Agenda - City of Tecumseh [PDF]

CITY OF TECUMSEH COUNCIL MEETING TECUMSEH CITY HALL DECEMBER 21, 2015 7:30 P.M. AGENDA 1. Call to order 2. Pledge of Allegiance 3. Roll call 4. Approval of Agenda 5. Welcome Guests A. Certificate of Appreciation – Eagle Scout Nathan Roberts B. 2015 Annual Audit Report Presentation – Rehman-Robson 6. Public Comment Re: Items on the Agenda 7. Report of the City Manager 8. Consent Agenda: (All matters listed under item #8 are considered to be routine by the City Council and will be enacted by one motion. There will not be separate discussion of these items. However, if discussion is desired, that item will be removed from the consent agenda and will be considered separately. (roll call) A. Approve Council minutes from the regular meeting held December 7, 2015 B. Budget Report C. Report of the Police Department D. Report of the Emergency Services Department E. Planning Commission minutes from the regular meeting held March 10, 2015 F. Draft Planning Commission minutes from the regular meeting held December 8, 2015 G. Independent Auditor’s Report and Comprehensive Annual Financial Report for the Fiscal Year Ending June 30, 2015 9. New Business: A. Resolution Re: Approve payment of bills (roll call) B. Resolution Re: Renewal of the Lease Agreement with Herrick Memorial Hospital, Inc. for the Fitness Connection at the Hayden Mill Building (roll call)

December 21, 2015 Council Meeting Agenda Page 2 of 2 C. Resolution Re: Renewal of J. Trees Lease Agreement at the Hayden Mill Building (roll call) D. Resolution Re: Renewal Lenawee Department on Aging Lease Agreement at the Hayden Mill Building (roll call) E. Resolution Re: Designation of Street Administrator for Public Act 51 Transportation Funds (roll call) F. Resolution Re: 2015 Annual Permits and Performance Resolution (roll call) G. Resolution Re: Special Land Use for the expansion of an existing drive-through at Old National Bank, 205 E. Chicago Blvd. (roll call) 10. Public Comment Re: Items not on the Agenda 11. Miscellaneous business 12.

Adjournment

The City of Tecumseh provides for reasonable accommodations for its programs, services and meetings under Title VI of its Non-Discrimination Policy and Limited English Proficiency Policy, with an advance 7 day notice to Joe Tuckey at 517 424 6555.

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In recognition of his Eagle Scout Project, this certificate is awarded to

NATHAN ROBERTS Nathan Roberts led the scouts of Troop 632 as they

worked on a restoration project along the south bank

of Globe Mill Pond, located in Tecum s eh, M ichigan.

Nathan, along with the scouts and volunteers

installed 35 tons of rip rap, reinforcing 300 feet of

the pond 's south bank. Because of Nathan and Boy

Scout T roop 632, the south bank of

Globe :NIill Pond has been stabilized.

0)0'.0-aA!td!O/5 Jackson L. Baker Mayor City of Tecumseh

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Shelley Lim CLS Director City of Tecumseh

309 E. Chicago Blvd.  Tecumseh, MI 49286 517.423.2107

City of Tecumseh Michigan

2015 Comprehensive Annual Financial Report

Elected Officials

Mayor - Jackson Baker Mayor Pro Tem - Stephanie Harmon Council Members: Gary Fox Vicki Philo Gary Naugle Laurence VanAlstine, Jr. Ron Wimple



Fiscal year ending 6/30/2015

Innovative • Timeless • Inviting

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CITY OF TECUMSEH, MICHIGAN COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2015 Prepared by: Treasurer's Department

CITY OF TECUMSEH, MICHIGAN Table of Contents Page Introductory Section Letter of Transmittal GFOA Certificate of Achievement Organizational Chart List of Elected and Appointed Officials

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Financial Section Independent Auditors’ Report Management’s Discussion and Analysis Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position Statement of Activities Fund Financial Statements: Balance Sheet – Governmental Funds Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: General Fund Tecumseh Center for the Arts Special Revenue Fund Statement of Net Position – Proprietary Funds Statement of Revenues, Expenses and Changes in Fund Net Position – Proprietary Funds Reconciliation of Changes in Net Position of Enterprise Funds to Change in Net Position of Business-type Activities Statement of Cash Flows – Proprietary Funds Statement of Fiduciary Net Position - Fiduciary Funds Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefits Trust Funds Notes to Financial Statements

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CITY OF TECUMSEH, MICHIGAN Table of Contents Page Required Supplementary Information: City of Tecumseh Retirement System: Schedule of Investment Returns Schedule of Changes in the City's Net Pension Liability and Related Ratios Schedule of City Contributions Other Postemployment Benefits Plan Combining and Individual Fund Financial Statements and Schedules: Nonmajor Governmental Funds: Combining Balance Sheet – Nonmajor Governmental Funds Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual: Major Street and Trunkline Fund Local Street Fund Development Services Fund PA-48 Fund Brownfield Redevelopment Authority Fund Economic Development Project Fund Movies in the Park Fund Fiduciary Funds: Combining Statement of Fiduciary Net Position - Pension and Other Employee Benefits Trust Funds Combining Statement of Changes in Fiduciary Net Position - Pension and Other Employee Benefits Trust Funds Combining Statement of Fiduciary Assets and Liabilities - Agency Funds Combining Statement of Changes in Assets and Liabilities - Agency Funds Component Units: Statement of Net Position and Governmental Fund Balance Sheet Downtown Development Authority Component Unit Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance - Downtown Development Authority Component Unit

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91 93 94 96

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CITY OF TECUMSEH, MICHIGAN Table of Contents Page Statistical Section (Unaudited) Table Description of Statistical Section 1 Net Assets by Component 2 Changes in Net Assets 3 Fund Balances - Governmental Funds 4 Changes in Fund Balances - Governmental Funds 5 Changes in Fund Balances - General Fund 6 Taxable and Estimated Actual Value of Property 7 Direct and Overlapping Property Tax Rates 8 Principal Property Taxpayers 9 Property Tax Levies and Collections 10 Ratios of General Bonded Debt Outstanding 11 Ratios of Outstanding Debt by Type 12 Computation of Net Direct and Overlapping Debt 13 Legal Debt Margin 14 Demographic and Economic Statistics 15 Principal Employers 16 Full-time Equivalent City Government Employees by Function/Program 17 Operating Indicators by Function/Program 18 Capital Asset Statistics by Function/Program 19 Other Continuing Disclosures 

108 110 114 116 118 120 122 124 125 127 128 130 131 132 133 134 136 138 140

INTRODUCTORY SECTION

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CITY OF

TECUMSEH

MICHIGAN

December 14, 2015

To the Honorable Mayor, Members of the City Council and Citizens of the City of Tecumseh: State law requires that all local governments, subject to certain size criteria, publish within six months of the close of each fiscal year a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. This report is published to fulfill that requirement for the fiscal year ended June 30, 2015. Management assumes full responsibility for the completeness and reliability of all of the information contained in this report, based on a comprehensive framework of internal control that is established for this purpose. Because the cost of internal control should not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that the financial statements are free of any material misstatement. Rehmann Robson, a firm of licensed certified public accountants, has issued an unmodified opinion on the City of Tecumseh’s financial statements for the year ended June 30, 2015. The independent auditor’s report is presented at the front of the financial section of this report. Management’s discussion and analysis (MD&A) immediately follows the independent auditor’s report and provides a narrative introduction, overview and analysis of the basic financial statements. MD&A complement this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Tecumseh, founded in 1824 and incorporated as a city in 1954, is located in southeast Michigan. The City currently has a land area of approximately 5.4 square miles and a population of 8,419 based on a 2013 estimate. The government is empowered to levy a property tax on both real and personal property located within its boundaries. The government also has the power by state statute to extend its corporate limits by annexation, which is done periodically, when deemed appropriate by the City Council.

www.mytecumseh.org P.o. Box 396 _ 309 East Chicago Boulevard - Tecumseh, Michigan 49286 - 517-423-2107 • Fax: 517-423-3610 1

The City has operated under the council-manager form of government since 1954. Policymaking and legislative authorities are vested in the governing council, a seven-member council including the mayor. The governing council is responsible, among other things, for passing ordinances and resolutions; making public policy decisions; confirming the appointments of department heads; adopting annual budgets; appointing boards, commissions, and committees; approving contracts; authorizing real estate transactions; approving payments; awarding bids; selling personal property; and hiring the government’s manager and attorney. The government’s manager is responsible for carrying out the policies and ordinances of the governing council, for supervising the day-to-day operations of the government, and for appointing the heads of the government’s departments. The council is elected on a non-partisan basis. Council members are elected to two-year staggered terms with three council members elected each year. The mayor is elected to two-year terms. The mayor and council members are elected at-large. The City provides a full range of services, including police and fire protection; the construction and maintenance of highways, streets and other infrastructure; sanitary sewage treatment and disposal; water treatment and distribution; economic development; recreational activities; and cultural events. The City is also financially accountable for certain legally separate entities, which are reported separately within the City’s financial statements. Additional information on each of these legally separate entities can be found in the notes to the basic financial statements. The City Council is required to adopt a final budget prior to the start of the fiscal year to which it pertains. This annual budget serves as the foundation for the City’s financial planning and control. The budget is prepared by fund, function and department. Department heads may transfer resources within a department as they see fit. Transfers between departments, however, require approval of the governing council. Factors Affecting Economic Condition The information presented in the financial statements is perhaps best understood when it is considered from the broader perspective of the environment within which the City operates as described below: Local economy. The City currently sees a challenging economic environment and local indicators point to continued challenges; despite the current national unemployment rate of 5.7%, Lenawee County is experiencing almost 1.2% less than the national rate and is 0.7% lower than it was last year at this time. The region does have a varied manufacturing and industrial base that contributes to the unemployment rate. Major industries with headquarters or divisions located within the government's boundaries or in close proximity include printing companies, electrical controls, automobile component manufacturers, and several financial institutions. Due to the current economic condition, there was little residential growth during the year. Some of the industrial business base within the City see positive market forces, both from a business and employment standpoint. The City continues to work with these businesses to offer any type of assistance it can. Van-Rob Tecumseh (formerly Lenawee Stamping Corporation) continues to grow both in investment and job growth.

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Long term financial planning. Continued economic development looks challenging, but favorable for the future. The Economic Development Department is promoting additional commercial development projects and implementing an economic enhancement strategy, which primarily targets the downtown and west end commercial districts. The West Chicago Boulevard area continues to experience increased commercial and residential development in the near future. These trends are also impacted, in large measure, however, by other factors. The changes in the assessed value of taxable property in the City continues to be constrained by the Headlee Amendment (which limits the annual increase in the State Equalized Value of real property) and the provisions of Proposal A (which limits increases in taxable property values to 5% or the rate of inflation, whichever is less). Taken together, these fiscal factors create a trend toward ever-tightening budgets under which the City must operate. Finally, an increasing financial challenge for the City is the cost of employee benefits, especially for medical insurance and from limited investment income in the employees’ retirement system. Together, these two issues impose increasing burdens on the City’s fiscal structure and pose a possible peril to the long-term stability of City finances. Greater revenue growth or cost containment measures may be necessary to mitigate future stress on City finances. The City has adopted State-required employee compensation plans (EVIP Part #3) with the attempt to address these costs. Relevant financial policies. The City has recently reviewed certain of its financial policies and procedures and made changes to ensure that adequate controls are in place. While the City’s auditor has indicated that there needs to be more separation of duties established in the Treasurer’s Department, this would be difficult to accomplish without hiring additional staff, although the Clerk's Department does assist with some of these duties. Additionally, the City has implemented numerous controls to compensate for the limits on separate controls, which include: 1. Department heads approving and signing all invoices before being processed. 2. The City Manager approving all invoices and the check register. 3. City Council and the City Manager approving a numerical check register that is continuous from the previous meeting. 4. Purchase requests are required and signed by the City Manager for purchases of $5,000 or more. 5. An employee, other than the preparer, reviews and verifies all journal entries, bank reconciliations, transfers, cash disbursements, cash sheets and deposits by signing and dating. 6. All electronic transfers are approved by the City Manager, who has access to the City’s bank accounts online to review at any time. 7. All cash is locked in a safe in the vault with only the Treasurer’s Department and Clerk’s employees having the combination. 8. All cash is transported from outside departments to City Hall in sealed, tamper-proof deposit bags and to the bank by the police department in a locked bank bag. 9. All refunds and credits are approved by the department head or City Manager. With these controls in place, we believe the risk associated with the lack of separation of duties is lower than the cost associated with having additional staff. When the auditor has suggested a way to reduce risk of fraud, the City has implemented measures whenever possible. However, we will continue to identify controls and consider future separation of duties.

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The City has set a goal of maintaining at least a 15% fund balance in the general fund. Major initiatives. The City purchased 160 acres of land in 2004 intended for industrial usage. The park, called the Tecumseh Business and Technology Campus, is the last contiguous parcel of land that could be used to attract additional non-residential tax base. The City completed a $2.2 million development of 55 acres of this property in 2011. The City constructed a recreation center in January 2013. The center should result in attracting people throughout Lenawee County to enroll in programs and new retail space will generate revenue. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Tecumseh for its comprehensive annual financial report (CAFR) for the fiscal year ended June 30, 2014. This was the 18th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the government had to publish an easily readable and efficiently organized CAFR that satisfied both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement is valid for a period of one year only. We believe that our current CAFR continues to meet the Certificate of Achievement Program’s requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. In addition to the Certificate of Achievement, the City is the proud recipient of the GFOA award for its Popular Annual Financial Report (PAFR) for June 30, 2014. The City of Tecumseh is one of eight cities in the State of Michigan that simultaneously receives this GFOA award along with the Certificate of Achievement, according to the 2014 GFOA award recipients. The preparation of this report would not have been possible without the efficient and dedicated services of the entire staff of the finance and administration departments. We wish to express our appreciation to all members of the departments who assisted and contributed to the preparation of this report. Credit also must be given to the mayor and the governing council for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Tecumseh’s finances. Respectfully submitted,

Kevin M. Welch City Manager

Leisa M. Still Treasurer (Signatures not shown for security purposes.)

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CITY OF TECUMSEH, MICHIGAN LIST OF ELECTED AND APPOINTED OFFICIALS For the Fiscal Year Ended June 30, 2015

Elected Officials Mayor Mayor Pro Tem Council Member Council Member Council Member Council Member Council Member

Jackson Baker Stephanie Harmon Gary Fox Gary Naugle Vicki Philo Laurence R. Van Alstine, Jr. Ronald Wimple

Appointed Officials Manager Assessor Cemetery Superintendent Clerk Cultural and Leisure Services Director Development Service Director Economic Development Director Emergency Services Chief Police Chief Public Works Superintendent Superintendent of Utilities Treasurer

Kevin M. Welch Amanda Lacelle Dan Righter Mary Feight Shelley Lim Bradley Raymond Paula Holtz Joseph C. Tuckey Troy Stern Tim Bock Todd Amstutz Leisa M. Still

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FINANCIAL SECTION

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Rehmann Robson 675 Robinson Rd. Jackson, MI 49203 Ph: 517.787.6503 Fx: 517.788.8111 rehmann.com

INDEPENDENT AUDITORS' REPORT December 14, 2015 The Honorable Mayor and Members of the City Council City of Tecumseh Lenawee County, Michigan We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Tecumseh, Michigan (the “City”), as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

Rehmann is an independent member of Nexia International.

CPAs & Consultants

Wealth Advisors

Corporate Investigators

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We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to previously present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Tecumseh, Michigan, as of June 30, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the general fund and each major special revenue fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Implementation of GASB Statement No. 68 As described in Note 19, the City implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pension Plans, in the current year. Accordingly, beginning net position of the governmental activities, the business-type activities and the enterprise funds were restated. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that management’s discussion and analysis and the schedules of pension and other postemployment benefit plan information, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The combining and individual fund financial statements and schedules, and the introductory and statistical sections are presented for purposes of additional analysis and are not a required part of the basic financial statements.

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The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied by us in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated in all material respects in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them.

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MANAGEMENT'S DISCUSSION AND ANALYSIS

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CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis As management of the City of Tecumseh, Michigan, we offer readers of the City’s financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2015. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, as listed in the table of contents. Financial Highlights · The assets of the City exceeded its liabilities at the close of the most recent fiscal year by $27,808,933 (net position). Of this amount, $788,074 (unrestricted net position) may be used to meet the government’s ongoing obligations to citizens and creditors. · The government’s total net position decreased by $2,471,562. Governmental activities decreased by $2,519,958 (predominantly because of current year pension expense) and the business-type activities increased by $48,396. · As of the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $5,570,438, an increase of $2,107,771 over the prior year. Approximately 25.8 percent of total fund balance, or $1,436,002, is available for spending at the government’s discretion (unassigned fund balance). · At the end of the current fiscal year, unassigned fund balance for the general fund was $1,436,002 or 26.9 percent of total general fund expenditures and transfers out. · The City’s total bonded debt increased by a net amount of $2,257,826 during the current fiscal year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g., uncollected taxes and earned but unused vacation leave).

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CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Both of the government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, parks and recreation, cultural, community development and operation of the civic auditorium. The business-type activities of the City include water and sanitary sewer operations. The government-wide financial statements include not only the City itself (known as the primary government), but also legally separate entities for which the City is financially accountable. Financial information for these component units are reported separately from the financial information presented for the primary government itself. The Building Authority and Brownfield Redevelopment Authority, although also legally separate, function for all practical purposes as departments of the City, and therefore have been included as an integral part of the primary government. Fund Financial Statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains 17 individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general fund, the Tecumseh Center for the Arts endowment fund, the Tecumseh Center for the Arts special revenue fund and the General Obligation Bond Construction capital projects fund, each of which are considered to be major funds. Data from the other 13 governmental funds are combined into a single, aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements elsewhere in this report. The City adopts an annual appropriated budget for its general and special revenue funds. Budgetary comparison statements or schedules have been provided herein to demonstrate compliance with those budgets. Proprietary Funds. The City maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its wastewater and water operations. The internal service fund is an accounting device used to accumulate and allocate costs internally among the City’s various functions. The City uses an internal service fund to account for its public works and general maintenance equipment. Because this service predominantly benefits governmental rather than business-type functions, it has been included within governmental activities in the government-wide financial statements.

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CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the wastewater and water operations, both of which are considered to be major funds of the City. Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. This is limited to schedules concerning the City’s progress in funding its obligation to provide pension and other postemployment benefits to its employees. The combining statements referred to earlier in connection with nonmajor governmental funds are presented immediately following the required supplementary information. Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government’s financial position. In the case of the City of Tecumseh, assets exceeded liabilities by $27,808,933 at the close of the most recent fiscal year. By far the largest portion of the City’s net position (87.7 percent) reflects its investment in capital assets (e.g., land, buildings, vehicles, equipment and infrastructure), less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s net position (9.4 percent) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net position (2.8 percent or $788,074) may be used to meet the government’s ongoing obligations.

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CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Net Position Governmental Activities

Current and other assets Capital assets, net Total assets Deferred outflows Long-term liabilities Other liabilities Total liabilities Deferred inflows Net position: Net investment in capital assets Restricted Unrestricted Total net position

Business-type Activities

Total

2015

2014

2015

2014

2015

2014

$ 7,794,426 20,470,709 28,265,135

$ 5,710,483 20,596,781 26,307,264

$ 1,252,644 11,747,364 13,000,008

$ 1,716,113 11,235,055 12,951,168

$ 9,047,070 32,218,073 41,265,143

$ 7,426,596 31,831,836 39,258,432

280,793

-

61,637

-

342,430

-

6,384,493 5,122,307 11,506,800

4,488,615 272,669 4,761,284

1,966,488 132,661 2,099,149

1,528,980 71,940 1,600,920

8,350,981 5,254,968 13,605,949

6,017,595 344,609 6,362,204

158,007

-

34,684

-

192,691

-

14,244,223 1,861,294 775,604 $ 16,881,121

16,602,508 1,888,415 3,055,057 $ 21,545,980

10,157,434 757,908 12,470 $ 10,927,812

9,837,951 1,092,404 419,893 $ 11,350,248

24,401,657 2,619,202 788,074 $ 27,808,933

26,440,459 2,980,819 3,474,950 $ 32,896,228

At the end of the current fiscal year, the City reports positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Positive balances for all categories were reported in the prior fiscal year. The government’s net position decreased by $2,471,562 during the current fiscal year as compared to a decrease of $240,880 in the prior year.

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CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Changes in Net Position Governmental Activities Revenues Program revenues: Charges for services Operating grants Capital grants General revenues: Property taxes Grants and contributions not restricted to specific programs Other Total revenues Expenses General government Public safety Public works Parks and recreation Cultural Community development Interest on long-term debt Wastewater Water Total expenses

Total

2015

2014

2015

2014

2015

2014

$ 1,164,883 1,426,007 122,609

$ 1,106,680 981,317 51,488

$ 1,686,292 137,196

$ 1,723,486 35,010

$ 2,851,175 1,426,007 259,805

$ 2,830,166 981,317 86,498

3,407,771

3,334,780

-

-

3,407,771

3,334,780

761,544 37,047 6,919,861

742,265 27,799 6,244,329

6,142 1,829,630

7,300 1,765,796

761,544 43,189 8,749,491

742,265 35,099 8,010,125

2,351,915 3,130,167 1,381,246 592,187 351,254 1,513,612 142,836 9,463,217

1,241,374 2,164,774 1,215,362 524,110 365,408 663,532 143,248 6,317,808

1,246,609 534,625 1,781,234

1,340,267 650,310 1,990,577

2,351,915 3,130,167 1,381,246 592,187 351,254 1,513,612 142,836 1,246,609 534,625 11,244,451

1,241,374 2,164,774 1,215,362 524,110 365,408 663,532 143,248 1,340,267 650,310 8,308,385

Change in net position before: Contributions to permanent funds Gain on sale of capital assets

(2,543,356)

Change in net position

(2,519,958)

Net position Beginning of year: As previously stated Restatement for GASB 68 End of year

Business-type Activities

23,398 -

(73,479) 17,380 40,000 (16,099)

21,545,980 21,562,079 (2,144,901) $ 16,881,121 $ 21,545,980

48,396 48,396

(224,781) (224,781)

11,350,248 11,575,029 (470,832) $ 10,927,812 $ 11,350,248

(2,494,960) 23,398 (2,471,562)

(298,260) 17,380 40,000 (240,880)

32,896,228 33,137,108 (2,615,733) $ 27,808,933 $ 32,896,228

Governmental Activities. Governmental activities decreased the City’s net position by $2,519,958 in the current fiscal year; by comparison, in the prior year, governmental activities net position decreased by $16,099. Key elements of this change include: · Implementation of GASB Statement No. 68 in fiscal 2015 resulted in current year expenses of $2.1 million in addition to the restatement of an equivalent amount. Business-type Activities. Business-type activities increased the City's net position by $48,396 as compared to a decrease of $224,781 the prior year. The primary reason for the comparable decrease in net position is capital grants were higher, expenses decreased and there were no transfers out.

20

CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental Funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $5,570,438, an increase of $2,107,771 over the prior year. Approximately 25.8% of this total amount ($1,436,002) constitutes unassigned fund balance, which is available for spending at the government’s discretion. The remainder of fund balance is categorized to indicate that it is not available for new spending because it is either nonspendable, restricted or committed. The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of the general fund was $1,436,002, while total fund balance was $1,511,748. As a measure of the general fund’s liquidity, it may be useful to compare unassigned fund balance to total fund expenditures and transfers out. Unassigned fund balance represents 26.9 percent of total general fund expenditures and transfers out. The fund balance of the City’s general fund increased by $196,214 during the current fiscal year as compared to a decrease of $136,218 for the previous fiscal year. The Tecumseh Center for the Arts endowment fund, a permanent fund, has a fund balance of $1,081,151, which is entirely nonspendable to generate future income for operations of the Tecumseh Center for the Arts. During fiscal 2015 the fund transferred $86,672 to the Tecumseh Center for the Arts special revenue fund from current year earnings. By the terms of the trust agreement that provided the original contribution of $1,000,000 from a local private foundation, any interest earnings not expended on a calendar year basis must be added to the principal balance. The interest income is used annually to offset operating expenses at the Tecumseh Center for the Arts. The Tecumseh Center for the Arts special revenue fund, which accounts for the operations of the Tecumseh Center for the Arts, finished the fiscal year with a total fund balance of $25,235, an increase of $23,821 for the year.

The City borrowed $2.25 million and issued its general obligation unlimited tax bonds payable over a period not to exceed 5.5 years for the purpose of paying the cost of installing, improving, replacing and reconstructing streets and sidewalks in the City. This is accounting for in the G.O. Bonds Construction capital projects fund.

21

CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Proprietary Funds. The City’s proprietary funds provide the same type of information found in the business-type activities of the government-wide financial statements, but in more detail. Unrestricted net position of the wastewater and water funds at the end of the year amounted to $55,840 and $10,590, respectively. The wastewater fund had an increase in total net position for the year of $3,899 and the water fund had an increase of $47,143. The increases can be attributed to higher capital grants and decreased expenses. General Fund Budgetary Highlights Differences between the original and final amended budgets for expenditures were relatively minor and spread across various functions/departments. This included an increase of approximately $196,000 in state shared revenues which were used to increase the budget for community development activities. For fiscal 2015, the budgetary estimate for the net change in fund balance was a decrease of $20,791; the actual change was an increase of $196,214 (or a difference of $217,005). Capital Asset and Debt Administration Capital Assets. The City’s investment in capital assets for its governmental and business-type activities as of June 30, 2015, amounted to $32,218,073 (net of accumulated depreciation). This investment in capital assets includes land, buildings and systems, improvements, machinery and equipment, park facilities, roads, highways, and bridges. Major capital asset events during the current fiscal year included a new truck for the Department of Public Works, improvements at City Hall and Tecumseh Center for the Arts, tennis court reconstruction, parks and recreation gym floor, body cameras and tasers for police department and wastewater improvements (blower project and trestle pipe replacement) along with well #8 transformer/switch. Capital Assets (Net of Depreciation) Governmental Activities

Land Land improvements Buildings and systems Vehicles Equipment Infrastructure Total capital assets, net

Business-type Activities

2015

2014

2015

$ 4,527,561 871,422 4,629,949 352,790 601,819 9,487,168 $ 20,470,709

$ 4,527,561 902,755 4,703,465 371,373 636,883 9,454,744 $ 20,596,781

$

11,679,079 68,285 $ 11,747,364

Total

2014

2015

2014

11,152,568 82,487 $ 11,235,055

$ 4,527,561 871,422 16,309,028 352,790 670,104 9,487,168 $ 32,218,073

$ 4,527,561 902,755 15,856,033 371,373 719,370 9,454,744 $ 31,831,836

$

Additional information on the City's capital assets can be found in the notes to the financial statements.

