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3. annual report

ANNUAL REPORT COVER SHEET
CITY OF GRAND RAPIDS, MICHIGAN
This cover sheet and the attached Annual Report are being sent to all Nationally Recognized Municipal Securities
Information Repositories pursuant to Securities and Exchange Commission Rule 15c2-12(b)(5)(i)(A) and (B).
City's name: City of Grand Rapids
City's six-digit CUSIP numbers(s): See below
Number of pages of the attached Annual Report or portion thereof:
38 pages plus the Comprehensive Annual Financial Report for the period ending June 30, 2007
Bond Issues to which this Annual Report relates:
CUSIP
Name of Bond Issue
490278 $4,500,000 Silver Creek Drainage District
Silver Creek Drain Bonds, Series 1995
386244 $6,500,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 1996
386244 $2,505,000 City of Grand Rapids Building Authority
Building Authority Refunding Bonds, Series 1997
490278 $8,640,000 Grand River Floodwalls and Embankments Drainage District
Grand River Floodwalls and Embankments Drain Bonds, Series 1997
386289 $83,650,000 City of Grand Rapids
Sanitary Sewer System Improvement & Refunding Revenue Bonds, Series 1998A
386244 $20,000,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 1998
386244 $2,000,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 1999
386226 $11,020,000 City of Grand Rapids
Transportation Fund Improvement and Refunding, Series 1999
386226 $2,600,000 City of Grand Rapids
Municipal Purchase Notes, Series 2000
490278 $3,750,000 Grand River Floodwalls and Embankments Drainage District
Grand River Floodwalls and Embankments Drain Bonds, Series 2000
386244 $25,500,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 2000
386316 $88,930,000 City of Grand Rapids (See Note below)
Water Supply System Refunding Revenue Bonds, Series 2000
386226 $2,600,000 City of Grand Rapids
Municipal Purchase Notes, Series 2001
386244 $14,620,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 2001
386226 $2,135,000 City of Grand Rapids
Municipal Purchase Notes, Series 2002
386244 $3,500,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 2002
386226 $3,975,000 City of Grand Rapids
Municipal Purchase Notes, Series 2002A
386226 $3,750,000 City of Grand Rapids
Transportation Fund Bonds, Series 2003
386244 $9,285,000 City of Grand Rapids Building Authority
Building Authority Refunding Bonds, Series 2003
490278 $5,290,000 Silver Creek Drainage District
Silver Creek Drain Refunding Bonds, Series 2003
386186 $5,000,000 City County Building Authority (Kent County)
Building Authority Bonds, Series 2003
386303 $3,805,000 SmartZoneLocal Development Authority
Local Development Bonds, Series 2004
386226 $3,360,000 City of Grand Rapids
Municipal Purchase Notes, Series 2004
386289 $37,475,000 City of Grand Rapids
Sanitary Sewer System Revenue Bonds, Series 2004
386289 $51,525,000 City of Grand Rapids
Sanitary Sewer System Revenue Bonds, Series 2005
386316 $35,000,000 City of Grand Rapids
Water Supply System Revenue Bonds, Series 2005
386226 $4,470,000 City of Grand Rapids
Municipal Purchase Notes, Series 2006
386244 $7,375,000 City of Grand Rapids Building Authority
Building Authority Bonds, Series 2006
386226 $3,660,000 City of Grand Rapids
Municipal Purchase Notes, Series 2006
386226 $14,740,000 City of Grand Rapids
Capital Improvement Bonds, Series 2007
I hereby represent that I am authorized by the City or its agent to distribute this information publicly:
Signature:
Name:
Title:
Employer:
Address:
City, State, ZIP code:
Voice telephone number:
Date of Such Bonds:
July 1, 1995
March 1, 1996
August 1, 1997
October 1, 1997
July 1, 1998
September 1, 1998
July 1, 1999
December 1, 1999
March 1, 2000
July 1, 2000
November 2, 2000
November 21, 2000
March 15, 2001
October 1, 2001
April 1, 2002
May 1, 2002
December 1, 2002
May 8, 2003
May 8, 2003
September 3, 2003
October 8, 2003
May 20, 2004
June 30, 2004
August 12, 2004
October 27, 2005
December 14, 2005
April 13, 2006
November 15, 2006
December 6, 2006
May 2, 2007
Scott Buhrer
Chief Financial Officer
City of Grand Rapids
Fiscal Services, 7th Floor; 300 Monroe Avenue, N.W.
Grand Rapids, MI 49503
616-456-3950
Note: The Official Statement for this issue includes references to CUSIP 386226. According to Bond Counsel, Dickinson Wright PLLC,
the correct CUSIP is 386316 as indicated above.
CITY OF GRAND RAPIDS, MICHIGAN
CONTINUING DISCLOSURE CERTIFICATE
AS OF JUNE 30, 2007
Prepared by Jana M. Wallace
Debt and Authority Finance Officer
City of Grand Rapids - Fiscal Services
300 Monroe Avenue, N.W.; 7th Floor
Grand Rapids, Michigan 49503
Telephone: 616-456-4514
Fax: 616-456-4655
Email: [email protected]
December 21, 2007
TABLE OF CONTENTS
Population
City Taxation and Limitations
Taxable Value
State Equalized Value
Tax Abatement
Property Taxes / State Limitations
Property Tax Rates
Property Tax Collections
Ten Largest Taxpayer Valuations
City Income Tax
Revenues from the State of Michigan
City Debt
Statutory and Constitutional Debt Provisions
Legal Debt Margin
Debt Statement
Schedule of Bond Maturities
Additional Debt-Related Information
Employee Benefits
Vacation and Sick Leave
Other Postemployment Benefits
Pension Plans - General and Police & Fire Retirement Systems
Labor Contracts
Economic Profile
Profile of Major Employers
Employment
Retail Sales
Estimated Effective Household Buying Income
Building Permits
Michigan Transportation Fund
Sanitary Sewer System
Wastewater Volumes
Waste Water Treatment Plant Effluent (30 months)
Retail Billings and Collections
Ten Largest Retail Customers
Revenue Requirements and Percentage Rate Increases
Integrated Connection Base Fee Schedule
Statement of Operations
Debt Service and Coverage Ratio
Water Supply System
Total Annual Water Sales
Daily Water Pumpage
Retail Billings and Collections
Ten Largest Retail Customers
Revenue Requirements and Percentage Rate Increases
Integrated Connection Base Fee Schedule
Statement of Operations
Debt Service and Coverage Ratio
Attachments:
• Table A - Matrix of Continuing Disclosure Requirements by Debt Issuance
• Comprehensive Annual Financial Report, Year Ended June 30, 2007
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CITY OF GRAND RAPIDS
City of Grand Rapids Population
The City's 1970, 1980, 1990 and 2000 census populations are as follows:
Year
of Census
1970
1980
1990
2000
Population
197,649
181,843
189,126
197,800
Percent
Change
0.23%
(8.00)
4.01
4.59
Source: U.S. Department of Commerce-Bureau of Census.
CITY TAXATION AND LIMITATIONS
Property Valuations
The value of all taxable real and personal property in the City as of December 31 of each year is
assessed by the City and then equalized by Kent County (the "County") and again by the State. The value
as equalized by the State becomes the state equalized valuation ("State Equalized Valuation" or "SEV").
Property taxpayers may appeal their property values to the City Assessor, the City's Board of Review and
ultimately to the State Tax Tribunal. Outstanding appeals are not anticipated to adversely impact the
financial condition of the City.
Since the 1960s, Michigan personal property tax assessments have been based on, among other
things, the use of one or more depreciation schedules formulated by the State Tax Commission. The
schedule used against the taxpayer-reported cost depends upon the assessor's view of the appropriate
depreciation table to adopt for valuation of the affected personal property. The State Tax Tribunal revised
its depreciation schedules beginning with the 2000 tax year. The revisions had the effect of reducing
personal property tax revenues in some jurisdictions. The revisions were effective beginning with the City's
fiscal year ended June 30, 2001.
Michigan statutes provide that all ad valorem (real and personal) property taxes ("Ad Valorem
Taxes") be levied upon Taxable Value, as hereinafter defined (the "Ad Valorem Tax Roll"). Article IX,
Section 3, of the Michigan Constitution limits the proportion of true cash value at which taxable property
can be assessed to a percentage not to exceed 50%. The Michigan Legislature has provided that taxable
property shall be assessed at 50% of its true cash value. The Michigan Legislature or the electorate may at
some future time change the percentage of true cash value at which property is assessed.
In 1994, the electors of the State approved an amendment to the Michigan Constitution permitting
the Michigan Legislature to authorize Ad Valorem Taxes on a non-uniform basis. The legislation
implementing this constitutional amendment added a new measure of property value known as taxable value
(“Taxable Value”). Since 1995, taxable property has two valuations, SEV and Taxable Value. Property
taxes are levied on Taxable Value. Generally, the Taxable Value of property is the lesser of (a) the Taxable
Value of the property in the immediately preceding year, adjusted for losses, multiplied by the lesser of the
net percentage change in the property’s SEV, or the inflation rate or 5%, plus additions, or (b) the
property’s current SEV. Under certain circumstances therefore the Taxable Value of property may be
different from the same property’s SEV.
When property is sold or transferred, Taxable Value is adjusted to the SEV, which under existing
law is 50% of the current true cash value. The Taxable Value of new construction is equal to current SEV.
Taxable Value and SEV of existing property are also adjusted annually for additions and losses.
1
Ad Valorem Taxable Value does not include any value of tax-exempt property (e.g., governmental
facilities, churches, public schools, etc.) or property granted tax abatement under Act 198, Public Acts of
Michigan, 1974, as amended (“Act 198”), Act 146, Public Acts of Michigan, 2000, as amended (“Act 146”)
and Act 147, Public Acts of Michigan, 1992, as amended (“Act 147”). For its fiscal year ending June 30,
2008, the equivalent effect of the abatements granted under Act 198, Act 146 and Act 147 is to understate
the City’s Taxable Value by $46,230,329 or 0.97%. Including the Equivalent Taxable Value (hereinafter
defined) of these properties, the City’s total Taxable Value (“Total Taxable Value”) has increased
$790,688,192 or approximately 19.78% between the fiscal years ended or ending June 30, 2004 through
2008. See the following table and “CITY TAXATION AND LIMITATIONS -- Tax Abatement” herein.
City of Grand Rapids
Total Taxable Value
Fiscal Years Ended June 30, 2003 Through 2007
Assessed
Value as of
December 31
2001
2002
2003
2004
2005
Year of State
Equalization
and Tax
Levy
2002
2003
2004
2005
2006
City's Fiscal
Year Ended
June 30
2003
2004
2005
2006
2007
Ad
Valorem
Taxable
Value (1)
$3,817,540,264
3,934,095,825
4,102,726,538
4,301,990,906
4,521,029,344
Equivalent
Taxable Value of
Property Granted
Tax Abatements
Under Act 198,
Act 146
and Act 147 (2)
$61,451,287
62,768,111
51,154,887
47,487,792
46,518,809
Total
Taxable Value
$3,878,991,551
3,996,863,936
4,153,881,425
4,349,478,698
4,567,548,153
Percent
Increase
Over
Prior
Year
4.63%
3.06
3.93
4.71
5.01
Per Capita Total Taxable Value for the Fiscal Year Ended June 30, 2007 (3)................................................. $23,091.75
(1) Includes the value of qualified property located within the City's Renaissance Zone (the "Zone") which was
created pursuant to the provisions of Act 376, Public Acts of Michigan, 1996 ("Act 376"), as amended. Act 376
was designed to stimulate private investment within the Zone through the abatement of certain property, income
and business taxes. For the fiscal year ended June 30, 2007, the Taxable Value of property qualified for the
benefits of the Zone program totaled $200,102,805.
(2) At the full tax rate. See "CITY TAXATION AND LIMITATIONS – Tax Abatement" herein.
(3) Based on the City's 2000 Census of 197,800.
Source: City of Grand Rapids
2
Including the value of property granted tax abatements under Act 198, Act 146 and Act 147, a
breakdown of the City's Total Taxable Value by use and class for the fiscal years ended June 30, 2003
through 2007 is shown below.
City of Grand Rapids
Total Taxable Value by Use and Class
Fiscal Years Ended June 30, 2003 Through 2007
Use
Commercial .............
Utility ......................
Industrial .................
Residential...............
2003
$1,116,894,138
70,221,900
468,389,158
2,223,486,355
$3,878,991,551
2004
$1,136,587,020
71,297,500
470,894,399
2,318,085,017
$3,996,863,936
2005
$1,168,860,005
82,277,264
468,231,574
2,434,512,582
$4,153,881,425
2006
$1,232,781,638
87,253,514
464,879,887
2,564,563,659
$4,349,478,698
2007
$1,291,550,364
58,786,723
493,320,115
2,723,890,951
$4,567,548,153
Class
Real Property...........
Personal Property ....
2003
$3,364,469,081
514,522,470
$3,878,991,551
2004
$3,506,104,231
490,759,705
$3,996,863,936
2005
$3,666,003,411
487,878,014
$4,153,881,425
2006
$3,870,911,884
478,566,814
$4,349,478,698
2007
$4,101,885,380
465,662,773
$4,567,548,153
Source: City of Grand Rapids
City of Grand Rapids
Percent of Total Taxable Value by Use and Class
Fiscal Years Ended June 30, 2003 Through 2007
Use
Commercial .............
Utility ......................
Industrial .................
Residential...............
2003
28.79%
1.81
12.08
57.32
100.00%
2004
28.44%
1.78
11.78
58.00
100.00%
2005
28.14%
1.98
11.27
58.61
100.00%
2006
28.34%
2.01
10.69
58.96
100.00%
2007
28.30%
1.30
10.80
59.60
100.00%
Class
Real Property...........
Personal Property ....
2003
86.74%
13.26
100.00%
2004
87.72%
12.28
100.00%
2005
88.25%
11.75
100.00%
2006
89.00%
11.00
100.00%
2007
89.80%
10.20
100.00%
Source: City of Grand Rapids
Aside from its use in determining Taxable Value for the purpose of levying Ad Valorem Taxes,
SEV is important because of its role in the spreading of taxes between overlapping jurisdictions, the
distribution of various State aid programs, State revenue sharing and in the calculation of debt limits.
