.65%                 1,874,740
 Muskegon County                                                     113,756,041             12.60%                14,333,261
 Muskegon Community College                                           30,230,000             12.66%                 3,827,118

Total Overlapping Debt                                        $      251,069,429                                   31,823,469

Total City Direct and Overlapping Debt                                                                  $          62,320,146


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.




                                                           143
                                                                                                                        City of Muskegon

                                                                                                          LEGAL DEBT MARGIN INFORMATION

                                                                                                                       Last Ten Fiscal Years



                                                           2012               2013                2014                     2015                2016                2017              2018             2019               2020              2021


      Debt Limit                                       $   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   $   128,830,259

      Total net debt applicable to limit                   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        31,848,925

      Legal debt margin                                $   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   $    96,981,334




      Total net debt applicable to the limit as               19.54%               19.92%                 20.82%               19.46%             18.56%               16.78%           14.41%               8.42%           25.70%            24.72%
      a percentage of debt limit

                                                                        Legal Debt Margin Calculation for 2021:

                                                                        Assessed Valuation:                                                                  $   1,288,302,587
                                                                        Legal Debt Limit (10% )                                                                    128,830,259

                                                                        Total Indebtedness:                                             $      40,905,378
                                                                        Debt not Subject to Limitation:
                                                                           Paid by Special Assessment                                                   -
                                                                           Revenue Bonds                                                       (9,056,453)
                                                                        Debt Subject to Limitation                                                                 31,848,925

                                                                        Legal Debt Margin                                                                    $     96,981,334




144
      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
2021                8,762,308         6,481,996           2,280,312           760,000           107,860            867,860                 2.63

                                                  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!
2021                9,298,294         7,481,042           1,817,252                 -              3,151              3,151          576.72



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.




                                                                145
                                                                          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


      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%
      2020           38,401             921,219,545         23,989       36.3                3,625               1,233                 92,319,998        17.7%
      2021           37,633             925,365,524         24,589       35.8                3,472               1,266                 53,810,437         5.0%




146
      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



                                                                                   2021                                     2012
                                                                                             Percentage                                Percentage
                                                                                               of total                                  of total
                                                                                                City                                      City
      Employer                                                    Employees        Rank      employment       Employees     Rank       employment


      Mercy General Health Partners                                       4,003         1           34.26%          3,657       1            24.7%
      ADAC Automotive                                                     1,168         2           10.00%            592       5             4.0%
      County of Muskegon                                                    990         3            8.47%            980       3             6.6%
      G.E. Aviation (formerly Johnson Technology Inc.)                      624         4            5.34%            327      10
      Port City Group Companies                                             421         5            3.60%
      KL Outdoors                                                           375         6            3.21%
      Muskegon Public School District                                       360         7            3.08%          1,570          2         10.6%
      Muskegon Area Intermediate School District                            355         8            3.04%




147
      Knoll Inc                                                             270         9            2.31%           450           6          3.0%
      Muskegon Community College                                            214        10            1.83%           446           7          3.0%
      State of Michigan                                                                                              772           4          5.2%
      Baker College                                                                                                  400           8          2.7%
      SAF Holland USA                                                                                                335           9          2.3%




      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                                        2012      2013      2014          2015     2016     2017     2018     2019     2020     2021
      Administration                                    0.40      0.40      0.40           -        -        -        -        -        -        -
      Affirmative Action                                1.10      1.10      1.10          1.30     1.30     1.46     0.40     1.00     1.00     1.00
      Cemetaries                                        1.75      1.25      1.25          1.25     1.25     1.25     1.25     1.25     2.25     2.25
      City Clerk & Elections                            3.00      3.00      3.00          3.00     3.00     3.54     3.80     3.80     4.80     5.80
      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     1.05     1.00
      City Manager's Office                             2.25      2.25      2.25          2.05     2.05     1.75     2.75     2.75     2.75     3.30
      City Treasurer's Office                           5.00      5.00      4.50          5.50     5.50     5.50     5.50     5.50     5.50     5.30
      Civil Service                                      -         -         -             -        -        -        -        -
      Environmental Services                            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      -       0.20     1.20     1.20     0.70
      Finance Administration                            3.00      2.00      2.00          3.00     3.00     3.00     3.60     3.00     3.45     3.70
      Fire                                             35.00     28.00     28.83         32.00    35.00    35.00    35.00    26.00    29.00    29.50
      Fire Safety Inspections                           6.00      6.00      0.83           -        -        -        -        -
      General Recreation                                 -         -         -             -        -        -        -        -
      Income Tax Administration                         5.00      5.00      4.50          3.50     3.50     3.50     3.50     3.50     3.50     3.70
      Information Systems                               3.00      3.00      3.00          3.00     3.00     3.00     3.50     3.50     3.50     3.50
      Parks                                             6.05      6.05      6.00          6.00     6.00     7.05     7.05    10.05    10.05    10.05
      Planning, Zoning & Economic Development           3.00      3.00      3.00          3.40     3.40     3.45     3.45     5.45     6.00     7.00