22

CITY OF TECUMSEH, MICHIGAN Management's Discussion and Analysis Long-Term Debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $5,169,930, which is backed by the full faith and credit of the government. General Obligation Bonds Governmental Activities

General obligation bonds

Business-type Activities

Total

2015

2014

2015

2014

2015

2014

$ 3,580,000

$ 1,385,000

$ 1,589,930

$ 1,397,104

$ 5,169,930

$ 2,782,104

The City’s total bonded debt increased by a net amount of $2,387,826 (85.8 percent) during the current fiscal year. The City has an “AA” rating from Standard & Poor’s. State statutes limit the amount of general obligation debt a governmental entity may issue to 10 percent of its total assessed valuation. The current debt limitation for the City is $24.8 million, which is significantly in excess of the City’s outstanding general obligation debt. Additional information on the City's long-term debt can be found in the notes to the financial statements. Economic Factors and Next Year’s Budget and Rates The following factors were considered in preparing the City’s budget for the 2015-16 fiscal year: · The overall plan for the budget was to maintain services in the community by providing a well-staffed, equipped and trained work force, consolidating services where appropriate, and to maintain a healthy fund balance. · To be sensitive to factors that may influence revenue projections, such as cuts to state shared revenue, declining housing values and potential plant closings that may increase unemployment rates, occupancy rates and reductions in personal property. · The City also wants to ensure that it has funding for streets, roads and other capital improvement projects by earmarking funds for future use. During the current fiscal year, unassigned fund balance in the general fund increased by $185,507 to $1,436,002. The City has not appropriated any general fund unassigned fund balance for spending in the 2015-16 fiscal year budget. Requests for Information This financial report is designed to provide a general overview of the City’s finances for all those with an interest in the government’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City Treasurer, 309 East Chicago Boulevard, Tecumseh, Michigan 49286.

23

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24

BASIC FINANCIAL STATEMENTS

25

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26

CITY OF TECUMSEH, MICHIGAN Statement of Net Position June 30, 2015 Primary Government

Assets Cash and cash equivalents Investments Receivables Internal balances Prepaids Restricted cash Capital assets not being depreciated Capital assets being depreciated, net

Governmental Activities

Business-type Activities

$

$

Total assets Deferred outflow of resources Deferred pension amounts Liabilities Accounts payable and accrued expenses Accrued interest payable Long-term liabilities: Due within one year Due in more than one year Net pension liability Total liabilities Deferred inflow of resources Deferred pension amounts Net position Net investment in capital assets Restricted for: Tecumseh Center for the Arts: Operations Endowment - nonexpendable Capital replacement Debt service Capital projects Perpetual care - nonspendable Perpetual care - spendable Unrestricted (deficit) Total net position

$

3,655,384 2,296,491 1,787,401 53,960 1,095 95 4,527,561 15,943,148

462,385 86,311 (53,960) 757,908 11,747,364

Component Unit

Total $

4,117,769 2,296,491 1,873,712 1,095 758,003 4,527,561 27,690,512

$

297,067 56,000 -

28,265,135

13,000,008

41,265,143

353,067

280,793

61,637

342,430

-

416,763 63,326

127,351 5,310

544,114 68,636

4,352 1,008

985,807 5,398,686 4,642,218

133,778 1,566,987 265,723

1,119,585 6,965,673 4,907,941

85,000 535,226 -

11,506,800

2,099,149

13,605,949

625,586

158,007

34,684

192,691

-

14,244,223

10,157,434

24,401,657

56,000

24,935 1,081,451 1,870 74 574,648 178,316 775,604

757,908 12,470

24,935 1,081,451 757,908 1,870 74 574,648 178,316 788,074

5,676 (334,195)

16,881,121

$

10,927,812

The accompanying notes are an integral part of these financial statements.

27

$

27,808,933

$

(272,519)

CITY OF TECUMSEH, MICHIGAN Statement of Activities For the Year Ended June 30, 2015 Program Revenues

Functions / Programs Primary government Governmental activities: General government Public safety Public works Parks and recreation Cultural Community development Interest on long-term debt

Charges for Services

Expenses

$

2,351,915 3,130,167 1,381,246 592,187 351,254 1,513,612 142,836

$

459,081 118,371 899 171,819 107,450 307,263 -

Operating Grants and Contributions

Capital Grants and Contributions

$

$

13,300 2,246 682,529 16,236 104,186 607,510 -

Net (Expense) Revenue

26,384 96,225 -

$ (1,879,534) (3,009,550) (671,434) (404,132) (139,618) (502,614) (142,836)

Total governmental activities

9,463,217

1,164,883

1,426,007

122,609

(6,749,718)

Business-type activities: Wastewater Water

1,246,609 534,625

1,108,652 577,640

-

137,196 -

(761) 43,015

Total business-type activities

1,781,234

1,686,292

-

137,196

42,254

Total primary government

$

11,244,451

$

2,851,175

$

1,426,007

$

259,805

Component unit Community development

$

82,113

$

-

$

16,150

$

-

$ (6,707,464)

$

(65,963) continued…

28

CITY OF TECUMSEH, MICHIGAN Statement of Activities For the Year Ended June 30, 2015 Program Revenues Functions / Programs

Governmental Activities

Business-type Activities

Changes in net position Net expense

$

$

General revenues: Property taxes Grants and contributions not restricted to specific programs Unrestricted investment earnings Contributions to permanent funds

(6,749,718)

42,254

Component Unit

Total

$

(6,707,464)

$

(65,963)

3,407,771

-

3,407,771

139,247

761,544 37,047 23,398

6,142 -

761,544 43,189 23,398

365 -

4,229,760

6,142

4,235,902

139,612

Change in net assets

(2,519,958)

48,396

(2,471,562)

73,649

Net position (deficit), beginning of year, as restated

19,401,079

30,280,495

(346,168)

Total general revenues and contributions

Net position (deficit), end of year

$

16,881,121

10,879,416 $

10,927,812

$

27,808,933

$

(272,519) concluded.

The accompanying notes are an integral part of these financial statements.

29

CITY OF TECUMSEH, MICHIGAN Balance Sheet Governmental Funds June 30, 2015

General Assets Cash and cash equivalents Investments Accounts receivable Special assessments receivable Accrued interest receivable Restricted cash Prepaid items

Tecumseh Center for the Arts Endowment

Tecumseh Center for the Arts

G.O. Bond Construction

Nonmajor Governmental Funds

Total Governmental Funds

$

1,024,470 486,201 1,627,656 6,813 795

$

1,153,151 -

$

(37,827) 80,090 95 300

$

2,114,108 -

$

418,845 657,139 41,134 2,305 -

$

3,519,596 2,296,491 1,748,880 6,813 2,305 95 1,095

Total assets

$

3,145,935

$

1,153,151

$

42,658

$

2,114,108

$

1,119,423

$

7,575,275

Liabilities Accounts payable / accrued liabilities

$

34,187

$

72,000

$

17,423

$

122,357

$

158,870

$

404,837

Deferred inflows of resources Unavailable - long-term receivable

1,600,000

-

-

-

-

1,600,000

-

1,081,151 -

300 -

-

574,648

1,081,451 574,648

Fund balances: Nonspendable: Tecumseh Center for the Arts Cemetery perpetual care Restricted: Public safety equipment and training Cemetery perpetual care Major and local streets Community development Unexpended bond proceeds Committed: Municipal purchase program Community development Debt service Capital projects Unassigned

25,250 -

-

-

-

178,316 159,839 45,806 81

25,250 178,316 159,839 45,806 81

41,483 9,013 1,436,002

-

24,935 -

1,991,751 -

1,789 74 -

41,483 2,025,699 1,789 74 1,436,002

Total fund balances

1,511,748

1,081,151

25,235

1,991,751

960,553

5,570,438

Total liabilities, deferred inflows of resources and fund balances

$

3,145,935

$

1,153,151

The accompanying notes are an integral part of these financial statements.

30

$

42,658

$

2,114,108

$

1,119,423

$

7,575,275

CITY OF TECUMSEH, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2015 Fund balances - total governmental funds

$

5,570,438

Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital assets Accumulated depreciation

31,094,324 (10,783,572)

Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current expenditures. Those assets (i.e., receivables) are offset by unearned revenues in the governmental funds and, therefore, are not included in fund balance. Unearned long-term receivable Unearned long-term receivable - installment purchase agreement

29,403 1,600,000

An internal service fund is used by management to charge the costs of certain equipment usage to individual funds. The assets and liabilities of the internal service fund are partially included in governmental activities in the statement of net position. Net position of governmental activities accounted for in the internal service fund.

337,779

Certain liabilities, such as bonds payable, are not due and payable in the current period and therefore are not reported in the funds. Bonds and purchase agreements payable Accrued interest on bonds payable Compensated absences Net pension liability Deferred outflows of resources related to the net pension liability Deferred inflows of resources related to the net pension liability Net position of governmental activities

(5,889,787) (63,326) (494,706) (4,642,218) 280,793 (158,007) $

The accompanying notes are an integral part of these financial statements.

31

16,881,121

CITY OF TECUMSEH, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2015

General Revenue Taxes and special assessments Licenses and permits Intergovernmental - state Charges for services Fines and forfeits Investment earnings (loss) Contributions Other revenues

$

Total revenues

3,426,301 136,264 1,018,138 457,915 47,071 25,248 232 423,520

Tecumseh Center for the Arts Endowment

Tecumseh Center for the Arts

$

$

29,076 -

22,590 121,200 (5) 38,776 -

G.O. Bond Construction $

742 -

Nonmajor Governmental Funds

Total Governmental Funds

$

$

7,854 95,168 1,131,643 74,834 11,154 49,517

3,434,155 231,432 2,172,371 653,949 47,071 66,215 39,008 473,037

5,534,689

29,076

182,561

742

1,370,170

7,117,238

1,346,880 2,004,896 201,814 425,110 478,996

2,862 -

325,412 -

254,641

1,771 184,085 919,026 616,981

1,348,651 2,188,981 1,120,840 425,110 328,274 1,350,618

302,500 78,179 -

-

-

4,350

52,500 59,464 -

355,000 137,643 4,350

4,838,375

2,862

325,412

258,991

1,833,827

7,259,467

696,314

26,214

(142,851)

(258,249)

Other financing sources (uses) Transfers in Transfers out Issuance of long-term debt

5,000 (505,100) -

(86,672) -

166,672 -

Total other sources (uses)

(500,100)

(86,672)

196,214

(60,458)

Expenditures Current: General government Public safety Public works Parks and recreation Cultural Community development Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures Revenues over (under) expenditures

Net change in fund balances Fund balances, beginning of year Fund balances, end of year

1,315,534 $

1,511,748

1,141,609 $

1,081,151

The accompanying notes are an integral part of these financial statements.

32

$

(463,657)

(142,229)

2,250,000

450,100 (30,000) -

621,772 (621,772) 2,250,000

166,672

2,250,000

420,100

2,250,000

23,821

1,991,751

(43,557)

2,107,771

1,414

-

25,235

$

1,991,751

1,004,110 $

960,553

3,462,667 $

5,570,438

CITY OF TECUMSEH, MICHIGAN Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2015 Net change in fund balances - total governmental funds

$

2,107,771

Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay Depreciation expense

483,286 (599,961)

Bond proceeds provide current financial resources to governmental funds in the period issued, but issuing bonds increases long-term liabilities in the statement of net position. Repayment of bond principal is an expenditure in the governmental funds, but the repayment reduces long-term liabilities in the statement of net position. Proceeds from issuance of debt Principal payments on long-term liabilities Amortization of bond discount

(2,250,000) 355,000 (514)

An internal service fund is used by management to charge the costs of certain equipment usage to individual funds. The net revenue (expense) attributable to those funds is partially reported with governmental activities. Net operating loss from governmental activities in internal service fund Interest revenue from governmental internal service fund

(35,571) 122

Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in the funds. Change in accrued interest payable on bonds Change in the accrual for compensated absences Pension and related deferred expenses Change in net position of governmental activities

(5,194) (366) (2,374,531) $

The accompanying notes are an integral part of these financial statements.

33

(2,519,958)

CITY OF TECUMSEH, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2015 Original Budget Revenue Taxes and special assessments Licenses and permits Intergovernmental - state Charges for services Fines and forfeits Investment earnings Contributions Other revenues

$

3,441,750 131,500 1,005,900 420,545 51,950 16,000 3,500 317,925

Final Budget $

3,423,492 133,304 1,017,000 448,148 44,225 10,800 240 316,125

Actual $

3,426,301 136,264 1,018,138 457,915 47,071 25,248 232 423,520

Actual Over (Under) Final Budget $

2,809 2,960 1,138 9,767 2,846 14,448 (8) 107,395

Total revenues

5,389,070

5,393,334

5,534,689

Expenditures General government: Salaries and wages Fringe benefits Office expenditures Contractual services Insurance Street lighting Cemetery Other expenditures Less: reimbursements Total general government

357,500 165,750 67,300 360,637 18,703 110,000 146,031 18,338 (25,000) 1,219,259

392,650 185,012 84,900 400,063 16,888 100,000 156,445 27,918 (25,000) 1,338,876

400,122 188,349 86,383 405,512 14,888 99,303 150,896 26,427 (25,000) 1,346,880

7,472 3,337 1,483 5,449 (2,000) (697) (5,549) (1,491) 8,004

1,594,605 477,945 2,072,550

1,606,152 440,119 2,046,271

1,561,993 442,903 2,004,896

(44,159) 2,784 (41,375)

92,026 1,100 93,126

197,452 44,450 241,902

158,464 43,350 201,814

(38,988) (1,100) (40,088)

Public safety: Police Fire Total public safety Public works: Public works department Sidewalks Total public works

141,355

continued…

34

CITY OF TECUMSEH, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2015 Original Budget Expenditures (concluded) Parks and recreation

$

Community development

380,118

Final Budget $

401,477

Actual $

425,110

Actual Over (Under) Final Budget $

23,633

502,082

507,320

478,996

(28,324)

300,000 79,886 379,886

300,000 78,179 378,179

302,500 78,179 380,679

2,500 2,500

4,647,021

4,914,025

4,838,375

742,049

479,309

696,314

Other financing sources (uses) Transfers in Transfers out

5,000 (737,000)

5,000 (505,100)

5,000 (505,100)

-

Total other financing (uses)

(732,000)

(500,100)

(500,100)

-

Net changes in fund balance

10,049

(20,791)

196,214

217,005

1,315,534

-

Debt service: Principal Interest and fiscal charges

Total expenditures Revenues over expenditures

Fund balance, beginning of year Fund balance, end of year

1,315,534 $

1,325,583

1,315,534 $

1,294,743

$

1,511,748

(75,650) 217,005

$

217,005 concluded.

The accompanying notes are an integral part of these financial statements.

35

CITY OF TECUMSEH, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Tecumseh Center for the Arts For the Year Ended June 30, 2015 Original Budget Revenues Intergovernmental - state Charges for services Investment earnings Contributions

$

17,500 134,041 9,150 33,920

Final Budget $

22,590 119,403 9,052 39,452

Actual $

22,590 121,200 (5) 38,776

Actual Over (Under) Final Budget $

1,797 (9,057) (676)

Total revenues

194,611

190,497

182,561

(7,936)

Expenditures Cultural (civic auditorium): Salaries, wages and stipends Fringe benefits Office expenditures Contractual services Repair and maintenance Utilities Other expenditures

139,900 34,626 52,410 27,806 10,500 40,000 26,240

139,900 35,814 54,518 23,945 17,910 35,000 33,453

137,265 35,188 47,009 24,501 17,750 30,379 33,320

(2,635) (626) (7,509) 556 (160) (4,621) (133)

Total expenditures

331,482

340,540

325,412

(15,128)

(136,871)

(150,043)

(142,851)

7,192

142,000

157,000

166,672

9,672

Net changes in fund balance

5,129

6,957

23,821

16,864

Fund balance, beginning of year

1,414

1,414

1,414

-

Revenues under expenditures Other financing sources Transfers in

Fund balance, end of year

$

6,543

$

8,371

The accompanying notes are an integral part of these financial statements.

36

$

25,235

$

16,864

CITY OF TECUMSEH, MICHIGAN Statement of Net Position

Proprietary Funds June 30, 2015

Business-type Activities - Enterprise Funds

Wastewater Assets Current assets: Cash and cash equivalents Accounts receivable Total current assets

$

Noncurrent assets: Restricted cash and cash equivalents Property and equipment, net Total noncurrent assets Total assets

379,413 66,197 445,610

Noncurrent liabilities, net of current portion: Accrued compensated absences Revenue bonds payable Net pension liability Total noncurrent liabilities Total liabilities

Total net position

$

82,972 20,114 103,086

Total

$

462,385 86,311 548,696

$

135,788 135,788

524,046 2,022,548 2,546,594

757,908 11,747,364 12,505,272

159,957 159,957

10,404,288

2,649,680

13,053,968

295,745

41,092

20,545

61,637

-

116,587 5,310 23,793 90,000 235,690

10,764 19,985 30,749

127,351 5,310 43,778 90,000 266,439

11,926 11,926

38,687 1,499,930 223,362 1,761,979

28,370 42,361 70,731

67,057 1,499,930 265,723 1,832,710

-

1,997,669

101,480

2,099,149

11,926

23,123

11,561

34,684

-

8,134,886 233,862 55,840

2,022,548 524,046 10,590

10,157,434 757,908 66,430

159,957 123,862

2,557,184

10,981,772

Deferred inflow of resources Deferred pension amounts Net position Net investment in capital assets Restricted for capital replacement Unrestricted

$

Internal Service Fund

233,862 9,724,816 9,958,678

Deferred outflow of resources Deferred pension amounts Liabilities Current liabilities: Accounts payable and accrued liabilities Accrued interest payable Accrued compensated absences, current portion Revenue bonds payable, current portion Total current liabilities

Water

Governmental Activities

8,424,588

$

Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds

(53,960)

Net position of business-type activities on the governmentwide statement of net position

$

The accompanying notes are an integral part of these financial statements.

37

10,927,812

$

283,819

CITY OF TECUMSEH, MICHIGAN Statement of Revenues, Expenses and Changes in Net Position

Proprietary Funds For the Year Ended June 30, 2015

Business-type Activities - Enterprise Funds

Wastewater Operating revenues Charges for services

$

Operating expenses Salaries and wages Fringe benefits Office expenses Contractual services Insurance Supplies and materials Utilities Depreciation/amortization Other expenses

1,108,652

Water $

312,727 82,892 4,802 55,524 29,000 79,577 166,982 368,568 122,627

Total operating expenses Operating loss

Internal Service Fund

Total

577,640

$

182,039 (17,399) 7,238 13,151 9,404 108,634 50,778 80,554 98,903

1,222,699

Governmental Activities

533,302

1,686,292

$

303,242

494,766 65,493 12,040 68,675 38,404 188,211 217,760 449,122 221,530

78,063 26,076 134,986 8,353 38,638 55,343

1,756,001

341,459

(114,047)

44,338

(69,709)

Nonoperating revenue (expense) Investment income Interest expense

3,337 (22,587)

2,805 -

6,142 (22,587)

122 -

Total nonoperating revenue (expense)

(19,250)

2,805

(16,445)

122

(133,297)

47,143

(86,154)

Loss before capital contributions Capital contributions Changes in net position Net position, beginning of year, as restated Net position, end of year

$

137,196

-

137,196

3,899

47,143

51,042

8,420,689

2,510,041

10,930,730

8,424,588

$

The accompanying notes are an integral part of these financial statements.

38

2,557,184

$

10,981,772

(38,217)

(38,095) (38,095) 321,914 $

283,819

CITY OF TECUMSEH, MICHIGAN Reconciliation Changes in Net Position of Enterprise Funds to Change in Net Position of Business-Type Activities For the Year Ended June 30, 2015 Change in net position - all enterprise funds

$

An internal service fund is used by management to charge the costs of certain equipment usage to individual funds. The net revenue (expense) attributable to enterprise funds is reported with business-type activities. Net operating loss from business-type activities in internal service fund Change in net position of business-type activities

(2,646) $

The accompanying notes are an integral part of these financial statements.

39

51,042

48,396

CITY OF TECUMSEH, MICHIGAN Statement of Cash Flows

Proprietary Funds For the Year Ended June 30, 2015

Business-type Activities - Enterprise Funds

Wastewater Cash flows from operating activities Cash received from customers Cash received from interfund services Cash payments to employees Cash payments to suppliers for goods and services

$

Net cash provided (used) by operating activities

1,134,471 (531,070) (375,513)

Water $

590,873 (282,292) (310,019)

Governmental Activities Internal Service Fund

Total $

1,725,344 (813,362) (685,532)

$

31,604 271,638 (78,063) (220,604)

227,888

(1,438)

226,450

4,575

Cash flows from capital and related financing activities Proceeds from bonds Purchase of capital assets Bond principal payments Bond interest payments

282,826 (791,510) (90,000) (22,953)

(32,725) -

282,826 (824,235) (90,000) (22,953)

(29,243) -

Net cash used by capital and related financing activities

(621,637)

(32,725)

(654,362)

(29,243)

Cash flows from investing activities Investment income

3,337

Net change in cash and cash equivalents

2,805

(390,412)

Cash and cash equivalents, beginning of year

6,142

(31,358)

1,003,687

122

(421,770)

638,376

(24,546)

1,642,063

160,334

Cash and cash equivalents, end of year

$

613,275

$

607,018

$

1,220,293

$

135,788

Reconciliation to statement of net assets Cash and cash equivalents Restricted cash and cash equivalents

$

379,413 233,862

$

82,972 524,046

$

462,385 757,908

$

135,788 -

$

613,275

$

607,018

$

1,220,293

$

135,788 continued…

40

CITY OF TECUMSEH, MICHIGAN Statement of Cash Flows

Proprietary Funds For the Year Ended June 30, 2015

Business-type Activities - Enterprise Funds

Wastewater Reconciliation of operating loss to net cash provided by operating activities Operating loss Adjustments to reconcile operating loss to net cash provided (used) by operating activities: Depreciation/amortization Pension expense Changes in assets and liabilities: Accounts receivable Accounts payable and accrued liabilities Accrued compensated absences

$

(114,047)

Water

$

Governmental Activities Internal Service Fund

Total

44,338

$

(69,709)

$

(38,217)

368,568 (108,495)

80,554 (123,567)

449,122 (232,062)

38,638 -

25,819 82,999 (26,956)

13,233 (21,911) 5,915

39,052 61,088 (21,041)

4,154 -

Net cash provided (used) by operating activities

$

227,888

$

Non-Cash Capital contributions

$

137,196

$

(1,438)

-

$

226,450

$

4,575

$

137,196

$

concluded.

The accompanying notes are an integral part of these financial statements.

41

CITY OF TECUMSEH, MICHIGAN Statement of Fiduciary Net Position

Fiduciary Funds June 30, 2015

Pension and Other Postemployment Benefits Trust Funds Assets Cash and cash equivalents Investments: Domestic equities Foreign equities Corporate bonds U.S. treasuries U.S. agencies Fixed income mutual funds Money market accounts Accrued interest receivable Delinquent taxes receivable

$

150,051

Agency Funds $

13,953,134 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542 12,732 -

Total assets Liabilities Due to other governments Net position Held in trust for pension and postemployment healthcare benefits

$

The accompanying notes are an integral part of these financial statements.

42

10,994 9,593

21,905,080

$

20,587

-

$

20,587

21,905,080

CITY OF TECUMSEH, MICHIGAN Statement of Changes in Fiduciary Net Position

Pension and Other Employee Benefits Trust Funds For the Year Ended June 30, 2015 Additions Investment income: Net realized and unrealized appreciation in fair value of investments Interest and dividends Less investment management fees

$

Net investment income

661,933 492,758 (146,762) 1,007,929

Contributions: City of Tecumseh Participants

561,322 122,260

Total contributions

683,582

Total additions

1,691,511

Deductions Participant benefits Administrative expenses

1,146,739 33,341

Total deductions

1,180,080

Net change to net position held in trust for benefits

511,431

Net position held in trust for benefits, beginning of year Net position held in trust for benefits, end of year

21,393,649 $

The accompanying notes are an integral part of these financial statements.

43

21,905,080

This page intentionally left blank.

44

NOTES TO FINANCIAL STATEMENTS

45

CITY OF TECUMSEH, MICHIGAN Index - Notes to Financial Statements

June 30, 2015

Page 1. Summary of Significant Accounting Policies

47

Reporting Entity Government-wide and Fund Financial Statements Measurement Focus, Basis of Accounting, and Financial Statement Presentation Assets, Liabilities, Deferred Inflows of Resources, and Equity

47 48 48 50

2. Budgetary Information

53

3. Excess of Expenditures Over Budget

53

4. Deposits and Investments

54

5. Receivables

57

6. Capital Assets

58

7. Payables

59

8. Interfund Receivables, Payables and Transfers

59

9. Long-term Debt

60

10. Segment Information - Enterprise Funds

63

11. Restricted Assets

63

12. Endowments

63

13. Risk Management

63

14. Property Taxes

64

15. Defined Benefit Pension Plan

64

16. Postemployment Health Care Benefit Plan

68

17. Net Position Invested in Capital Assets

70

18. Financial Statements of Individual Pension and Employee Benefit Plans

71

19. Restatement

72

46

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity The City of Tecumseh, Michigan is a municipal corporation governed by a seven-member council and administered by an appointed city manager. The accompanying financial statements present the government and its component units, entities for which the government is considered to be financially accountable. Blended component units, although legally separate entities, are, in substance, part of the government’s operations. Each discretely presented component unit is reported in a separate column in the government-wide financial statements to emphasize that it is legally separate from the government. The blended and discretely presented component units have June 30 year ends. Blended Component Units The Building Authority is governed by a three-member board appointed by the City Council. Its sole function is to oversee the financing and construction, if any, of the City’s public buildings; therefore, it is reported as if it were part of the primary government. Currently, there are no such capital projects in process and, therefore, there are no Building Authority funds or activities reported herein. The Brownfield Redevelopment Authority of the City of Tecumseh (BRA) is governed by a seven-member board consisting of the members of the City Council as appointed by the City Council and, as such, is reported as a blended component unit. The BRA is essentially part of the government’s operations; therefore, it is combined with data of the primary government. The BRA was formed to encourage and support the redevelopment of under-utilized and environmentally contaminated properties in the City of Tecumseh, pursuant to Public Act 381 of 1996. Discretely Presented Component Units The Tecumseh Downtown Development Authority (DDA) is responsible for certain projects and activities whose purpose is to revitalize the downtown business district. The members of the DDA’s governing board are appointed by the government’s council. The DDA is also fiscally dependent upon the government because the government’s council approves the DDA’s budget and any debt issuances. The DDA does not issue separate financial statements; accordingly, DDA fund financial statements are included herein as supplementary information. The Local Development Finance Authority of the City of Tecumseh (LDFA) is governed by a ten-member board consisting of seven members appointed by the City Manager (subject to City Council approval), one member appointed by Lenawee County, and two members appointed by Tecumseh Public Schools. The LDFA was formed to promote economic growth in the City of Tecumseh, pursuant to Public Act 281 of 1986. The LDFA has no financial activity; as such, no financial statements or information is presented. The Economic Development Corporation of the City of Tecumseh (EDC) is governed by a nine-member board appointed by the City Manager (subject to City Council approval). The EDC was formed in December 2004 to strengthen and revitalize the City’s economy, pursuant to Public Act 338 of 1974, as amended. The EDC has no financial activity; as such, no financial statements or information is presented.