Ad Valorem SEV does not include any value of tax-exempt property (e.g., governmental facilities,
churches, public schools, etc.) or property granted tax abatement under Act 198, Act 146 or Act 147. The
effect of the abatements granted under Act 198, Act 146 and Act 147 is to understate the City's Ad Valorem
SEV for its fiscal year ended June 30, 2007 by $92,314,400 or 1.69%. Including the SEV of these
properties, the City's total SEV ("Total SEV") has increased $989,908,000 or approximately 22.15%
between the fiscal years ended June 30, 2003 through 2007. See the following table and "CITY
TAXATION AND LIMITATIONS – Tax Abatement" herein.
3
City of Grand Rapids
Total State Equalized Valuation
Fiscal Years Ended June 30, 2003 Through 2007
Assessed
Value as of
December 31
2001
2002
2003
2004
2005
Year of State
Equalization
and Tax Levy
2002
2003
2004
2005
2006
City's Fiscal
Year Ended
June 30
2003
2004
2005
2006
2007
Ad
Valorem
SEV
$4,355,006,100
4,646,795,500
4,852,844,200
5,118,063,700
5,365,731,600
Property
Granted Tax
Abatement
Under Act 198,
Act 146
and Act 147 (1)
$113,131,900
106,905,300
101,014,600
93,518,200
92,314,400
Total SEV
$4,468,138,000
4,753,700,800
4,953,858,800
5,211,581,900
5,458,046,000
Percent
Increase
Over
Prior Year
6.80%
6.39
4.21
5.20
4.73
Per Capita Total SEV for the Fiscal Year Ended June 30, 2007 (2) ............................................................... $27,593.76
(1) See "CITY TAXATION AND LIMITATIONS – Tax Abatement" herein.
(2) Based on the City's 2000 census of 197,800.
Source: City of Grand Rapids
Including the value of property granted tax abatement under Act 198, Act 146 and Act 147 a breakdown
of the City's Total SEV by use and class for the fiscal years ended or ending June 30, 2003 through 2007 is
shown below. See "CITY TAXATION AND LIMITATIONS – Tax Abatement" herein.
City of Grand Rapids
Total SEV by Use and Class
Fiscal Years Ended June 30, 2003 Through 2007
Use
Commercial ...................
Industrial .......................
Residential.....................
Utility ............................
2003
$1,227,788,200
543,823,500
2,626,268,100
70,258,200
$4,468,138,000
Fiscal Year Ended June 30
2004
2005
2006
$1,299,853,000 $1,319,569,700 $1,401,135,400
561,542,900
562,733,500
547,881,300
2,821,007,400
2,985,193,700
3,172,875,700
71,297,500
86,361,900
89,689,500
$4,753,700,800 $4,953,858,800 $5,211,581,900
2007
$1,451,680,900
575,732,600
3,371,520,200
59,112,300
$5,458,046,000
Class
Real Property.................
Personal Property ..........
2003
$3,924,696,100
543,441,900
$4,468,138,000
2004
$4,240,304,600
513,396,200
$4,753,700,800
2007
$4,968,229,200
489,816,800
$5,458,046,000
Source: City of Grand Rapids
4
2005
$4,434,498,200
519,360,600
$4,953,858,800
2006
$4,706,049,400
505,532,500
$5,211,581,900
City of Grand Rapids
Percent of Total SEV by Use and Class
Fiscal Years Ended June 30, 2003 Through 2007
Use
Commercial ...................
Industrial .......................
Residential.....................
Utility ............................
2003
27.48%
12.17
58.78
1.57
100.00%
2004
27.34%
11.81
59.34
1.50
100.00%
Fiscal Year Ended June 30
2005
26.64%
11.36
60.26
1.74
100.00%
2006
26.89%
10.51
60.88
1.72
100.00%
2007
26.60%
10.55
61.77
1.08
100.00%
Class
Real Property.................
Personal Property ..........
2003
87.84%
12.16
100.00%
2004
89.20%
10.80
100.00%
2005
89.52%
10.48
100.00%
2006
90.30%
9.70
100.00%
2007
91.03%
8.97
100.00%
Source: City of Grand Rapids
Tax Abatement
The City's Ad Valorem Taxable Value does not include the value of certain facilities which have
temporarily been removed from the Ad Valorem Tax Roll pursuant to Act 198. Act 198 was designed to
provide a stimulus in the form of significant tax incentives to industrial enterprises to renovate and expand
aging facilities and to build new facilities. Except as indicated below, under the provisions of Act 198, a
local governmental unit (i.e., a city, village or township) may establish plant rehabilitation districts and
industrial development districts and offer industrial firms certain property tax incentives or abatements to
encourage restoration or replacement of obsolete facilities and to attract new facilities to the area.
An industrial facilities exemption certificate granted under Act 198 entitles an eligible facility to
exemption from Ad Valorem Taxes for a period of up to 12 years. In lieu of Ad Valorem Taxes, the eligible
facility will pay an industrial facilities tax (the "IFT Tax"). For properties granted tax abatement under Act
198 there exists a separate tax roll referred to as the industrial facilities tax roll (the "IFT Tax Roll"). The
IFT Tax for an obsolete facility which is being restored or replaced is determined in exactly the same
manner as the Ad Valorem Tax; the important difference being that the value of the property remains at the
Taxable Value level prior to the improvements even if the restoration or replacement substantially increases
the value of the facility. For a new facility the IFT Tax is also determined the same as the Ad Valorem Tax
but instead of using the total mills levied as Ad Valorem Taxes, a lower millage rate is applied. For
abatements granted prior to 1994, this millage rate equals 1/2 of all tax rates levied by other than the State
and local school district for operating purposes plus 1/2 of the 1993 rate levied by the local school district
for operating purposes. For abatements granted after 1993, this millage rate equals 1/2 of all tax rates levied
by other than the State plus 0%, 50% or 100% of the State Education Tax (as determined by the State
Treasurer).
The City's Ad Valorem Taxable Value also does not include the value of certain facilities which
have been temporarily removed from the Ad Valorem Tax Roll pursuant to Act 146. Act 146 was designed
to provide a stimulus in the form of significant tax incentives to renovate certain blighted, environmentally
contaminated or functionally obsolete commercial property or commercial housing property ("OPRA
Properties.") Except as indicated below, under the provisions of Act 146, a local governmental unit (i.e. a
city, village or township) may establish obsolete property rehabilitation districts and offer tax incentives or
abatements to encourage rehabilitation of OPRA Properties.
An obsolete property rehabilitation certificate granted under Act 146 entitles an eligible facility to
an exemption from Ad Valorem Taxes on only the building for a period of up to 12 years. A separate tax
5
roll exists for OPRA Properties abated under Act 146 called the "Obsolete Properties Tax Roll." An
"Obsolete Properties Tax" is calculated using current year ad valorem millages times the taxable value of
the obsolete building for the tax year immediately prior to the effective date of the obsolete property
rehabilitation certificate except for the annual school operating and State Education Tax millages which are
charged at the Ad Valorem Tax rate on the current Taxable Value of the building. The City created its first
Obsolete Properties Tax Roll for the 2005 tax year (FY2006).
The newest property tax abatement program to be used by the City is authorized under Act 147, which is
known as the Neighborhood Enterprise Zone Act. Act 147 allows specific local governments to create
“Neighborhood Enterprise Zones.” The goal of the Neighborhood Enterprise Zone (“NEZ”) abatement
program is to promote home ownership and investment in areas of the City where the greatest impact would
occur and where such improvements may trigger additional investment in adjacent neighborhoods.
There are two types of available NEZ property tax abatements: one for the rehabilitation of an existing
property and one for new construction. Both types of NEZ property tax abatements apply only to
residential properties. The holder of an NEZ Certificate does not pay ad valorem property taxes related to
the taxable value of the NEZ residence. Instead, the property owner pays the Neighborhood Enterprise
Zone Tax (the “NEZ Tax”) which is equal to one half of the State’s average rate of taxation. Currently, the
NEZ Tax rate is nearly 17 mills. The amount of the NEZ Tax on an NEZ residence is determined each year
by multiplying the Taxable Value of the residence for the tax year immediately preceding the effective date
of the NEZ Certificate by the total ad valorem millage rate. Land value and special assessments are not
eligible for the NEZ property tax abatement. The effective date for the tax abatement is dependent upon
commencement of construction and when the residence is substantially completed. NEZ Certificates are in
effect for up to 12 years. The continuance of a NEZ Certificate is conditional upon being current on
payment of all taxes and any other debts owed to the City on an annual basis.
The City has established goals, objectives and procedures to provide the opportunity for residential,
industrial and commercial development and expansion. The SEV of properties that have been granted tax
abatement under Act 198, Act 146 and Act 147, removed from the Ad Valorem Tax Roll and placed on the
IFT Tax Roll, the Obsolete Properties Tax Roll and the NEZ roll totaled $92,314,400 for the fiscal year
ended June 30, 2007. The IFT, Obsolete Properties and NEZ taxes paid on these properties are equivalent
to Ad Valorem Taxes paid on $46,518,909 of Taxable Value at the full tax rate (the "Equivalent Taxable
Value"). Upon expiration of the industrial facilities exemption, obsolete property rehabilitation and NEZ
certificates the current equalized valuation of the abated properties will return to the Ad Valorem Tax Roll
as Taxable Value.
Personal Property Tax Exemptions
Act 328, Public Acts of Michigan, 1998, as amended, ("Act 328") allows certain eligible
communities to designate specific existing areas as "eligible distressed areas" in which "new personal
property" of "eligible businesses" would be exempt from Ad Valorem property taxation. The City is one of
the eligible communities. With the approval of the State Tax Commission, the City designated certain areas
as eligible distressed areas beginning in 2005 (FY2006). Under Act 328, the City has exempted personal
property related to one twelve year agreement beginning with the 2005 (FY 2006) assessment roll. Since
Act 328 does not require annual reporting, the amount of exempted taxable value is not available.
6
Property Taxes
Michigan statutes provide that all ad valorem taxes be levied upon Taxable Value. The City's ability
to tax is limited by the State Constitution, State statutes and the City Charter. Home rule cities, such as the
City, are permitted by Act 279, Public Acts of Michigan, 1909, as amended (the "Home Rule Cities Act"),
to authorize by their charters a maximum levy of 20 mills for operating purposes. The City's charter
authorizes a maximum levy of 6.4100 mills for operating purposes (including the library) and 0.3950 mills
for additional library purposes limited to twenty years commencing July 1, 1998. A mill is equal to $1.00
for each $1,000 of Taxable Value.
Pursuant to Act 298, Public Acts of Michigan, 1917, as amended, home rule cities may authorize an
additional levy of up to three mills for refuse collection and disposal. Home rule cities are also authorized
to levy up to one mill (plus one additional mill with voter approval) for library purposes pursuant to Act
164, Public Acts of Michigan, 1877, as amended. Act 359, Public Acts of Michigan, 1925, as amended,
also authorizes home rule cities to levy up to $50,000 for promotional expenses.
For its fiscal year beginning July 1, 2006, the City levied 6.1798 mills for operating purposes,
1.5500 mills for refuse collection and disposal, 0.0114 for promotion purposes and 0.3805 mills for library
capital improvement purposes (see "CITY TAXATION AND LIMITATIONS – State Limitations on
Property Taxes" herein). In addition, the electorate may authorize the issuance of general obligation bonds
or other obligations which pledge the full faith and credit and unlimited taxing power of the City. See
"CITY TAXATION AND LIMITATIONS" and "CITY DEBT" herein.
State Limitations on Property Taxes
In 1978, the electorate of the State passed an amendment to the State Constitution (the “Headlee
Amendment") which placed certain limitations on increases of taxes by the State and political subdivisions
from currently authorized levels of taxation. The Amendment and the enabling legislation, Act 35, Public
Acts of Michigan, 1979, may have the effect of reducing the maximum authorized tax rate which could be
levied by a local taxing unit. Under the Headlee Amendment's millage reduction provisions, should the
value of taxable property, exclusive of new construction, increase at a percentage greater than the
percentage increase in the Consumer Price Index, the maximum authorized tax rate would be reduced by a
factor which would result in the same maximum potential tax revenues to the local taxing unit as if the
valuation of taxable property (less new construction) had grown only at the national inflation rate instead of
the higher actual growth rate. Thus, should taxable property values increase faster than consumer prices, the
maximum authorized tax rate would be reduced accordingly. However, should consumer prices
subsequently rise faster than taxable property values, the maximum authorized tax rate would be increased
accordingly, but never higher than the statutory or charter tax rate limitations.
The Headlee Amendment does not limit taxes for the payment of principal of and interest on the
bonds or other evidences of indebtedness outstanding at the time the Headlee Amendment became effective
or which have been approved by the electorate of the State or such political subdivision. For the fiscal year
ended June 30, 2007, the Headlee Amendment has the effect of reducing the City's authorized millages as
follows:
7
City of Grand Rapids
Maximum Property Tax Rates
Fiscal Year Ended June 30, 2007
Current Year
Millage Rate As
Permanently
Millage
Maximum
Reduction Fraction
Reduced by
Allowable Millage
Headlee
6.1798
Operating (1)................................
1.0000
6.4100
6.1798
1.0000
2.7837
Refuse Collection and Disposal ....... 3.0000
2.7837
Promotional (2) ................................ 0.0120
1.0000
0.0120
n/a
1.0000
Library (3)........................................ 0.3950
0.3805
0.3805
(1) For the fiscal year ended June 30, 2007, includes operating levies allocated for general, capital reserve and library
purposes of 2.8570, 1.2500, and 2.0728 mills respectively.
(2) Estimate. Levy intended to generate approximately $50,000 annually.
(3) In 1997 the City's electorate amended the City's Charter to increase its operating levy by 0.3950 mills for a period
of twenty years commencing July 1, 1998 to be allocated and used solely for the City's public library facilities.
Headlee required millage rate rollbacks have reduced the authorized levy to 0.3805 mills. See "CITY TAXATION
AND LIMITATIONS – Property Tax Rates" herein.
Source: City of Grand Rapids
Millage
Classification
Millage
Authorized
Property Tax Rates
As defined under "Property Taxes" herein, a mill is equal to $1.00 for each of $1,000 of Taxable
Value. The City is currently authorized to levy annually 6.1798 mills for operating purposes or a maximum
of $6.1798 for each $1,000 of Taxable Value. Excluding taxes levied by other units of government, the
City's property tax rates, expressed as a dollar for each $1,000 of Taxable Value, for the fiscal years ended
June 30, 2003 through 2007 are shown below. See "CITY TAXATION AND LIMITATIONS-State
Limitations on Property Taxes" herein.