148
      Police                                           88.00     88.00     87.34         88.00    88.00    88.00    88.00    89.00    89.00    91.00
      Sanitation                                        0.20      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                                11.70     10.70     10.70         10.70    10.70    10.70    10.70    12.20    12.20    13.20
      MVH-Local Streets                                 6.70      6.70      6.70          6.70     6.70     6.70     6.70     7.20     7.20     7.20
      Community Development                             4.00      4.00      4.00          4.00     4.00     4.00     3.55     3.55     4.30     5.30
      Home Program                                       -         -         -             -        -        -        -        -        -
      Lead Program                                       -         -         -             -        -        -        -        -        -
      Sewer Maintenance                                 9.75      9.75      9.80          9.80     9.80     9.80     9.80     9.80    10.80    10.95
      Water Filtration                                  9.00     10.00     10.00         10.00    10.00    10.00    10.00    10.00    11.00    12.15
      Water Maintenance                                11.75     11.75     11.75         11.75    11.75    11.75    11.75    11.75    12.75    14.90
      Hartshorn Marina Fund                             0.30      0.30      0.30          0.30     0.30     0.30     0.30     0.30     0.30     0.30
      Mercy Health Arena                                 -         -         -             -        -        -        -        -       3.00     6.00
      Public Service Building                           7.95      8.45      8.45          8.50     8.50     8.50     8.50     8.50     8.75     8.75
      Engineering                                       4.95      4.95      4.95          4.95     4.95     4.95     4.95     5.95     5.20     4.25
      Equipment                                         6.25      6.25      6.25          6.25     6.25     6.25     6.25     6.25     6.25     6.25
                                                      241.00    233.00    227.00        228.00   231.00   232.45   233.50   232.50   245.25   257.50




      SOURCE: City of Muskegon Finance Department
                                                                                     City of Muskegon

                                                                    OPERATING INDICATORS BY FUNCTION/PROGRAM

                                                                                  Last Ten Fiscal Years



      Function/Program                               2012        2013         2014          2015           2016          2017         2018          2019          2020         2021



      Administrative Services
      Elections
      Number of registered voters                      26,324      26,098       26,025        24,014         24,005        24,612       26,136        25,182        28,127       27,889
      Number of votes cast:
       Last general election                            1,933      13,487        3,029         7,763          2,547        13,179       15,271        11,407         3,105       15,156
       Last city election                               1,933       2,131        3,029         7,763          2,547        13,179        2,254         1,938         3,105        2,968
      Percentage of registered voters voting:
       Last general election                                7%          52%          12%           32%            11%           54%          58%           45%           11%          67%
       Last city election                                   7%           8%          12%           32%            11%           54%           9%            8%           11%          12%



      Financial Services
      Property Tax Bills                               15,261      15,291       15,211        14,528         14,611        14,243       14,229        14,180        15,090       15,117
      Income Tax Returns                               18,699      17,857       18,222        17,839         17,800        17,792       17,280        17,399        15,928       14,253
      Paper Check Issued to Vendors                     3,746       1,677        1,404         1,527          1,608         1,675        1,782         1,863         1,946        1,676
      Electronic Payments to Vendors                    1,334       1,251        1,579         1,471          1,849         1,998        2,104         2,307         2,494        2,465