47

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds, a type of fiduciary fund, are unlike all other types of funds, reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the government considers revenues to be available if they are collected within 60 days of the end of the current fiscal period or within one year for reimbursement-based grants. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, claims and judgments, are recorded only when payment is due.

48

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Property taxes, franchise taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the government. The government reports the following major governmental funds: The general fund is the government’s primary operating fund. It accounts for all the financial resources of the general government, except those accounted for and reported in another fund. The Tecumseh Center for the Arts endowment fund (a permanent fund) accounts for monies held in trust by the City, the investment earnings from which may only be used for the operation and maintenance of the cultural facility. The Tecumseh Center for the Arts special revenue fund accounts for the activities of this facility; its primary revenue source is charges for services. The general obligation (G.O.) bond construction capital projects fund accounts for the use of the bondfunded construction projects. The government reports the following major proprietary funds: The wastewater fund accounts for the activities of the government’s sewage disposal and treatment system. The water fund accounts for the activities of the government’s water distribution and treatment Additionally, the government reports the following fund types: Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal and interest. Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. The permanent fund accounts for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the government’s programs. The internal service fund accounts for fleet and equipment management to other departments or agencies of the government on a cost reimbursement basis.

49

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements The pension and other employee benefits trust funds account for the activities of the employees’ retirement system and retiree health insurance plan. The agency funds account for assets held for other governments in an agency capacity, including tax collections, delinquent taxes receivable and other monies. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and other charges between the government’s water and sewer function and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the wastewater and water enterprise funds and of the government’s internal service fund are charges to customers for sales and services. The enterprise funds also recognize as operating revenues the portion of tap fees intended to recover the cost of connecting new customers to the system. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Restricted assets are assets that are subject to restrictions beyond the government’s control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government’s policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity Deposits and Investments The government’s cash and cash equivalents are considered to be cash on hand, demand deposits and shortterm investments with original maturities of three months or less from the date of acquisition. State statutes authorize the government to deposit in the accounts of federally insured banks, credit unions, and savings and loan associations, and to invest in obligations of the U.S. Treasury, certain commercial paper, repurchase agreements, bankers acceptances, and mutual funds composed of otherwise legal investments. The pension and other employee benefits trust funds are authorized by the State’s Pension Investment Act, as amended, to invest in common stocks, real estate, and various other investment instruments, subject to certain limitations. Investments are reported at fair value.

50

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Receivables and Payables Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfund loans) or “advances to/from other funds” (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as “due to/from other funds.” Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as “internal balances.” Prepaid Items Certain payments to vendors, if any, reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements using the consumption method. Restricted Assets Certain resources have been set aside, primarily in the wastewater and water funds, to finance future capital asset replacements pursuant to City ordinance. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. The government defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at estimated fair value at the date of donation. In accordance with the provisions of GASB Statement No. 34, the government has only capitalized infrastructure assets acquired or constructed since 1980. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the assets constructed. No such interest expense was incurred during the current fiscal year. Capital assets of the primary government are depreciated using the straight line method over the following estimated useful lives: Assets

Years

Land improvements Buildings Public domain infrastructure System infrastructure Vehicles Equipment

15-40 20-50 15-50 15-50 7-25 3-20

51

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Deferred Outflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of net position that applies to one or more future periods and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City reports deferred outflows of resources for change in expected and actual investment returns, assumptions, and benefits provided in its pension plans. Compensated Absences It is the government’s policy to permit employees to accumulate earned but unused vacation and sick pay benefits. All vacation pay and 50 percent of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, as a result of employee resignations or retirements. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts are amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred Inflows of Resources In addition to liabilities, the statement of financial position and governmental funds balance sheet will sometimes report a separate section for deferred inflows of resources.  This separate financial statement element, deferred inflows of resources, represents revenue that applies to one or more future periods and so will not be recognized as an inflow of resources until that time.  The governmental funds report unavailable revenues, which arise only under a modified accrual basis of accounting.  These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Fund Balances Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government’s highest level of decision-making authority, the City Council. A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City may report assigned fund balance for amounts that are constrained by the government’s intent to be used for specific purposes, but are neither restricted nor committed. Authority to make assignments is granted by the City Council; however, no such authorizations have yet been made. Unassigned fund balance is the residual classification for the general fund.

52

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements When the government incurs an expenditure for purposes for which various fund balance classifications can be used, it is the government’s policy to use restricted fund balance first, then committed, assigned and finally unassigned fund balance. 2. BUDGETARY INFORMATION Annual budgets are adopted on a basis consistent with generally accepted accounting principles for the general and special revenue funds. All annual appropriations lapse at fiscal year end. On or before the third Monday in April of each year, the City Manager must present the proposed budget to the government’s council for review. The Council holds public hearings and a final budget must be prepared and adopted no later than the second Monday in May. The appropriated budget is prepared by fund, function and department. The government’s department heads may make transfers of appropriations within a department. The general government function of the general fund is treated as a department for budgetary purposes and its budget is adopted at the object level. Transfers of appropriations between departments require the approval of the governing council. The legal level of budgetary control is the department level. Certain supplemental budgetary appropriations were made during the year, which were not considered material. 3. EXCESS OF EXPENDITURES OVER BUDGET PP.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amounts appropriated. During the year ended June 30, 2015, the government incurred expenditures in excess of the amounts appropriated at the legal level of budgetary control as follows: Final Budget General fund General government: Salaries and wages Fringe benefits Office expenditures Contractual services Parks and recreation Debt service - principal

$

Tecumseh Center for the Arts special revenue fund Civic auditorium Contractual services Nonmajor special revenue funds Major street fund: Street construction Routine maintenance Local street fund Routine maintenance Development services fund Community development

53

392,650 185,012 84,900 400,063 401,477 300,000

Actual

$

400,122 188,349 86,383 405,512 425,110 302,500

Variance

$

(7,472) (3,337) (1,483) (5,449) (23,633) (2,500)

23,945

24,501

(556)

10,500 304,075

13,515 330,331

(3,015) (26,256)

335,000

376,892

(41,892)

215,827

217,154

(1,327)

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 4. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposits and investments as of June 30, 2015: Primary Government Statement of Net Position Cash and cash equivalents Investments Restricted cash

$

Statement of Fiduciary Net Position Pension trust fund: Cash and cash equivalents Investments Agency funds - cash and cash equivalents

4,117,769 2,296,491 758,003

Component Units $

150,051 21,742,297 10,994

Total

$ 29,075,605

Deposits and investments Bank deposits (checking accounts and certificates of deposit) Investments in securities, mutual funds and similar vehicles: Treasurer's investment pool Pension trust fund Cash on hand Total

$

Totals

297,067 -

$

4,414,836 2,296,491 758,003

-

150,051 21,742,297 10,994

297,067

$ 29,372,672

$

2,076,159 5,552,766 21,742,297 1,450

$ 29,372,672

Bank Deposits and Treasurer’s Investment Pool Custodial Credit Risk - Deposits. Deposits are exposed to custodial credit risk if they are not covered by depository insurance. As of June 30, 2015, $276,403 of the City’s total bank balance of $2,052,473 (total book balance was $2,076,159) was exposed to custodial credit risk as it was uninsured and uncollateralized. In accordance with the City’s investment policy and State law, all deposits are uncollateralized and held in the City’s name. Due to the dollar amounts of cash deposits and the limits of FDIC insurance, the City believes it is impractical to insure all bank deposits. As a result, the City evaluates each financial institution and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. The City has no policy regarding custodial credit risk for deposits.

54

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Custodial Credit Risk - Investments. Following is a summary of the City’s investments as of June 30, 2015: Amount

Investment Type U.S. treasuries U.S. agencies Local government bonds Mutual funds Lenawee Community Foundation Money market accounts

$

519,407 436,531 42,279 325,436 1,153,151 3,075,962

Total

$

5,552,766

In accordance with the City’s investment policy, all investments (except amounts held by the Lenawee Community Foundation) are held in the name of the City and are evidenced by a safekeeping receipt confirmation, and thus not exposed to custodial credit risk. Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. In accordance with the City’s investment policy, the City will limit investments to the safest types of securities, pre-qualify financial institutions the City will do business with and diversify the investment portfolio, thus minimizing credit risk. As of June 30, 2015, Standard & Poor’s rated the City’s investments as follows: securities of U.S. agencies were rated AAA and local government bonds were rated AA. Ratings are not required for U.S. treasuries, mutual funds, or money market accounts; ratings are not available for investments with the Lenawee Community Foundation. Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government’s investment in a single issuer. The City’s investment policy requires diversification by security type and institution, but does not place a fixed percentage limit for any one issuer. At June 30, 2015, the City had no investments for a single issuer greater than 5% of its total investment portfolio and was therefore not concentrated. Interest Rate Risk. Interest rate risk is the risk that changes in market interest rates will adversely affect the fair value of investments. In accordance with the City’s investment policy, the City limits interest rate risk by purchasing a mix of short and longer term investments. This laddering approach also matches investment maturities to projected cash flow needs, thus minimizing interest rate risk and the need to liquidate securities at a loss.

55

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements As of June 30, 2015, maturities of the City’s fixed income securities were as follows: Investment Maturities (fair value by years) Fair Value

U.S. treasuries U.S. agencies Local government bonds Total

Due in 1-5 years

Due < 1 year

Due in 6-10 years

Due > 10 years

$

519,407 436,531 42,279

$

29,233 -

$

353,133 265,278 42,279

$

137,041 171,253 -

$

-

$

998,217

$

29,233

$

660,690

$

308,294

$

-

Pension and Other Employee Benefits Trust Funds Investments The pension and other employee benefits trust funds’ investments are primarily held in a broker administered trust fund. Following is a summary of the trust funds’ investments at fair value, as determined by quoted market price, as of June 30, 2015: Amount

Investment Type Domestic equities Foreign equities Corporate bonds U.S. treasuries U.S. agencies Fixed income mutual funds Money market accounts

$

13,953,134 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542

Total investments

$ 21,742,297

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The trust funds’ investment policy provides that investments in fixed income securities be limited to those rated BBB- or better at the time of purchase by a nationally recognized statistical rating organization, except for United States treasury securities which are explicitly guaranteed by the U.S. government and not considered to have credit risk. As of June 30, 2015, the investments in U.S. agencies were rated AAA by Standard & Poor’s. Investments in corporate bonds were rated by Moody's as follows: Amount

Rating AA1 A1 A2 A3 BAA1

$

124,361 92,094 190,275 353,183 275,517

$

1,035,430

Investments in money market accounts and fixed income mutual funds are not rated.

56

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty to a transaction, the trust funds will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. Although its investment policy does not specifically address custodial credit risk (and its investments are uninsured and unregistered), the trust funds’ investments are not exposed to custodial credit risk since the securities are held by the counterparty or its agent in the trust funds’ name. Short-term investments in money market funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book form. Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of the trust funds’ investment in a single issuer. The investment policy generally requires that no more than 8% to 10% of a particular portfolio may be invested in any one company or issuer, except for U.S. treasuries and agencies. At June 30, 2015, the investment portfolio was not concentrated. Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The trust funds’ investment policy does not discuss the maximum maturity for any single fixed income security or the weighted average portfolio maturity. As of June 30, 2015, maturities of the trust funds’ debt securities were as follows (maturity information is not available for the fixed income mututal funds): Investment Maturities (fair value by years) Fair Value

Corporate bonds U.S. treasuries U.S. agencies Total

Due in 1-5 years

Due < 1 year

Due in 6-10 years

Due > 10 years

$

1,035,430 289,472 1,849,896

$

-

$

127,615 406,036

$

622,582 125,546

$

285,233 289,472 1,318,314

$

3,174,798

$

-

$

533,651

$

748,128

$

1,893,019

5. RECEIVABLES Receivables in the governmental activities are 89.5 percent accounts receivable due from a local community foundation relative to a community center building construction/financing arrangement and 10.5 percent other receivables. Business-type activities receivables are composed entirely of amounts due from customers.

57

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital assets activity for the year ended June 30, 2015 was as follows: Primary government Beginning Balance Governmental Activities Capital assets, not being depreciated Land

$

Capital assets, being depreciated: Land improvements Buildings Vehicles Equipment Infrastructure

4,527,561

Additions

$

Ending Balance

Disposals

-

$

-

$

4,527,561

1,237,818 9,105,115 1,099,318 3,905,687 12,713,502 28,061,440

147,763 29,243 42,977 292,545 512,528

(5,376) (5,376)

1,237,818 9,252,878 1,128,561 3,943,288 13,006,047 28,568,592

(335,063) (4,401,650) (727,945) (3,268,804) (3,258,758) (11,992,220)

(31,333) (221,279) (47,826) (78,041) (260,121) (638,600)

5,376 5,376

(366,396) (4,622,929) (775,771) (3,341,469) (3,518,879) (12,625,444)

Total capital assets being depreciated, net

16,069,220

(126,072)

-

15,943,148

Governmental activities capital assets, net

$ 20,596,781

$

(126,072) $

-

$ 20,470,709

$

$

-

$

Less accumulated depreciation for: Land improvements Buildings Vehicles Equipment Infrastructure

Business-type Activities Capital assets, being depreciated: Buildings and systems Equipment

Less accumulated depreciation for: Buildings and systems Equipment Business-type activities capital assets, net

19,615,737 345,525 19,961,262

(8,463,169) (263,038) (8,726,207) $ 11,235,055

58

961,431 961,431

$

(434,920) (14,202) (449,122) $

512,309

$

-

20,577,168 345,525 20,922,693

(8,898,089) (277,240) (9,175,329) $ 11,747,364

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government Public safety Public works, including depreciation of general infrastructure assets Parks and recreation Cultural (civic auditorium) Community development Capital assets held by the government's internal service funds are charged to the various functions based on their usage of the assets

Depreciation of business-type activities by function Wastewater Water

$

16,644 143,251 267,069 105,262 39,734 28,002 38,638

$

638,600

$

368,568 80,554

$

449,122

Discretely presented component units The DDA owns land that was originally purchased for $56,000. There were no increases or decreases to the Authority’s capital assets during the year. The EDC formerly held $2.0 million of land that was acquired by the City during fiscal 2004-05 and contributed at that time to the EDC by the City. The City has and continues to carry the debt obligation for the original land acquisition (see Long-term debt note). During fiscal 2010, the EDC contributed the land back to the City pursuant to a condition of a grant agreement to develop the property into an industrial park. 7. PAYABLES Payables in the governmental activities are 90.6 percent vendors and 9.4 percent deposits. Business-type activities payables are composed entirely of amounts due to vendors. 8. INTERFUND RECEIVABLES AND PAYABLES AND TRANSFERS Amounts reported as interfund payables are funds with negative cash pool balances, which are equal to the interfund receivable reported in the general fund.

59

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements For the year then ended, interfund transfers consisted of the following: Transfers In Tecumseh Center for the Arts Fund

General Fund

Transfers Out General fund Civic endowment fund Nonmajor governmental funds

NMGF

Total

$

5,000

$

80,000 86,672 -

$

425,100 25,000

$

505,100 86,672 30,000

$

5,000

$

166,672

$

450,100

$

621,772

NMGF = nonmajor governmental funds

Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 9. LONG-TERM DEBT General obligation bonds. The government issues general obligation bonds to provide for the acquisition and construction of major capital facilities. General obligation bonds have been issued for both governmental and business-type activities as well as for a component unit. The original amount of general obligation bonds issued in prior years for the items listed below was $1,565,000 for the governmental activities, $1,897,104 for the business-type activities and $845,000 for the component unit. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 20-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Purpose

Interest Rates

Governmental activities Public works Building and site development General government

3.00% - 4.25% 3.00% - 4.25% 1.55%

Total governmental activities Business-type activities Wastewater Wastewater

2.50% 1.63%

Total business-type activities

60

Amount

$

280,000 1,050,000 2,250,000

$

3,580,000

$

282,826 1,307,104

$

1,589,930

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Component unit - Downtown Development AuthorityGeneral government

1.92%

$

630,000

Annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Year Ended June 30, $ 2016 2017 2018 2019 2020 2021-2025 2026-2030 2031-2034 $

Principal 490,000 500,000 510,000 515,000 525,000 540,000 500,000 3,580,000

Business-type Activities

Interest $

$

92,342 83,355 74,175 64,780 55,268 173,609 54,801 598,329

Principal $

$

100,000 100,000 100,000 105,000 105,000 565,000 454,930 60,000 1,589,930

Component Unit

Interest $

$

42,481 39,556 36,631 33,706 30,618 105,317 21,655 309,964

Principal $

$

85,000 95,000 100,000 110,000 115,000 125,000 630,000

Interest $

$

12,096 10,464 8,640 6,720 4,608 2,400 44,928

Purchase agreements. The government entered into a purchase agreement for the acquisition of real property, which is interest only through July 1, 2023 at which time a balloon principal balance is due. Early principal payments on the agreement may be made without penalty. Such an early payment in the amount of $63,019 was made during fiscal 2006, $1,035,000 during fiscal 2010, $35,000 during fiscal 2012, $100,000 during fiscal 2013 and fiscal 2014; the outstanding principal balance was $716,981 as of June 30, 2015. The original amount of the outstanding obligation was $2,150,000 and carries interest at 2.9 percent. Annual debt service requirements to maturity for this purchase agreement are as follows: Year Ended June 30, 2016 2017 2018 2019 2020

Principal

Interest

$

716,981

$

30,931 31,016 30,931 30,931 15,338

$

716,981

$

139,147

61

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements The government entered into another purchase agreement during fiscal 2013 relative to the acquisition of a new community center. The repayment agreement to a bank provides for ten annual payments of $200,000 each plus interest at 2.9 percent. The original amount borrowed was $2,000,000 and the amount outstanding at June 30, 2015 was $1,600,000. As part of this transaction, the Lenawee County Community Foundation agreed to reimburse the City for the annual debt principal and interest payments; accordingly, a receivable in the amount of the outstanding principal and accrued interest has been recorded. Annual debt service requirements to maturity for this purchase agreement are as follows: Year Ended June 30, 2016 2017 2018 2019 2020 2021-2023

Principal

Interest

$

200,000 200,000 200,000 200,000 200,000 600,000

$

47,044 41,277 35,283 29,403 23,522 35,332

$

1,600,000

$

211,861

Changes in Long-term Debt. Long-term liability activity for the year ended June 30, Beginning Balance Primary government Governmental activities: General obligation bonds $ Unamortized bond discount Purchase agreements Compensated absences

Business-type activities: General obligation bonds Compensated absences

Component unit General obligation bonds Unamortized loss on refunding

Additions

Ending Balance

Reductions

Due Within One Year

1,385,000 (7,708) 2,616,981 494,342

$

2,250,000 295,953

$

55,000 $ (514) 300,000 295,589

3,580,000 $ (7,194) 2,316,981 494,706

490,000 200,000 295,807

$

4,488,615

$

2,545,953

$

650,075

$

6,384,493

$

985,807

$

1,397,104 131,876

$

282,826 41,116

$

90,000 62,157

$

1,589,930 110,835

$

100,000 42,093

$

1,528,980

$

323,942

$

152,157

$

1,700,765

$

142,093

$

710,000

$

-

$

80,000

$

630,000

$

85,000

(11,403) $

698,597

(1,629)

$

-

$

78,371

(9,774) $

620,226

$

85,000

For the governmental activities, compensated absences, net pension obligations and net postemployment benefit obligations, if any, are generally liquidated by the general fund.

62

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 10. SEGMENT INFORMATION - ENTERPRISE FUNDS The government has issued debt to finance certain improvements to its wastewater and water systems. Because these enterprise funds account entirely for these respective activities, they are segments and are reported as major funds in the fund financial statements. Accordingly, segment disclosures herein are not required. 11. RESTRICTED ASSETS The balances of the restricted asset accounts (which is entirely cash) are as follows: Governmental Activities Restricted for: Civic auditorium contribution Wastewater fund - capital replacement Water fund - capital replacement Total restricted assets

$

95

Business-type Activities Wastewater

$

$

95

Water

-

$

233,862 $

233,862

Total

-

$

524,046 $

524,046

233,862 524,046

$

757,908

12. ENDOWMENTS Tecumseh Center for the Arts Endowment Permanent Trust Fund. For the year ended June 30, 2015, the net investment earnings of donor-restricted endowments were $29,076 ($22,801 of interest earnings and $2,934 of appreciation on fair value of investments). Under the terms of the endowment, the City is authorized to spend the interest earnings on a calendar year basis for the benefit of the civic auditorium. However, any such interest earnings not expended during a particular fiscal year must be added to the nonexpendable principal or endowment balance. Accordingly, no amounts are available for authorized expenditure at yearend. Cemetery Perpetual Care Permanent Trust Fund. For the year ended June 30, 2015, the net investment earnings of perpetual care endowments were $10,975 ($13,572 of interest earnings and $2,597 of depreciation on fair value of investments). Under local ordinances and State statutes, the City is authorized based on a total-return policy to spend the net appreciation on the maintenance of the community cemetery. At June 30, 2015, accumulated available net appreciation of $178,316 is reported in restricted fund balance (whereas $574,648 is reported in nonexpendable fund balance). 13. RISK MANAGEMENT The government is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the year ended June 30, 2015, the government carried insurance through various commercial carriers, including the Michigan Municipal League, to cover all risks of losses. The government has had no settled claims resulting from these risks that exceeded its commercial coverage in any of the past three fiscal years.

63

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 14. PROPERTY TAXES The government’s property taxes are levied each July 1 on the taxable valuation of property located in the City as of the preceding December 31, the lien date. Property taxes are payable without penalty and interest through August 31; as of March 1 of the succeeding year, unpaid real property taxes are sold to and collected by Lenawee County. Assessed values as established annually by the government, and subject to acceptance by the County, are equalized by the State at an estimated 50% of current market value. Real and personal property in the City for the 2014 levy were assessed and equalized at $234,024,951 (not including properties subject to Industrial Facilities Tax exemption), representing roughly 50% of estimated current market value. The government’s general operating tax rate for fiscal year 2013-14 was 14.3966 mills. Property taxes for the DDA are derived from a tax increment financing agreement between the DDA and other related taxing districts. Under this arrangement, the DDA receives those property taxes levied on the increment of current taxable valuations (determined as of the preceding December 31, the lien date) over base year assessed valuations on certain property located in the City of Tecumseh, which are within the DDA district. Property taxes are recognized in the fiscal year in which they are levied. 15. DEFINED BENEFIT PENSION PLAN Plan administration. The City has a single-employer defined benefit contributory pension plan, the City of Tecumseh Employees’ Retirement System (the “Plan”), which provides retirement, death and disability benefits covering all of the City’s full-time employees. Plan amendments are under the authority of the City of Tecumseh Ordinances. Changes in required contributions are subject to the approval of the City of Tecumseh Employees’ Retirement System Board and the City Council. The City of Tecumseh is the administrator of the Plan. Administrative costs of the Plan are financed through investment earnings. The Plan is included as a pension trust fund in the City’s financial statements; a stand-alone financial report of the Plan has not been issued. The Plan’s financial statements are prepared using the accrual basis of accounting. Member contributions are recognized in the period in which they are due. The City’s contributions are recognized when due and the employer has made a formal commitment to provide them. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Investments are reported at fair value which is determined using selected bases as follows: short-term investments are reported at cost, which approximates fair value; securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates; investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the City Council, with the assistance of a valuation service; and cash deposits are reported at carrying amounts which reasonably approximates fair value. Management of the System is vested in the Retirement System Board of Trustees, which consists of five members, two are elected (with no more than one from any particular City department), two are city council members appointed by the City Council, and one is a citizen appointed by the City Council who is a resident and taxpayer of the city and who is neither a member, retirant or beneficiary of the Plan.

64

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Plan membership. At June 30, 2015, the date of the latest actuarial valuation, plan membership consisted of the following: Retirees and beneficiaries receiving benefits Terminated plan members entitled to but not yet receiving benefits Active plan members

43 5 42 90

Benefits provided. The System provides retirement, disability, and death benefits. Retirement benefits for general plan members are calculated as 2.5% of the member’s final three-year average salary times the member’s years of service up to a maximum of 80%. Benefits for police and fire members are calculated as 2.75% of the member’s final three-year average salary times the member’s years of service up to a maximum of 75%. Retirement benefits for members hired after July 1, 2011, are calculated as 1.5% of the final threeyear average salary using base salary only. General plan members may retire with 30 years of service at any age or age 55 with 5 or more years of service. Police and fire members may retire after 25 years of service regardless of age or at age 55 with 5 or more years of service. Members hired after July 1, 2011, may retire at age 60 with 6 or more years of service. All plan members are eligible for non-duty disability benefits after 5 years of service and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner as retirement benefits but are payable immediately without an actuarial reduction. A plan member who leaves City service may withdraw his or her contributions plus any accumulated interest. For members hired prior to July 1, 2011, each July 1 (starting July 1, 1994), all pensioners who have been receiving pension benefits for at least one year will receive and increase. The increase will be equal to the increase in the consumer price index (but not more than 2.8%) multiplied by the member's current benefit. Members hired after July 1, 2011, receive no cost of living adjustments. Contributions. Eligible members are required to contribute 5.5% to 6.73% of their annual compensation to the Plan with the City contributing such additional amounts, as necessary, to provide assets sufficient to pay for member benefits. The City’s contribution to the Plan for the year ended June 30, 2015, represents 22.75% of the annual covered payroll; whereas the contribution of employees hired after July 1, 2011 (and therefore in the Hybrid Plan) was 7.78%. Net pension liability. The City's net pension liability was measured as of June 30, 2015, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of June 30, 2015. Actuarial assumptions. The total pension liability was determined by an actuarial valuation as of June 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation Salary increases Investment rate of return Mortality rates

3.75 percent 3.75-7.95 percent, including inflation 7.5 percent, net of pension plan investment expense, including inflation RP 2014 Healthy Annuitant Mortality Table

The actuarial assumptions used in the June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2008 through June 30, 2013.