City of Grand Rapids
Property Tax Rates
Fiscal Years Ended June 30, 2003 Through 2007
Levy
Fiscal Year
July 1
Ended June 30
Operating (1)
Other (2)
Library (3)
Total
2002
2003
$6.2882
$1.3631
$0.3873
$8.0386
2003
2004
6.2278
1.3627
0.3835
7.9740
2004
2005
6.2078
1.5616
0.3823
8.1517
2005
2006
6.1798
1.5620
0.3805
8.1223
2006
2007
6.1798
1.5614
0.3805
8.1217
(1) Includes operating levies allocated for general, capital reserve and library purposes.
(2) Includes refuse collection and disposal as well as promotional levies. See "CITY TAXATION AND
LIMITATIONS – Property Taxes" herein. Beginning in the fiscal year ended June 30, 2005, the City
Commission approved a 0.2000 mill refuse collection millage increase.
(3) In 1997 the City's electorate amended the City's Charter to increase its operating levy by 0.3950 mills for a period
of twenty years commencing July 1, 1998 to be allocated and used solely for the City's public library facilities.
Headlee required millage rate rollbacks have reduced the authorized levy to 0.3805 mills. See "CITY
TAXATION AND LIMITATIONS – Property Tax Rates" herein.
Source: City of Grand Rapids
In addition to the City's property tax rates, residents of the City must pay property taxes to other
units of local government. With the exception of the 2003 tax year in which 5.000 mills was levied, a State
education tax of 6.0000 mills is levied by the State on all real and personal property currently subject to
property tax. To be eligible for state school aid, a local school district is also required to levy not more than
the lesser of 18.0000 mills or the number of mills levied in 1993 for school operating purposes on nonhomestead property. These property taxes are in lieu of those previously levied for local school district
8
operating purposes. Total rates, expressed as a $1.00 for each $1,000 of Taxable Value, for the City's fiscal
years ended June 30, 2003 through 2007, are as follows:
PRE/Homestead
(1)
City of Grand Rapids
Property Tax Rates per $1,000 of Taxable Value by Governmental Unit
Fiscal Years Ended June 30, 2003 Through 2007
Governmental Unit
City of Grand Rapids .............................
County of Kent ......................................
State of Michigan...................................
Grand Rapids Public Schools (2)...........
Kent Intermediate School District..........
Grand Rapids Community College ........
Interurban Transit Partnership ...............
Total ............................................
2003
$ 8.0386
5.3140
6.0000
0.9800
3.8192
1.8000
0.7480
$26.6998
2004
$ 7.9740
5.3140
5.0000
0.8000
3.7903
1.7865
0.7603
$25.4251
2005
$ 8.1517
5.3140
6.0000
2.6800
4.5333
1.7865
0.9500
$29.4155
2006
$ 8.1223
5.3140
6.0000
2.1100
4.6453
1.7865
0.9500
$28.9281
2007
$ 8.1217
5.3940
6.0000
1.7700
4.6903
1.7865
0.9500
$28.7125
City of Grand Rapids
(1)
Non-PRE/Non-Homestead Property Tax Rates per $1,000 of Taxable Value by Governmental Unit
Fiscal Years Ended June 30, 2003 Through 2007
Governmental Unit
City of Grand Rapids .............................
County of Kent ......................................
State of Michigan...................................
Grand Rapids Public Schools (3)...........
Kent Intermediate School District..........
Grand Rapids Community College ........
Interurban Transit Partnership ...............
Total ............................................
2003
$ 8.0386
5.3140
6.0000
18.9800
3.8192
1.8000
0.7480
$44.6998
2004
$ 7.9740
5.3140
5.0000
18.7154
3.7903
1.7865
0.7603
$43.3405
2005
$ 8.1517
5.3140
6.0000
20.5058
4.5333
1.7865
0.9500
$47.2413
2006
$ 8.1223
5.3140
6.0000
19.9358
4.6453
1.7865
0.9500
$46.7539
2007
$ 8.1217
5.3940
6.0000
19.5958
4.6903
1.7865
0.9500
$46.5383
(1) Principal Residence Exemption ("PRE")/Homestead Property means a dwelling or unit in a multiple-unit dwelling
subject to ad valorem property taxes that is owned and occupied as a principal residence by the owner of the
dwelling or unit. PRE/Homestead includes all unoccupied property classified as agricultural adjacent and
contiguous to the home of the owner that is not leased or rented by the owner to another person if the gross
receipts of the agricultural or horticultural operations, if any, exceed the household income of the owner. If the
gross receipts of the agricultural or horticultural operations do not exceed the household income of the owner, the
homestead includes only 5 acres adjacent and contiguous to the home of the owner. PRE/Homestead includes a
life care facility registered under the Living Care Disclosure Act, Act 440, Public Acts of Michigan, 1976, as
amended. PRE/Homestead also includes property owned by a cooperative housing corporation and occupied as a
principal residence by tenant stockholders. Non-PRE/Non-Homestead Property is property not included in the
above definition.
(2) Debt millage only. The Grand Rapids Public Schools is the largest school district within the City. Portions of
other school districts overlap the City's boundaries. Of those which do, the total PRE/Homestead local school
millage rates for the fiscal year ended June 30, 2007 ranged from $3.20 to $7.30 for each $1,000 of Taxable
Value. The total tax rates for property owners in other school districts would change accordingly.
(3) The Grand Rapids Public Schools is the largest school district within the City. Portions of other school districts
overlap the City's boundaries. Of those which do, the total Non-PRE/Non-Homestead local school millage rates
for the fiscal year ended June 30, 2007 ranged from $21.20 to $25.30 for each $1,000 of Taxable Value. The total
tax rates for property owners in other school districts would change accordingly.
Source: City of Grand Rapids
Property Tax Collections
The City's fiscal year begins on July 1. Real and personal property taxes are due on July 1 and are
payable without penalty until July 31. Property owners who have not paid their property taxes on or before
July 31 are required to pay interest and penalties on, and collections fees with respect to, such unpaid taxes.
9
Personal property taxes that are delinquent as of March 1 following the City’s July 1 levy are
collected by the City (“Delinquent Personal Property Taxes”). The City may bring suit to collect
Delinquent Personal Property Taxes. The City may also seize the personal property to satisfy the tax lien
thereon. The City’s Delinquent Personal Property Taxes are a small percentage of the tax roll. The City’s
delinquent property taxes are removed from the tax roll after five years and represent an average of less than
$20,000 per year.
Real property taxes that are delinquent as of March 1 following the City's July 1 levy are turned
over to Kent County (the "County") for collection ("Delinquent Real Property Taxes"). Such Delinquent
Real Property Taxes are subject to additional penalties and interest charges by the County. Unless the
Delinquent Real Property Taxes are paid within approximately 25 months from the date of delinquency the
underlying property may be foreclosed upon and sold at public auction.
The County has historically purchased the City's Delinquent Real Property Taxes from its
delinquent tax payment fund. In return, the City has assigned the County all amounts due from the
taxpayers with respect to such Delinquent Real Property Taxes. As a result of these purchases the City's
real property tax receipts have approached 100%. The continued purchase of Delinquent Real Property
Taxes may be dependent upon the sale of delinquent tax notes by the County for that purpose. There is no
assurance that the County will issue such delinquent tax notes or purchase such Delinquent Real Property
Taxes in any fiscal year. If Delinquent Real Property Taxes are not purchased by the County, any
Delinquent Real Property Taxes collected by the County are remitted to the City within a month following
the County’s collection those past due taxes. The following table reflects the actual property tax collections
for the City's fiscal years ended June 30, 2003 through 2007.
City of Grand Rapids
Property Tax Collections
Fiscal Years Ended June 30, 2003 Through 2007
July 1
Levy
2002
2003
2004
2005
2006
Fiscal Year
Ended June 30
2003
2004
2005
2006
2007
City
Tax Levy (1)
$29,940,510
30,372,753
32,256,743
33,540,423
35,139,504
Collections
to March 1
Following Levy (2)
$28,704,022
29,066,556
30,873,039
31,825,503
33,494,049
Percent
Collected
95.9%
95.7
95.7
94.9
95.3
(1) Excludes taxes on properties granted tax abatement under Act 198, Act 146 and Act 147. See "CITY
TAXATION AND LIMITATIONS - Property Valuations" and "CITY TAXATION AND LIMITATIONS - Tax
Abatement" herein.
(2) Excludes real property taxes turned over to Kent County for collection March 1.
Source: City of Grand Rapids
10
Pursuant to Act 197, Public Acts of Michigan, 1975, as amended, Act 281, Public Acts of
Michigan, 1986, as amended, Act 381, Public Acts of Michigan, 1996, as amended, and Act 450, Public
Acts of Michigan, 1980, as amended, the City has established authorities which capture tax increment
pursuant to these acts. The City's general operating levies reflected in its audited financial statements are
net of such capture.
Taxpayers with Largest Valuations
The taxpayers with the largest valuations in the City, their principal product or service and Total
Taxable Value for the fiscal year ended June 30, 2007 are as follows:
City of Grand Rapids
(1)
Largest Taxpayer Valuations
Fiscal Year Ended June 30, 2007
Taxpayer
Steelcase Inc.
Consumers Energy
Alticor, Incorporated
Keebler Company (4)
SH-2 LLC and BT-2 LLC
Centerpointe Developmt LLC
Holland Home
MichCon
Fifth Third Bank, Michigan
Jade Pig Ventures
Principal Product or Service
Office systems designer & manufacturer
Electric utility
Hotel / real estate
Bakery products
Real estate holding and development
Shopping center / real estate
Senior care services
Gas utility
Banking / real estate holding
Real estate holding and development
Total
Taxable Value (2)
$65,074,163
39,301,877
32,000,567
26,897,800
25,660,031
24,925,544
23,036,804
21,447,372
20,131,039
16,076,939
$294,552,136
Percent of
Total (3)
1.42%
0.86
0.70
0.59
0.56
0.55
0.50
0.47
0.44
0.35
6.45%
(1) Property taxpayers and Taxable Value are based on the July 1, 2006 tax bills.
(2) Includes the Equivalent Taxable Value of property granted tax abatement under Act 198, Act 146 and Act 147.
See "CITY TAXATION AND LIMITATIONS – Tax Abatement" herein.
(3) Based on $4,567,548,153 which is the City's Total Taxable Value for the fiscal year ended June 30, 2007.
Includes the Taxable Value of property granted tax abatement under Act 198, Act 146 and Act 147 as applicable.
See "CITY TAXATION AND LIMITATIONS – Property Valuations" and "CITY TAXATION AND
LIMITATIONS – Tax Abatement" herein.
(4) Keebler Company real and personal property is eligible for property tax exemptions under Act 376.
Source: City of Grand Rapids
City Income Tax
In 1967, the City's electorate approved a two mill reduction in the City's maximum authorized
general operating millage and the implementation of an income tax imposed on income earned within the
City regardless of the residence of the taxpayer and on all income of City residents. Income taxed includes
business net income and individuals' salaries and wages. Up to and including the calendar year ending
December 31, 1995, residents paid 1% and non-residents paid 1/2 of 1%. In 1995, the City's electorate
authorized an increase in the income tax from 1.0 % to 1.3% for residents and from 0.5% to 0.65% for nonresidents effective January 1, 1996. Prior to the tax year beginning January 1, 2001, a $750 dependency
exemption was allowed on individual returns with other exemptions for alimony, Keogh and IRA plans,
unreimbursed business expenses and disability income. The dependency exemption was increased to $1,000
per dependent effective January 1, 2001. Effective January 1, 2005 the dependency exemption was lowered
to $750. In 1995, the City's electorate voted to amend the City Charter to annually dedicate an appropriation
of not less than 32% of the City's general operating fund budget to provide police services so long as an
income tax of at least 1.3% for residents and 0.65% for non-residents is collected. Set forth below is a five
year history of income tax collections.
City of Grand Rapids
11
Income Tax Collections
Fiscal Years Ended June 30, 2003 Through 2007
Fiscal Years
Ended June 30
2003
2004
2005
2006
2007
Gross Tax
Collections 1
$59,392,058
58,464,081
60,746,314
64,528,045
66,383,912
Less:
Refunds
$8,874,788
7,524,258
7,636,012
6,328,173
7,908,626
Net Income
Tax Collections
$50,517,270
50,939,823
53,110,302
58,199,872
58,475,286
% Increase or
(Decrease) over
Prior Year
(4.0)%
0.8
4.3
9.60 2
0.47
1
Including interest and penalties.
8.3% net of one-time adjustments.
Source: City of Grand Rapids
2
REVENUES FROM THE STATE OF MICHIGAN
The City receives revenue sharing payments from the State of Michigan under the State
Constitution and the State Revenue Sharing Act of 1971, as amended. Revenue sharing payments and other
moneys paid to municipalities (other than the portion that is mandated by the State Constitution) are subject
to annual appropriation by the State Legislature, and may be reduced or delayed by Executive Order during
any fiscal year in which the Governor, with the approval of the Legislature’s appropriation committees,
determines that actual revenues will be less than the revenue estimates on which appropriations were based.
The Legislature and Governor have modified the appropriations at various times over the past several years
in order to balance the State’s general fund budget and may do so in the future.
Bondholders should be alert to further modifications to revenue sharing payments to
Michigan local governmental units, to the potential consequent impact upon the City’s general fund
condition, and to the potential impact upon the market price or marketability of the City’s bonds
resulting from changes in revenues received by the City from the State.
In addition to payments of revenue sharing moneys, the State pays the City to support district court
judges’ salaries, as well as other miscellaneous state grants. Beginning July 1, 2004, budgeting and
accounting for the 61st District Court was moved from the City’s General Operating Fund to the newly
created 61st District court Fund wherein the State funds for judges’ salaries are deposited.
The following table sets forth the annual revenue sharing payments and other moneys received for
the City’s general operating fund for the fiscal years ended June 30, 2003 through June 30, 2007.
12
City of Grand Rapids
General Operating Fund Revenues from the State of Michigan
Fiscal Years Ended June 30, 2003 Through 2007
Sales Tax …………….
Judicial Salary
Reimbursement (1)….
Grants and Other ………..
Total Revenues…….…….