149
      Public Safety
      Fire Protection
       Number of firefighter and officer positions         36          41           38            35             35            35           23            29            26           29
       Number of emergency calls                        4,676       4,563        4,354         4,881          4,938         4,895        4,948         5,106         5,147        4,203
      Police Protection
       Number of sworn officer positions                   79          79           76            76             76            75           79            80            80           89
       Part I (Major) Crimes                            2,772       2,647        2,240         2,107          1,989         2,816        2,357         1,728         1,621        1,442



      Public Works
       Refuse Collected (Tons per Year)                10,153       9,958       10,217        10,512         10,994        11,009       10,801        10,753        11,534       12,289
       Recyclables Collected (Tons per Year)                -           -            -             -              -             -            -             -           160          224



      Water & Sewer
      Number of consumers                               13,109      13,144       13,086        13,223         13,307        13,248       13,104        13,343        13,422       12,660
      Average daily water consumption (GPD)          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    7,570,000
      Water main breaks repaired                             5          11           30            15             16            12           15            11            17           13
      Sewer flows (Millions Gallons per Year)            1,695       1,777        1,833         2,013          1,794         1,815        1,832         2,048         2,138        1,596
      Sewer Service Calls                                  522         508          532           501            521           462          451           443           475          541




      SOURCE: City of Muskegon Departments
                                                                                     City of Muskegon

                                                             CAPITAL ASSET STATISTICS BY FUNCTION/PROGRAM

                                                                                    Last Ten Fiscal Years




      Function/Program                       2012         2013         2014               2015              2016         2017         2018         2019         2020         2021


      Public Safety
      Fire Protection
        Number of stations                           3            3            3                  3                 3            3            3            3            3            3
      Police Protection
        Number of stations                           1            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       197.19       187.34       187.34
      Number of streetlights                    2,838        2,838        2,838               2,838            2,900        2,984        2,967        2,930        2,995        2,995

      Culture and Recreation
      Number of parks (acres)                       701          701          701                701               701          701          701          701          701          701
      Lake Michigan beaches (acres)                 119          119          119                119               119          119          119          119          119          119
      Hockey/Entertainment Arena                      1            1            1                  1                 1            1            1            1            1            2

      Sewer
      Sanitary sewers (miles)                  177.04       177.04       177.04              177.04           177.04       177.04       177.04       177.04       177.04       176.69




150
      Storm sewers (miles)                     184.35       184.35       184.25              184.35           184.35       184.35       184.35       184.35       184.35       147.58

      Water
      Water mains (miles)                      195.40       195.95       195.95              195.95           195.95       195.95       195.95       195.27       195.27       213.92




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




                         151
               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, 2021, 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 9, 2021.

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.

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. A significant deficiency is a deficiency, or a
combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough
to merit attention by those charged with governance.

Our consideration of internal control was for the limited purpose described in the first paragraph of this section
and was not designed to identify all deficiencies in internal control that might be material weaknesses or
significant deficiencies. Given these limitations, during our audit, we did not identify any deficiencies in internal
control that we consider to be material weaknesses. However, material weaknesses may exist that have not been
identified.




                               Grand Haven | Grand Rapids | Hart | Muskegon

                                                www.brickleydelong.com
                                                         152
BRICKLEY DELONG

City Commission
City of Muskegon
Page 2


Compliance and 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
financial statements. 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.

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 9, 2021




                                                         153
     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, 2021. 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.




                              Grand Haven | Grand Rapids | Hart | Muskegon

                                               www.brickleydelong.com

                                                        154
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, 2021.

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 9, 2021




                                                         155
                                                                                                City of Muskegon
                                                                     SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
                                                                               For the year ended June 30, 2021


                                                                              CFDA/                         Accrued                       Cash or                         Accrued
                                                                             Assistance   Program or      (Unearned)     Adjustments   Payments In-      Amount of       (Unearned)       Passed
      Federal Grantor/Pass-Through Grantor/                                   Listing       Award          Revenue           and       Kind Received       Grant          Revenue        Through to
        Program or Cluster Title/Identifying Number                           Number       Amount         July 1, 2020    Transfers     (Cash Basis)    Expenditures    June 30, 2021   Subrecipents   Notes