65

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Investment allocation policy. The System’s policy in regard to the allocation of invested assets is established and may be amended by the Retirement System Board of Trustees. The policy pursues an investment strategy that protects the financial health of the System and reduces risk through the prudent diversification of the portfolio across a broad selection of distinct asset classes. System assets will be invested in the broad investment categories and asset classes to achieve the allocation targets below. Recognizing that asset returns may vary, causing fluctuations in the relative dollar value levels of assets within classes, the System may not maintain strict adherence to the targets in the short-term, but may allow the values to fluctuate within these ranges. Over the long-term, the System will strive to adhere to the given targets as financially practicable and move toward target allocations in a prudent manner consistent with its fiduciary duty. The adopted asset allocation policy as of June 30, 2015, is presented in the table below. Expected long-term rate of return. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocation as of June 30, 2015 (see the discussion of the System's investment allocation policy above) are summarized in the following table:

Target Allocation

Long-term Expected Real Rate of Return

Domestic equities International equities Fixed income

55% 10% 35%

9.7% 10.1% 4.3%

Total investments

100%

Asset Class

Money-weighted rate of return. For the year ended June 30, 2015, the annual money-weighted rate of return on plan investments, net of investment expenses, was 5.3 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Discount rate. The discount rate used to measure the total pension liability was 7.5 percent. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows:

66

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements

Balances at June 30, 2014

Total Pension Liability (a)

Plan Fiduciary Net Position (b)

$

$

Changes for the year: Service cost Interest Differences between expected and actual experience Changes in assumptions Employer contributions Employee contributions Net investment income Benefit payments, including refunds of employee contributions Administrative expense Net changes

22,532,061

19,916,328

$

$

-

442,570 1,665,105

Balances at June 30, 2015

Net Pension Liability (a) - (b) 2,615,733

442,570 1,665,105

(242,099) 2,066,218 -

504,197 122,259 1,046,530

(242,099) 2,066,218 (504,197) (122,259) (1,046,530)

(1,103,892) 2,827,902

(1,103,892) (33,400) 535,694

33,400 2,292,208

25,359,963

$

20,452,022

$

4,907,941

Sensitivity of the net pension liability to changes in the discount rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.5 percent, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.5 percent) or 1-percentage-point higher (8.5 percent) than the current rate: 1% Decrease (6.5%) City's net pension liability

$

8,206,885

Current Discount (7.5%) $

4,907,941

1% Increase (8.5%) $

2,148,837

Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position is shown in Note 18 to the financial statements. Pension expense and deferred outflows of resources related to pensions. For the year ended June 30, 2015, the City recognized pension expense of $2,142,469. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows related to pensions from the following sources: Deferred Outflows of Resources Difference between expected and actual experience Net difference between projected and actual earnings on pension plan investments

$

Total

$

67

Deferred Outflows of Inflows -

$

-

342,430 342,430

192,691

$

192,691

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Amounts reported as deferred outflows of resources related to pension will be recognized in pension expense as follows:

Year Ended June 30, 2016 2017 2018 2019

Deferred Outflows Amortization

Deferred Inflows Amortization

$

85,608 85,608 85,608 85,606

$

49,408 49,408 49,408 44,467

$

342,430

$

192,691

16. POSTEMPLOYMENT HEALTH CARE BENEFITS PLAN The City provides postemployment health care benefits to certain retirees and their beneficiaries, which are advance-funded on an actuarially determined basis. The Plan is a single-employer defined benefit health care plan administered by the City. The City is the plan administrator; administrative costs are financed through investment earnings. The Plan is included as a pension and other employee benefits trust fund in the City’s financial statements; a stand-alone financial report of the Plan has not been issued. Plan membership is the same as for the pension plan as described above. Plan amendments are under the authority of the City of Tecumseh Ordinances. Changes in required contributions are subject to the approval of the City of Tecumseh Employees’ Retirement System Board and the City Council. The plan’s financial statements are prepared using the accrual basis of accounting. Plan contributions are recognized in the period in which the contributions are due and the employer has made a formal commitment to provide the contribution. Benefits and refunds are recognized when due and payable in accordance with the terms of the plan. Plan investments, if any, are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price. Investments for which market quotations are not readily available are valued at their fair values as determined by the portfolio manager under the direction of the City. The City has no obligation to make contributions in advance of when the insurance premiums or benefits are due for payment; in other words, the plan may be financed on a pay-as-you-go basis. Plan participants are not required to contribute to the plan. The City’s contribution to the Plan for the year ended June 30, 2015, represents 2.18% of the annual covered payroll.

68

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements For the year ended June 30, 2015, the City estimated the cost of providing retiree healthcare benefits through an actuarial valuation as of June 30, 2013. Such a valuation computes an annual required contribution (ARC) that represents a level of funding that, if paid on an ongoing basis, is projected to cover the normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. For fiscal 2015, the components of the City’s annual OPEB (other postemployment benefit) cost for the year, the amount actually contributed to the plan (including pay-as-you-go amounts), and changes in the City’s net OPEB obligation to the plan are as follows: Annual required contribution Contribution made Change in net OPEB obligation Net OPEB obligation, beginning of year

$

Net OPEB obligation, end of year

$

48,747 (48,747) -

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation as of June 30, 2015 and the two preceding years, were as follows:

Year Ended June 30, 2013 2014 2015

Annual OPEB Cost $

43,983 62,077 48,747

Percentage of Annual OPEB Cost Contributed 100% 100% 100%

Net OPEB Obligation $

-

The funded status of the Plan as of June 30, 2015, the most recent actuarial valuation date, is as follows: Actuarial accrued liability (AAL) Actuarial value of assets

(1) (2)

$

1,385,489 1,379,117

Unfunded AAL (UAAL)

(3)

$

6,372

(1) - (2)

Funded ratio

(4)

99.5%

(2) / (1)

Covered payroll

(5)

UAAL as % of covered payroll

(6)

69

$

1,953,711 0.3%

(3) / (5)

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information that shows whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. Significant methods and assumptions were as follows: Actuarial valuation date Actuarial cost method Amortization method contributions

6/30/15 Entry age Level percentage of payroll or level of dollar depending on division; open 24 years; closed basis 7-year smoothing

Remaining amortization period Asset valuation method Actuarial assumptions: Investment rate of return Projected salary increases Healthcare inflation rate Inflation rate

7.50% 3.75% 5.50% 3.75%

70

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements 17. NET POSITION INVESTED IN CAPITAL ASSETS Following is a summary of net position invested in capital assets as presented in the government-wide statement of net assets:

Capital assets: Capital assets not being depreciated Capital assets being depreciated, net

Governmental Activities

Business-type Activities

$

$

Long-term liabilities: Due within one year Due in more than one year

Less compensated absences

Invested in capital assets

$

4,527,561 15,943,148 20,470,709

11,747,364 11,747,364

985,807 5,398,686 6,384,493

133,778 1,566,987 1,700,765

(158,007) 6,226,486

(110,835) 1,589,930

14,244,223

$

10,157,434

18. FINANCIAL STATEMENTS OF INDIVIDUAL PENSION AND EMPLOYEE BENEFIT PLANS Stand alone financial reports have not been issued for the plans. GASB Statement 25 and 43 required supplementary information is presented after the footnotes section. Financial statements for the individual pension and employee benefit plans are as follows: Plan Net Position

Assets Cash and cash equivalents Investments, at fair value: Domestic equities Foreign equities Corporate bonds U.S. treasuries U.S. agencies Fixed income mutual funds Money market accounts Accrued interest receivable

Employees' Retirement System Pension Trust Fund

Other Postemployment Benefits Trust Fund

$

$

150,051 12,500,075 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542 12,732

Net position restricted for pensions

$

71

20,452,021

-

Total $

1,453,059 $

1,453,059

150,051 13,953,134 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542 12,732

$

21,905,080

CITY OF TECUMSEH, MICHIGAN Notes to Financial Statements Changes in Plan Net Position

Additions Investment income: Net appreciation (depreciation) in fair value of investments Interest and dividends Less investment management fees

Employees' Retirement System Pension Trust Fund

Other Postemployment Benefits Trust Fund

$

$

Net investment income (loss)

681,741 507,504 (151,154) 1,038,091

(19,808) (14,746) 4,392

Total

$

(30,162)

661,933 492,758 (146,762) 1,007,929

Contributions: City of Tecumseh Participants

512,575 122,260

48,747 -

561,322 122,260

Total contributions

634,835

48,747

683,582

Total additions

1,672,926

18,585

1,691,511

Deductions Participant benefits Administrative expenses

1,103,892 33,341

42,847 -

1,146,739 33,341

Total deductions

1,137,233

42,847

1,180,080

Change in net position

535,693

Net position, beginning of year

(24,262)

19,916,328

Net position, end of year

$

20,452,021

511,431

1,477,321 $

1,453,059

21,393,649 $

21,905,080

19. RESTATEMENT The City adopted the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the current year. As a result of this change, beginning net position of the governmental activities, the business-type activities, the wastewater enterprise fund, and the water enterprise fund decreased by $2,144,901, $470,832, $313,888 and $156,944, respectively. 

72

REQUIRED SUPPLEMENTARY INFORMATION

73

CITY OF TECUMSEH, MICHIGAN Required Supplementary Information Employees Retirement System Schedule of Investment Returns

Fiscal Year Ended

Annual MoneyWeighted Rate of Return, Net of Investment Expense

6/30/2014 6/30/2015

18.40% 5.30%

Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.

74

CITY OF TECUMSEH, MICHIGAN Required Supplementary Information Employees Retirement System Schedule of Changes in the City's Net Pension Liability and Related Ratios 2014 Change in total pension liability Service cost Interest Changes of benefit terms Differences between expected and actual experence Changes of assumptions Benefit payments, including refunds of member contributions Net change in total pension liability

$

460,322 1,616,448 -

2015 $

442,570 1,665,105 -

(358,312) -

(242,099) 2,066,218

(1,017,739) 700,719

(1,103,892) 2,827,902

Total pension liability, beginning

21,831,342

22,532,061

Total pension liability, ending (a)

22,532,061

25,359,963

Change in plan fiduciary net position Contributions - employer Contributions - member Net investment income Benefit payments, including refunds of member contributions Administrative expense Other Net change in plan fiduciary net positon

551,761 132,084 2,852,773

504,197 122,259 1,046,530

(1,017,739) (33,450) 2,485,429

(1,103,892) (33,400) 535,694

Plan fiduciary net position, beginning

17,430,899

19,916,328

Plan fiduciary net position, ending (b)

19,916,328

20,452,022

City's net pension liability, ending (a)-(b)

$

Plan fiduciary net position as a percentage of the total pension liability

2,615,733

$

4,907,941

88.39%

Covered-employee payroll

2,400,911

City's net pension liability as a percentage of covered payroll

80.65% 2,326,265

108.95%

Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.

75

210.98%

CITY OF TECUMSEH, MICHIGAN Required Supplementary Information Employees Retirement System Schedule of City Contributions

Fiscal Year Ended 6/30/2013 6/30/2014 6/30/2015

Contributions in Relation to the Actuarially Determined Contribution

Actuarially Determined Contribution $

564,664 613,838 553,186

$

564,664 613,838 553,186

Contribution Deficiency (Excess) $

-

Covered Payroll $

Contributions as a Percentage of Covered Payroll

2,346,597 2,400,911 2,326,265

24.1% 25.6% 23.8%

Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, ten years of data will be presented. Notes to Schedule of Contributions Valuation date Notes Other information

June 30, 2015 Actuarially determined contribution rates are calculated as of June 30 that is 12 months prior to the beginning of the fiscal year for which the contributions are reported. There were no benefit changes during the year.

Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll, closed Remaining amortization period 23 years Asset valuation method 5-year smoothed market Inflation 3.75% Salary increases 3.75 - 7.95% including inflation Investment rate of return 7.5% net of pension plan investment expense, including inflation Mortality rates RP 2014 Healthy Annuitant Mortality Table

76

CITY OF TECUMSEH, MICHIGAN GASB Statement 45 Required Supplementary Information

Other Postemployment Benefits Plan

Schedule of Funding Progress

Actuarial Valuation Date June 30, 2008 2009 2010 2011 2012 2013 2014 2015

Actuarial Accrued Liability (AAL) Entry Age (b)

Actuarial Value of Assets (a) $

738,480 407,494 504,431 968,683 831,649 996,030 1,373,932 1,379,117

$

1,066,264 1,069,685 1,114,486 1,233,156 1,381,158 1,367,524 1,379,720 1,385,489

Unfunded AAL (UAAL) (b-a) $

327,784 662,191 610,055 264,473 549,509 371,494 5,788 6,372

Funded Ratio (a / b) 69.3% 38.1% 45.3% 78.6% 60.2% 72.8% 99.6% 99.5%

Schedule of Employer Contributions

Year Ended June 30, 2008 2009 2010 2011 2012 2013 2014 2015

Annual Required Contributions $

62,891 56,990 71,867 64,010 53,690 43,983 62,077 48,747

77

Percentage Contributed 100% 100% 100% 100% 100% 100% 100% 100%

Covered Payroll (c) $

2,784,261 2,862,258 2,607,673 2,314,751 2,299,116 2,267,474 2,126,759 1,953,711

UAAL as a Percentage of Covered Payroll ((b-a) / c) 11.8% 23.1% 23.4% 11.4% 23.9% 16.4% 0.3% 0.3%

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78

COMBINING AND INDIVIDUAL FUND STATEMENTS AND SCHEDULES

79

CITY OF TECUMSEH, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2015

Special Revenue Funds

Major Street Assets Cash and cash equivalents Investments Accounts receivable Accrued interest receivable

Local Street

Development Services

Brownfield Redevelopment

PA-48

$

99,851 -

$

70,257 -

$

58,963 1,120 -

$

(20,329) 23,239 -

$

8,769 -

Total assets

$

99,851

$

70,257

$

60,083

$

2,910

$

8,769

Liabilities Accounts payable / accrued liabilities

$

6,572

$

6,607

$

29,144

$

-

$

6,348

Fund Balances Nonspendable - cemetery perpetual care Restricted Committed

93,279 -

63,650 -

30,939 -

2,910 -

2,421 -

Total fund balances

93,279

63,650

30,939

2,910

2,421

Total liabilities and fund balances

$

99,851

$

80

70,257

$

60,083

$

2,910

$

8,769

Special Revenue Funds Economic Development Project

Movies in the Park

Debt Service Funds

Permanent Fund

Capital Projects Funds

MTF Bonds

Capital 2010 BABS Improvements

NonMotorized Trail

Community Center

Cemetery Care

Total Nonmajor Governmental Funds

$

1,987 -

$

28,587 -

$

1,789 -

$

81 -

$

75,350 16,775 -

$

10 -

$

10 -

$

93,520 657,139 2,305

$

418,845 657,139 41,134 2,305

$

1,987

$

28,587

$

1,789

$

81

$

92,125

$

10

$

10

$ 752,964

$

1,119,423

$

-

$

18,128

$

-

$

-

$

92,071

$

-

$

-

$

$

158,870

$

-

1,987 -

10,459 -

1,789

81 -

54

10

10

574,648 178,316 -

574,648 384,042 1,863

1,987

10,459

1,789

81

54

10

10

752,964

960,553

10

$ 752,964

1,987

$

28,587

$

1,789

$

81

$

92,125

81

$

10

$

$

1,119,423

CITY OF TECUMSEH, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30, 2015

Special Revenue Funds

Major Street Revenues Taxes and special assessments Licenses and permits Intergovernmental - state Charges for services Investment earnings Other revenues

$

Total revenues Expenditures General government Public safety Public works Community development Debt service: Principal Interest and fiscal charges Total expenditures Revenues over (under) expenditures

Local Street

480,990 55 -

$

Development Services

178,189 51 -

$

95,168 51,436 14 -

Brownfield Redevelopment

PA-48 $

23,239 5 -

$

7,854 8 -

481,045

178,240

146,618

23,244

7,862

468,685 -

450,341 -

217,154

-

6,348

-

-

-

-

-

468,685

450,341

217,154

-

6,348

12,360

(272,101)

(70,536)

23,244

1,514

Other financing sources (uses) Transfers in Transfers out

-

175,000 -

90,000 -

(25,000)

-

Total other financing sources (uses)

-

175,000

90,000

(25,000)

1,514

Net changes in fund balances

12,360

(97,101)

19,464

(1,756)

Fund balances, beginning of year

80,919

160,751

11,475

4,666

Fund balances, end of year

$

93,279

$

82

63,650

$

30,939

$

2,910

907 $

2,421

Special Revenue Funds Economic Development Project $

$

353,000 33 19,981

Debt Service Funds

Movies in the Park $

14,650 6 16,236

MTF Bonds

Capital 2010 BABS Improvements

NonMotorized Trail

$

$

$

-

Permanent Fund

Capital Projects Funds

-

$

81,575 7 13,300

-

Community Center

Cemetery Care

Total Nonmajor Governmental Funds

$

$

$

-

23,398 10,975 -

7,854 95,168 1,131,643 74,834 11,154 49,517

373,014

30,892

-

-

94,882

-

-

34,373

1,370,170

371,027

20,433

-

-

184,085 2,019

-

-

1,771 -

1,771 184,085 919,026 616,981

-

-

35,000 12,069

17,500 47,395

-

-

-

-

52,500 59,464

371,027

20,433

47,069

64,895

186,104

-

-

1,771

1,833,827

1,987

10,459

(47,069)

(64,895)

(91,222)

-

-

32,602

(463,657)

-

-

47,000 -

63,100 -

75,000 -

-

-

(5,000)

450,100 (30,000)

-

-

47,000

63,100

75,000

-

-

(5,000)

420,100

1,987

10,459

(1,795)

(16,222)

-

-

27,602

(43,557)

-

-

1,876

16,276

10

10

725,362

10

$ 752,964

1,987

$

10,459

(69) 1,858 $

1,789

$

81

$

54

83

$

10

$

1,004,110 $

960,553

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Major Street and Trunkline Fund For the Year Ended June 30, 2015

Original Budget Revenues Intergovernmental - state Investment earnings

$

Final Budget

452,584 300

$

Actual Over (Under) Final Budget

Actual

476,184 300

$

480,990 55

$

4,806 (245)

Total revenues

452,884

476,484

481,045

4,561

Expenditures Public works: Street construction Routine maintenance Traffic services Winter maintenance Administration Trunkline maintenance

10,500 316,000 11,100 43,728 45,000 26,800

10,500 304,075 15,600 46,170 45,000 24,300

13,515 330,331 14,012 46,170 42,365 22,292

3,015 26,256 (1,588) (2,635) (2,008)

Total expenditures

453,128

445,645

468,685

23,040

30,839

12,360

(18,479)

Revenues over (under) expenditures

(244)

Other financing sources Transfers in

30,000

-

-

Net changes in fund balance

29,756

30,839

12,360

Fund balance, beginning of year

80,919

80,919

80,919

Fund balance, end of year

$

110,675

84

$

111,758

$

93,279

(18,479) $

(18,479)

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Local Street Fund For the Year Ended June 30, 2015

Original Budget Revenues Intergovernmental - state Investment earnings

$

Final Budget

153,077 150

$

178,861 50

Actual $

178,189 51

Actual Over (Under) Final Budget $

(672) 1

Total revenues

153,227

178,911

178,240

(671)

Expenditures Public works: Street construction Routine maintenance Winter maintenance Administration

104,000 331,000 42,600 20,000

14,000 335,000 44,685 17,000

13,643 376,892 44,685 15,121

(357) 41,892 (1,879)

Total expenditures

497,600

410,685

450,341

39,656

(344,373)

(231,774)

(272,101)

(40,327)

425,000

175,000

175,000

80,627

(56,774)

(97,101)

160,751

160,751

160,751

Revenues (under) expenditures Other financing sources Transfers in Net changes in fund balance Fund balance, beginning of year Fund balance, end of year

$

241,378

85

$

103,977

$

63,650

(40,327) $

(40,327)

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Development Services Fund For the Year Ended June 30, 2015

Original Budget Revenues Licenses and permits Charges for services Investment earnings

$

Final Budget

90,000 26,500 500

$

95,000 27,740 100

Actual $

95,168 51,436 14

Actual Over (Under) Final Budget $

168 23,696 (86)

Total revenues

117,000

122,840

146,618

23,778

Expenditures Community development

172,126

215,827

217,154

1,327

Revenues over (under) expenditures

(55,126)

(92,987)

(70,536)

22,451

57,000

90,000

90,000

-

1,874

(2,987)

19,464

22,451

11,475

11,475

11,475

-

Other financing sources Transfers in Net changes in fund balance Fund balance, beginning of year Fund balance, end of year

$

13,349

86

$

8,488

$

30,939

$

22,451

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual PA-48 Fund For the Year Ended June 30, 2015

Original Budget Revenues Intergovernmental Investment earnings

$

Total revenues

Final Budget

26,000 100

$

26,000 100

Actual $

23,239 5

26,100

26,100

23,244

(25,000)

(25,000)

(25,000)

Net changes in fund balance

1,100

1,100

(1,756)

Fund balance, beginning of year

4,666

4,666

4,666

Other financing uses Transfers out

Fund balance, end of year

$

5,766

87

$

5,766

$

2,910

Actual Over (Under) Final Budget $

(2,761) (95) (2,856)

(2,856) $

(2,856)

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Brownfield Redevelopment Authority For the Year Ended June 30, 2015

Original Budget Revenues Taxes and special assessments Investment earnings

$

Final Budget

17,164 -

$

Actual Over (Under) Final Budget

Actual

17,164 -

$

7,854 8

$

(9,310) 8

Total revenues

17,164

17,164

7,862

(9,302)

Expenditures Community development

17,164

17,164

6,348

(10,816)

-

-

1,514

1,514

907

907

907

-

Net changes in fund balance Fund balance, beginning of year Fund balance, end of year

$

907

88

$

907

$

2,421

$

1,514

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Economic Development Project Fund For the Year Ended June 30, 2015

Original Budget Revenues Intergovernmental - state Investment earnings Other revenues

$

Final Budget

370,000 20,000

$

Actual Over (Under) Final Budget

Actual

370,000 20,000

$

353,000 33 19,981

$

(17,000) 33 (19)

Total revenues

390,000

390,000

373,014

(16,986)

Expenditures Community development

390,000

390,000

371,027

(18,973)

Net changes in fund balance

-

-

1,987

1,987

Fund balance, beginning of year

-

-

-

-

Fund balance, end of year

$

-

89

$

-

$

1,987

$

1,987

CITY OF TECUMSEH, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balance Budget and Actual Movies in the Park Fund For the Year Ended June 30, 2015

Original Budget Revenues Intergovernmental - state Investment earnings Other revenues

$

Final Budget -

$

Actual Over (Under) Final Budget

Actual

14,650 14,650

$

14,650 6 16,236

$

6 1,586

Total revenues

-

29,300

30,892

1,592

Expenditures Community development

-

23,675

20,433

(3,242)

Net changes in fund balance

-

5,625

10,459

4,834

Fund balance, beginning of year

-

-

-

-

Fund balance, end of year

$

-

90

$

5,625

$

10,459

$

4,834

CITY OF TECUMSEH, MICHIGAN Combining Statement of Fiduciary Net Position Pension and Other Employee Benefits Trust Funds June 30, 2015 Employee's Other Retirement Postemployment System Pension Benefits Trust Fund Trust Fund Assets Cash and cash equivalents Investments: Domestic equities Foreign equities Corporate bonds U.S. treasuries U.S. agencies Fixed income mutual funds Money market accounts Accrued interest receivable

$

150,051

$

12,500,075 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542 12,732

Net position restricted for pensions

$

91

20,452,021

-

Total $

1,453,059 $

1,453,059

150,051 13,953,134 1,029,771 1,035,430 289,472 1,849,896 3,206,052 378,542 12,732

$

21,905,080

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92

CITY OF TECUMSEH, MICHIGAN Combining Statement of Changes in Fiduciary Net Position Pension and Other Employee Benefits Trust Funds For the Year Ended June 30, 2015 Employee's Other Retirement Postemployment System Pension Benefits Trust Fund Trust Fund Additions Investment income: Net realized and unrealized appreciation in fair value of investments Interest and dividends Less investment management fees Net investment income (loss)

$

Contributions: City of Tecumseh Participants Total contributions

681,741 507,504 (151,154) 1,038,091

$

(19,808) (14,746) 4,392 (30,162)

Total

$

661,933 492,758 (146,762) 1,007,929

512,575 122,260 634,835

48,747 48,747

561,322 122,260 683,582

Total additions

1,672,926

18,585

1,691,511

Deductions Participant benefits Administrative expenses

1,103,892 33,341

42,847 -

1,146,739 33,341

Total deductions

1,137,233

42,847

1,180,080

Change in net position

535,693

Net position, beginning of year

(24,262)

19,916,328

Net position, end of year

$

93

20,452,021

511,431

1,477,321 $

1,453,059

21,393,649 $

21,905,080

CITY OF TECUMSEH, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2015

Current Tax

Delinquent Tax

Pure Tecumseh Campaign Fund

Memorial Day Parade

Assets Cash and cash equivalents Delinquent taxes receivable

$

2,500 -

$

9,593

$

2,223 -

$

4,910 -

Total assets

$

2,500

$

9,593

$

2,223

$

4,910

Liabilities Due to other governments

$

2,500

$

9,593

$

2,223

$

4,910

94

John Damelio Fund

Flower Fund

Total

$

1,341 -

$

20 -

$

10,994 9,593

$

1,341

$

20

$

20,587

$

1,341

$

20

$

20,587

95

CITY OF TECUMSEH, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2015 Balance July 1, 2014

Additions

Balance June 30, 2015

Deletions

Current Tax Assets Cash

$

2,500

$

12,539,138

$

12,539,138

$

2,500

Liabilities Due to other governments

$

2,500

$

12,539,138

$

12,539,138

$

2,500

$

$

$ $

3,837 23,280 27,117

$

$

3,837 22,652 26,489

$

9,593 9,593

Delinquent Tax Assets Cash Delinquent taxes receivable Total assets

$

10,221 10,221

Liabilities Due to other governments

$

10,221

$

26,489

$

27,117

$

9,593

Pure Tecumseh Campaign Fund Assets Cash

$

309

$

25,060

$

23,146

$

2,223

Liabilities Due to other governments

$

309

$

25,060

$

23,146

$

2,223 continued…

96

CITY OF TECUMSEH, MICHIGAN Combining Statement of Changes in Assets and Liabilities Agency Funds For the Year Ended June 30, 2015 Balance July 1, 2014

Additions

Balance June 30, 2015

Deletions

Memorial Day Parade Assets Cash

$

3,538

$

5,924

$

4,552

$

4,910

Liabilities Due to other governments

$

3,538

$

5,924

$

4,552

$

4,910

Assets Cash

$

1,339

$

1

$

(1)

$

1,341

Liabilities Due to other governments

$

1,339

$

1

$

(1)

$

1,341

Assets Cash

$

20

$

-

$

-

$

20

Liabilities Due to other governments

$

20

$

-

$

-

$

20

$

$

$ $

12,570,672 23,280 12,593,952

$

$

12,573,960 22,652 12,596,612

$

10,994 9,593 20,587

$

12,596,612

$

12,593,952

$

20,587

John Damelio Fund

Flower Fund

Total All Agency Funds Assets Cash Delinquent taxes receivable Total assets

$

7,706 10,221 17,927

Liabilities Due to other governments

$

17,927

concluded.