2003
$26,175,652
Fiscal Years Ended June 30
2004
2005
2006
$23,653,513 $23,394,253 $23,468,415
2007
$22,510,081
274,344
556,122
$27,006,118
274,344
473,918
$24,401,775
--867,973
$23,378,054
--636,886
$24,031,139
--467,216
$23,935,631
(1) Beginning July 1, 2004, 61st District Court operations were moved from the City's General Operating Fund and
established as a discretely presented component unit.
Source: City of Grand Rapids
Revenue sharing payments and other moneys paid to municipalities (other than the portion
which is mandated by the State Constitution) are subject to annual appropriation by the State
Legislature, and may be reduced or delayed by Executive Order during any fiscal year in which the
Governor, with the approval of the Legislature's appropriation committees, determines that actual
revenues will be less than the revenue estimates on which appropriations were based.
CITY DEBT
Statutory and Constitutional Debt Provisions
Section 21 of Article VII of the State Constitution establishes the authority, subject to statutory and
constitutional limitations, for municipalities to incur debt for public purposes:
"The legislature shall provide by general laws for the incorporation of cities and villages.
Such laws shall limit their rate of ad valorem property taxation for municipal purposes, and
restrict the powers of cities and villages to borrow money and contract debts. Each city and
village is granted power to levy other taxes for public purposes, subject to limitations and
prohibitions provided by this constitution or by law."
In accordance with the foregoing authority granted to the State Legislature, the Home Rule Cities
Act limits the amount of debt a city may have outstanding at any time. Section 4(a) of this Act provides:
"... the net indebtedness incurred for all public purpose may be as much as but shall not
exceed the greater of the following:
(a)
Ten percent of the assessed value of all real and personal property in the city.
(b) Fifteen percent of the assessed value of all the real and personal property in the city if
that portion of the total amount of indebtedness incurred which exceeds 10% is or has been
used solely for the construction or renovation of hospital facilities."
Significant exceptions to the debt limitation are permitted by the Home Rule Cities Act for certain
types of indebtedness which include: special assessment bonds and State transportation fund bonds
(formerly, motor vehicle highway fund bonds), even though they are a general obligation of the City;
revenue bonds payable from revenues only, whether secured by a mortgage or not; bonds issued or contract
13
obligations or assessments incurred to comply with an order of the Water Resources Commission of the
State or a court of competent jurisdiction, and obligations incurred for water supply, sewage, drainage or
refuse disposal or resource recovery projects necessary to protect the public health by abating pollution.
Legal Debt Margin
Pursuant to the statutory and constitutional debt provisions set forth herein, the following table
reflects the amount of additional debt the City may legally incur as of June 30, 2007.
Debt Limit (1)................................................................ $545,804,600
Debt Outstanding (2) ........................ $522,118,872
Less: Exempt Debt (2)……………....(379,599,016)
142,519,856
Legal Debt Margin(2).................................................... $403,284,744
(1) 10% of $5,458,046,000 which is the City's Total SEV for the fiscal year ending June 30, 2007. Includes the SEV
of property granted tax abatement under Act 198, Act 146 and Act 147. See "CITY TAXATION AND
LIMITATIONS – Property Valuations" and "CITY TAXATION AND LIMITATIONS – Tax Abatement" herein.
(2) See "CITY DEBT-Statutory and Constitutional Debt Provisions" herein.
Source: Municipal Advisory Council of Michigan and the City of Grand Rapids
14
Debt Statement
The following table reflects a breakdown of the City's direct and overlapping debt as of June 30, 2007. Direct debt
shown as self-supporting is paid from sources other than the City's General Fund. The City's ability to levy taxes to
pay the debt service on the obligations that are designated as "Limited Tax" is subject to applicable charter, statutory
and constitutional limitations.
City Direct Debt
Share of County Issued Bonds:
Dated September 30, 2003 (Limited Tax)
Dated July 1, 2000 (Limited Tax)
Dated October 1, 1997 (Limited Tax)
Gross
$
Building Authority Bonds:
Dated November 15, 2006
Dated November 18, 2004 (4)
Dated May 8, 2003
Dated June 15, 2002 (4)
Dated May 1, 2002 (Limited Tax)
Dated October 1, 2001 (Limited Tax)
Dated November 2, 2000 (Limited Tax)
Dated July 1, 1999 (Limited Tax)
Dated September 1, 1998 (Limited Tax)
Dated August 1, 1997 (Limited Tax)
Subtotal ………………………..………
Tax Increment Bonds:
Dated May 20, 2004 (Limited Tax)
Dated November 15, 1994
Subtotal ………………………..………
Sewer Revenue Bonds:
Senior Lien
Dated October 27, 2005
Dated August 26, 2004
Dated July 1, 1998
Junior Lien
Dated September 28, 1995 (Limited Tax)
Dated June 29, 1995 (Limited Tax)
Dated September 29, 1994 (Limited Tax)
Dated June 28, 1994 (Limited Tax)
Dated September 30, 1993 (Limited Tax)
Dated June 29, 1993 (Limited Tax)
Dated September 24, 1992
Dated June 25, 1992
Dated December 20, 1991
$
-0-0-0-
$12,559,856
$
-0-
$
1,595,000
$
1,595,000
$
-0-
$
7,375,000
17,770,000
4,510,000
17,880,000
2,960,000
14,235,000
20,320,000
1,405,000
15,085,000
755,000
$
7,375,000
17,770,000
4,510,000
17,880,000
-014,235,000
-0-0-0-0-
$
-0-0-0-02,960,000
-020,320,000
1,405,000
15,085,000
755,000
$
102,295,000
$
61,770,000
$
40,525,000
$
3,805,000
39,320,720
$
3,805,000
39,320,720
$
-0-0-
$
43,125,720
$
43,125,720
$
-0-
$
50,095,000
36,900,000
76,180,000
$
50,095,000
36,900,000
76,180,000
-0-0-0-
1,915,000
1,933,296
2,990,000
4,890,000
3,935,000
4,125,000
675,000
5,650,000
480,000
-0-0-0-0-0-0-0-0-0-
1,915,000
1,933,296
2,990,000
4,890,000
3,935,000
4,125,000
675,000
5,650,000
480,000
Subtotal …………………………..……
$
Water Revenue Bonds:
15
Net
3,554,856
3,030,000
5,975,000
Subtotal ……………………..…………
Share of Joint Building Authority Bonds:
Dated December 1, 1993 (Limited Tax)
Self-Supporting
189,768,296
$
189,768,296
$
3,554,856
3,030,000
5,975,000
$12,559,856
$
-0-
Dated December 14, 2005
Dated November 1, 2000
Dated March 18, 1993
Subtotal …………………………..……
$
$
Michigan Transportation Fund Bonds:
Dated May 8, 2003 (Limited Tax)
Dated December 1, 1999 (Limited Tax)
Subtotal ………………………..………
Installment Purchase Notes:
Dated December 20, 2006
Dated April 13, 2006 (Limited Tax)
Dated June 30, 2004 (Limited Tax)
Dated December 1, 2002 (Limited Tax)
Dated April 1, 2002 (Limited Tax)
Dated March 1, 2001 (Limited Tax)
Subtotal …………………………..……
$
$
$
34,440,000
65,975,000
34,700,000
135,115,000
$
3,135,000
6,860,000
9,995,000
$
$
$
$
$
3,660,000
3,770,000
1,910,000
1,940,000
875,000
770,000
12,925,000
Capital Improvement Bonds
Dated May 16, 2007 (Limited Tax)
$
Total Direct Debt ……………………………….……
$
34,440,000
65,975,000
34,700,000
135,115,000
$
-0-
$
-0-0-
3,135,000
6,860,000
9,995,000
$
-0-0-
$
-0-0-0-0-
$
14,740,000
$
-0-
$
14,740,000
522,118,872
$
441,369,016
$
80,749,856
$
770,817,292
$ 1,292,936,164
Per Capita Net Overlapping Debt (1) ………………………………………………………..……………
Percent of Net Overlapping Debt to Total SEV (2) ………………………………………..……………..
Per Capita Net Direct and Overlapping Debt (1) …………………………………………..……….…….
Percent of Net Direct and Overlapping Debt to Total SEV (2)………………………………..………….
(1)
(2)
$
3,660,000
3,770,000
1,910,000
1,940,000
875,000
770,000
12,925,000
Per Capita Net Direct Debt (1) ………………………………………………………………….…………..
Percent of Net Direct Debt to Total SEV (2) ……………………………………………………………….
City Share as a
Overlapping Debt (3)
Gross
Percent of Gross
Caledonia Community Schools
$
93,063,292
0.17%
Forest Hills Public Schools
179,250,000
1.76%
Godwin Heights Public Schools
10,350,000
12.15%
Grand Rapids Public Schools
168,225,000
100.00%
Grandville Public Schools
35,655,000
0.04%
Kenowa Hills Public Schools
32,460,000
0.12%
Kentwood Public Schools
100,079,000
9.14%
Kent County
100,490,000
22.35%
Grand Rapids Community College
51,245,000
21.77%
Total Overlapping Debt ………………………..
Total City Direct and Overlapping Debt …………
-0-0-0-
$
$408.24
1.48%
$
Net
158,208
3,154,800
1,257,525
168,225,000
14,262
38,952
9,147,221
22,459,515
11,156,037
$
$
215,611,519
296,361,375
$
1,090.05
3.95%
1,498.29
5.43%
$
Based on the City's 2000 Census of 197,800.
Based on $5,458,046,000 which is the City's Total SEV for the fiscal year ended June 30, 2007. Includes the SEV of property
granted tax abatements under Act 198, Act 146 & Act 147. See "CITY TAXATION AND LIMITATIONS - Property
Valuations" and "CITY TAX AND LIMITATIONS - Tax Abatement" herein.
(3)
Overlapping debt is the portion of another taxing unit's debt for which property taxpayers of the City are liable in addition to debt
issued by the City. Data as of May 31, 2007.
(4)
Debt service is payable only from rental revenues received from the State of Michigan.
Source: Municipal Advisory Council of Michigan and the City of Grand Rapids
16
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
Schedule of Bond Maturities
The following table sets forth the annual maturities of the City's bonded indebtedness by type of issue as of June 30, 2007:
Fiscal
Year
Ending
June 30
County
Issued Bonds
Joint Building
Authority
Bonds
Building
Authority Bonds
Tax
Increment
Bonds
Sewer
Revenue Bonds
Water
Revenue
Bonds
Michigan
Transportation
Fund Bonds
Installment
Purchase
Notes
17
2008
2009
2010
$
922,768
974,056
1,012,200
$ 195,000
205,000
215,000
$ 4,595,000
4,870,000
5,180,000
$3,075,000
1,275,300
1,210,875
$ 6,051,584
6,231,433
6,451,433
$ 7,030,000
7,380,000
7,830,000
$ 925,000
975,000
1,010,000
$3,440,000
2,775,000
2,220,000
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
2022
2023
2024
2025
2026
2027
2028
2029
2030
2031
2032
2033
2034
2035
2036
2037
1,068,488
1,115,704
1,176,992
1,242,352
1,100,040
1,167,256
925,000
980,000
275,000
290,000
310,000
$12,559,856
225,000
240,000
250,000
265,000
$ 1,595,000
4,365,000
4,655,000
4,945,000
4,870,000
5,190,000
5,510,000
5,915,000
6,295,000
4,435,000
4,685,000
4,935,000
3,070,000
2,810,000
2,960,000
3,110,000
3,280,000
3,445,000
3,630,000
3,820,000
1,205,000
1,260,000
1,325,000
355,000370,000385,000
405,000
420,000
$102,295,000
1,209,281
1,249,788
1,213,969
1,159,047
1,171,247
1,107,487
1,074,572
849,600
3,424,554
4,335,000
4,645,000
4,970,000
5,320,000
4,800,000
220,000
245,000
270,000
300,000
$ 43,125,720
6,651,357
6,751,281
6,901,129
7,011,776
5,515,094
4,363,209
4,400,000
4,420,000
4,665,000
4,910,000
5,120,000
7,895,000
8,705,000
9,140,000
9,585,000
10,060,000
10,560,000
11,070,000
5,375,000
5,650,000
5,940,000
6,240,000
6,565,000
6,900,000
6,640,000
$189,768,296
8,215,000
8,590,000
9,190,000
9,650,000
10,230,000
10,740,000
11,345,000
11,950,000
4,505,000
4,755,000
1,105,000
1,160,000
1,215,000
1,280,000
1,340,000
1,410,000
1,480,000
1,555,000
1,625,000
1,695,000
1,780,000
1,870,000
1,965,000
2,060,000
2,165,000
$135,115,000
1,065,000
1,120,000
1,170,000
1,225,000
1,305,000
280,000
295,000
305,000
320,000
$ 9,995,000
1,880,000
1,325,000
395,000
405,000
250,000
115,000
120,000
$12,925,000
Source: Municipal Advisory Council of Michigan and the City of Grand Rapids
Capital
Improvement
Bonds
$
555,000
570,000
595,000
620,000
645,000
675,000
695,000
725,000
755,000
795,000
650,000
680,000
710,000
740,000
785,000
820,000
860,000
910,000
955,000
1,000,000
$14,740,000
Debt History
There is no record of default on obligations by the City since 1933.
Short Term Borrowing
No short-term borrowing is being utilized except to the extent of the City's participation in the County
delinquent tax payment fund. See "CITY TAX AND LIMITATIONS – Property Tax Collections" herein.
Operating Lease
In 1998, the Kent County Building Authority sold $65,650,000 of bonds to finance the construction of a
new courthouse. In 1998, the City entered into a 28 year operating lease with Kent County to utilize approximately
31.35% of the facility to house the 61st District Court and related City facilities. In November, 2005 the Kent
County Building Authority refunded a portion of the outstanding 1998 bonds with a $49,990,000 issue of refunding
bonds and the District Court’s share of the debt service decreased accordingly.
Future Financing
The City and its various authorities are considering several possible debt issues within twelve months after June 30,
2007. If market conditions indicate the City’s net present value savings threshold will be achieved, the City’s
Downtown Development Authority (DDA) will issue approximately $35 million in refunding bonds. Debt service
will be paid with pledged future DDA tax increment revenues. The Grand Rapids Building Authority (the GRBA)
may issue approximately $5 million in debt early in 2008, approximately $9.4 million in the spring of 2008 and
approximately $10.5 million in the fall of 2008 for the purpose of adding general and development-related parking
for the southern area of downtown Grand Rapids. If market conditions indicate desired savings can be achieved,
the GRBA will also issue approximately $15 million in bonds to advance refund portions of three of its bond issues.