      U.S. Department of Housing and Urban Development
      Direct programs
         CDBG - Entitlement Grants Cluster
            Community Development Block Grants/Entitlement Grants              14.218
                B-14-MC-26-0026                                                           $     897,025   $          -   $        -    $            -   $      17,403   $      17,403   $          -
                B-16-MC-26-0026                                                                 886,662              -            -             1,125           1,125               -              -
                B-17-MC-26-0026                                                                 871,542              -            -             3,626           3,626               -              -
                B-18-MC-26-0026                                                                 937,658              -            -           126,527         126,527               -              -
                B-19-MC-26-0026                                                                 973,451         11,131            -            42,179          39,452           8,404              -
                B-20-MC-26-0026                                                                 994,698              -            -           644,566         698,971          54,405              -
                COVID-19 - B-20-MW-26-0026                                                      794,564              -            -           154,883         182,738          27,855        150,000
                Program Income                                                                   58,212              -            -            58,212          58,212               -              -
                   Total CDBG - Entitlement Grants Cluster                                    6,413,812         11,131            -         1,031,118       1,128,054         108,067        150,000


        Home Investment Partnerships Program                                   14.239
          M-15-MC-26-0215                                                                       268,639              -            -             4,334           4,334               -              -
          M-17-MC-26-0215                                                                       249,537              -            -             5,343           5,343               -              -




156
          M-18-MC-26-0215                                                                       327,681              -            -            12,421          12,421               -              -
          M-19-MC-26-0215                                                                       334,818          7,417            -            22,026          14,609               -              -
          M-20-MC-26-0215                                                                       343,362              -            -            16,580          18,361           1,781              -
          Program Income                                                                        300,092              -            -           300,092         300,092               -              -
                Total Home Investment Partnerships Program                                    1,824,129          7,417            -           360,796         355,160           1,781              -

                    Total U.S. Department of Housing and Urban Development                    8,237,941         18,548            -         1,391,914       1,483,214         109,848        150,000
                                                                                                        City of Muskegon
                                                          SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
                                                                          For the year ended June 30, 2021


                                                                                        CFDA/                        Accrued                        Cash or                         Accrued
                                                                                       Assistance   Program or      (Unearned)     Adjustments   Payments In-      Amount of       (Unearned)       Passed
      Federal Grantor/Pass-Through Grantor/                                             Listing       Award          Revenue           and       Kind Received       Grant          Revenue        Through to
        Program or Cluster Title/Identifying Number                                     Number       Amount         July 1, 2020    Transfers     (Cash Basis)    Expenditures    June 30, 2021   Subrecipents   Notes
      U.S. Department of Justice
      Direct programs
         Coronavirus Emergency Supplemental Funding Program                              16.034
            COVID-19 - 2020-VD-BX-1081                                                              $     65,931    $     32,602   $        -    $       65,931   $      33,329   $           -   $          -

        Bulletproof Vest Partnership Program                                             16.607
           2018 Grant                                                                                      8,876           5,513            -             5,513               -               -              -
           2019 Grant                                                                                      6,944               -            -             1,838           1,838               -              -
                                                                                                          15,820           5,513            -             7,351           1,838               -              -
        Edward Byrne Memorial Justice Assistance Grant Program                           16.738
          2018-DJ-BX-0619                                                                                 37,971          11,507            -            11,507               -               -              -
          2019-DJ-BX-0927                                                                                 35,195             463            -            12,795          12,332               -              -
          2020-DJ-BX-0470                                                                                 32,996               -            -                 -          17,866          17,866              -
                                                                                                         106,162          11,970            -            24,302          30,198          17,866              -
        Criminal and Juvenile Justice and Mental Health Collaboration Program            16.745
           2019-MO-BX-0006                                                                               100,000           2,221            -            31,185          33,801           4,837              -

                 Total direct programs                                                                   287,913          52,306            -           128,769          99,166          22,703              -




157
      Passed through Michigan Department of Health and Human Services
         Violence Against Women Formula Grants                                           16.588
            E20203703-00                                                                                  73,100           5,108            -             5,108               -               -              -
            E20211656-002                                                                                177,934               -            -            61,455          71,420           9,965              -
                                                                                                         251,034           5,108            -            66,563          71,420           9,965              -
      Passed through Ottawa County
         Edward Byrne Memorial Justice Assistance Grant Program                          16.738
           2019-MU-BX-0061                                                                                15,000          15,000            -            15,000               -               -              -