97

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98

DISCRETELY PRESENTED COMPONENT UNIT

99

CITY OF TECUMSEH, MICHIGAN Statement of Net Position and Governmental Fund Balance Sheet Downtown Development Authority Component Unit June 30, 2015 Debt

Special Revenue Funds Public Art

Operating Assets Cash and cash equivalents Receivables Capital assets, net Total assets

Liabilities Accounts payable / accrued liabilities Accrued interest payable Long-term liabilities: Due within one year Due in more than one year

Service Fund

$

286,404 -

$

4,987 -

$

5,676 -

$

286,404

$

4,987

$

5,676

$

3,845 -

$

507 -

$

-

-

-

-

3,845

507

-

Fund balances / net position Restricted for grant program Committed for debt service Unassigned

282,559

4,480 -

5,676 -

Total fund balances

282,559

4,480

5,676

Total liabilities

Total liabilities and fund balances

$

Net position: Net investment in capital assets Restricted for debt service Unrestricted (deficit) Total net position (deficit)

100

286,404

$

4,987

$

5,676

Total

Adjustments

Statement of Net Assets

$

297,067 -

$

297,067

56,000

353,067

$

4,352 -

1,008

4,352 1,008

-

85,000 535,226

85,000 535,226

4,352

621,234

625,586

$

$

56,000

$

297,067 56,000

4,480 5,676 282,559

(4,480) (5,676) (282,559)

-

292,715

(292,715)

-

297,067

56,000 5,676 (334,195) $

(272,519)

56,000 5,676 (334,195) $

(272,519)

101

CITY OF TECUMSEH, MICHIGAN Statement of Activities and Governmental Fund Revenues, Expenditures and Changes in Fund Balance Downtown Development Authority Component Unit For the Year Ended June 30, 2015 Special Revenue Funds Public Art

Operating Expenditures/expenses Community development Debt service: Principal Interest and fiscal charges

$

Total expenditures/expenses Program revenues

- operating grants

Debt

52,149

$

Service Fund

14,842

$

-

-

-

80,000 13,621

52,149

14,842

93,621

-

16,150

-

Net program (expense) revenue

(52,149)

General revenues Property taxes Investment earnings

139,247 354

5

6

Total general revenues

139,601

5

6

87,452

1,313

Excess of revenues over (under) expenditures/expenses

1,308

(93,621)

(93,615)

Other financing sources (uses) Transfers in Transfers out

(93,621)

-

93,621 -

Total other financing sources (uses)

(93,621)

-

93,621

(6,169)

1,313

6

-

-

-

288,728

3,167

5,670

Net changes in fund balances Change in net position Fund balance/net position(deficit), beginning of year, as restated Fund balance/net position (deficit), end of year

$

102

282,559

$

4,480

$

5,676

Total $

Adjustments

66,991

$

$

66,991

80,000 13,621

(80,000) 1,501

15,122

160,612

(78,499)

82,113

16,150

-

(144,462)

16,150

78,499

(65,963)

139,247 365

-

139,247 365

139,612

-

139,612

(4,850)

78,499

73,649

93,621 (93,621)

(93,621) 93,621

(4,850) -

297,565 $

-

Statement of Activities

292,715

$

-

-

-

4,850

-

73,649

73,649

(643,733)

(346,168)

(565,234)

$

(272,519)

103

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104

STATISTICAL SECTION

105

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106

CITY OF TECUMSEH, MICHIGAN Statistical Section Table of Contents This part of the City of Tecumseh’s comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City’s overall financial health. Page Financial Trends Schedules 1-5

Revenue Capacity Schedules 6-9

Debt Capacity Schedules 10-13

Demographic and Economic Information Schedules 14-15

Operating Information Schedules 16-18

Other Continuing Disclosures Schedule 19

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

108

These schedules contain information to help the reader assess the City’s ability to generate its most significant local revenue source, the property tax.

120

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

127

These schedules present various demographic and economic indicators to help the reader understand the environment within which the City operates and how they affect the City’s financial activities.

132

These schedules contain service and infrastructure date to help the reader understand how the information in the City’s financial report relates to the services the City provides and the activities it performs.

134

These schedules contain additional financial information required for the City and its component units to satisfy continuing disclosure obligations under its respective bond issuance agreements.

140

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

107

CITY OF TECUMSEH, MICHIGAN Net Assets by Component

Last Ten Fiscal Years (accrual basis of accounting)

2006

2007

Governmental activities Net investment in capital assets $ Restricted Unrestricted (deficit) Total governmental activities net position $

15,610,207 2,747,827 (402,533) 17,955,501

$

Business-type activities Net investment in capital assets $ Restricted Unrestricted Total business-type activities net position $

11,079,267 1,318,870 627,398 13,025,535

$

Primary government Net investment in capital assets Restricted Unrestricted (deficit) Total primary government net position

26,689,474 4,066,697 224,865 30,981,036

$

$

$

$

$

$

2008

15,811,861 2,623,049 (129,668) 18,305,242

$

11,016,909 1,540,395 370,372 12,927,676

$

26,828,770 4,163,444 240,704 31,232,918

$

Source: City of Tecumseh Finance Department

108

$

$

$

2009

15,908,055 2,246,052 581,093 18,735,200

$

10,815,479 1,042,748 473,686 12,331,913

$

26,723,534 3,288,800 1,054,779 31,067,113

$

$

$

$

2010

15,636,009 2,066,266 402,653 18,104,928

$

10,550,344 1,062,575 573,747 12,186,666

$

26,186,353 3,128,841 976,400 30,291,594

$

$

$

$

15,645,901 2,025,437 2,084,683 19,756,021

10,225,622 976,612 710,817 11,913,051

25,871,523 3,002,049 2,795,500 31,669,072

Schedule 1 Unaudited

2011 $

$

$

$

$

$

2012

16,324,895 2,013,560 1,627,960 19,966,415

$

10,638,258 1,072,807 637,786 12,348,851

$

26,963,153 3,086,367 2,265,746 32,315,266

$

$

$

$

2013

16,040,248 2,190,629 1,773,811 19,966,415

$

10,372,331 1,079,674 378,587 11,830,592

$

26,412,579 3,270,303 2,152,398 31,835,280

$

$

$

$

2014

16,129,720 1,881,533 3,550,826 19,966,415

$

10,094,051 1,085,994 394,985 11,575,030

$

26,223,771 2,967,527 3,945,811 33,137,109

$

$

$

$

2015

16,602,508 1,888,415 3,055,057 21,545,980

$

9,837,951 1,092,404 419,894 11,350,249

$

26,440,459 2,980,819 3,474,951 32,896,229

109

$

$

$

$

14,244,223 1,861,294 775,604 16,881,121

10,157,434 757,908 12,470 10,927,812

24,401,657 2,619,202 788,074 27,808,933

CITY OF TECUMSEH, MICHIGAN Changes in Net Assets

Last Ten Fiscal Years (accrual basis of accounting) 2006 Expenses Governmental activities: General government Public safety Public works Parks and recreation Civic auditorium Community development Interest on long-term debt Total governmental activities expenses Business-type activities: Wastewater Water Total business-type activities expenses

$

2007

1,575,053 2,163,553 996,024 661,173 555,002 522,402 125,960 6,599,167

$

1,624,898 2,206,194 1,082,985 751,336 501,271 531,668 113,637 6,811,989

2008

$

1,523,991 2,351,821 1,231,859 746,924 507,926 611,858 111,211 7,085,590

2009

$

1,597,338 2,403,269 1,455,518 626,829 548,724 592,850 109,029 7,333,557

2010

$

1,489,319 2,309,317 1,362,358 516,725 492,848 1,025,510 128,633 7,324,710

1,054,516 654,754 1,709,270

1,166,237 630,444 1,796,681

1,169,574 630,631 1,800,205

1,177,137 581,417 1,758,554

1,238,467 577,776 1,816,243

Total primary government expenses

8,308,437

8,608,670

8,885,795

9,092,111

9,140,953

Program revenues Governmental activities: Charges for services: General government Public safety Public works Parks and recreation Cultural / civic auditorium Community development Operating grants and contributions Capital grants and contributions Total governmental activities program revenues

319,857 102,961 112,605 49,006 206,686 684,781 475,034 1,950,930

400,253 117,064 4,396 115,235 120,333 120,398 801,648 380,302 2,059,629

387,166 117,563 120,804 137,096 120,186 1,030,456 76,141 1,989,412

381,086 108,636 266 112,164 143,589 100,714 874,905 48,157 1,769,517

376,479 111,742 101,187 140,692 104,857 839,335 2,627,327 4,301,619

Business-type activities: Charges for services: Wastewater Water Operating grants and contributions Capital grants and contributions Total business-type activities program revenues

986,383 629,868 96,678 1,712,929

980,262 568,008 49,028 1,597,298

980,591 555,385 39,383 1,575,359

1,039,201 549,381 1,588,582

1,033,069 493,099 1,526,168

3,663,859

3,656,927

3,564,771

3,358,099

5,827,787

Net (expense)/revenue Governmental activities Business-type activities

(4,648,237) 3,659

(4,752,360) (199,383)

(5,096,178) (224,846)

(5,564,040) (169,972)

(3,023,091) (290,075)

Total primary government net expense

(4,644,578)

(4,951,743)

(5,321,024)

(5,734,012)

(3,313,166)

Total primary government program revenues

110

Schedule 2 Unaudited

2011

$

1,461,557 2,278,206 1,198,267 492,775 497,689 413,785 120,130 6,462,409

2012

$

1,341,587 2,095,860 1,274,780 364,053 467,143 541,353 111,983 6,196,759

2013

$

1,171,298 2,145,084 1,431,660 461,250 376,095 531,803 90,843 6,208,033

2014

$

1,241,374 2,164,774 1,215,362 524,110 365,408 663,532 143,248 6,317,808

2015

$

2,351,915 3,130,167 1,381,246 592,187 351,254 1,513,612 142,836 9,463,217

1,225,686 594,576 1,820,262

1,293,884 654,424 1,948,308

1,357,572 650,401 2,007,973

1,340,267 650,310 1,990,577

1,246,609 534,625 1,781,234

8,282,671

8,145,067

8,216,006

8,308,385

11,244,451

382,938 110,892 109,338 125,723 93,786 830,299 483,701 2,136,677

428,134 109,612 3,214 107,541 128,702 161,000 974,088 2,724 1,915,015

464,846 115,218 459 135,607 92,739 121,724 770,655 2,007,086 3,708,334

470,515 111,300 49,710 177,981 127,255 169,919 981,317 51,488 2,139,485

459,081 118,371 899 171,819 107,450 307,263 1,426,007 122,609 2,713,499

1,054,357 528,226 663,072 2,245,655

1,000,497 517,333 1,517,830

1,084,156 642,213 23,715 1,750,084

1,128,247 595,239 35,010 1,758,496

1,108,652 577,640 137,196 1,823,488

4,382,332

3,432,845

5,458,418

3,897,981

4,536,987

(4,325,732) 425,393

(4,281,744) (430,478)

(2,499,699) (257,889)

(4,178,323) (232,081)

(6,749,718) 42,254

(3,900,339)

(4,712,222)

(2,757,588)

(4,410,404)

(6,707,464) continued…

111

CITY OF TECUMSEH, MICHIGAN Changes in Net Assets

Last Ten Fiscal Years (accrual basis of accounting) 2006 General revenues Governmental activities: Property taxes Unrestricted grants and contributions Investment earnings Gain on sale of capital assets Contributions to permanent funds Transfers Total governmental activities

$

Business-type activities: Investment earnings Transfers Total business-type activities Total primary government Change in net position Governmental activities Business-type activities Total primary government

3,875,075 824,403 183,542 9,675 4,892,695

2007

$

81,412 81,412

101,524 101,524

4,974,107

5,203,625

244,458 85,071 $

4,056,239 815,190 214,897 15,775 5,102,101

329,529

2008

$

Source: City of Tecumseh Finance Department

112

251,882

$

82,707 (453,624) (370,917) 5,155,219

349,741 (97,859) $

4,078,900 797,401 184,636 11,575 453,624 5,526,136

2009

429,958 (595,763) $

(165,805)

4,051,279 792,056 78,074 10,225 4,931,634

2010

$

24,725 24,725

16,460 16,460

4,956,359

4,690,644

(632,406) (145,247) $

3,893,346 684,953 82,945 12,940 4,674,184

(777,653)

1,651,093 (273,615) $

1,377,478

Schedule 2 Unaudited

2011

$

3,720,112 694,653 31,116 80,865 9,380 4,536,126

2012

$

10,407 10,407

(479,986)

$

4,112,829

38,273 (518,259) $

3,352,629 733,211 8,687 10,975 5,000 4,110,502

2014

7,327 (5,000) 2,327

4,232,236

210,394 435,800 646,194

$

8,766 (96,547) (87,781)

4,546,533

$

3,468,109 719,939 26,122 9,300 96,547 4,320,017

2013

1,610,803 (255,562) $

1,355,241

3,334,780 742,265 27,799 40,000 17,380 4,162,224

2015

$

7,300 7,300

6,142 6,142

4,169,524

4,235,902

(16,099) (224,781) $

3,407,771 761,544 37,047 23,398 4,229,760

(240,880)

(2,519,958) 48,396 $

(2,471,562) concluded.

113

CITY OF TECUMSEH, MICHIGAN Fund Balances - Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)

2006 General fund Restricted Committed Unassigned Reserved Unreserved Total general fund

All other governmental funds Nonspendable Restricted Committed Reserved Unreserved, reported in: Special revenue funds Debt service funds Capital projects funds Permanent fund Total all other governmental funds

2007

2008

2009

2010

$

263,665 892,025

$

339,310 889,241

$

107,980 1,248,996

$

119,428 1,244,519

$

132,814 1,236,996

$

1,155,690

$

1,228,551

$

1,356,976

$

1,363,947

$

1,369,810

$

1,638,011

$

1,655,730

$

1,684,824

$

1,713,608

$

1,739,162

1,251,109 48,771 511,063 86,890 $

3,535,844

1,177,290 10,100 612,164 110,503 $

3,565,787

Note: GASB 54 first adopted and implemented with fiscal 2011. Source: City of Tecumseh Finance Department

114

700,881 10,520 1,282,423 129,934 $

3,808,582

471,907 11,208 1,160,311 162,214 $

3,519,248

506,946 17,436 577,769 189,094 $

3,030,407

Schedule 3 Unaudited

2011

2012

2013

2014

2015

$

102,222 120,589 1,210,475 -

$

77,589 140,058 1,236,517 -

$

88,256 90,250 1,273,246 -

$

14,541 50,498 1,250,495 -

$

25,250 50,496 1,436,002 -

$

1,433,286

$

1,454,164

$

1,451,752

$

1,315,534

$

1,511,748

$

1,733,710 546,352 73,982 -

$

1,781,943 649,070 198,865 -

$

1,675,792 522,613 29,683 -

$

1,693,482 434,706 18,945 -

$

1,656,099 409,292 2,069,045 -

$

2,354,044

$

2,629,878

$

2,228,088

$

2,147,133

115

$

4,134,436

CITY OF TECUMSEH, MICHIGAN Changes in Fund Balances - Governmental Funds

Last Ten Fiscal Years (modified accrual basis of accounting)

2006 Revenues Taxes and special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Contributions and other revenues

$

Total revenues Expenditures General government Public safety Public works Parks and recreation Civic auditorium Community development Debt service: Principal Interest and fiscal charges Bond issuance costs Total expenditures

3,895,428 244,834 1,467,171 567,748 42,961 97,534 199,169

4,098,447 210,499 1,498,842 611,019 50,874 296,598 357,161

$

4,069,349 152,736 1,476,570 581,499 42,636 174,073 158,370

$

3,894,441 172,719 1,902,396 581,305 43,742 187,852 154,759

6,655,233

6,937,214

1,484,463 2,039,417 1,004,618 671,670 511,491 1,500,105

1,535,475 2,332,862 1,265,558 637,344 444,353 466,477

1,495,271 2,470,519 1,434,538 553,539 452,475 545,600

1,510,682 2,341,796 1,398,705 575,267 497,112 567,223

1,435,347 2,151,213 1,194,679 471,201 452,074 1,617,386

253,419 122,367 -

221,873 116,694 -

16,540 111,152 -

15,796 110,918 -

1,050,000 168,014 -

7,587,550

7,020,636

7,079,634

7,017,499

8,539,914

1,470,816 (1,470,816) 25,000

102,804

1,447,420 (1,447,420) -

25,000

Debt services as a percentage of noncapital expenditures

4,093,605 166,161 1,477,053 635,161 52,651 452,671 113,920

2010

6,991,222

Other financing sources (uses) Transfers in Transfers out Long-term debt issued Discount on long-term debt Proceeds from sale of capital assets

$

$

2009

7,123,440

(1,072,705)

Net changes in fund balances

$

2008

6,514,845

Revenues over (under) expenditures

Total other financing sources (uses)

2007

(1,047,705)

$

102,804

6.55%

5.35%

Source: City of Tecumseh Finance Department

116

(88,412)

(362,266)

(1,602,700)

2,329,823 (1,876,199) 6,008

1,210,833 (1,135,833) 2,770

3,157,948 (3,127,948) 1,100,000 (10,278) -

459,632 $

371,220

2.03%

77,770 $

(284,496)

1.91%

1,119,722 $

(482,978)

14.52%

Schedule 4 Unaudited

2011 $

3,723,894 179,238 1,789,102 574,551 40,892 86,373 170,435

2012 $

$

3,353,051 210,777 1,447,336 542,992 49,218 (14,072) 198,666

2014 $

2015

3,335,202 234,299 1,630,092 659,490 43,300 65,774 464,527

$

3,434,155 231,432 2,172,371 653,949 47,071 66,215 512,045

6,564,485

6,098,092

5,787,968

6,432,684

7,117,238

1,427,076 2,190,751 1,197,468 433,973 463,444 1,338,397

1,248,104 1,978,368 1,237,055 298,028 428,519 531,477

1,116,624 2,010,649 1,289,861 349,490 342,894 2,850,599

1,191,085 2,199,408 1,290,950 417,449 336,408 722,695

1,348,651 2,188,981 1,120,840 425,110 328,274 1,350,618

20,000 136,263 -

55,000 121,376 -

140,000 97,053 -

345,000 146,862 -

355,000 137,643 4,350

7,207,372

5,897,927

8,197,170

6,649,857

7,259,467

(642,887)

200,165

830,999 (800,999) -

1,183,840 (1,087,293) -

30,000 $

3,468,493 203,283 1,422,161 556,799 45,612 155,414 246,330

2013

(612,887)

2.63%

96,547 $

296,712

3.14%

(2,409,202)

(217,173)

(142,229)

1,024,603 (1,019,603) 2,000,000 -

842,622 (842,622) -

621,772 (621,772) 2,250,000 -

2,005,000 $

(404,202)

4.20%

$

(217,173)

8.19%

117

2,250,000 $

2,107,771

7.27%

CITY OF TECUMSEH, MICHIGAN Changes in Fund Balances - General Fund

Last Ten Fiscal Years (modified accrual basis of accounting)

2006 Revenues Taxes and special assessments Licenses and permits Intergovernmental Charges for services Fines and forfeits Investment earnings Contributions Other revenues

$

Total revenues

2007

3,762,383 94,631 844,411 357,116 42,961 138,395 156,735 23,350

$

2008

3,978,434 121,823 836,584 395,307 50,874 181,584 290,156 15,239

$

2009

4,093,454 100,731 845,591 415,868 52,651 153,396 10,480 13,604

$

2010

4,069,225 104,869 894,608 367,670 42,636 64,458 450 17,447

$

3,894,440 114,366 692,633 360,454 33,996 40,883 2,901 6,558

5,419,982

5,870,001

5,685,775

5,561,363

5,146,231

1,484,463 2,020,567 6,220 564,985 -

1,514,871 2,078,109 174,522 555,465 -

1,484,959 2,164,260 134,614 539,364 -

1,503,865 2,299,997 151,918 562,463 15,000

1,435,347 2,010,750 241,236 471,201 -

55,400 101,313

55,400 95,430

94,161

94,419

103,334

Total expenditures

4,232,948

4,473,797

4,417,358

4,627,662

4,261,868

Revenues over expenditures

1,187,034

1,396,204

1,268,417

933,701

884,363

Other financing sources (uses) Transfers in Transfers out Debt issued Proceeds from sale of capital assets

65,191 (1,321,575) 25,000

(1,323,343) -

5,000 (1,151,000) 6,008

82,000 (1,011,500) 2,770

70,000 (948,500) -

Total other financing sources (uses)

(1,231,384)

(1,323,343)

(1,139,992)

(926,730)

(878,500)

Expenditures Current: General government Public safety Public works Parks and recreation Community development Debt Service: Principal Interest and fiscal charges

Net changes in fund balances

$

Debt service as a percentage of noncapital expenditures

(44,350)

$

72,861

3.7%

3.4%

Source: City of Tecumseh Finance Department

118

$

128,425

2.1%

$

6,971

2.0%

$

5,863

2.4%

Schedule 5 Unaudited

2011 $

$

2012

3,723,892 121,887 705,146 382,398 40,892 29,310 181 19,085

$

2013

3,468,493 123,980 817,127 364,027 45,612 21,714 866 83,654

$

2014

3,353,051 130,795 825,030 392,165 49,218 14,669 674 128,588

$

2015

3,335,202 133,441 924,364 445,306 43,300 16,106 383 327,772

$

3,426,301 136,264 1,018,138 457,915 47,071 25,248 232 423,520

5,022,791

4,925,473

4,894,190

5,225,874

5,534,689

1,427,076 2,123,669 168,718 433,973 203,977

1,248,104 1,900,726 137,662 298,028 326,771

1,114,031 1,949,037 179,278 349,490 2,311,635

1,188,526 2,020,268 175,024 417,449 405,152

1,346,880 2,004,896 201,814 425,110 478,996

73,276

35,000 57,386

100,000 34,055

300,000 85,542

300,000 80,679

4,430,689

4,003,677

6,037,526

4,591,961

4,838,375

592,102

921,796

(1,143,336)

633,913

696,314

55,438 (707,268) -

34,777 (935,695) -

6,000 (865,076) 2,000,000 -

10,000 (780,131) -

5,000 (505,100) -

(651,830)

(900,918)

1,140,924

(770,131)

(500,100)

(59,728)

1.7%

$

20,878

2.3%

$

(2,412)

2.2%

$

(136,218)

8.4%

119

$

196,214

7.9%

CITY OF TECUMSEH, MICHIGAN Taxable and Estimated Actual Value of Property

Last Ten Fiscal Years

Real Property (1) As of December 31,

FYE June 30,

Taxable Value

Estimated Actual Value

2013 2012 2011 2010 2009 2008 2007 2006 2005 2004

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

$ 218,180,500 213,916,628 214,183,611 224,842,532 240,359,999 258,714,678 264,974,248 265,669,626 256,179,277 241,516,924

$ 436,361,000 427,833,256 428,791,507 457,313,800 500,110,200 548,196,200 587,148,200 608,955,600 602,338,900 578,366,000

(1) Includes properties subject to Industrial Facility Tax exemptions. (2) Per $1,000 of taxable value.

120

Personal Property (1) Taxable Value $

30,032,200 30,405,800 29,416,900 19,716,200 28,439,300 24,092,100 28,724,200 29,479,700 32,867,900 34,521,900

Estimated Actual Value $

60,064,400 60,811,600 66,901,200 55,082,800 57,300,400 48,184,200 57,424,800 59,591,200 65,735,800 69,043,800

Schedule 6 Unaudited

Total Taxable Value

Estimated Actual Value

$ 248,212,700 244,322,428 243,600,511 244,558,732 268,799,299 282,806,778 293,698,448 295,149,326 289,047,177 276,038,824

$ 496,425,400 488,644,856 495,692,707 512,396,600 557,410,600 596,380,400 644,573,000 668,546,800 668,074,700 647,409,800

(2) Total Direct

14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.8246 14.8966

121

CITY OF TECUMSEH, MICHIGAN Direct and Overlapping Property Tax Rates

Last Ten Fiscal Years (rate per $1,000 of taxable value)

Overlapping Rates

Direct Fiscal Year Ended June 30, 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

(1) City General Operating

Tecumseh Public Schools

14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.3966 14.8246 14.8966

25.4500 25.4500 25.4500 25.2000 25.2000 25.2000 25.2000 25.2000 25.2000 25.2000

State Education Tax 6.0000 6.0000 6.0000 6.0000 6.0000 6.0000 6.0000 6.0000 6.0000 6.0000

Lenawee Intermediate School District 7.2796 7.2796 7.2796 7.2796 7.2796 7.2796 7.2796 7.2796 7.2900 7.3409

County

Tecumseh District Library

5.9128 5.9128 5.9628 5.5232 5.7128 5.6128 5.6128 5.6128 5.6270 5.6663

SOURCES: Treasurer, City of Tecumseh (1) The City has only a general operating levy; there are no other components -- i.e., other voted tax rates/levies. (2) Homesteads do not pay 18 mills of the Tecumseh Public Schools total rate whereas non-homesteads do.

122

1.3500 1.3500 1.1472 1.1472 1.1472 1.1472 1.1472 1.1472 1.1472 1.1472

Schedule 7 Unaudited

Totals (2)

Homestead 42.3890 42.3890 42.2362 41.5466 41.7362 41.6362 41.6362 41.6362 42.0888 42.2510

NonHomestead 60.3890 60.3890 60.2362 59.5466 59.7362 59.6362 59.6362 59.6362 60.0888 60.2510

123

CITY OF TECUMSEH, MICHIGAN

Table 8 Unaudited

Principal Property Taxpayers

Current Year and Nine Years Ago

2015 (1) Taxable Value

Taxpayer Kirchoff Van-Rob Tecumseh (formally Lenawee Stamping Corp.) Consumer Energy Company Old National Bank (formally United Bank & Trust) Tecumseh Place Apartments D & P Communications Ervin Industries, Inc. D.J. Martin Cambrian of Tecumseh LLC Tri-Bros. (Busch's) Tecumseh Bakery (formerly Tecumseh Products Co.) Tecumseh Plaza Tecumseh Packaging (formerly Tecumseh Corrugated Box)

$

$

21,215,300 3,183,310 2,652,284 2,543,673 2,146,600 2,223,500 2,129,563 2,127,951 1,418,400 881,000 40,521,581

(1) Includes ad valorem and Industrials Facilities Tax property (at full value). SOURCE: Assessor and Treasurer, City of Tecumseh

124

2006

Rank

Percent of Total Taxable Value

1 2 3 4 5 6 7 8 9 10

8.55% 1.28% 1.07% 1.02% 0.86% 0.90% 0.86% 0.86% 0.57% 0.35%

(1) Taxable Value $

16.33%

$

16,279,600 2,678,898 2,203,581 2,464,214 1,695,140 2,527,337 1,511,561 8,539,776 2,290,000 1,576,900 41,767,007

Rank

Percent of Total Taxable Value

1 3 7 5

5.92% 0.97% 0.80% 0.90%

8 4 10

0.62% 0.92% 0.55%

2 6 9

3.11% 0.83% 0.57% 15.19%

CITY OF TECUMSEH, MICHIGAN

Schedule 9 Unaudited

Property Tax Levies and Collections

Last Ten Fiscal Years (1) Fiscal Year Ended

(2) Taxes Levied for the

June 30,

Fiscal Year

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

$

3,422,886 3,443,269 3,445,875 3,576,653 3,802,136 4,011,043 4,170,769 4,185,847 4,159,786 3,985,374

Collected within the Fiscal Year of the Levy Amount $

% of Levy

3,306,594 3,329,088 3,355,955 3,441,157 3,659,201 3,838,188 3,990,235 3,938,272 4,028,312 3,857,201

96.6% 96.7% 97.4% 96.2% 96.2% 95.7% 95.7% 94.1% 96.8% 96.8%

$

(3) Delinquent

Total Collections to Date

Collections

Amount

115,666 109,833 88,696 135,229 143,614 171,795 176,682 138,843 128,795 104,780

$

(1) Property taxes are levied July 1 of the current fiscal year based on taxable property values as of the preceding December 31. Unpaid property taxes become delinquent as of September 1 of the current fiscal year. The City's delinquent real property taxes are purchased by the Lenawee County Delinquent Tax Revolving Fund. Uncollected personal property taxes must be collected by the City Treasurer. (2) Includes Industrial Facility Tax. (3) Includes settlement from Lenawee County Delinquent Tax Revolving for purchase of delinquent real property taxes.