For all of these proposed GRBA issues, the City’s full faith and credit will be pledged. The City also expects to
issue as much as $10 million in Municipal Purchase Notes early in 2008 for various personal property acquisitions.
In spring 2008, the Cities of Grand Rapids and Wyoming jointly plan to issue as much as $20.5 million in Grand
Valley Regional Biosolids Authority debt. It is expected that these bonds will be purchased by the Michigan
Municipal Bond Authority through its State Revolving Fund and that each city will pledge its limited full faith and
credit for its share of the debt service.
EMPLOYEE BENEFITS
Vacation and Sick Leave Benefits and Associated Liabilities
Employees of the City earn up to 25 days of paid vacation per year based on various years of service
formulas. Unless an exception is granted by the City Manager or by way of a given labor contract, paid vacation
must be used within 14 months from the time it is earned or it is forfeited. Terminated or retiring employees are
paid for unused vacation days. Employees of the City also earn up to 1 day of paid sick leave per month.
Employees are paid for up to 90 days of accumulated sick leave at termination or retirement provided they have
worked a minimum of 10 continuous years.
The City no longer accrues paid vacation and sick leave liabilities as a liability in the General Fund.
Instead, beginning with the fiscal year ended June 30, 2003, the City has designated fund equity on the
Governmental Fund Balance Sheet. For the fiscal year ended June 30, 2007, the amount of $7,500,518 was so
designated for the City's General Fund.
Other Postemployment Benefits
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
18
In June, 2004 the Governmental Accounting Standards Board ("GASB") issued its Statement 45 –
"Accounting and Financial Reporting by Employers for Postemployment Benefits Other than Pensions." Other
postemployment benefits ("OPEB") include postemployment healthcare insurance as well as other forms of
postemployment benefits (for example, life insurance) when provided separately from a pension plan. GASB
Statement 45 establishes standards for the measurement, recognition, and display of OPEB expense/expenditures
and related liabilities (assets), note disclosures, and, if applicable, required supplementary information in the
financial reports of state and local governmental employers.
The City currently provides postemployment healthcare insurance until age 65 for its employees who retire
prior to age 65 and meet other negotiated criteria. Similar to other governmental units, the City historically funded
its OPEB program on a pay-as-you-go basis. According to initial actuarial studies prepared for the General
Retirement System as of June 30, 2004 (“FY2004”) and for the Police and Fire Retirement System as of December
31, 2004, the City had combined OPEB unfunded actuarial accrued liabilities of $137 million. The next actuarial
studies were prepared for the General Retirement System as of June 30, 2005 and for the Police and Fire Retirement
System as of December 31, 2005 (both considered “FY2005”.) The results of these studies indicated that, effective
July 1, 2007 the City had combined OPEB unfunded actuarial accrued liabilities of $154.4 million.
The FY2004 actuarial studies recommended that the City’s annual contribution for its fiscal year ending June
30, 2007 (“FY2007”) be 10.44% of general payroll and 21.78% of police and fire payroll. The City’s FY2007
adopted budget reflected the City’s partial prefunding of retiree health insurance benefits based on the FY2004
actuarial studies and included annual contributions of 9.67% of general payroll and 13.29% of police and fire
payroll. The FY2005 actuarial studies generally divided recommended contributions into three categories based on
a 7% discount rate. For its fiscal year ending June 30, 2008, the City’s annual contributions were actuarially
recommended to be 11.92% of general straight time payroll, 28.65% of total police payroll, and 21.02% of total fire
payroll.
Pension Plans
The City maintains two defined benefit retirement plans that cover substantially all City full-time
employees. The plans, known as the City of Grand Rapids General Retirement System and the City of Grand
Rapids Police and Fire Retirement System, are administered by local pension boards, members of which are
appointed by the Mayor and/or elected by members of the respective System. During the fiscal year ended June 30,
2007, General Retirement System employees contributed 3.98% (weighted average) of their wages to the pension
fund and members of the Police and Fire Retirement System contributed 4.12% (weighted average) of their wages
to the pension fund. The City is currently required to make annual contributions to the General Retirement System.
The Police and Fire Retirement System is currently funded at over 100% of the actuarial accrued liability;
therefore, in accordance with the Plan, no employer contributions are currently required. The plans are advance
funded on a level percent-of-payroll basis. These contributions are equal to normal cost (the current value of
benefits accrued by active members during the year) and both interest and principal on the unfunded actuarial
accrued liability (the difference between actuarial accrued liability and the system assets.) The actuary for the
retirement systems is Gabriel, Roeder, Smith and Company of Southfield, Michigan.
For additional information regarding "Actuarial Accrued Liability" and "Actuarial Value of Plan Assets"
please refer to the June 30, 2007 Comprehensive Annual Financial Report.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
19
City of Grand Rapids
General Retirement System
Fiscal Years Ended June 30, 2003 Through 2007
Valuation Date
June 30
2003
2004
2005
2006
2007
Actuarial
Accrued
Liabilities
$297,568,110
307,762,043
334,554,231
352,860,547
368,873,096
Actuarial
Value of
Plan Assets
$270,637,794
282,160,341
305,533,088
352,522,401
391,693,895
Assets as a Percent
of Actuarial
Accrued Liabilities
91.0%
91.7
91.3
99.9
106.2
Source: Gabriel, Roeder, Smith and Company
City of Grand Rapids
Police and Fire Retirement System
Fiscal Years Ended June 30, 2002 and 2003
and December 31, 2003 Through 2006
Valuation Date
June 30, 2002
June 30, 2003
December 31, 2003
December 31, 2004
December 31, 2005
December 31, 2006
Actuarial
Accrued
Liabilities
$265,750,488
276,876,491
276,065,502
285,041,937
284,262,073
292,906,422
Actuarial
Value of
Plan Assets
$287,125,896
270,208,638
301,845,219
315,021,806
325,044,112
350,154,501
Source: Gabriel, Roeder, Smith and Company
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
20
Assets as a Percent
of Actuarial
Accrued Liabilities
108.0
98.0
109.3
110.5
114.3
119.5
Labor Contracts
Approximately 95.4% of the City's 1,678 full and permanent part-time employees are currently represented
by labor organizations. The following table describes the labor organizations that represent City employees, the
number of members and the expiration dates of the present contracts.
Labor Organizations
Grand Rapids Police Officers Association
(Officers and Sergeants Unit)
Grand Rapids Police Officers Association – CST Unit
Grand Rapids Police Officers Association – ECO Unit
Grand Rapids Command Police Officers Association
International Association of Firefighters
Grand Rapids Employees Independent Union
Grand Rapids Employees Independent Union
(61st District Court Affiliate)
Grand Rapids Employees Independent Union
(Library Supervisor Affiliate)
Grand Rapids Employees Independent Union
(Library Non-Supervisor Affiliate)
Association of Public Administrators
Association of Public Administrators
(61st District Court Chapter)
Teamsters – Emergency Communication Supervisors
Non-union
Total FTE City Employees
1
2
Actual number of employees (full-time and FTE) on July 16, 2007.
All contracts currently under negotiation.
Source: City of Grand Rapids.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
21
Current
Membership1
Contract
Expiration Date2
320
11
33
20
227
656
June 30, 2007
June 30, 2007
December 31, 2006
June 30, 2007
June 30, 2007
December 31, 2006
58
December 31, 2006
14
December 31, 2006
76
163
December 31, 2006
December 31, 2006
18
4
78
December 31, 2006
December 31, 2006
N/A
1,678
Profile of Major Employers
The following table reflects the diversity of the major employers in the greater Grand Rapids area by the products
manufactured or services performed and the approximate number of employees employed in the area.
Company
Spectrum Health
Meijer, Inc
Herman Miller, Inc
Steelcase, Inc
Alticor, Inc
Axios, Inc
Wal-Mart Stores Inc
Johnson Controls
Spartan Stores, Inc
Grand Rapids Public Schools
St. Mary's Health Care
General Motors Corp
Perrigo Company
U.S. Postal Service – 493, 494, 495
Metropolitan Hospital
Gentex Corp
Lacks Industries
County of Kent
Grand Valley State University
Howmet, an Alcoa Business
Fifth Third Bank
Mercy General Health Partners
Wolverine World Wide
Haworth, Inc
Calvin College
Benteler Automotive Corp
City of Grand Rapids
Gordon Food Service
Smiths Aerospace
Rockford Public Schools
Dematic Corp
Farmers Insurance Group/Foremost
Hope Network
Magna Donnelly
United Parcel Service
Forest Hills Public Schools
Consumers Energy
Principal Product or Service
Hospitals, clinics and medical care
Retailer – food and general
Office systems and furniture
Office systems and furniture
Home care, nutritional and other products
Human resource and training services
Retailer – general and food
Automotive interiors
Food wholesaler and retailer
Elementary and secondary schools
Hospital, clinics and medical care
Automotive components
Pharmaceuticals
Mail and package delivery services
Hospital, clinics and medical care
Automotive components
Automotive components
County government
Education
Automotive stamping and dies
Banking and financial services
Hospital, clinic and medical care
Footwear and leather products
Office systems and furniture
Private liberal arts college
Automotive components
Municipal government
Food services wholesaler
Instruments and navigational systems
Elementary and secondary schools
Material and management information systems
Insurance
Special needs rehabilitation services
Automotive components
Logistics and parcel delivery
Elementary and secondary schools
Electricity and natural gas utility
Sources: Compiled by The Right Place, Inc. in December, 2006, then updated in March, 2007.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
22
Grand Rapids Area
Employees
13,000
7,000
5,920
5,000
3,900
3,886
3,432
3,250
2,989
2,885
2,700
2,500
2,500
2,500
2,200
2,186
2,175
2,128
2,023
2,000
1,990
1,957
1,925
1,900
1,777
1,700
1,678
1,631
1,600
1,505
1,500
1,500
1,471
1,450
1,430
1,420
1,370
Employment
Reflected below are the unadjusted yearly average unemployment statistics for the City and the State for the calendar
years 2002 through 2007.
City of Grand Rapids:
Employed
Unemployed
Labor Force
Unemployed as % of Labor Force(2)
State of Michigan:
Employed
Unemployed
Labor Force
Unemployed as % of Labor Force(2)
2002
92,997
8,642
101,890
2003
91,554
10,336
103,131
2004
93,551
9,580
104,503
2005
96,192
8,311
104,594
8.5%
10.1%
9.3%
8.0%
2002
4,733,812
315,426
5,054,902
2003
4,696,338
358,564
5,073,174
2004
4,717,152
356,022
5,097,457
2005
4,753,822
343,635
5,081,000
6.2%
7.1%
7.0%
6.7%
2006
96,349
8,245
104,594
2007(1)
95,107
8,302
103,409
7.9%
8.0%
2006
4,730,000
351,000
5,081,000
2007(1)
4,662,000
351,000
5,013,000
6.9%
7.0%
(1) Through October, 2007.
(2) Totals and percentages may differ due to rounding by the Michigan Department of Labor and Economic Growth.
Source: Michigan Department of Labor and Economic Growth.
Retail Sales
The following table reflects the projected breakdown of retail sales according to major purchase categories for the City
and County of Kent.
City of Grand Rapids
Retail
Number
Sales*
of Stores
$900,088
93
141,029
45
132,886
40
348,979
72
88
263,457
63
145,460
268,920
67
137,994
89
546,520
29
$2,885,334
772
County of Kent
Retail
Number
Sales*
of Stores
$2,871,592
259
448,945
127
472,835
112
1,240,508
200
872,181
247
491,223
177
817,583
188
518,481
248
1,948,060
81
$9,681,408
2,156
Automotive............................
Furniture................................
Electrical Appliances ............
Lumber & Hardware .............
Food ......................................
Health Care ...........................
Gasoline ................................
Clothing.................................
General Merchandise ............
Totals .............................
* Dollar amounts in thousands.
Source: 2006 Editor & Publishers Market Guide. Updated data for this table is no longer available.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
23
Estimated 2003 Retail Sales
The following table reflects the projected breakdown of retail sales according to major purchase categories for the City
of Grand Rapids, State of Michigan and United States for the year ended 2003. This is the most recent year for which
this information is available in this format.
Automotive
Food
General Merchandise
Restaurant
Furniture-Appliances
Other
Total
City of Grand Rapids
Retail
Percent
Sales *
of Total
$623,350
26.97 %
129,765
5.61
385,493
16.68
205,866
8.91
201,812
8.73
764,881
33.10
$2,311,167
100.00 %
State of Michigan
Retail
Percent
Sales *
of Total
$22,012,826
16.74 %
14,597,321
11.10
21,583,094
16.41
11,676,649
8.88
8,285,129
6.30
53,346,471
40.57
$131,501,490
100.00 %
United States
Retail
Percent
Sales *
of Total
$889,259,170
23.87 %
489,332,034
13.14
483,234,307
12.97
257,906,000
6.92
197,787,828
5.31
1,407,472,691
37.79
$3,724,992,030
100.00 %
* Dollar amount in thousands
Source: Survey of Buying Power, “Sales and Marketing Management Magazine,” September, 2003.
2005 Estimated Effective Household Buying Income (“E.H.B.I.”)
Under $19,999……………...
20,000-34,999………………
35,000-49,999………………
50,000 and over…………….
Median Household Effective Buying Income
Average Household Effective Buying Income
Per Capita Effective Buying Income
% of Households in E.H.B.I. Range
City of
State of
Grand Rapids
Michigan
United States
26.1 %
20.6 %
21.5 %
27.0
22.7
22.5
20.2
19.1
19.3
26.7
37.6
36.7
100.0 %
100.0 %
100.0 %
$33,331
39,905
14,808
$39,668
50,491
19,444
$39,324
51,284
19,289
Source: Survey of Buying Power, “Sales and Marketing Management Magazine,” September 2005. This is the most recent year
for which this information is available in this format.