                    Total U.S. Department of Justice                                                     553,947          72,414            -           210,332         170,586          32,668              -

      U.S. Department of Transportation, National Highway Safety Administration
      Passed through Michigan State Police
         Highway Safety Cluster
            National Priority Safety Programs                                            20.616
               Bicycle and Pedestrian Safety Initiative Grant                                             19,944           1,772            -             5,743           3,971               -              -

      U.S. Department of Treasury
      Passed through Michigan Department of Treasury
         Coronavirus Relief Fund                                                         21.019
            COVID-19 - Coronavirus Relief Local Government Grants                                         303,760              -            -           303,760         303,760               -              -
            COVID-19 - Public Safety and Public Health Payroll Reimbursement Program                    1,089,599              -            -         1,089,599       1,089,599               -              -
            COVID-19 - First Responder Hazard Pay Premiums Program                                        100,000              -            -           100,000         100,000               -              -

                    Total U.S. Department of Treasury                                                   1,493,359              -            -         1,493,359       1,493,359               -              -
                                                                                                   City of Muskegon
                                                           SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS—CONTINUED
                                                                           For the year ended June 30, 2021


                                                                                   CFDA/                         Accrued                       Cash or                           Accrued
                                                                                  Assistance   Program or      (Unearned)     Adjustments   Payments In-       Amount of        (Unearned)        Passed
      Federal Grantor/Pass-Through Grantor/                                        Listing       Award          Revenue           and       Kind Received        Grant           Revenue        Through to
        Program or Cluster Title/Identifying Number                                Number       Amount         July 1, 2020    Transfers     (Cash Basis)     Expenditures     June 30, 2021   Subrecipents   Notes

      Environmental Protection Agency
      Passed through Department of Environment, Great Lakes, and Energy
        Clean Water State Revolving Fund Cluster
           Capitalization Grants for Clean Water State Revolving Funds              66.458
               5675-01                                                                         $ 11,500,000    $          -   $        -    $     8,592,794   $    9,090,488   $     497,694   $          -     3
               5679-01                                                                            4,715,000               -            -            971,531        1,203,721         232,190              -
                                                                                                 16,215,000               -            -          9,564,325       10,294,209         729,884              -

         Drinking Water State Revolving Fund Cluster
            Capitalization Grants for Drinking Water State Revolving Funds          66.468
               7449-01                                                                             2,000,000              -            -            848,418          848,418               -              -     3
               7446-01                                                                             4,225,000              -            -            380,250          380,250               -              -
                                                                                                   6,225,000              -            -          1,228,668        1,228,668               -              -

                     Total Environmental Protection Agency                                        22,440,000              -            -         10,792,993       11,522,877         729,884              -

      U.S. Department of Health and Human Services
      Passed through Michigan Department of Health and Human Services
         Children's Health Insurance Program                                        93.767




158
            E20202333-00                                                                            880,005          84,579            -           292,580          208,001                -              -
            E20211485-002                                                                           943,785               -            -           416,824          473,114           56,290              -

                     Total Department of Health and Human Services                                 1,823,790         84,579            -           709,404          681,115           56,290              -

      Department of Homeland Security
      Passed through Federal Emergency Management Agency
        Disaster Grants - Public Assistance (Presidentially Declared Disasters)     97.036           27,600               -            -             5,535            5,535                -              -

                     TOTAL FEDERAL ASSISTANCE                                                  $ 34,596,581    $   177,313    $        -    $   14,609,280    $ 15,360,657     $    928,690    $   150,000




      The accompanying notes are an integral part of this statement.
                                                                                   City of Muskegon
                                                   NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
                                                                  For the year ended June 30, 2021


      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, 2021. 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.   Amounts expended reflect drawdown for both the year ended June 30, 2021 and June 30, 2020 in accordance with guidance from the Michigan Department of
           Environment, Great Lakes, and Energy.

      4.   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, 2021 and federal expenditures per the Schedule of Expenditures of Federal Awards.