125

3,422,260 3,438,921 3,444,651 3,576,386 3,802,815 4,009,983 4,166,917 4,077,115 4,157,107 3,961,981

% of Levy 100.0% 99.9% 100.0% 100.0% 100.0% 100.0% 99.9% 97.4% 99.9% 99.4%

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126

CITY OF TECUMSEH, MICHIGAN

Schedule 10 Unaudited

Ratios of General Bonded Debt Outstanding

Last Ten Years

General Bonded Debt Outstanding

Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Governmental Business-type Activities Activities General General Obligation Bonds Obligation Bonds $

3,572,806 1,377,292 1,421,778 1,461,264 1,480,750 1,510,000 425,000 440,000 455,000 620,000

$

1,589,930 1,397,104 1,482,104 1,567,104 1,652,104 1,732,104 1,812,104 1,379,872 -

Total $

5,162,736 2,774,396 2,903,882 3,028,368 3,132,854 3,242,104 2,237,104 1,819,872 455,000 620,000

Source: City of Tecumseh Finance Department

127

Amounts Restricted to Repaying Principal $

(1,870) (3,734) (2,554) (7,549) (7,440) (7,292) (1,225) (724) (605) (48,771)

% of Actual Taxable Value of Property 2.12% 1.14% 1.19% 1.13% 1.17% 1.15% 0.76% 0.62% 0.16% 0.22%

Per Capita $

613.22 329.54 344.59 357.08 367.66 382.37 259.83 209.20 51.96 72.31

CITY OF TECUMSEH, MICHIGAN Ratios of Outstanding Debt by Type

Last Ten Years

Governmental Activities General Obligation Bonds

Year 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

$

3,572,806 1,377,292 1,421,778 1,461,264 1,480,750 1,510,000 425,000 440,000 455,000 620,000

Purchase Agreement $

2,316,981 2,616,981 2,916,981 1,016,981 1,051,981 1,051,981 2,086,981 2,086,981 2,086,981 2,142,381

Business-type Activities General Obligation Bonds

Capital Lease $

796 2,336 3,809

$

1,589,930 1,397,104 1,482,104 1,567,104 1,652,104 1,732,104 1,812,104 1,379,872 -

Source: City of Tecumseh Finance Department Details regarding the City's debt can be found in the notes to the financial statements.

128

Revenue Bonds $

65,000 125,000

Total Primary Government $

7,479,717 5,391,377 5,820,863 4,045,349 4,184,835 4,294,085 4,324,085 3,907,649 2,609,317 2,891,190

Schedule 11 Unaudited

Total Debt as a % of Personal Income 2.65% 1.91% 2.12% 1.56% 1.61% 1.72% 1.66% 1.52% 1.02% 1.17%

Total Debt as a % of Taxable Value 3.01% 2.21% 2.39% 1.65% 1.56% 1.52% 1.47% 1.32% 0.90% 1.05%

Total Debt Per Capita $

888.43 640.38 690.74 476.99 491.12 506.44 502.22 449.21 297.97 337.20

129

CITY OF TECUMSEH, MICHIGAN

Schedule 12 Unaudited

Computation of Net Direct and Overlapping Debt

As of June 30, 2015

Gross Amount Outstanding Direct debt General obligation bonds General obligation bonds - wastewater Purchase agreements and capital leases Net direct debt

Self-Supporting or Paid by Benefited Government

$

3,572,806 1,589,930 2,316,981

$

1,589,930 -

$

7,479,717

$

1,589,930

Net Amount Outstanding $

3,572,806 2,316,981 5,889,787

Overlapping debt (1) Lenawee County (7.69%) Tecumseh Public Schools (42.86%)

731,821 19,487,308

Net overlapping debt

20,219,129

Net direct and overlapping debt

$

Source: 2014 Lenawee County, Tecumseh Public Schools, and City of Tecumseh L-4029. (1) The percentage of overlapping debt applicable is estimated using taxable assessed values. Applicable percentages were estimated by dividing the portion of the county's taxable assessed value that is within the City's boundaries and dividing it by the county's total taxable assessed value.

130

26,108,916

CITY OF TECUMSEH, MICHIGAN

Schedule 13 Unaudited

Legal Debt Margin

Last Ten Years

Legal Debt Margin Calculation for Fiscal 2014 Taxable value

$ 248,212,700

Debt limit (10% of assessed value) Less: debt applicable to limit - general obligation bonds Add: amounts available for repayment of general obligation bonds Legal debt margin

Total Net Debt Applicable to Limit

Debt Limit

2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

$

24,821,270 24,432,243 24,360,051 24,455,873 26,879,930 28,280,678 29,369,845 29,514,933 28,904,718 27,603,882

Source: City of Tecumseh Treasurer

131

$

5,891,657 3,998,007 4,341,313 2,494,530 3,471,257 3,658,206 1,780,632 1,981,229 2,110,547 1,887,721

$

24,821,270 5,889,787 (1,870)

$

18,929,613

Legal Debt Margin

$

18,929,613 20,434,236 20,018,738 21,961,343 23,408,673 24,622,472 27,589,213 27,533,704 26,794,171 25,716,161

Total Net Debt Applicable to Limit as a Percentage of Debt Limit

23.74% 16.36% 17.82% 10.20% 12.91% 12.94% 6.06% 6.71% 7.30% 6.84%

CITY OF TECUMSEH, MICHIGAN

Schedule 14 Unaudited

Demographic and Economic Statistics

Last Ten Years

Year 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005

Year 2010 2000 1990 1980 1970 1960 1950

(1) (2) (3) (4) (5) (6) (7) (8) (9)

(9) Personal Income

Population 8,400 8,419 8,427 8,481 8,521 8,479 8,610 8,699 8,757 8,574

(9) (8) (7) (6) (5) (4) (3) (2) (1) (1)

(9) Per Capita Income

289,027,200 282,196,461 274,812,897 258,992,778 260,214,298 249,274,121 261,098,250 257,272,925 255,082,653 246,451,056

Population

34,408 33,519 32,611 30,538 30,538 29,399 30,325 29,575 29,129 28,744

School Enrollment

Unemployment Rate

2,895 2,901 2,957 2,971 2,943 3,066 3,190 3,250 3,405 3,451

Median Age

8,521 8,574 7,462 7,320 7,120 7,045 4,020

39.8 36.3 33.6 30.0 27.4 -

Per 2000 Census Estimate as of July 2006 Estimate as of July 2007 Estimate as of July 2008 Estimate as of July 2009 Per 2010 Census Estimate as of July 2011 Estimate as of July 2012 Estimate as of July 2013

SOURCES: School Enrollment - Tecumseh Public Schools Population and Unemployment Rate - Michigan Department of Energy, Labor and Economic Growth Personal and Per Capita Income - Bureau of Economic Analysis

132

5.6% 8.3% 8.7% 12.5% 14.1% 16.1% 13.6% 8.6% 6.9% 6.9%

CITY OF TECUMSEH, MICHIGAN

Schedule 15 Unaudited

Principal Employers

Current Year and Nine Years Ago 2015

Employer Kirchoff Van-Rob Tecumseh (Lenawee S Tecumseh Public Schools Herrick Memorial Hospital GLOVE (formally Tecumseh Thermal) Old National Bank Ervin Industries City of Tecumseh Ididit Tecumseh Packaging Solutions Glycon Tecumseh Products Tecumseh Precision Plastics Cyltec

Employees 700 290 276 100 75 60 58 41 35 30 -

2006 % of Total City Employment

Rank 1 2 3 4 5 6 7 8 9 10

1,665

Source: Economic Development Department, City of Tecumseh Employer Human Resource Departments

133

Employees

8.78% 3.64% 3.46% 1.25% 0.94% 0.75% 0.73% 0.51% 0.44% 0.38% -

330 353 1,250 81 32 80

20.88%

2,499

120 150 40 63

Rank 3 2 1 6 10 7 5 4 8 9

% of Total City Employment 4.14% 4.43% 15.67% 0.00% 1.02% 0.40% 1.00% 0.00% 1.50% 0.00% 1.88% 0.50% 0.79% 31.34%

CITY OF TECUMSEH, MICHIGAN Full-Time Equivalent City Government Employees by Function/Program

Last Ten Years

Function/Program General government City council City manager City clerk City treasurer City assessor Development services Economic development Public safety Police Emergency services (fire) Public works Department of public works Cemetery Culture & recreation Parks & recreation Tecumseh Center for the Arts Public utilities

2006

2007

2008

2009

2010

7.0 2.0 3.0 3.0 1.8 2.5 2.8

7.0 2.0 3.0 3.0 1.0 2.5 2.8

7.0 2.0 3.0 3.0 1.0 2.5 2.8

7.0 2.0 3.0 3.0 1.0 2.5 2.8

7.0 2.0 2.0 3.0 1.0 2.6 2.5

21.0 4.2

20.7 4.0

18.0 4.1

18.1 4.0

18.1 3.0

9.0 2.5

9.0 3.0

9.0 2.6

9.0 2.0

7.0 2.0

4.0 4.8 8.3 75.6

3.8 4.4 8.0 74.1

5.1 4.0 7.0 71.0

4.1 2.8 8.0 69.2

3.5 2.8 8.0 64.4

SOURCE: City of Tecumseh

134

Schedule 16 Unaudited

2011

2012

2013

2014

2015

7.0 1.3 2.0 3.0 1.0 2.2 2.5

7.0 1.3 2.0 3.7 1.0 2.2 2.5

7.0 1.3 2.0 3.7 1.0 2.2 2.5

7.0 1.7 2.0 3.0 1.0 3.3 2.5

7.0 1.5 2.0 3.0 1.0 2.0 2.5

15.1 3.0

15.1 3.0

15.1 3.0

15.0 3.0

14.0 3.0

6.0 1.0

6.0 1.0

6.0 1.0

6.0 1.0

6.0 1.0

2.4 2.5 8.0 57.0

3.1 2.7 8.0 58.6

3.1 2.7 8.0 58.6

3.8 3.2 9.0 61.5

3.0 3.0 8.0 57.0

135

CITY OF TECUMSEH, MICHIGAN Operating Indicators by Function/Program

Last Ten Years Function/Program Public safety Police: Number of Number of Number of Number of

2006

uniform crime reporting traffic violations arrests parking violations

2007

2008

2009

2010

436 985 249 27

368 849 320 20

687 1,005 355 14

515 673 243 17

819 697 344 26

Fire: Number of calls answered Number of inspections conducted

685 10

690 15

679 15

711 6

720 3

Public works Miles of local streets maintained Miles of major streets maintained

28 17

28 17

28 17

28 17

28 17

219 985 57 128 443 97 70 18 2,611 91 92

238 947 51 128 412 93 19 9 2,669 85 107

227 877 48 86 401 83 55 39 2,704 60 91

218 851 56 74 300 48 52 17 2,605 57 99

161 736 48 86 219 64 23 4 2,800 74 79

7 350 15

33 340 17

27 340 46

29 380 61

23 385 58

53 20 56 3,866 431

53 20 56 3,874 433

53 20 56 3,874 433

53 20 56 3,878 433

53 20 56 3,878 433

Culture & recreation Parks & recreation: Basketball participation Soccer participation Floor/inline hockey participation Flag football participation Baseball/softball participation Volleyball participation Tennis lessons Golf lessons Recreation center activities participation Picnic shelter rentals Glass room/main room rentals Tecumseh Center for the Arts Number of shows Average show attendance Number of rentals Public utilities Miles of sanitary sewers maintained Miles of storm sewers Miles of water mains Number of service connections Number of fire hydrants Source: City of Tecumseh

136

Schedule 17 Unaudited

2011

2012

2013

2014

2015

885 1,293 629 41

695 940 563 30

686 1,074 561 29

588 886 537 53

424 995 441 39

780 15

744 6

874 5

900 12

849 6

28 17

28 17

28 17

28 17

28 17

330 766 96 172 123 30 45 27 2,600 66 72

142 545 59 133 117 20 59 13 2,750 79 63

81 508 83 907 89 48 14 3,200 69 60

179 460 33 147 73 6 59 10 2,315 71 29

146 411 41 101 81 10 70 16 7,168 71 25

19 395 70

67 350 59

12 350 51

26 350 41

20 350 55

53 20 56 3,891 444

53 20 56 3,891 444

53 20 56 4,111 488

53 20 56 4,118 488

53 20 56 4,140 488

137

CITY OF TECUMSEH, MICHIGAN Capital Asset Statistics by Function/Program

Last Ten Years Function/Program

2006

Police: Police department building Vehicle patrol units: Police service automobiles Animal control Temporary lock up Speed trailer Fire: Emergency services building Vehicle units: Pumper truck Pumper ladder truck Rescue truck Tanker truck Brush truck Jaws of life Chief's city car Trailer Pickup truck Public works Miles of city streets: State Local Parks & recreation Parks: City Bike/skate Dog Park acreage: Active parks Passive parks Green spaces Picnic areas Historical sites Buildings: Recreation center Gazebo Concessions Log cabin Pavilions Trails: Nature Multiuse Playgrounds Water areas: Swimming beach area Splash pad Tennis courts In-line skating rink

Source: City of Tecumseh

138

2007

2008

2009

2010

1

1

1

1

1

7 1 2 1

7 1 2 1

7 1 2 1

6 1 2 1

6 1 2 1

1

1

1

1

1

2 1 1 1 1 1 1 1 1

2 1 1 1 1 2 1 1 -

3 1 1 1 2 1 1 -

3 1 1 1 2 1 1 -

3 1 1 1 2 1 1 -

16.57 28

16.57 28

16.57 28

16.57 28

16.57 28

19 1 -

19 1 -

20 1 1

20 1 1

20 1 1

137.3 140.4 37.4 4 2

137.3 140.4 37.4 4 2

137.3 140.4 62.4 4 2

137.3 140.4 62.4 4 2

137.3 140.4 62.4 5 2

1 1 2 1 5

1 1 2 1 5

1 1 2 1 5

1 1 1 1 5

1 1 1 1 5

1 3 4

2 3 5

2 4 5

2 5 5

2 6 5

1 1 5 1

1 1 5 1

1 1 5 1

1 1 4 1

1 1 3 1

Schedule 18 Unaudited

2011

2012

2013

2014

2015

1

1

1

1

1

5 1 2 1

6 1 2 1

6 1 2 1

6 1 2 1

6 1 2 1

1

1

1

1

1

2 1 1 1 2 1 -

2 1 1 1 2 1 -

2 1 1 1 2 1 -

1 1 1 1 2 2 1 -

1 1 1 1 2 2 1 -

16.57 28

16.57 28

16.57 28.65

16.57 28.65

16.57 28.65

20 1 1 137.3 140.4 62.4 5 2

20 1 1 1 137.3 140.4 62.4 5 2

20 1 1 1 137.3 140.4 62.4 5 2

20 1 1 1 137.3 140.4 62.4 5 2

20 1 1 1 137.3 140.4 62.4 5 2

1 1 1 1 5

1 1 1 1 5

2 1 1 1 5

1 1 1 1 5

1 1 1 1 5

2 6 5

2 6 5

2 6 5

2 6 5

2 6 5

1 1 2 1

1 1 2 1

1 1 2 1

1 1 2 1

1 1 2 1

139

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures Total Taxable Value in the Development Area Equivalent Taxable Value Year of

of Property

State

Percent

Ad

Granted Tax Abatement

Total

Over

Assessed

Equalization

City's Fiscal

Valorem

Change

Value as of

and Tax

Years Ended

Taxable

Under

Taxable

Prior

December 31

Levy

June 30

Value

Act 198 (1)

Value

Year

2008

2009

$ 12,941,864

3% -2%

2010

$

12,933,664

$

8,200

2009

2010

2011

12,685,552

7,550

12,693,102

2010

2011

2012

12,020,103

7,050

12,027,153

-5%

2011

2012

2013

11,250,218

6,600

11,256,818

-6%

2012

2013

2014

11,133,912

-

11,133,912

-1%

2013

2014

2015

11,499,255

-

11,499,255

3%

(1) At the full tax rate Source: City of Tecumseh Downtown Development Authority Total Taxable Value in the Development Area By Use and Class Fiscal Years Ended June 30 2010

Use

2011

2012

2013

2014

2015

Homestead……………………………. Real………………………………….. Commercial……………………………… $

214,923

Residential………………………………

667,208

$

214,277

$

607,450

205,434

$

533,654

162,965 506,240

$

136,230

$

510,300

136,365 518,460

Personal……………………….. Commercial…………………………

674,500

679,800

674,700

635,200

682,700

566,300

Industrial…………………………

262,700

281,750

268,350

267,600

254,300

244,500

9,185,463

Non-Homestead…………………….. Real…………………………………….. Commercial……………………

10,041,194

10,047,358

9,468,018

8,868,547

8,770,850

Industrial………………………

216,003

212,800

206,800

166,300

151,100

Residential………………….

865,336

649,667

670,197

649,966

153,000

628,432

645,167

$ 12,941,864

$

12,693,102

$

12,027,153

$

11,256,818

$ 11,133,912

$

11,449,255

$ 12,004,664

$

11,731,552

$

11,084,103

$

10,354,018

$ 10,196,912

$

10,638,455

902,800

937,000

$

12,693,102

$

12,027,153

$

11,256,818

$ 11,133,912

$

11,449,255

Class Real Property……….. Personal Property…..

937,200 $ 12,941,864

961,550

943,050

810,800

Source: City of Tecumseh continued…

140

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures Downtown Development Authority Total SEV in the Development Area SEV of Property Assessed

Year of State

City's Fiscal

Ad

Granted Tax

Percent

Abatement

Change

Value as of

Equalization

Year Ended

Valorem

Under

Total

Over

December 31

and Tax Levy

June 30

SEV

Act 198

SEV

Prior Year

2008

2009

2010

16,400

$ 15,031,100

2%

$

15,014,700

$

2009

2010

2011

14,156,900

15,100

14,172,000

-6%

2010

2011

2012

12,473,300

14,100

12,487,400

-12%

2011

2012

2013

11,479,900

13,200

11,493,100

-8%

2012

2013

2014

11,339,500

-

11,339,500

-1%

2013

2014

2015

11,677,700

-

11,677,700

3%

Downtown Development Authority Total SEV in the Development Area By Use and Class Fiscal Years Ended June 30 2010

Use

2011

2012

2013

2014

2015

Homestead……………………………. Real………………………………….. Commercial……………………………… $

245,180

Residential………………………………

742,674

$

232,020

$

628,678

207,410

$

539,600

162,965 507,400

$

136,230

$

510,300

136,365 528,000

Personal……………………….. Commercial…………………………

674,500

679,800

674,700

635,200

682,700

566,300

Industrial…………………………

270,900

289,300

275,400

264,200

254,300

244,500

11,914,820

11,430,680

9,866,990

9,091,735

8,960,470

9,378,235

Industrial………………………

216,400

212,800

206,800

166,300

151,100

Residential………………….

966,626

Non-Homestead…………………….. Real…………………………………….. Commercial……………………

698,722

702,400

665,300

153,000

644,400

671,300

$ 15,031,100

$

14,172,000

$

12,473,300

$

11,493,100

$ 11,339,500

$

11,677,700

$ 14,085,700

$

13,202,900

$

11,523,200

$

10,580,500

$ 10,402,500

$

10,866,900

912,600

937,000

11,493,100

$ 11,339,500

Class Real Property……….. Personal Property…..

945,400 $ 15,031,100

969,100 $

14,172,000

964,200 $

12,487,400

$

810,800 $

11,677,700

Source: City of Tecumseh continued…

141

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures Downtown Development Authority of the City of Tecumseh Captured Principal Residential Exemption (1) Property Tax Rates in the Development Area by Governmental Unit Fiscal Years Ended June 30 2010

Governmental Unit City of Tecumseh……………………

2011

2012

2013

2014

2015

14.3966

14.3966

14.3966

14.3966

14.3966

14.3966

Lenawee County……………………….

5.6128

5.7128

5.5232

5.9628

5.9128

5.9128

State Education Levy…………….

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Tecumseh Public Schools………..

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Intermediate School District……

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Tecumseh District Library………

1.1472

1.1472

1.1472

1.1472

1.3500

1.3500

21.1566

21.2566

21.0670

21.5066

21.6594

21.6594

Total………………………………………………

Downtown Development Authority of the City of Tecumseh Captured Non-Principal Residential Exemption (1) Property Tax Rates in the Development Area by Governmental Unit Fiscal Years Ended June 30 2010

Governmental Unit City of Tecumseh……………………

2011

2012

2013

2014

2015

14.3966

14.3966

14.3966

14.3966

14.3966

14.3966

Lenawee County……………………….

5.6128

5.7128

5.5232

5.9628

5.9128

5.9128

State Education Levy…………….

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Tecumseh Public Schools………..

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Intermediate School District…………

0.0000

0.0000

0.0000

0.0000

0.0000

0.0000

Tecumseh District Library

1.1472

1.1472

1.1472

1.1472

1.3500

1.3500

21.1566

21.2566

21.0670

21.5066

21.6594

21.6594

Total………………………………………. (1)

Principal Residential Exemption 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. Principal Residential Exemption 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 principal residence includes only 5 acres adjacent and contiguous to the home of the owner.  Principal Residence includes a life  care facility registered under the living care disclosure act, Act No. 440 of the Public Acts of 1976, being sections 554.801 to 554.844  of the Michigan Compiled Laws. Principal Residents also includes property owned by a cooperative housing corporation and  occupied as a principal residence by tenant stockholders. Non‐Principal Residence is property not included in the above definition. Downtown Development Authority of the City of Tecumseh

Largest Employers in the Authority District Company

Principal Product or Service

Approximate Number of Employees

Old National Bank

Financial Institution

75

City of Tecumseh

Government

57

Howard Hanna

Real Estate Sales

36 32

JR's Grill & Pub

Restaurant

Basil Boys

Restaurant

30

Evans Street Station

Restaurant

27

Martins Home Center

Retail Sales

25

____________ Source: City of Tecumseh

continued…

142

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures Total Taxable Value by Use and Class Fiscal Years Ended June 30 Use Commercial……………..

2010 $ 51,356,249

2011 $

54,132,348

2012 $

50,472,724

$

2013

2014

48,090,304

$ 48,125,112

2015 $

48,359,531

Industrial………………

22,708,164

23,513,220

22,125,965

23,004,740

20,893,002

21,293,639

Residential…………….

197,180,019

178,461,547

168,400,271

160,339,056

161,192,235

164,099,157 3,408,300

2,899,800

2,938,400

2,959,000

3,172,100

3,301,700

Development………..

Utility………………….

485,638

484,177

491,367

502,626

512,902

Total………………….

$ 274,629,870

$ 259,529,692

$

244,449,327

$

235,108,826

$ 234,024,951

$

237,680,447

$ 257,427,070

$ 239,221,492

$

224,623,127

$

213,759,326

$ 213,498,051

$

217,909,347

17,202,800

20,308,200

21,349,500

20,526,900

$ 274,629,870

$ 259,529,692

235,108,826

$ 234,024,951

519,820

Class Real Property……….. Personal Property……. Total…………………..

19,826,200 $

244,449,327

$

19,771,100 $

237,680,447

Percent of Total Taxable Value by Use and Class Fiscal Years Ended June 30 Commercial……………..

2010

2011

2012

2013

2014

2015

18.70%

20.86%

20.65%

20.45%

20.56%

20.35%

Industrial………………

8.27%

9.06%

9.05%

9.78%

8.93%

8.96%

Residential…………….

71.80%

68.76%

68.89%

68.20%

68.88%

69.04%

Utility………………….

1.06%

1.13%

1.21%

1.35%

1.41%

1.43%

Development………..

0.18%

0.19%

0.20%

0.21%

0.22%

0.22%

Total………………….

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

93.74%

92.17%

91.89%

90.92%

91.23%

91.68%

6.26%

7.83%

8.11%

9.08%

8.77%

8.32%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

Class………………… Real Property……….. Personal Property……. Total…………………..

continued…

143

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures State Equalized Valuation SEV of Property Granted Tax

Percent

Assessed

Year of State

City's Fiscal Year Ended

Ad

Abatement

Increase

Value as of

Equalization

or Ending

Valorem

Under

Over

December 31

and Tax Levy

June 30

Act 198 (1)

Prior Year

2008

2009

2010

2009

2010

2011

2010

2011

2011 2012 2013

SEV $

289,896,135

$

8,081,100

-7.2304%

269,200,000

9,233,400

-7.1392%

2012

247,980,800

7,393,800

-7.8823%

2012

2013

237,196,550

8,526,600

-4.3488%

2013

2014

236,179,200

10,327,500

-0.4289%

2014

2015

241,857,300

10,487,200

2.4041%

Per Capital Total SEV for the Fiscal Year Ending June, 2015 (2)……………………………………………………………………… $

28,727.56

(1) At the full tax rate. See "CITY TAXATION AND LIMITATIONS - Tax Abatements" herein. (2) Based on the City's 2014 Population estimation of 8,400

Total SEV by Use and Class Fiscal Years Ended June 30 Use

2010

2011 58,474,000

$

52,438,900

$

2014

2015

49,167,400

$ 49,172,800

23,053,500

23,782,100

22,247,500

23,082,600

20,966,600

21,455,400

Residential…………….

206,226,535

183,089,500

169,418,300

160,866,150

161,830,500

166,629,400 3,408,300

Utility………………….

$

2013

Industrial………………

Commercial……………..

$ 56,802,500

2012

$

49,454,100

2,899,800

2,938,400

2,959,000

3,172,100

3,301,700

Development………..

913,800

916,000

917,100

908,300

907,600

Total………………….