Building Permits
The following are the number and value of building permits issued in the City during the past five fiscal years:
Fiscal Year
Ended June 30
2003
2004
2005
2006
2007
Number of
Permits Issued
1,733
1,723
1,945
1,965
1,814
Total Value
$236,589,829
205,709,807
228,571,954
334,924,264
488,167,885
Source: City of Grand Rapids.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
24
MICHIGAN TRANSPORTATION FUND
The principal of and interest on Michigan Transportation Fund bonds (“the Fund”) are paid from the receipt of funds
by the City from the Fund. The Michigan Constitution provides that all proceeds of taxes levied by the State on motor
vehicle fuels and registered motor vehicles (except general sales and use taxes and regulatory fees) and all or a portion
of the proceeds of certain other transportation related taxes must be used exclusively for transportation purposes. The
Michigan constitution further provides that at least 90% of all such taxes must be used for the purposes of planning,
administering, constructing, financing, and maintaining state, county, city and village roads. Monies deposited into the
Fund (after the deduction of certain specified amounts) are allocated by formula established under Act 51 of the Public
Acts of Michigan of 1951, as amended (“Act 51”), and transferred to the State Trunk Line Fund, the Comprehensive
Transportation Fund, the county road commissions and the cities and villages of the State, all for use for transportation
purposes. The currently existing formula established by Act 51 is as follows:
(a)
Not more than $3,000,000 as may be annually appropriated each fiscal year to the State Trunk Line
Fund for subsequent deposit in the Railroad Grade Crossing Account.
(b)
Not less than $3,000,000 each year to the Local Bridge Fund created pursuant to PA 384 of 2004 for
the purpose of payment of the principal, interest and redemption premium on any notes or bonds issued by
the State Transportation Commission under Section 11b of Act 51.
(c)
Revenue from 3 cents of the tax levied under section 8 of 2000 PA 403, MCL 207.1008,
MCL 207.102, to the State Trunk Line Fund, county road commissions, and cities and villages in the
percentages provided in subdivision (i).
(d)
Revenue from 1 cent of the tax levied under section 8 of 2000 PA 403, MCL 207.1008, to the State
Trunk Line Fund for repair of state bridges under Section 11 of Act 51; provided, however that for fiscal year
2005, a quarter-cent of the tax shall be redirected to the Local Bridge Fund for distribution to cities, villages
and county road commissions and for subsequent fiscal years, a half-cent of the tax shall be redirected to the
Local Bridge Fund for distribution to cities, villages and county road commissions.
(e)
$43,000,000.00 to the State Trunk Line Fund for debt service costs on state of Michigan projects.
(f)
10% to the Comprehensive Transportation Fund.
(g)
$5,000,000 to the Local Bridge Fund.
(h)
$36,775,000 to the State Trunk Line Fund for subsequent deposit in the Transportation Economic
Development Fund, and with first priority for allocation to debt service on bonds issued to fund
Transportation Economic Development Fund Projects. In addition, $3,500,000.00 is appropriated from the
Michigan Transportation Fund to the State Trunk Line Fund for subsequent deposit in the Transportation
Economic Development Fund to be used for economic development road projects in any of the targeted
industries described in section 9(1)(a) of 1987 PA 231, MCL 247.909.
(i)
Not less than $33,000,000 as may be annually appropriated each fiscal year to the Local Program Fund
created in Section 11e of Act 51.
(j)
The balance of the Michigan Transportation Fund as follows, after deduction of the amounts
appropriated in subparagraphs (a) through (i):
(i)
39.1% to the State Trunk Line Fund for the purposes described in Section 11 of Act 51.
(ii) 39.1% to the county road commissions of the State.
(iii) 21.8% to the cities and villages of the State.
The monies received by cities and villages, after certain deductions by the State, are allocated on the basis of
population and mileage for the type of street when compared to the total for the State. Pursuant to statutory
authorization, a city must first expend such state-returned moneys for payment of principal and interest on its
transportation fund bonds and notes.
Michigan Public Act 175 of 1952, as amended, specifically states that “no city or village may pledge, for annual
debt service requirements in excess of 50% of the revenues received during the fiscal year next preceding any
borrowing from the Fund pursuant to Act 51.” The effect of this pledge is to provide a minimum of 2.0 times
coverage to the bondholders. The City may, but does not expect to, enter into contracts with the Michigan
Department of Transportation which pledge on a pari passu basis with the bonds the City’s receipts from the Fund
and which contract could be the basis of a state bond issue payable from the Fund and pledge Fund receipts for the
payment thereof. The right is reserved in accordance with the provisions of Act 175, to issue additional bond
pledging moneys derived from State collected taxes returned to the City for road purposes pursuant to Act 175 and
subject to the limitations contained therein.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
25
Listed below are the balances in the accrued cash account for the five most recent fiscal years for the City from the
Fund, the maximum debt service and the historical coverage provided.
2003
$12,670,032
1,393,535
9.09x
Accrued Revenue (1)………...………….
Maximum Annual Debt Service………..
Historical Debt Service Coverage………
Fiscal Years Ended June 30
2004
2005
2006
2007
$14,036,759 $13,855,765 $13,680,294 $13,521,754
1,389,368
1,388,847
1,387,213
1,387,213
10.10x
9.98x
9.86x
9.75x
(1) The City usually receives accrued revenue within two months of posting.
Source: City of Grand Rapids
SANITARY SEWER SYSTEM
Wastewater Volumes
Annual tributary flows to the WWTP for fiscal year 2003 through 2007 are shown in the following table.
Fiscal
Year
June 30
Total Sales(1)
in Million
Gallons ("MG")
Additional
Inflow and
Infiltration in
MG to the
WWTP(2)
2003
2004
2005
2006
2007
11,411
10,982
11,004
11,132
10,635
5,515
7,576
6,801
6,393
8,094
Total
WWTP
Influent
in MG
16,926
18,558
17,805
17,525
18,729
Treated
Average
Daily
Influent
in MG
Known
Bypass
in MG
Total Annual
Billing in
Million
Dollars
46.4
50.7
48.8
48.0
51.3
10
420
56
8
13
$30.8
30.6
30.8
35.0
36.4
(1) Sales are based upon customer water consumption, excepting large wholesale customers whose sewage flow is metered.
(2) Additional inflow and infiltration into the System is a result of wet weather, leakage, unauthorized drainage and other
types
of wastewater infiltration within the System.
Source: City of Grand Rapids
Wastewater Characteristics
The quality of the wastewater influent received at the Waste Water Treatment Plant (“WWTP”) and the quality of the
effluent discharged into the Grand River is measured in four principal ways – carbonaceous biochemical oxygen
demand, total suspended solids, ammonia and total phosphorus. The table below summarizes certain measures of the
quality of the wastewater treated by the WWTP compared with the amounts allowed under the National Pollutant
Discharge Elimination System (“NPDES”) permit issued to the City. WWTP effluent consistently meets all applicable
permitted discharge standards.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
26
City of Grand Rapids, Michigan
Waste Water Treatment Plant Effluent - 30 Months
Carbonaceous BOD*
Suspended
Total
Solids*
Phosphorous*
Month
June-07
May-07
April-07
March-07
February-07
January-07
December-06
November-06
October-06
September-06
August-06
July-06
June-06
May-06
April-06
March-06
February-06
January-06
December-05
November-05
October-05
September-05
August-05
July-05
June-05
May-05
April-05
March-05
February-05
January-05
Allowed / Actual
16
3.9
23
4.7
23
6.4
23
6.8
23
5.7
23
4.9
23
5.9
23
5.3
23
4.3
18
3.0
18
3.3
18
3.1
18
3.5
23
5.1
23
6.6
23
7.4
23
8.7
23
8.8
23
7.6
23
6.3
23
5.5
18
5.4
18
5.2
18
4.8
18
5.3
23
6
23
9
23
8
23
9
23
11
Allowed / Actual
29
5
29
5
29
10
29
9
29
8
29
6
29
8
29
8
29
6
29
5
29
5
29
6
29
5
29
6
29
8
29
12
29
10
29
10
29
8
29
7
29
6
29
7
29
6
29
6
29
7
29
8
29
10
29
11
29
9
29
12
Allowed / Actual
1
0.8
1
0.9
1
0.7
1
0.8
1
0.8
1
0.8
1
0.8
1
0.8
1
0.9
1
0.7
1
0.9
1
0.7
1
0.9
1
0.8
1
0.9
1
0.9
1
0.7
1
0.7
1
0.8
1
0.8
1
0.9
1
0.8
1
0.8
1
0.9
1
0.8
1
0.8
1
0.9
1
0.8
1
0.8
1
0.8
Ammonia*
Allowed / Actual
8.5
1.19
18.0
1.34
18.0
5.19
18.0
7.76
18.0
4.34
18.0
1.82
18.0
1.54
18.0
3.21
18.0
1.15
10.0(1)
0.69
10.0(1)
0.41
(1)
10.0
0.47
(2)
13.2
0.5
NL
1.8
NL
6.5
NL
11.2
NL
10.1
NL
6.7
NL
3.6
NL
1.5
10.0(1)
1.2
10.0(1)
1.8
(1)
10.0
0.6
10.0(1)
2.1
(2)
13.2
9.0
NL
17.2
NL
14.9
NL
14.1
NL
13.1
NL
9.8
*
The concentrations in this table are presented in milligrams per liter averaged on a daily basis over one-month periods.
The concentrations are determined from a composite of samples taken at intervals over a one-day period. The composite
daily concentrations are analyzed and the daily results over a one month period are added together and averaged.
NL Not limited.
(1) Daily limit.
(2) Monthly average.
Source: City of Grand Rapids Waste Water Treatment Plant
If discharge levels exceed levels allowed under the permit issued to the City, the City reports that fact to the Michigan
Department of Environmental Quality (the "MDEQ"). The MDEQ has not sought any fines, penalties or other
sanctions against the City for discharges which exceed the limits or restrictions set forth above. The City files monthly
operating reports and reports of any spills associated with its wastewater system to MDEQ as mandated in its NPDES
wastewater discharge permit. All reports have been filed with MDEQ as required.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
27
Organization, Management and Staffing
The City administers the System through its Environmental Services Department ("ESD") which is aligned under the
Enterprise Systems Services Group. This service group operates under the administrative direction of the Deputy City
Manager. The daily operations of the ESD are overseen by the Department Director. The ESD administers the System
through four divisions - Operations, Maintenance, Environmental Assessment, and the Utilities Engineering,
Distribution and Collection Division ("UEDCD"). The Maintenance Division is responsible for all
mechanical/electrical/facilities maintenance as well as pipeline cleaning in the collection system. The Operations
Division maintains the remote pumping stations, meter stations, regulator stations and operates the WWTP. The
Environmental Assessment Division provides laboratory services, industrial monitoring and surveillance, and special
field investigations. The UEDCD provides utility and process engineering services for the ESD.
The fiscal year 2008 budget for these divisions authorizes a total staff of 127.50. The City believes that the ESD is
adequately staffed to operate and maintain the collection and treatment system in accordance with its NPDES permit.
Regulatory Requirements
The System is subject to extensive regulation under the Federal Water Pollution Control Act, as amended by the Clean
Water Act of 1977 and the Water Quality Act of 1987 as amended and other federal and state statutes. In Michigan,
the regulatory requirements of the Clean Water Act are administered by the United States Environmental Protection
Agency (the "EPA") through the MDEQ. Regulations of these agencies deal primarily with the quality of effluent
discharged to the Grand River, disposal of biosolids and other requirements imposed on the System as a condition of
its participation in federal financial assistance for construction of wastewater facilities.
Included in the Clean Water Act regulatory framework administered by EPA is the NPDES permit program. This
program requires the operation of wastewater treatment facilities according to discharge limitations and reporting
requirements set forth in permits issued for each facility.
The Grand River, which receives the treated effluent from the WWTP, has a water quality standard for partial body
contact, recreational use, the ability to support warm water fish, ability to supply agricultural and industrial water. The
City's current NPDES permit was issued on November 1, 2006 and is in effect until October 1, 2010.
Billings and Collections
The following table sets forth the history of billings and collections for the System for the fiscal years ended June 30,
2003 through 2007.
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
RETAIL BILLINGS AND COLLECTIONS
Fiscal Year
Ended June 30
2003
2004
2005
2006
2007
(1)
Total
Billings
$27,636,907
27,589,137
27,669,865
29,826,191
32,477,778
Paid
0-30 Days
$21,190,970
21,281,153
20,547,094
22,628,893
23,953,715
Paid
31-90 Days
$5,004,075
4,984,142
4,870,966
5,371,621
5,923,736
Paid Over 90
Days
$1,262,657
1,321,505
1,292,853
1,513,672
1,668,516
Total
Collected (1)
$27,457,702
27,586,800
26,710,913
29,514,186
31,545,967
Reflects penalty and interest charges and the receipt of delinquent payments from period prior to commencement of fiscal
year.
Source: City of Grand Rapids
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
28
10 Largest Retail Customers of the Sanitary Sewer System
The following table sets forth the ten largest retail customers of the system for the one-year period ended on June 30,
2007, their respective volumes of usage and the amounts billed.
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
TEN LARGEST RETAIL CUSTOMERS BY BILLINGS
Dollar Amount
Volume of Usage
Customer
Billed Per Year
(Sewer Gallons)
Kent County Public Works
$600,236
191,394,500
Spectrum Health
320,058
94,240,520
Steelcase, Inc.
241,117
82,131,896
Coca Cola Enterprises
186,946
59,234,120
Calvin College
184,358
55,643,720
Lacks Trim Systems
174,777
85,033,388
Amway Grand Plaza
165,291
50,607,436
St. Mary’s Hospital
158,659
48,554,924
Grand Rapids Public Schools
134,644
28,661,116
Kent County Controller
132,482
41,430,972
Source: City of Grand Rapids
Sanitary Sewer System Revenue Requirements and Results of Operations
In 1976, the City undertook the task of establishing a methodology to be used to annually determine appropriate rates
and charges for customers using the System. Prior to that time, the City had periodically adjusted rates for City users
based on short-term projections of cash flow requirements and indexed suburban customer rates at a factor of the City
rates. The rates that resulted from such adjustments did not adequately reflect the longer term needs of the System and
did not adequately reflect the variations in usage rates and operating and capital costs of providing service to the
various suburban customer communities.
To remedy this and to establish a procedure for implementing annual rate adjustments, the City, in consultation with
the customer communities with which it had service agreements, adopted a method of adjusting rates annually. The
first such annual rate study took eighteen months to complete and resulted in new rates effective January 1, 1978.
Agreements with each of the governmental customer communities serviced by the System were amended in 1978 to
incorporate the current rate setting methodology and establish the annual revenue requirement. In 1998, the new
Contacts further amended the rate setting methodology. Additionally, in 2006, the rate study was amended further for
an amendment to the new Contracts. It no longer applies penalty fees as credits (offsets) to revenue requirements.