159
              Federal revenues per City of Muskegon financial statements
                General Fund                                                                                                                        $    1,667,916
                Other governmental funds                                                                                                                 1,811,560
                                                                                                                                                         3,479,476
              Plus drawdowns on federal loans                                                                                                           11,522,877
              Plus program income                                                                                                                          358,304
              Federal expenditures per the Schedule of Expenditures of Federal Awards                                                               $ 15,360,657
                                             City of Muskegon
              NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS
                             For the year ended June 30, 2021


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?                                           yes     X 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/Assistance Listing Number(s)         Name of Federal Program/Cluster
                                                       U.S. Department of Treasury
             21.019                                       ∙ Coronavirus Relief Fund
                                                       Environmental Protection Agency
             66.458                                       ∙ Capitalization Grants for Clean Water
                                                               State Revolving Funds
             66.468                                       ∙ Capitalization Grants for Drinking Water
                                                               State Revolving Funds
   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


SECTION II – FINANCIAL STATEMENT FINDINGS

   NONE


SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS

   NONE



                                                         160
CLIENT DOCUMENTS




       161
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
(231)724-6705
FAX (231)724-4178                        SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS
Comm. & Neigh.
Services
(231)724-6717         December 9, 2021
FAX (231)726-2501

Computer Info.
Technology
(231)724-4126         U.S. Department of Housing and Urban Development
FAX (231)722-4301     Washington, D.C.
Engineering
(231)724-6707
FAX (231)727-6904     City of Muskegon respectfully submits the following summary of the current status of prior audit
Finance               findings contained in the single audit report for the year ended June 30, 2020 dated December 22,
(231)724-6713         2020.
FAX (231)726-2325

Fire Department       SECTION II – FINANCIAL STATEMENT FINDINGS
(231)724-6795
FAX (231)724-6985
                      Finding 2020-001: MATERIAL WEAKNESS—Budgetary Process
Human Resources
Co. (Civil Service)
(231)724-6442         Condition: We noted a number of significant budget variances including cost centers that had
FAX (231)724-6840     expenditures in excess of the amount budgeted.
Income Tax
(231)724-6770         Recommendation: The City should review its budgetary policies and procedures to ensure a regular
FAX (231)724-6768     review of the budget is performed and budgets are amended as necessary to ensure compliance with the
Mayor’s Office        Budget Act. In addition to complying with the Budget Act, this is also a good governance policy to
(231)724-6701         monitor spending and ensure that all purchases are properly budgeted and authorized.
FAX (231)722-1214

Planning/Zoning       Current Status: This recommendation was implemented during the year ended June 30, 2021. No
(231)724-6702         similar finding was reported during the single audit for the year ended June 30, 2021.
FAX (231)724-6790

Police Department     SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
(231)724-6750
FAX (231)722-5140
                      There were no findings reported in relation to major federal award programs during the single audit for
Public Works          the year ended June 30, 2020.
(231)724-4100
FAX (231)722-4188

SafeBuilt             Sincerely,
(Inspections)
(231)724-6715
FAX (231)728-4371

Treasurer
(231)724-6720
FAX (231)724-6768
                      Ken Grant
Water Billing
(231)724-6718         Finance Director
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                                                 162
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
(231)724-6705                                      CORRECTIVE ACTION PLAN
FAX (231)724-4178

Comm. & Neigh.
Services              December 9, 2021
(231)724-6717
FAX (231)726-2501

Computer Info.
Technology
                      U.S. Department of Housing and Urban Development
(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, 2021.
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, Michigan 49443
Human Resources       Audit period: June 30, 2021
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, 2021
                      provided no findings in either Section II or Section III. Accordingly, there are no matters requiring
Income Tax
(231)724-6770
                      corrective action as shown below.
FAX (231)724-6768
                      SECTION II – FINANCIAL STATEMENT FINDINGS
Mayor’s Office
(231)724-6701
FAX (231)722-1214     There were no findings in relation to the financial statement audit.
Planning/Zoning
(231)724-6702         SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS
FAX (231)724-6790

Police Department
                      There were no findings in relation to the major federal award programs.
(231)724-6750
FAX (231)722-5140     If the U.S. Department of Housing and Urban Development has questions regarding this plan, please
Public Works          call Ken Grant at (231) 724-6917.
(231)724-4100
FAX (231)722-4188

SafeBuilt             Sincerely,
(Inspections)
(231)724-6715
FAX (231)728-4371

Treasurer
(231)724-6720
FAX (231)724-6768
                      Ken Grant
Water Billing
(231)724-6718
                      Finance Director
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                                                  163

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