$ 289,896,135

$ 269,200,000

$

247,980,800

$

237,196,550

$ 236,179,200

$

241,857,300

$ 272,693,335

$ 248,891,800

$

228,154,600

$

215,847,050

$ 215,652,300

$

222,086,200

17,202,800

20,308,200

21,349,500

20,526,900

$ 289,896,135

$ 269,200,000

237,196,550

$ 236,179,200

$

241,857,300

910,100

Class Real Property……….. Personal Property……. Total…………………..

19,826,200

$

247,980,800

$

19,771,100

Percent of Total SEV by Use and Class Fiscal Years Ended or Ending June 30 Use

2010

2011

2012

2013

2014

2015

Commercial……………..

19.59%

21.72%

21.15%

20.73%

20.82%

20.45%

Industrial………………

7.95%

8.83%

8.97%

9.73%

8.88%

8.87%

Residential…………….

71.14%

68.01%

68.32%

67.82%

68.52%

68.90%

Utility………………….

1.00%

1.09%

1.19%

1.34%

1.40%

1.41%

Development………..

0.32%

0.34%

0.37%

0.38%

0.38%

0.38%

Total………………….

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

continued…

144

CITY OF TECUMSEH, MICHIGAN

Schedule 19

Other Continuing Disclosures Class Real Property………..

94.07%

Personal Property……. Total…………………..

92.46%

92.00%

91.00%

91.31%

91.83%

5.93%

7.54%

8.00%

9.00%

8.69%

8.17%

100.00%

100.00%

100.00%

100.00%

100.00%

100.00%

City of Tecumseh - Maximum Tax Rates Fiscal Year Ending June 30, 2014 Millage

Millage

Millage Reduction

Maximum

Classification

Authorized

Fraction (1)

Allowable Millage

Operating

18.0000

0.7998

14.3966

(1) Cumulative

Stated Shared Revenue State Fiscal

Share

Year Ended

Revenues

2010

$

692,333

2011

705,146

2012

817,127

2013

825,030

2014

924,364

2015

1,018,138

Approximately 41.07% of the City of Tecumseh's permanent employees are represented by labor organizations. The following table illustrates the various labor organizations that represent City employees, the number of members in each and the expiration date of the present contract. Police Officers Labor Council……………………………………………………

13

6/30/2015

International Union of Operating Engineers………………………………

9

6/30/2015

Non-Union Employees………………………………………………………………….

35

Total Permanent City Employees……………………………………………

57 concluded.

145

309 E. Chicago Blvd.  Tecumseh, MI 49286 517.423.2107

City of Tecumseh

P.O. Box 396 309 E. Chicago Blvd. Tecumseh, MI 49286 • 517-423-2107 • www.mytecumseh.org www.downtowntecumseh.com

Innovative • Timeless • Inviting

Citrof

:l1madj ourn tU~~ clli~centbi€F~:~,

was made by Ruhl and supported by

WeiU'el. .,.';;;3-J07"

~

Nib'ti!lP carried U:iiibim0u;ly:~c .'

Meeting~c:ljourned

at 7:23 p.m.

Recorded by

Pc. 12.8.15

Page 3

Agenda Item Review Form

City Council

City of Tecumseh

Agenda Item Number: 9. New Business, Item B

Submitted by: Dan Swallow

Item'

Department'

Lease Agreement with Herrick Memorial Hospital, Inc. for the Fitness Connection at the Hayden Mill Building

Tecumseh City Manager •

Summary:

Since May of 1997, Herrick Memorial Hospital, Inc. (dba ProMedica Herrick Hospital) has leased space from the City of Tecumseh to operate a workout facility, the Fitness Connection, at the Hayden Mill Building. ProMedica currently leases the lower level of the Hayden Mill Building and the Glass Room, located at the east end of the building, in the amount of $39,000 annually. ProMedica is interested in renewing their lease agreement. The renewal would be valid from January of2016 through December of20l6. Space usage and lease rates are stipulated in the attached lease agreement. I am requesting that the City Council approve the lease renewal with Herrick Memorial Hospital, Inc. (dba ProMedica Herrick Hospital) and to authorize the City Clerk and Mayor to sign any necessary rental agreements that will be required.

(Continued on Page 2)

Recommendation:

Council Action:

D D

RESOLUTION

THE CITY COUNCIL OF THE CITY OF TECUMSEH RESOLVES: Approve the renewal of the lease agreement between Herrick Memorial Hospital, Inc. (dba ProMedica Herrick Hospital) and the City of Tecumseh for the use of space at the Hayden Mill BuildIng, beginnIng on January 1,2016 and ending on December 31,2016. Further, the Mayor and City Clerk are authorized to sign the lease agreement.

Approved

Denied

Continued

Bid/Purchase Item:

D

Budgeted "'____ _ _ Page(s) in FY Budget

D

12-15-15

City Manager Signature signed by Daniel E. Swallow Da n e I E• Swa Ilow Digitally Date: 2015.12.1516:27:18 -05'00' " Signature

Not Budgeted

Department Head

Date

12-15-15

City Manager City Manager

Date

~ PRoMEDICA

BIXBY AND HERRICK HOSPITALS

Our Mission is to December 14,2015 improve your health and well ing. City of Tecumseh 309 E. Chicago Blvd. Tecumseh, MI 49286 Attn: City Manager Re:

Lease Agreements between City of Tecumseh and Herrick Memorial Hospital, Inc., d/b/a ProMedica Herrick Hospital for Fitness Connection.

Dear Sir: We are enclosing herewith 3 copies of the above referenced Lease Agreement with a term of January 1,2016 thru December 31,2016. Please review these documents and if you have any changes please contact either myself or Matt Hammond. If these are found to be acceptable please sign all 3 copies and return 2 copies to me retaining 1 copy for your files. If you have any questions please contact me directly at 517-265-0392. cerely,

[t o

.\

i;~

;

1

".

.

\

Brenda Hoover Property Management Enclosures

Bixby Hospital 818 Riverside Ave. Adrian, Michigan 49221 517 -265-0900 Herrick Hospital

500 E. Pottawatamie St Tecumseh, Michigan 49286 517-4243000

www.promedica.org

LEASE AGREEMENT THIS LEASE AGREEMENT (the "Lease") is entered into effective as of the 1st day of January 2016, ("Lease Date") by and between City of Tecumseh, a Michigan governmental entity ("Landlord") and Herrick Memorial Hospital, Inc., a Michigan nonprofit corporation, doing business as ProMedica Herrick Hospital ("Tenant"). ARTICLE I: BASIC LEASE INFORMATION Each reference in this Lease to information and definitions contained in this "Article 1: Basic Lease Information" shall, unless the context clearly requires a different meaning, be deemed to refer to, and shall have the respective meaning as follows: 1.1.

PREMISES. That portion of the Building: (0 comprising the Lower Level (the "Basement"), including front desk, locker rooms, strength area and all areas currently used by Tenant as of the Lease Date, excluding the tool room, storage area and the space leased to a third party tenant in the east portion of the Basement; and (ii) that portion of the Building commonly known as the Glass Room.

1.2.

BUILDING. The building located on the Land and having a mailing address of 703 East Chicago Boulevard, Tecumseh, Michigan 49286.

1.3.

LAND. The real property located in Tecumseh, Michigan, and legally described on attached Exhibit A.

1.4.

RENT COMMENCEMENT DATE. The Rent Commencement Date shall be January 1, 2016.

1.5.

EXPIRATION DATE. The Expiration Date is December 31,2016.

1.6.

INITIAL TERM. The Initial Term shall commence on the Rent Commencement Date and shall continue, unless earlier terminated, for I year.

1. 7.

OPTION TERM(S). Intentionally left blank.

1.8.

LANDLORD SERVICES & TENANT SERVICES. The Landlord Services and Tenant Services are described on Exhibit B attached hereto.

1.9.

BASE RENT; AND BASE MONTHLY RENT. The Base Rent shall be the sum of the Base Monthly Rent due during the Term. The Base Monthly Rent during the Initial Term $3,250, without regard to the actual square footage of the Premises.

(

1.10. REAL ESTATE BROKER. The Real Estate Broker for the Landlord and Tenant is (are) as follows: Real Estate Broker/Agent for Landlord:

Real Estate Broker/Agent for Tenant:

N/A

N/A

1.11. LANDLORD'S AND TENANT'S ADDRESSES FOR NOTICES. Landlord's Address for Notices: City of Tecumseh 309 East Chicago Blvd. Tecumseh, MI 49286 Attn: City Manager

Tenant's Address for Notices: Herrick Memorial Hospital, Inc. dba ProMedica Herrick Hospital 818 Riverside Avenue Adrian, MI 49221 Attn: President

1.12. LANDLORD'S ADDRESS FOR PAYMENT OF RENT. City of Tecumseh, 309 East Chicago Blvd., Tecumseh, MI 49286 Attn: City Manager. 1.13. EXHIBITS AND ATTACHMENTS. The Exhibits and Attachments form a substantive part of this Lease and are incorporated into the Lease by reference: Exhibit!Attachment:

Description:

Exhibit A Exhibit B Exhibit C

Legal Description of Property Landlord and Tenant Services Other Terms and Conditions

[THE REMAINDER OF THIS PAGE LEFT BLANK INTENTIONALLY]

ARTICLE 2: PREMISES AND COMMON AREAS

2.1

THE PREMISES. Landlord hereby leases the Premises to Tenant, and Tenant hereby rents and hires the Premises from Landlord, for the Term. Tenant acknowledges and agrees that: (i) the basement level of the Premises shall be used for fitness activities only; and (ii) the area of the Building commonly known as the Glass Room will be used only for fitness activities and Tenant's general purposes. The parties acknowledge the basement space included in this Lease is the same space currently used by Tenant.

2.2.

COMMON AREAS. Beginning on the Rent Commencement Date and continuing during the Term, Landlord grants to Tenant, its employees, contractors, licensees and invitees, a nonexclusive license to use, in common with all others to whom Landlord has granted or may hereafter grant a license to use, subject to the provisions hereof, inclusive of the Rules and Regulations, all of the following to the extent designed and intended for the nonexclusive use of Tenant and other tenants of the Building and each of their respective employees, invitees, contractors, and licensees: parking and driveway areas inclusive of related landscaping and lighting, entrance areas, lobby areas, hallways, elevators, and restrooms (collectively, the "Common Areas"). Landlord shall not obstruct or suffer or permit any obstruction of any of the Common Areas or otherwise modify the Common Areas which obstruction or modification impairs the reasonable use of the Common Areas by Tenant, its employees, contractors, licensees and invitees in connection with the Premises as permitted under this Lease.

2.3.

PARKING. Without limiting the provisions of Section 2.3 above, Landlord shall reserve for the benefit of Tenant, and Tenant's employees, contractors, licensees and invitees, sufficient lighted parking within the parking areas on the Land as reasonably required by Tenant for the use and operation of the Premises as permitted under this Agreement. The parties acknowledge that all parking is public and not reserved for the use by a single tenant. Landlord will continue to designate the parking area on the south side of the Building for Tenant's sole use.

2.4.

SIGNS. Tenant shall have the right to erect, at Tenant's expense, identification signs on the Premises and at the Building in accordance with Tenant's customary practices. All such signs shall comply with all applicable municipal laws, building codes, ordinances and regulations. Upon the expiration of this Lease, Tenant shall remove any signs at Tenant's expense and repair any damage caused by such signs.

2.5.

QUIET ENJOYMENT. So long as no Event of Default has occurred under this Lease, Tenant shall have the peaceable and quiet enjoyment of possession of the Premises without hindrance from Landlord or any parties lawfully claiming under Landlord, subject to the terms of this Lease and except for regulations imposed by any governmental or quasi-governmental agency on the occupancy of Tenant or the conduct of Tenant's business operations.

ARTICLE 3: TERM

3.1. TERM. The Term of this Lease includes the Initial Tenn and any other extensions or renewals of the Term of this Lease in accordance with the provisions hereof. 3.2.

TERMINAl'lON. Notwithstanding anything in this Lease to the contrary, Tenant shall be '

entitled to tenninate this Lease, without penalty or recourse, upon 30 days' written notice to Landlord, in the event that Landlord sells, conveys or otherwise transfers (by operation of law or othetwise) title to the Building and/or Premises to a third party. Without limiting the types of transfers under this Section, a transfer shall be deemed to have occurred if, in a single transaction or in a series of transactions, more than 50% in interest in Landlord is transferred, diluted, reduced, or otherwise effected (inclusive of by merger or operation of law) with the result that the present holder or owners of Landlord, have less than a 50% interest in Landlord. ARTICLE 4: CONDITION OF PREMISES; ALTERATIONS TO PREMISES 4.1.

OCCUPANCY AND CONDITION OF PREMISES. Landlord shall deliver to Tenant exclusive occupancy of the Premises on or before the Rent Commencement Date. Landlord represents and warrants to Tenant that upon such delivery to Tenant:

(i)

The Premises, the Building, and all improvements, fixtures and systems conform to all building codes, laws, and regulations applicable to the use thereof as pennitted or intended under this Lease; and

(ii)

There are no latent defects in the Premises known to Landlord.

Except to the extent represented and warranted by Landlord in this Section 4.1, and subject to Landlord's obligations for maintenance, repair and replacement as set forth in this Lease, Tenant's acceptance and occupancy of the Premises upon delivery of the same by Landlord shall be deemed acknowledgment by the Tenant that the Premises were acceptable to Tenant and are suitable for Tenant's intended use. Tenant accepts the current condition of property subject to the representations and warranties in this Section. 4.2.

ALTERAl'lONS. Tenant shall not make any structural changes, alterations or additions to

the Premises without the prior written approval of Landlord, which shall not be unreasonably withheld. Tenant may make non-structural changes, alterations, or additions to the Premises without Landlord's consent and agrees to assume responsibility for the cost of any such improvements. 4.3.

AMERICANS WITH DISABILiTIES ACT. Landlord and Tenant acknowledge that landlords and tenants may both be subject to the public accommodation provisions of the Americans With Disabilities Act and/or equivalent federal, state and local laws and regulations (the "Act") and that the Lease may be used to determine the extent of each party's responsibility for compliance with the Act. Landlord and Tenant agree that, subject to Landlord's representations and warranties in Section 4.1 hereof and Tenant's rights under Section 9.1 hereof, Landlord is responsible for ensuring compliance with the public accommodation requirements of the Act, including but not limited to, the responsibility for agents, clients, customers or visitors, for the business of the Tenant,

which is to include all portions of the Building, and the responsibility for accommodation of employees, agents, patients, clients, customers and visitors within the Premises, including the obligation to provide auxiliary aids. Landlord shall indemnity Tenant, Tenant's trustee, officers, employees, agents and attorneys for any costs damages, or attorney fees to the extent permissible by law, incurred in defending any claims by any private or governmental person or entity under the Act which claims arise from the obligations described herein as the responsibility of Landlord. Tenant agrees to assume responsibility for the cost of any alterations that require strUctural improvements to comply with the Act. ARTICLE 5: RENT 5.1

PAYMENT OF RENT. Tenant shall pay to Landlord, in lawful money of the United States of America, at Landlord's Address for Payment, or at such other place as Landlord shall designate in writing from time to time: (a) the Base Monthly Rent, in arrears (ie. Rent applies to the month previous to which it is paid), without notice or demand, beginning the second month and thereafter on the first day of each successive calendar month during the Term, and (b) the Additional Rent, at the respective times required hereunder. If either the Rent Commencement Date or the Expiration Date falls on a date other than the first day or last day, respectively, of a calendar month, the Rent due for such fractional month shall be prorated on a per diem basis between Landlord and Tenant so as to charge Tenant only for the portion of such fractional month falling within the Term.

5.2

All sums of money or charges, and all costs and expenses and other sums that Tenant assumes or agrees to pay to Landlord pursuant to this Lease, other than Base Rent and Base Monthly Rent, shall be deemed "Additional Rent" and, unless expressly provided otherwise herein, shall be due and payable 30 days after demand. Unless Landlord has specified herein or otherwise in writing a different place for payment, all Additional Rent shall be payable to Landlord at the place where the Base Rent is payable.

5.3

"RENT" DEFINED. "Rent" means, individually or collectively, as the context requires, Base Rent, Base Monthly Rent, Personal Property Rent, and Additional Rent.

ADDITIONAL RENT.

ARTICLE 6: MAINTENANCE 6.1.

MAINTENANCE. Landlord, at Landlord's expense, shall maintain, repair, and replace the roof and structure of the Building, the heating, ventilating, air-conditioning, water, sewer, electrical and mechanical systems serving the Building, all Common Areas, and the Premises, and all improvements and non-trade fixtures located therein and thereat, in a good safe operating condition and repair as they become necessary; provided that, Tenant shall reimburse Landlord as Additional Rent for the cost to repair or replace any improvements, facilities, or systems comprising or serving the Premises, Building or Common Areas, where such repairs or replacements are made necessary by Tenant's misuse or neglect or the misuse or negligence of anyone occupying the Premises as Tenant's agent, employee, invitee, contractor, tenant, or subtenant. Tenant shall provide Landlord with reasonable notice of any condition of the Building, Common Areas or

Premises requiring repair or maintenance and Landlord shall have a reasonable time in which to make such repairs and maintenance. Subject to Tenant's "Self-Help" rights set forth in Section 6.2, below, Tenant shall not perform any repairs or maintenance to the Building or Common Areas or, without the written consent of Landlord and then only by approved contractors, any portion of the Premises. Tenant shall assume responsibility for maintenance and repair of any equipment or mechanical units installed by Tenant. In no event shall Landlord be responsible for maintaining or repairing Tenant's equipment, or for loss, damage or injury to any of the Tenant's equipment or personal property or any other personal property at the Premises, unless such loss, damage or injury is caused by or arises out of the negligence or misconduct of Landlord or Landlord's agents, employees, contractors, or invitees. Tenant agrees to be responsible for housekeeping, cleaning and minor repair of the Premises, including cleaning of the main floor restrooms in the event utilized by Tenant. 6.2.

TENANT'S "SELF-HELP" RIGHTS.

If:

(i)

Landlord, after receiving notice from Tenant, refuses or neglects to commence any repairs, replacements or maintenance required hereunder to be performed by Landlord within 5 days after the receipt of such notice, or

(ii)

if a condition of the Premises, Building or Land exists which requires immediate repair, replacement or maintenance to (x) protect the safety of Tenant, Tenant's employees, contractors, tenants, licensees, or invitees, or (y) allow for the continued reasonable operation of the Premises as permitted under this Lease, and in either case «x) or (y)), the time period for notice and repair, replacement or maintenance as provided under sub-part (i) above is not possible or practicable,

then Tenant may make or complete said repairs, replacement or maintenance and Landlord shall pay to Tenant the reasonable cost thereof within 10 days after Landlord's receipt of written demand by Tenant for such payment. Notwithstanding any other provision of this Lease to the contrary, in the event that Landlord fails to reimburse Tenant for the cost of any such repairs within said lO-day period, Tenant shall have the right to offset the same against Rent payable hereunder. 6.3.

Tenant shall permit Landlord, its agents, employees and contractors, at any time in the event of an emergency, and otherwise at reasonable times, to take any and all measures, including inspections, repairs, alterations, additions and improvements to the Premises, Building or Common Areas as may be necessary or desirable to safeguard, protect or preserve the Premises, Building, or Common Areas, or Landlord's interests; to operate or improve the Premises, Building or Common Areas, to comply on behalf of Tenant with all laws, orders and requirements of governmental or other authority (if Tenant fails to do so); to examine the Premises to verify Tenant's compliance with all of the terms, covenants, obligations and conditions of this Lease; or to exercise any rights with respect to the Premises that Landlord may exercise in the event of default by Tenant. INSPECTIONS BY LANDLORD.

ARTICLE 7: INSURANCE

7.1.

LANDLORD'S INSURANCE. Landlord shall obtain and carry at its own expense during the Tenn the following insurance: 7.1.1. COMMERCIAL GENERAL LIABILITY INSURANCE. Public liability and property damage insurance, covering loss, damage or injury to persons or property (inclusive of glass breakage) occurring during the Tenn, within the Common Areas or any portions of the Building which are not occupied by a tenant for such portion. The insurance under this Section 7.1.1. shall have a combined single limit for bodily injury and propel1y damage per occurrence not less than $2.0 million, shall include an endorsement covering Landlord's contractual liability for indemnity and other assumption of liability under this Lease, and which insurance shall be primary with respect to any loss covered by insurance maintained by Tenant. Tenant shall be named as an "additional insured" under the insurance in this Section 7.1.1. and such insurance shall not be cancelable without less than 30 days' written notice to Tenant. Landlord shall furnish to Tenant, on or before the Rent Commencement Date and thereafter at such a reasonable times as requested by Tenant, an ACORD Certificate of Insurance evidencing the insurance required under this Section 7.1.1. 7.1.2. CASUALTY INSURANCE. Casualty/fire insurance keeping the Building insured against the following risks: (a) loss or damage by fire, vandalism and malicious mischief, sprinkler leakage, and all other physical loss perils commonly covered by "all risk" insurance and/or an extended coverage endorsement in an amount equal to the full functional replacement cost of the Building, including a stipulated value endorsement if available at a reasonable cost; and (b) loss or damage by explosion of steam boilers, pressure vessels, or similar apparatus, now or hereafter installed on the Premises or in the Building, in the minimum amount of $500,000. Landlord's insurance should name the Tenant as an "additional insured" or "certificate holder" or similar designation such that the insurer would not have subrogation rights against Tenant for any payment made by the insurer under the insurance policy. Landlord shall provide to Tenant on or before the Rent Commencement Date with an ACORD Certificate of Insurance evidencing that Landlord has purchased the insurance required under this Paragraph and that such insurance is not cancelable without 30 days' advance written notice to Tenant.

7.2.

TENANT'S INSURANCE. Tenant shall obtain and carry at its own expense, public liability and property damage insurance, covering loss, damage or injury to persons or property (inclusive of glass breakage) occurring during the Tenn, arising out of or relating to the use by Tenant or any employee, contractor, licensee or visitor of Tenant of the Premises, Building or Common Areas, with a combined single limit for bodily injury and property damage per occurrence not less than $2.0 million which insurance shall cover, among other perils, Tenant's contractual liability for indemnity and other assumption of liability under this Lease. Notwithstanding anything to the contrary contained in this Section 7.2., Tenant's obligations to carry the insurance provided for herein may be brought within the coverage of a so-called blanket policy or policies of insurance carried and maintained by Tenant provided that any such blanket policy or policies shall otherwise satisfy the insurance requirements of this Section 7.2.

7.3.

Anything in this Lease to the contrary notwithstanding, Landlord and Tenant each hereby waives any and all rights of recovery, claim, action or cause of action against the other for any loss or damage that may occur to the Premises, Building or Common Areas, or any improvements thereto, or any personal property of Landlord or Tenant, or any interruption of the business of Landlord or Tenant arising from any cause that is insured against under the terms of any property insurance required to be carried hereunder. The foregoing waiver shall apply regardless of the cause or origin of the claim, including but not limited to the negligence of a party or that party's agents, officers, employees or contractors. The foregoing waiver shall not be enforceable if it would have the effect, but only to the extent of such effect, of invalidating any insurance coverage of Landlord or Tenant if an endorsement to such insurance coverage permitting this waiver could not be obtained at a reasonable cost. WAIVER OF RIGHTS OF RECOVERY.

ARTICLE 8: LANDLORD AND TENANT SERVICES

8.1

LANDLORD SERVICES. Landlord agrees to provide or to cause to be provided (where

provided by third parties), the Landlord Services, commencing on the Rent Commencement Date and continuing during the Term. 8.2

TENANT SERVICES. Tenant agrees to provide or to cause to be provided (where provided

by third parties), the Tenant Services, commencing on the Rent Commencement Date and continuing during the Term. ARTICLE 9: USE AND INDEMNIFICATION

9.1.

USE AND INDEMNIFICATION. Tenant shall use the Premises for general medical, wellness

and physical fitness purposes and for no other such purpose whatsoever without the prior written consent of Landlord, which consent may not be unreasonably withheld or delayed. Tenant shall not use the Premises for any unlawful purpose and shall comply with all laws and regulations applicable to Tenant's use of the Premises (subject to Landlord's representations and warranties in Section 4.1). 9.2.

TENANT INDEMNIFICATION. Tenant shall indemnify, defend and hold Landlord, and its

shareholders, trustees/directors, officers, employees and agents (collectively, the "Landlord Indemnified Parties"), harmless from and against any and all claims, damages, costs, liability and expenses (including reasonable attorneys fees) (collectively, "Claims and Liabilities") against or incurred by Landlord Indemnified Parties arising from or out of (i) any loss, damage or injury to persons or property from any act, omission or occurrence at the Premises during the Term; (ii) the violation by Tenant or anyone occupying the Premises as Tenant's agent, employee, licensee, invitee, contractor tenant, or subtenant of any law or order of any governmental or quasi-governmental agency; or (iii) the failure of Tenant or any agency, employee, licensee, invitee, contractor, tenant or subtenant of Lease to observe and perform each and all of the terms covenants and conditions of this Lease, except that Tenant's indemnity obligation under this Section 9.2 shall not apply to the extent, and only to the extent, of the negligence or intentional misconduct of the Landlord Indemnified Parties.

9.3.