Instead, the augmentation of revenue requirements for penalty fees is used to fund the Individual Circuit Breaker
(“ICB”) program and City and Customer Community Circuit Breaker. The ICB is a program aimed at addressing retail
users requiring assistance in payment of their water/sewer bills. The City and Customer Community Circuit Breaker is
a funding mechanism, if sufficient funding is available, to limit retail service area revenue requirement changes to a
level in line with the overall systems’ initial proposed changes. The City has conducted annual rate studies each year
since 1978 and has adjusted rates accordingly.
The rate setting methodology when applied in the annual rate studies for the years 2003 through 2007 has yielded the
revenue requirements and percentage rate increases/(decreases) set forth in the table below for the calendar years
commencing January 1, 2004 through January 1, 2008.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
29
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
REVENUE REQUIREMENTS AND PERCENTAGE RATE INCREASES
Rate Study Year
Effective Date
Operation & Maintenance
Depreciation
Return on Investment
Less: Revenue Credits
CSO Project Debt Service
Less: Integrated Connection Fee Credit
Less: Circuit Breaker Program
Total Revenue Requirements
Percentage Gross Rate Increases (Decreases)
Necessary to Meet Total Revenue Requirement (1)
2003
1/1/04
$17,866,955
2,136,117
3,749,711
(235,412)
8,363,452
(1,284,551)
$30,596,272
2004
1/1/05
$19,921,894
2,197,205
3,888,769
(342,338)
8,101,539
(1,554,485)
$32,212,584
2005
1/1/06
$21,891,961
2,608,902
4,668,559
(362,825)
9,128,168
(1,651,009)
$36,283,756
2006
1/1/07
$22,448,459
3,231,101
5,666,286
(304,388)
9,080,233
(1,428,021)
(392,563)
$38,301,107
2007
1/1/08
$24,982,060
3,662,553
6,799,300
(250,473)
9,057,901
(1,058,619)
(449,897)
$42,742,825
(4.03%)
9.03%
12.76%
4.94%
15.73%
(1) The percentage rate changes differ from the annual percentage changes in total Revenue Requirements due to differences in
usage volumes.
Source: City of Grand Rapids
Connection Fees
On June 27, 2000, the Grand Rapids City Commission enacted Ordinance No. 2000-32 establishing a schedule of
integrated connection base fee increases for initial connection to the System for periods through December 31, 2004.
On December 18, 2007, the Grand Rapids City Commission enacted Ordinance No. 2007-70 establishing the fees
effective January 1, 2008. These integrated connection fees apply to all users of the System except users in North Kent
Service Area and Gaines Township. The receipts from these fees are shown in the table “SANITARY SEWER
SYSTEM – Statement of Operations”.
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
INTEGRATED CONNECTION BASE FEE SCHEDULE
Water Meter Size
¾” or less
1”
1-1/2”
2”
3”
4”
6” & over
01/01/04
$2,200
3,650
7,350
11,750
25,650
46,200
102,650
01/01/05
$2,250
3,750
7,500
12,000
25,250
47,250
105,000
Effective On and After
01/01/06
01/01/07
$2,350
$2,450
3,900
4,100
7,850
8,150
12,550
13,050
27,400
28,600
49,350
51,450
109,650
114,350
01/01/08
$2,500
4,150
8,300
13,300
29,150
52,450
116,600
Source: City of Grand Rapids
Effective January 1, 2005, and January 1st of every year thereafter, the Integrated Sanitary Sewer Connection Base
Fees is adjusted by an annual percentage which is determined by the annual change in the Consumer Price Index –
U.S. City Average, All Urban Consumers.
The rate increases (decreases) under the rate setting methodology have produced the results of operations from the
System for the fiscal years ended June 30, 2003 through 2007 are as set forth in the table below.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
30
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
STATEMENT OF OPERATIONS
Fiscal Years Ended June 30,
2004
2005
2006
2003
REVENUES
Service Charges- Retail
Service Charges-Wholesale
Sewage Surcharge
Connection Fees/Front Foot Fees
Prelim/Design/Constr Engineering Fees
2007
$28,084,496
2,328,489
396,316
1,410,731
-
$27,437,824
2,643,022
561,137
1,719,675
121,171
$27,578,656
2,629,765
628,253
1,873,100
157,051
$31,257,821
2,831,568
891,882
1,568,694
159,760
$32,412,070
3,083,477
948,578
1,276,995
130,617
71,530
88,413
83,738
92,967
61,340
Interest on Investments
Miscellaneous
Total Gross Revenues
715,184
195,718
33,202,464
847,390
424,469
33,843,101
1,440,595
268,431
34,659,589
1,059,480
182,285
38,044,457
1,233,311
713,863
39,860,251
OPERATING EXPENSES
Wastewater Treatment
Sanitary Sewer Repair & Maintenance
Customer Services
Administration
Industrial Pretreatment
Depreciation
Total Gross Expenses
9,747,857
2,861,266
1,717,044
2,034,424
528,870
7,564,906
24,454,367
11,411,333
3,860,433
1,930,765
1,977,216
518,798
7,704,306
27,402,851
12,224,823
4,167,361
2,037,157
1,916,794
559,558
7,980,013
28,885,706
12,241,611
4,131,084
2,448,949
2,168,424
602,775
8,619,105
30,211,948
13,041,737
6,837,579
2,268,725
2,099,129
622,981
9,612,689
34,482,840
7,564,906
$16,313,003
7,704,306
$14,144,556
7,980,013
$13,753,896
8,619,105
$16,451,614
9,612,689
$14,990,100
Industrial Pretreatment Permit Fee
Additions - Depreciation
NET EARNINGS
Source: City of Grand Rapids
Net Earnings and Bond Coverage
The Bond Ordinance requires that the Net Revenue generated by the System must be sufficient to meet the cash
requirements of the System which include: (a) system administrative, operation and maintenance expenses; (b) debt
service requirements on bonded debt; and (c) expenditures for capital improvements not financed from bond proceeds
or contributions. In addition, the City covenants and agrees that it will, at all times, on a pro-forma basis, prescribe and
maintain and thereafter collect rates and charges for the services and facilities furnished by the System which, together
with other income, are reasonably expected to yield annual Net Earnings in the current fiscal year equal to at least one
hundred twenty percent (120%) of the Annual Principal and Interest Requirement in such fiscal year.
Net Earnings of the System are stated in the section entitled “Sanitary Sewer System Revenue Requirements and
Results of Operations.” The table below sets forth the Debt Service and the Coverage Ratio based on the Net Earnings
of the System for the fiscal years ended June 30, 2003 through 2007. The Coverage Ratio has been determined by
dividing the Net Earnings for each fiscal year by the total annual principal and interest payments for each fiscal year.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
31
CITY OF GRAND RAPIDS
SANITARY SEWER SYSTEM
DEBT SERVICE AND COVERAGE RATIO
Net Earnings of the System
Total Net Senior Debt Service
Coverage-Senior Debt
Debt Service on Subordinated (SRF) Bonds
Coverage Ratio-All Debt
Total Available After Debt Service
2003
$16,313,003
5,893,053
2.77
3,983,083
1.65
$6,436,867
Fiscal Years Ended June 30,
2004
2005
2006
$14,144,556
$13,753,896
$16,451,614
5,896,288
6,758,637
9,265,808
2.40
2.04
1.78
3,978,947
3,973,529
3,976,793
1.43
1.28
1.24
$4,296,321
$3,021,730
$3,209,013
2007
$14,990,100
10,846,432
1.38
3,953,984
1.01
$189,684
Source: City of Grand Rapids
WATER SUPPLY SYSTEM
Annual Sales
The annual water sales are set forth in the following table:
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
TOTAL ANNUAL WATER SALES IN GALLONS, PUMPAGE, AND DOLLARS BILLED
Fiscal Year
Ended June 30
2003
2004
2005
2006
2007
Total Sales in
Billion Gallons
13.419
12.523
12.770*
13.571*
12.804*
Total Pumpage in
Billion Gallons
15.164
14.065
14.713
14.812
14.705
Total Annual Billings
in Millions of Dollars
$35.078
33.511
33.793
37.570
37.423
*Includes billings (262 million gallons in fiscal year 2005, 144 million in fiscal year 2006, and 69 million in fiscal year 2007) for
the supplemental agreement, dated May 13, 2004, with Ottawa County.
Source: City of Grand Rapids
The following table summarizes the historical daily volume sales.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
DAILY WATER PUMPAGE IN MILLIONS OF GALLONS
Average Day Pumpage
Maximum Day Pumpage
2003
41.5
90.1
2004
38.4
71.9
Fiscal Years Ended June 30
2005
2006
340.3
40.6
79.2
82.3
2007
40.2
83.7
Source: City of Grand Rapids
The following table sets forth the history of billings and collections for the System for the fiscal years ended June 30,
2003 through June 30, 2007.
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
32
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
RETAIL BILLINGS AND COLLECTIONS
Fiscal Year
Ended
Paid
Paid
Paid Over
Total
June 30
Total Billed
0-30 Days
31-90 Days
90 Days
Collected (1)
2003
$31,885,191
$24,594,429
$6,538,231
$2,076,605
$33,209,265
2004
31,103,285
24,095,003
6,353,005
2,076,974
32,524,982
2005
30,819,038
23,188,226
6,210,665
2,024,680
31,423,571
2006
33,280,178
25,536,251
6,990,972
2,350,761
34,877,984
2007
34,575,743
25,837,578
7,337,680
2,563,159
35,738,417
(1) Reflects penalties & interest charges and receipt of delinquent payments from the period prior to the commencement of the
fiscal year.
Source: City of Grand Rapids
Ten Largest Retail Customers
The following table sets forth the ten largest retail customers of the System for the one year period ended on June 30,
2007 and their respective volumes of usage and the amounts billed.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
TEN LARGEST RETAIL CUSTOMERS BY BILLINGS
FISCAL YEAR ENDED JUNE 30, 2007
Customer
Kent County Public Works
Spectrum Health
Steelcase, Inc.
Lacks Trim Systems
Coca Cola Enterprises
Cintas Corporation
Grand Rapids Public Schools
Calvin College
Allied Finishing
Amway Grand Plaza
Source: City of Grand Rapids
Dollar Amount
Billed Per Year
$400,762
294,978
198,573
181,800
180,476
139,305
132,289
122,832
110,763
108,770
Volume of Usage
Water Gallons
200,009,216
131,683,156
86,721,624
86,267,588
89,577,488
55,103,664
38,405,312
55,643,720
54,903,948
50,607,436
Rate Setting Methodology
In 1976, the City undertook the task of establishing a methodology that could be utilized to annually determine
appropriate rates and charges for customers using the System. Prior to that time, the City had periodically adjusted
rates for City users based on short-term projections of cash flow requirements and indexed suburban customer rates at
a factor of two times the City rates. The rates that resulted from such adjustments did not adequately reflect the longer
term needs of the System and did not adequately reflect the variations in usage rates and operating and capital costs of
providing service to the various suburban customer communities.
To remedy this and to establish a procedure for implementing annual rate adjustments, the City, in consultation with
the customer communities with which it had retail and wholesale water service agreements, adopted a method of
adjusting rates annually. The first such annual rate study took eighteen months to complete and resulted in new rates
effective January 1, 1978. Agreements with each of the retail and wholesale governmental customer communities
serviced by the System were amended in 1978 to incorporate the current rate setting methodology and establish the
annual revenue requirement. In 1998, the new Contacts further amended the rate setting methodology. Additionally,
in 2006, the rate study was amended further for an amendment to the new Contracts. It no longer applies penalty fees
as credits (offsets) to revenue requirements. Instead, the augmentation of revenue requirements for penalty fees is used
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
33
to fund the Individual Circuit Breaker (“ICB”) program and City and Customer Community Circuit Breaker. The ICB
is a program aimed at addressing retail users requiring assistance in payment of their water/sewer bills. The City and
Customer Community Circuit Breaker is a funding mechanism, if sufficient funding is available, to limit retail service
area revenue requirement changes to a level in line with the overall systems’ initial proposed changes. The City has
conducted annual rate studies each year since 1978 and has adjusted rates accordingly.
The rate setting methodology is founded on the basic principle that rates will be set to meet revenue requirements as
defined by historical costs adjusted by known cost increases. Also, a significant purpose of the methodology was the
proper allocation of costs and rates among the users in each of the customer communities.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
REVENUE REQUIREMENTS AND PERCENTAGE RATE INCREASES
Rate Study Year
Date Effective
Operation & Maintenance
Depreciation
Return on Investment
Less: Revenue Credits
Less: Integrated Connection Fee Credit (1)
Less: Circuit Breaker Program
Total Revenue Requirements
Gross Rate Increases/(Decreases) Necessary to
Meet Total Revenue Requirements (2)
2003
1/1/04
$22,192,670
5,348,422
10,736,018
(1,175,372)
(1,955,088)
$35,146,650
2004
1/1/05
$22,385,414
5,299,784
10,783,189
(1,283,015)
(1,992,022)
$35,193,350
2005
1/1/06
$24,345,425
5,389,957
10,766,608
(1,346,780)
(1,826,121)
$37,329,089
2006
1/1/07
$25,202,053
5,631,280
11,173,881
(514,195)
(1,568,310)
(295,449)
$39,629,260
2007
1/1/08
$25,369,320
5,639,732
11,092,785
(619,764)
(1,132,446)
(79,356)
$40,270,271
(2.18%)
4.41%
5.94%
0.63%
4.93%
(1) The collection of integrated connection fees which is to be applied as a credit to the rate base.
(2) The percentage increase/ (decrease) shown in each year accounts for actual results and changes in volume from the previous
year. The amounts shown do not equal the annual growth in Total Revenue Requirements.
Source: City of Grand Rapids
Connection Fees
On June 27, 2000, the Grand Rapids City Commission enacted Ordinance No. 2000-31 establishing a schedule of
integrated connection base fee increases for initial connection to the System for periods through December 31, 2004.
On December 18, 2007, the Grand Rapids City Commission enacted Ordinance No. 2007-69 establishing the fees
effective January 1, 2008. These integrated connection fees apply to all users of the System except users in Ottawa
County. The receipts from these fees are shown in the table “WATER SUPPLY SYSTEM – Statement of
Operations”.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
INTEGRATED CONNECTION BASE FEE SCHEDULE
Water Meter Size
01/01/04
¾” or less
$2,200
1”
3,650
1-1/2”
7,350
2”
11,750
3”
25,650
4”
46,200
6” & over
102,650
Source: City of Grand Rapids
01/01/05
$2,250
3,750
7,500
12,000
26,250
47,250
105,000
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
Effective On and After
01/01/06
01/01/07
$2,350
$2,450
3,900
4,100
7,850
8,150
12,550
13,050
27,400
28,600
49,350
51,450
109,650
114,350
34
01/01/08
$2,500
4,150
8,300
13,300
29,150
52,450
116,600
Effective January 1, 2005, and January 1st of every year thereafter, the Integrated Water Connection Base Fees is
adjusted by an annual percentage which is determined by the annual change in the Consumer Price Index – U.S. City
Average, All Urban Consumers.
Results of Operations
The rate increases and decreases under the rate setting methodology have produced the results of operations from the
System for the fiscal years ended June 30, 2003 through June 30, 2007 as are set forth in the table below.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
STATEMENT OF OPERATIONS
HISTORICAL
2003
Fiscal Years Ended June 30,
2004
2005
2006
2007
REVENUES
Retail Service Charges
Wholesale Service Charges
Connection & Front Foot Fees
Engineering Fees
Sewage Disposal Fund–Customer Svc.
Other Operating Revenues (1)
Interest on Investments
Miscellaneous (Non-Operating)
Total Revenues
$32,222,288
2,855,742
2,156,346
1,717,044
1,808,224
798,260
8,749
$41,566,653
$30,898,755
2,612,248
2,199,081
121,171
1,930,765
1,329,478
635,266
653,426
$40,380,190
$30,545,916
3,246,670
2,195,652
157,051
2,037,157
1,301,778
841,056
338,772
$40,664,052
$34,296,079
3,273,788
1,878,008
159,760
2,448,949
1,411,317
1,194,513
407,688
$45,070,102
$34,297,610
3,125,313
1,367,035
130,617
2,268,725
1,544,954
1,663,978
511,627
$44,909,859
OPERATING EXPENSES
Administration
Customer Services
Engineering
Distribution System
Repair & Maintenance
Filtration Plant
Depreciation
Total Expenses
$2,403,123
4,561,869
836,651
3,133,925
5,175,231
6,375,387
6,133,735
$28,619,921
$2,707,201
4,985,579
945,677
3,803,151
5,646,966
5,912,334
6,224,657
$30,225,565
$2,594,517
5,216,842
1,276,107
3,643,153
6,696,014
6,081,849
6,412,000
$31,920,482
$2,940,530
6,246,728
1,298,405
3,584,636
6,996,872
6,558,183
6,541,846
$34,167,200
$2,968,121
6,015,234
1,240,663
3,702,670
6,796,822
6,790,037
6,785,682
$34,299,229
6,133,735
6,224,657
6,412,000
6,541,846
6,785,682
$19,080,467
$16,379,282
$15,155,570
$17,444,748
$17,396,312
ADDITIONS - DEPRECIATION
NET EARNINGS (2)
(1) Includes public fire protection, merchandise jobbing, and penalties.
(2) Pursuant to bond ordinance definition of net earnings.
Source: City of Grand Rapids
NET EARNINGS AND BOND COVERAGE
The Bond Ordinance requires that the Net Revenue generated by the System must be sufficient to meet the cash
requirements of the System which include: (a) System administrative, operation, and maintenance expenses; (b) debt
service requirements on bonded debt; and (c) expenditures for capital improvements not financed from bond proceeds
or contributions. In addition, the City covenants and agrees that it will, at all times, prescribe and maintain and
thereafter collect rates and charges for the services and facilities furnished by the System which, together with other
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
35
income, are reasonably expected to yield annual Net Earnings in the current fiscal year equal to at least one hundred
twenty percent (120%) of the Annual Principal and Interest Requirement in such fiscal year.
The table below sets forth the Debt Service and Coverage Ratio based upon the Net Earnings of the System for the
fiscal years ended June 30, 2003 through June 30, 2007. The Coverage Ratio has been determined by dividing the Net
Earnings for each fiscal year by the total annual principal and interest payments of Outstanding Bonds for each Fiscal
Year.
CITY OF GRAND RAPIDS
WATER SUPPLY SYSTEM
DEBT SERVICE AND COVERAGE RATIO
HISTORICAL
6/30/2003
Net Earnings of the System
Debt Service (1)
Series 2005 Bonds
Series 2000 Bonds
Series 1993 Bonds (2)
Total Debt Service
Coverage Ratio
Total Available After Debt Service
Fiscal Years Ended
6/30/2004
6/30/2005
6/30/2006
6/30/2007
$19,080,467
$16,379,282
$15,155,570
$17,444,748
$17,396,312
0
8,208,900
3,515,000
$11,723,900
0
8,201,900
3,445,000
$11,646,900
0
8,201,150
3,475,000
$11,676,150
0
8,195,900
3,500,000
$11,695,900
2,272,948
8,170,900
3,520,000
$13,963,848
1.63
$7,356,567
1.41
$4,732,382
1.30
$3,479,420
1.49
$5,748,848
1.25
$3,432,464
(1) Payments on debt service are recorded in the fiscal year when due.
(2) Amounts take into account the 1993 Swap Agreement interest rate of 5% and exclude remarketing, liquidity, and other fees
related to the Series 1993 Bonds.
Source: City of Grand Rapids
City of Grand Rapids, Michigan
Continuing Disclosure Certificate as of June 30, 2007
36
TABLE A - Page 1 of 2 pages
CITY OF GRAND RAPIDS, MICHIGAN
CONTINUING DISCLOSURE STATEMENT
MATRIX OF FINANCIAL DISCLOSURES - ISSUES DATED JULY 1, 1995 - APRIL 1, 2002
December 21, 2007
CUSIP
490278
386244
386244
490278
386289
386244
386244
386226
386226
490278
386244
386316*
386226
386244
386226
Issue #
County
#45
#47
County
#49
#50
#52
#53
#54
County
#56
#57
#58
#59
#62
Amount of Issue $ 4,500,000 $ 6,500,000 $ 2,505,000 $ 8,640,000 $ 83,650,000 $ 20,000,000 $ 2,000,000 $ 11,020,000 $ 2,600,000 $ 3,750,000 $ 25,500,000 $ 88,930,000 $ 2,600,000 $ 14,620,000 $ 2,135,000
Type Drain - SC
GRBA
GRBA
Drain -FW SSS-Revenue
GRBA
GRBA-GOLT Act 175-GOLT MPN-GOLT
Drain -FW2
GRBA-GOLT WSS-Revenue MPN-GOLT
GRBA-GOLT MPN-GOLT
Date of Issue
07/01/95
03/01/96
08/01/97
10/01/97
07/01/98
09/01/98
07/01/99
12/01/99
03/01/00
07/01/00
11/02/00
11/21/00
03/15/01
10/01/01
04/01/02
Final Maturity (including terms)
11/01/15
10/01/20
10/01/09
11/01/17
01/01/28
04/01/18
04/01/19
10/01/14
06/01/07
11/01/20
08/01/15
01/01/18
06/01/08
10/01/31
06/01/10
Dissemination Agent
City
GRBA
GRBA
City
City
GRBA
GRBA
City
City
City
GRBA
City
City
City
City
-
Population
Taxable Value
TV - by Use and Class ($/%)
State Equalized Value
SEV - by Use and Class ($/%)
Ten Largest Valuations by TV
State and Local Tax Limitations
Maximum Property Tax Rates
X
X
X
X
X
X
X
-
X
X
X
X
-
X
X
X
X
-
X
X
X
X
X
X
X
-
X
X
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
-
Property Tax Rates - Grand Rapids and
Homestead / Non-Homestead
X
X
X
X
X
X
X
X
X
Property Tax Collection Record
X
X
X
X
X
X
X
X
X
Status of Labor Contracts
X
X
X
X
X
X
X
Statement of Legal Debt Margin
X
X
X
X
X
X
X
X
X
Debt Statement
X
X
X
X
X
X
X
X
X
Schedule of Bond Maturities
X
X
Income Tax Collections
X
X
X
X
X
X
X
Retirement Plans - General and
X
X
X
X
Police & Fire
- Profile of Major Employers
X
- Employment
X
X
- Tax Abatement (Explanation)
- Revenues fr the State of Michigan
X
X
- Single Business Tax (Explanation)
- Retail Billings & Collections
X
- 10 Largest Retail Customers
X
- Revenue Requirements & Results
X
of Operations - Sanitary Sewer
- Statement of Operations
X
- Debt Service & Coverage Ratio
X
- Economic Profile - Industrial
X
- Economic Profile - Commercial
X
- Retail Sales
X
X
- Effective Hshold Buying Income
- Building Permits
- Total Annual Water Sales
- Daily Water Pumpage
- Revenue Requirements & % Rate
Increases - Water System
- Integrated Connection Base Fees
- W W T P Effluent Table
- Michigan Transportation Fund
* - Official Statement lists the incorrect CUSIP number - this is the correct one per Bond Counsel Dickinson Wright PLLC
GOLT = general obligation limited tax
Issue # 44: City of Grand Rapids Municipal Purchase Notes (GOLT) in the amount of $6,700,000, dated 12/01/1995, was retired on 02/01/2003. CUSIP 386226
Issue # 48: City of Grand Rapids Municipal Purchase Notes (GOLT) in the amount of $2,325,000, dated 02/01/1998, was retired on 02/01/2005. CUSIP 386226
Issue # 51: City of Grand Rapids Municipal Purchase Notes (GOLT) in the amount of $2,170,000, dated 03/01/1999, was retired on 06/01/2005. CUSIP 386226
Issue # 55: City / County Building Authority Bonds (GOLT) in the amount of $5,170,000, dated 07/06/2000, was defeased on 11/27/2001. CUSIP 386186
X
X
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
-
X
X
X
X
X
-
-
X
X
X
X
X
-
-
-
-
-
-
-
-
-
-
-
X
X
X
X
X
X
X
-
-
-
-
-
-
-
X
-
-
-
X
-
-
bondcdc063007.xls jmw 12202007
TABLE A - Page 2 of 2 pages
CITY OF GRAND RAPIDS, MICHIGAN
CONTINUING DISCLOSURE STATEMENT
MATRIX OF FINANCIAL DISCLOSURES - ISSUES DATED MAY 1, 2002 - JUNE 30, 2007
December 21, 2007
CUSIP
386244
386226
386226
386244
490278
386303
386226
386289
386289
386316
386226
386244
386226
386226
Issue #
#63
#65
#66
#67
County
#69
#70
#72
#73
#74
#75
#76
#77
#78
Amount of Issue $ 3,500,000 $ 3,975,000 $ 3,750,000 $ 9,285,000 $ 5,290,000 $ 3,805,000 $ 3,360,000 $ 37,475,000 $ 51,525,000 $ 35,000,000 $ 4,470,000 $ 7,375,000 $ 3,660,000 $ 14,740,000
Type GRBA-GOLT MPN-GOLT Act 175-GOLT GRBA-GOLT Drain - SC
SZ-Revenue MPN-GOLT SSS-Revenue SSS-Revenue WSS-Revenue MPN-GOLT
GRBA-GOLT
MPN-GOLT
CIB-GOLT
Date of Issue
05/01/02
12/01/02
04/25/03
04/25/03
09/30/03
05/20/04
06/30/04
08/12/04
10/27/05
12/14/05
04/13/06
11/15/06
12/06/06
05/02/07
Final Maturity (including terms)
04/01/22
06/01/17
10/01/18
04/01/13
11/01/15
06/01/16
06/01/12
01/01/34
01/01/35
01/01/35
06/01/14
10/01/36
12/01/14
09/01/27
Dissemination Agent
City
City
City
City
County
City
City
City
City
City
City
City
City
City
-
Population
Taxable Value
TV - by Use and Class ($/%)
State Equalized Value
SEV - by Use and Class ($/%)
Ten Largest Valuations by TV
State and Local Tax Limitations
Maximum Property Tax Rates
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
-
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
XX
X
X
X
X
X
XX
X
X
X
X
X
XX
X
X
X
Property Tax Rates - Grand Rapids and
Homestead / Non-Homestead
X
X
X
X
X
X
X
X
X
X
XX
XX
XX
XX
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
XX
XX
XX
-
X
-
X
-
-
-
-
-
-
-
-
-
-
Property Tax Collection Record
X
X
X
X
X
X
X
X
X
X
X
Status of Labor Contracts
X
X
X
X
X
X
X
X
X
X
Statement of Legal Debt Margin
X
X
X
X
X
X
X
X
X
X
X
Debt Statement
X
X
X
X
X
X
X
X
X
X
X
Schedule of Bond Maturities
X
X
Income Tax Collections
X
X
X
X
X
X
X
X
X
X
Retirement Plans - General and
X
X
X
X
X
X
XX
XX
Police & Fire
- Profile of Major Employers
X
- Employment
X
- Tax Abatement (Explanation)
X
- Revenues fr the State of Michigan
X
X
X
X
- Single Business Tax (Explanation)
- Retail Billings & Collections
X
X
- 10 Largest Retail Customers
X
X
- Revenue Requirements & Results
X
of Operations - Sanitary Sewer
- Statement of Operations
X
- Debt Service & Coverage Ratio
- Economic Profile - Industrial
- Economic Profile - Commercial
- Retail Sales
- Effective Hshold Buying Income
- Building Permits
- Total Annual Water Sales
X
- Daily Water Pumpage
X
- Revenue Requirements & % Rate
Increases - Water System
- Integrated Connection Base Fees
- Wastewater Volumes
X
- W W T P Effluent Table
X
X
- Michigan Transportation Fund
X
GOLT = general obligation limited tax
Issue # 60: CCBA $84,578,903.75 Series 2001 is part of Kent County's Continuing Disclosure Certificate, not City's per Assistant City Manager RJWhite, December 6, 2002
Issue # 61: CCBA - Defeased Series 2000 Bonds (#55) transferred funds to a trust which is responsible to bondholders. No Continuing Disclosure Certificate requirements for this
issue or for #55 per Assistant City Manager RJWhite, 12/6/02
Issues # 64 and # 71: Per the lease agreements, GRBA $30,855,000 Series 2002A (Issue # 64) and GRBA $18,225,000 Series 2004A (Issue # 71) continuing disclosure requirements are
executed and delivered by the State of Michigan unless there is a significant event. Issue # 64 was partially defeased by Issue # 71.
Issue # 68: Per the lease agreement, CCBA $5,000,000 Series 2003B Continuing Disclosure requirements are executed and delivered by the County of Kent unless there is a significant event.
bondcdc063007.xls jmw 12202007