LANDLORD INDEMNIFICATION. Landlord agrees to indemnify, defend and hold Tenant, and its shareholders, directors, officers, employees and agents (collectively, "Tenant Indemnified Parties") harmless from and against any and all claims, damages, costs, liability and expenses (including reasonable attorneys' fees) (collectively, "Claims and Liabilities") against or incurred by the Tenant Indemnified Parties arising from or out of (i) the failure by Landlord to perform any of Landlord's obligations under this Lease when and as required under this Lease or the breach by Landlord of any of its representations or warranties under Section 4.1; or (ii) any loss, damage or injury to persons or property on, in or about the Common Areas or unoccupied portions of the Building, except the Landlord's indemnity obligation under this Section 9.3 shall not apply to the extent, and only to the extent, of the negligence or intentional misconduct of the Tenant Indemnified Parties. ARTICLE 10: ASSIGNMENT AND SUBLETTING

10.1. ASSIGNMENTS AND SUB-LEASES. Landlord and Tenant agree that this Lease may not be assigned or sub-leased without the express written approval of the other parties. Further, Tenant agrees and acknowledges that Landlord cannot agree to an assignment or sublease of this Lease without the approval Tecumseh City Council, the same requiring an affirmative vote of 5 members of the Council. ARTICLE 11: DEFAULT 11.1. EVENT OF DEFAULT. Anyone or more of the following events shall be an "Event of Default": 11.1.1. Tenant shall have failed to pay an installment of Base Rent or Additional Rent or any portion thereof or any sum of money required to be paid by Tenant by the terms of this Lease within 30 days from written notice from Landlord that such Rent is past due; or 11.1.2. Tenant shall have breached any other provision of this Lease and shall not have commenced to remedy such breach for a period of 30 days after Landlord, by written notice, has informed Tenant of such breach or, if once commenced, Tenant fails to diligently prosecute the curing of such breach. 11.2. REMEDIES UPON OCCURRENCE OF AN EVENT OF DEFAULT. Upon the occurrence of an Event of Default, Landlord may exercise any rights that Landlord may have under law or at equity. Landlord shall also be required to mitigate any damages that Landlord may suffer as a result of such Event of Default. ARTICLE 12: CASUALTY 12.1. DAMAGE. In the event the Building or Common Areas shall be damaged by any casualty which renders all or a substantial portion of the Premises or the Common Areas unusable for the purposes provided herein, then either Landlord or Tenant may terminate this Lease within 14 days from the date of such damage by providing written notice to the other party of such termination, effective as of the date of the casualty. If neither

Landlord nor Tenant elect to tenninate the Lease as provided herein, or if only an insubstantial portion of the Premises or the Common Areas are damaged by reason of such casualty, then Landlord shall proceed with all diligence to repair said damage within 90 days of the date of such damage. If Landlord is unable to repair such damage within 90 days from the date of the casualty, then Tenant may tenninate this Lease upon giving written notice of such tennination to Landlord, effective as of the date of the casualty. 12.2. TENANT'S PROPERTY. Any repairs by Landlord pursuant to this Section shall not extend to Tenant's personal property, and Landlord shall have no liability to repair any trade fixtures or improvements installed or owned by Tenant or personal property of Tenant or Tenant's employees, patient, agents, or invitees, provided the repair or restoration of any trade fixtures or improvements shall be perfonned by Landlord, at Tenant's expense, or by Tenant's contractors approved by Landlord. 12.3. LIABILITY OF TENANT DURING PERIOD OF UNTENANTABILITY OR TERMINATION OF LEASE. In the event the Premises shall become untenantable or inaccessible as a result of any casualty, Tenant's Rent shall be equitably abated until such time as the Premises are made tenantable andlor accessible. In the event this Lease shall be tenninated by Landlord or Tenant in accordance with this Section, Tenant shall remain responsible for any obligations accruing through the date of the casualty. ARTICLE 13: SURRENDER OF PREMISES AND HOLDOVER

13.1. SURRENDER OF PREMISES BY TENANT. On the Expiration Date or earlier tennination of this Lease, or upon any re-entry of Premises by Landlord without tenninating this Lease upon an Event of default, Tenant, at Tenant's sole cost and expense, shall peacefully vacate and surrender the Premises to Landlord in broom clean and in the same condition as on the Rent Commencement Date or as the Premises may thereafter have been improved by Landlord or Tenant, reasonable use and wear thereof, repairs which are Landlord's obligations under this Lease, and damage due to casualty or failure of Landlord to perfonn its obligations under this Lease excepted. On or before the Expiration Date, Tenant shall remove all of Tenant's furniture, equipment, trade fixtures and personal property, and shall be responsible to Landlord as Additional Rent for the cost incurred by Landlord to repair any damage caused by such removal (or failure of Tenant to so remove), and Tenant shall tum over all keys to the Premises to the Landlord. The provisions of this Section shall survive the expiration or earlier tennination of the Lease. 13.2. HOLDOVER. Any holding over by Tenant beyond the expiration of the Initial Tenn or, if applicable, any Option Tenn, shall give rise to a tenancy from month-to-month on the same tenns and conditions applicable to such tenancy immediately PilOf to the commencement of such month-to-month tenn. ARTICLE 14: MISCELLANEOUS PROVSIONS

14.1. W AlVER OF DEFAULT OR REMEDY. No waiver of any covenant or condition or of the breach of any covenant or condition of this Lease shall be taken to constitute a waiver of

any subsequent breach of such covenant or condition nor to justify or authorize the nonobservance on any other occasion of the same or of any other covenant or condition hereof. 14.2. TIME. In computing any period of time prescribed by this Lease, the day of the act, event, or default from which the designated period of time begins to run shall not be included. The last day of the period so computed shall be included, unless it is a Saturday a Sunday, or a legal holiday, in which event the period runs until the end of the next day which is not one of the aforementioned days. Without limiting the generality of the foregoing, any act, including but not limited to payment of Rent, for which the last due date falls on Saturday, a Sunday, or a legal holiday, shall be due on the next day which is not one of the aforementioned days. 14.3. CONSTRUCTION OF AGREEMENT. This Lease has been prepared by Tenant and its professional advisors and reviewed by Landlord and its professional advisors. Landlord, Tenant and their respective advisors believe that this Lease is the product of all of their efforts, it expresses their agreement, and, therefore, this Lease shall not be interpreted in favor of either Landlord or Tenant or against either Landlord or Tenant merely because of their efforts in preparing it. 14.4. SEVERABILITY. Every agreement contained in this Lease is, and shall be construed as, a separate and independent agreement. If any term of this Lease or the application thereof to any person or circumstances shall be invalid or unenforceable, the remaining agreements contained in this Lease shall not be affected. 14.5. HEADINGS. The article and section headings contained in this Lease are for convenience only and shall not enlarge or limit the scope of meaning of the various and several articles hereof. Words in the singular number shall be held to include the plural, unless the context otherwise requires. 14.6. SUCCESSORS AND ASSIGNS. All agreements and covenants herein contained shall be binding upon the respective heirs, personal representative, successors and assigns of the parties hereto. If there is more than one Tenant, the obligations hereunder imposed upon Tenant shall be joint and several. 14.7. ENTIRE AGREEMENT; AMENDMENTS. This Lease sets forth the entire agreement between the parties, and cancels all prior agreements, leases, arrangements, negotiations, and understandings between Landlord and Tenant with respect to the subject matter of this Lease. No amendment or modification of this Lease shall be binding or valid unless expressed in writing executed by both parties hereto. 14.8. TIME OF ESSENCE. Time is of the essence with respect to time for performance of any obligations of either party under this Lease. 14.9. RELATIONSHIP OF PARTIES. Nothing contained herein shall be deemed or construed by the parties hereto, nor by any third party, as creating the relationship of principal and agent or of partnership or of joint venture between the parties hereto, it being understood and agreed that neither the method of computation of rent, nor any other provision contained herein, nor any acts of the parties herein, shall be deemed to carry any relationship between the parties hereto other than the relationship of Landlord and Tenant.

14.10. NOTICES. All notices, consents, demands, requests, documents, or other communications (other than payment of Rent) required or permitted hereunder (collectively, "notices") shall be in writing and be deemed given upon actual receipt by the intended party. The addresses of the parties for notices are set forth in Article 1 of this Lease, or any such other addresses subsequently specified by each party in notices given pursuant to this Section. 14.11. GOVERNING LAW; JURISDICTION AND VENUE. This Lease shall be governed by the laws of the state where the Premises is located (the "Forum State"). Landlord and Tenant irrevocably and unconditionally: (a) agree that any suit, action or legal proceeding arising out of or relating to this Agreement, or for recognition and enforcement of any judgment in respect thereof, shall be brought in the courts of record in the county of the Forum State where the Premises is located (the "Forum County") or the District Court of the United States having jurisdiction over the Forum County, and appellate courts from any thereof; (b) consents to the jurisdiction of each such court in any such suit, action or proceeding; (c) waives any objection which it may have to the laying of venue of any such suit, action or proceeding in any of such courts; and (d) agrees that service of any court paper may be effected on such party by mail, as provided in this Agreement, or in such other manner as may be provided under applicable laws or court rules in said Forum State. The parties hereto have caused this Lease to be executed in duplicate by their duly authorized representatives as ofthe date first aforesaid. CITY OF TECUMSEH

HERRICK MEMORIAL HOSPITAL, INC. dba PROMEDICA HERRICK HOSPITAL

EXHIBIT A LEGAL DESCRIPTION OF PROPERTY The Building and adjoining parking areas located at: XTO-320-0570-00 LOTS 57 & 58 (SEE 675-0160) ASSESSOR'S PLAT # 5 CITY OF TECUMSEH

14

EXHIBITB

LANDLORD SERVICES

Without limiting any of Landlord's obligations under the Lease, Landlord shall furnish to Tenant

the Premises, Building, Land and the following: A.

Electric and Natural Gas for normal and usual operation of the Premises and Tenant's equipment as permitted in the Premises under the Lease.

B.

Heating, Ventilating and Air Conditioning, in order to maintain the temperature and air circulation within the Premises as reasonably required for the conduct by Tenant of Tenant's business at the Premises as permitted under this Lease.

C.

Access to telephone wire lines currently available in the Building.

D.

Proper illumination, ventilation, heating and air~conditioning (to maintain reasonably appropriate temperature, air circulation and illumination) within the Premises as reasonably required for Tenant to conduct business at the Premises as well as to all interior Common Areas during operating hours of Tenant.

E.

Maintenance, repair and replacement of all Common Areas to maintain the condition of the Building and repairs as they become necessary.

F.

Illumination of all parking, driveway and walkway areas and exterior signage seven days a week, 6:00 a.m. until one hour after dawn, and one hour before dusk until midnight.

G.

Applicable property taxes so long as Tenant remains a tax-exempt entity.

H.

Point of contact building manager.

L

A list of vendors providing services at the Building as of the Rent Commencement Date.

1.

Current standard furniture, fixtures and equipment. TENANT SERVICES

A.

Water and sanitary sewer service charges.

B.

Disposal of sharps or other wastes that may not be legally disposed in standard refuse removal service.

C.

Telephone, internet and cable TV charges.

D.

Heating, ventilation and air conditioning installed by Tenant.

E.

Waste removal services, if needed.

F.

General housekeeping and maintenance. 15

EXillBITC OTHER TERMS AND CONDITIONS As part of its maintenance responsibilities Landlord shall actively monitor any water intrusion into the Premises and immediately remediate any resulting damage. Tenant agrees to consult with Landlord when installing new equipment or making modifications that may be affected by damp conditions. Tenant acknowledges the current condition of the Building in an "as-is" condition. Landlord agrees to take all reasonable steps to keep water out of the Building and make remediation it when it occurs. However, both Tenant and Landlord acknowledge that water infiltration into the Building does and will occur from time to time. Tenant agrees to notify Landlord at least 180 days in advance of the Expiration Date of its intent to renew the Lease. Failure to provide the advance notice will allow Landlord to lease the space to other tenants.

16

Agenda Item Review Form

City Council

City of Tecumseh

Agenda Item Number:

Submitted by:

9. New Business, Item C

Shelley Lim

Item:

Department:

Renewal of J. Trees Lease Agreement at the Hayden Mill Building

Parks and Recreation

I

Summary:

In November of 2013, J. Trees Wines LLC, dlbla J. Trees Cellars, entered into a lease agreement with the City of Tecumseh to lease space at the Hayden Mill Building. The space has been used as a tasting room, offering customers the opportunity to sample and purchase J. Trees Cellars ciders and wines. J. Trees Cellars also offers food and live music. The tasting room is a great addition to the Tecumseh business community and is an ideal use of the Hayden Mill Building. J. Trees Cellars would like to renew the lease agreement for a twelve month period, beginning on January 1, 2016 and ending on December 31, 2016. Space usage and lease rates are stipulated in the attached lease agreement. The one-year term is intended to provide flexibility to the City and J. Trees Cellars regarding future use of the space.

Council Action:

Recommendation:

RESOLUTION THE CITY COUNCIL OF THE CITY OF TECUMSEH RESOLVES: Approve the renewal of the lease agreement between J. Trees Wines LLC and the City of Tecumseh for the use of Suite B at the Hayden Mill Building, beginning on January 1, 2016 and ending on December 31,2016. Further, the Mayor and City Clerk are authorized to sign the lease agreement.

D

Approved

D

Denied

D

Continued

Bid/Purchase Item:

D

Budgeted $_ __

_ _ _ Page(s) in FY Budget

D Shelley Lim -------------------

CLS Director

Da n'Ie I E Swa Ilow Digitally .,gned by Daniel E, Swallow

City Manager

Signature

•

Date: 2015.12,1510:37:46-05'00'

Signature

Department Head

City Manager

Not Budgeted

11/18/2015 Date

12/15/15 Date

LEASE AGREEMENT This lease (the Lease), is entered into on 2015, between the City of Tecumseh, a Michigan Municipal Corporation, of 309 East Chicago Boulevard, Tecumseh, Michigan (Landlord), and Trees Wmes U.C, d/b/a J. Trees Ceflars. by Jon Tr.eka, is Membe.: arlO President, of 5722 Summerfiel'd Road', Petersburg. MfC/lJigan (Tenant? on the terms and. conditions listed below. The execution of this lease agreement is subject to approval required by the Tecumseh City Council.

1. Description of the Premises. Landlord owns a building located in Tecumseh, Michigan. Landlord leases to Tenant and Tenant rents from laJlldlord a leasehold in the building known as the Hayden Mifl Building wi'ltt a matting address of 703 East Chicago Boulevard, Tecumseh, Michigan (the Building), containing approximately 2,073 square feet, which is shown on the layout on the attached exhibit A (the Premises). In conjunction with its use of the Premises, Tenant shall have the right to use the adjacent outdoor area as depicted in exhibit A for outdoor seating, an additional garage and storage area ,as defined below, consisting of approximately 650 square feet, as well as the public parking areas located behind the building as shown on exhibit A. The garage is defined· as the space to the east of Swle B and accessible from the northern parking level. The storage area is defined as aU space to the east of Suite B.

2. Basic Lease provisions. The basic lease provisJons are stated below and further explained in the section referenced to th.e 'igbt of each prowsion: (a) Term: One year (b) Commencement Date: January 1, 2016 (c) Termination date: December 31.2016 (d) Options: None (See §3) (e) Monthly rent amount: $900.00; per month; (See §4) (t) Security deposit: $800 (See §5) (g) Use: The operation of a wine making and tasting business, including retail sales, as arrowed by the B-3, with conditions zoning as approved by the City of Tecumseh. (See §10)

3. Term. This Lease shall be for a term stated in section 2(a) commencing on the date stated in section 2(b) (the Commencement Date) and terminating on the date stated in section 2(c). Each succeeding .lease 'f82' shatl ~ on ,the anniversary af the same date and continue for 12 calendar months until the tenmnation Of'the'Lease. The Landtord and Tenant may mutuany agree to extend the Lease agreement, subject to the approval of the Tecumseh City Council.

4. Minimum rent. Tenant shall pay to Landlord as rent the sum stated in section 2(e). payable in monthly tnstaJlments due: in.actvaflCe, on.ttle:f:imctay oteact1, montilduringthe term of this Lease. Aft

Pent'stat,be paid: to, laAfI;k)rd at tJle adtWess·set fofUl..ai>ove or: at stlCfl other addfess as Landlord may designate in writing, without any prior demand and without any deduction or offset. If Tenant shall fail to pay any amount due from it to Landlord by the due date under this Lease, then that amount shall be subject to a 10% penalty. 6. Security deposit. Tenant, contemporaneously with the execution of this Lease, has deposited with Landlord the sum stated' msecUor:l 2.(1)3S.2 'SeCfJ':r.ity depoSit. The·deposit :stlaftbe nmaoyl.aFKilord, wfthoot liability for interest, as security for the faftttful performance by Tenant of an the terms, covenants, and conditions of this Lease to be kept and performed by Tenant during the term of this Lease. If Tenant fails to keep and perform any of its covenants of this Lease, Landlord at its option may appropriate and apply the entire deposit, or so much as may be necessary, to compensate Landlord for loss or damage sustained by Landlord due to Tenant's breach. If the entire deposit or any portion is appropriated and applied by Landlord for the payment of overdue rent or other sums due and payable to Landlord by Tenant, Tenant shall, on the written demand of Landlord, forthwith remi( to landtord a su1lCiem amOUflt itl cas'h"to restore· the security to tfIle original sum deposited. Tenant's failure to do so within 5 days after receipt of demand shan constitute a breach of this Lease. 6. Taxes. Landlord shall payor cause to be paid all real property taxes and special assessments levied against the Building including the Premises. Tenant shall pay all personal property taxes assessed ~ amy persooal"propen,y 0\V!IIled tTy leITant on 1M1e,PfemlSes. Tenant will not be delinquent to the city fOT any taxes,fees or perm'its. 7. Maintenance and repair. Tenant shall maintain and repair and keep the premises in good condition and repair, including Tenant's improvements and installed fixtures. Landlord shall, at its expense, make all other necessary repairs and replacements to the Building, including those of a structural or capital nature, determi'!!\ieO necessary by hl.~. tat'ldSord sttaI*, be,o~ to make !!ef)8its only after Tenant has given landford written notice of the need for the repair, and only rf the repair was not caused by the negligence or willful act of Tenant, its agents, employees, invitees, or licensees. Tenant shall provide and pay for its own regular janitorial service to maintain the premises in a neat and clean condition. Landlord shall be responsible for repairs to the building not caused by the negligence or willful act of Tenant, its agents, employees, invitees, or licensees. Tenant shall be responsible for all repairs or replacements to the Building occasioned by the negligence or willful act of Tenant, its agents, employees, invitees, or licensees.

i"enam wUlrestorethe SUite Bspace to 'its preieaseOO1'ldlt1oo 'atlease ·termil'K!ltlonsbotM the lease agreement nolbe extended.

Tenant shall not remove any energy savings devices, such as water savers, low voltage lighting,

thermostats without consent of the landlord.

Tenant shall be responsible for the cost of any additional water, sewer, gas or electrical charges

as a result of intentional or negligent acts of the Tenant, its employees or customers. Tenant

shall routinely inspect and monitor the leased space for life safety issues that may arise. If the

cause of the safety issue is caused by the Tenant, the Tenant will resolve those issues

immediately. If the cause is not of the Tenant, the Landtoro will be nOltified immediately.

8. Utilities.

Landlord shall pay all charges and deposits for the water, sewer, natural gas and electric utilities

provided to or used in the premises during the term of this Lease. Landlord shall not be liable in

damages should the furnishing of any utilities be interrupted by fire or other casualty, accident,

strike, labor dispute or disagreement, the making of any necessary repairs or improvements, or

any other causes/beyond the ~ control of La!ldk:m:l. Tenant shan assume one hundred percent (100%) of all telephone, telecommunications, cable or other such services, including all installation charges for the telephone lines, facsimile, data transmission lines and devices, or other related equipment or utilities. 9. Liability insurance. Tenant shall indemnify Landlord and save Landlord harmless from any liability or claim for damages that may be 865e,rtecf agailllst LamllOiqj'1)y 1Ie8SOl\l\ ofi8flY accid8Jilt: 011 casua.ay occurring on or about the Premises. Tenant shall, at its own cost and expense, obtain and keep in force a policy or policies of public liability insurance with an insurance company approved by Landlord, with liability coverage of an amount as recommended by Landlord's insurance agent that, for the initial coverage shall be not less than $1 million for injury or death to anyone person, $3 million for injury or death to more than one person, and $500,000 regarding damage to property. Tenant shall furnish Landlord with certificates or other evidence acceptable to Landlord indicating that the insurance is in effect and providing that Landlord shall be notified in writing at :4east 30 days before oaooeItafJon of,anymaBial Ohange in or renewat of the po1icy.. ~ insurance policies shall name Landlord and any persons deSignated by Landlord as insured parties. Any insurance maintained by either party pursuant to this section or under this Lease shall contain a clause or endorsement under which the insurer waives a" rights of subrogation against the other party, its agents or employees, regarding losses payable under the policy. Any personal property kept on the Premises by Tenant shall be at Tenant's sole risk.

10. Us•. Tenant shall use and occupy the Premises for the purpose stated in section 2(g) and for no other purpose without the prior written consent of Landlord. Tenant shall not intentionally and knowingly use the Premises for any purpose or in any manner in violation of any law, ordinance, rule or regulation adopted or imposed by any other governmental agency. Tenant shall not deface or injure the Premises or the Building, permit anything to be done on the Premises tending to create a nuisance or to disturb other tenants in the Building, or permit any activity in the Premises that will result in an increase of any premium, or cancellation of a policy, for insurance on the Premises or the )~.

12. Operations.

Tenant's operations in conjunction with the Premises shall meet the reqUirements set forth

below.

a. Tenant shall keep all garbage and refuse in the kind of container specified by Landlord. If

Landlord shall provide Of designate a 8eIVice for picking up l!'eWse and garbage, Tenant shaft

use the same at Tenant's cost. 1enant srtaJr pay the cost of remowrof any of Tenant's refuse or

rubbish. Tenant may utilize the Landlord's trash dumpsters at an additional cost as part of a

separate agreement.

b. Tenant shall not cause the Premises to fall below a temperature that is sufficiently high to

prevent freezing of water in any pipes and fixtures. Tenant understands that the HVAC controls

are a single thermostat for both SUite A & B and Tenant may not have full control of HVAC

temperatures. Tenant shall not cause any activity that disturbs adjoining tenants.

c. Tenant shalt keep the outside areas immediately adjoining the Premises clean and free from

dirt and rubbish to the satisfaction of Landlord, and Tenant shall not place or permit any

obstructions or merchandise in those areas. Tenant shall water and maintain any flowers,

shrubs, and trees located immediately adjoining the Premises.

d. Tenant shall store only those items used in the course of the tenant's business operations.

e. Tenant shall conduct its business in the Premises in a dignified manner and in accordance

with high standards of store operation.

f. Tenant agrees that there will be no outdoor storage, unless approved by the Landlord in

writing~ Temporary storage may be aRowed with approva' of the LandlOrd.

13. RestrtcUons 00" l'enanf's aetlviU.s:.

Without Landlord's written consent, Tenant shall not engage in the activities listed befow.

a. Tenant shall not operate all or any part of its business in the Premises in the manner that is a

"discount house," "wholesale house," "outlet store," or "surplus store."

b. Tenant shall not conduct any auction, fire, going-out-of-business, or bankruptcy sales in the

Premises.

c. Tenant shall not operate or permit to be operated on the Premises any coin or token operated

vending machines or similar devices for the sale of goods, wares, merchandise, food,

beverages, or serWce, Jnalucding, without Itmitatiofl, 'Pay tetepttones, paytockers, scale, and

amusement devices without Landlord's prior written consent.

d. Tenant and Tenant's employees and agents shall not SOlicit bUSiness in the parking or other

common areas of the Building, nor shall Tenant or its employees or agents distribute any

handbills or other advertising matter in or on automobiles parked in the parking area or in other

common areas without Landlord's prior written consent.

e. Tenant shall conduct outdoor activitieslbusiness in compliance with all city ordinances.

f. Tenant shall not receive or ship articles of any kind that disrupts the other tenants or that i~ with. tile publiC'S use of the p8Vk.: area. Tenant will coordinate use of. parklland' area so that conflicts in scheduling and parking areas are avoided. Tenant agrees to not allow parking of customers and/or employees near the Tecumseh Senior Center. during their operating hours. See shaded area on Exhibit A. g. Tenant and its employees and agents shall not park any vehicle on the Building landscaped areas. h. Tenant shall not conduct any business or keep or display any merchandise in any common areaof.ne~.

14. Assignment and subletting. Tenant agrees not to sell. assign. mortgage. pledge. or in any manner transfer this Lease or sublet the Premises or any portion of the Premises without the prior written consent of Landlord. Notwithstanding any assignment or subletting. Tenant shall remain fully liable on this Lease. Lancnord~s ~t to a5$l'gn this lease is,. atKi sttal'remain unquafrfied. On atlY tran5fer of Landlord's interest in the Premises in which the purchaser assumes all obligations under this Lease. Landlord shall be free of all obligations of Landlord under this Lease and shall not be subject to any liability resulting from any act or omission or event occurring after the conveyance. Tenant agrees to recognize the transferee as Landlord. and Tenant further agrees, at Landlord's request, to execute and deliver such documents and estoppel letters as Landlord may request to assist in that transfer.

1'6. 'Acceptace ~ PreMIses. The occupancy by Tenant oflhe Premises shall constitute an acknowledgment by Tenant that the Premises are then in the condition called for by this Lease. 16. Damage or destruction. If. during the term of this Lease, the Premises shall be partially or totally destroyed by fire or other casualty covered by insurance so as to become partially or totally un-tenantable, the same snat. be repaired as promptly as; possible witn the insurance proceeds unless this lease is terminated. In the event of damage or destruction, if this Lease is not tenrninated, fhe rent shall be abated proportionately to the loss of use suffered by Tenant. If. during the term of this Lease, the Premises shall be partially or totally destroyed by fire or other causality, and the cost of restoring the Premises to its condition prior to the damage shall equal or exceed 40 percent of its fair replacement value immediately prior to the damage, or if the Premises are damaged by any casualty not insured against by Landlord, Landlord shall have the right to terminate this Lease by giving Tenant written notice of its election to do so within 15 days after the date on which the damage occurs. On the giving of notice, the Lease shall terminate as of the date on

which damage occurred and the rent shall be adjusted to that date. In default of notice by Landlord, this Lease shall continue and Landlord shall cause the Premises to be repaired or restored with due diligence.

17. Condemnation.

If the whole or any part of the Premises shall be taken by any public authority under the power

of eminent domain, the term of this Lease shall cease on that part to be taken from the day the

possession is acquired by the public authority and the rent shall be paid up to that date. If the

portion of the Premises taken substantially impairs the usefulness of the Premises for the

purpose for which the Premises were leased, Tenant shall have the right either to terminate this

Lease or to conMue in _ ~of the remai~fiet; of the Priernises uo.c!ecthe terms: and.

conditions of this Lease except that the rentals shall be reduced in proportion to the amount of

the Premises taken, and in the latter event, Landlord shall promptly restore the remainder to a

reasonably tenantable condition. All damages awarded for the taking shall belong to and be the

property of Landlord.

18. Alterations and signage.

,No Jrn,provements,alteratiollS, additioAS,Or physical cha~ shall be made 00 ,the Premises by

Tenant without the prior written consent of Landlord and in compliance with local ordinances.

19. Remedies and default.

If Tenant shall default in the payment of any sums (lease payments and improvements) to

Landlord when due and shall not cure such default within 7 days; or if Tenant shall default in the

performance of any other covenant or condition of the Lease and shall not cure such other

default within 30' days after written ,notice. frQrrtLandlord specifying the defallllt; or if Tenarntor its

agent shall falsify any report to be furnished to Landlord pursuant to the terms ofthisLease; or

in case Tenant shall be adjudicated a bankrupt or make any assignment for the benefit of

creditors; then, in any such event, Landlord may either (a) accelerate the full balance of the

rental payable for the remainder of the term and sue for such sums or Landlord may terminate

this Lease or (b) reenter the premises, without terminating this Lease, and dispossess Tenant or

any other occupant of the Premises and remove Tenant's effects and re-Iet the same for the

account of Tenant for such rent and on such terms as shall be satisfactory to Landlord, crediting

tile proceeds, first to tile costs aAd expense of reentry, alterat\Qns and addnkms, and the

expense of re-Ietting, and then to the unpaid rent and the other amounts due during the

remainder of the term. Tenant shall remain liable to Landlord for any unpaid balance. In case

suit shall be brought for recovery of possession of the Premises, for the recovery of any rent or

any other amount due under the provisions of this Lease, or because of the breach of any other

covenant on the part of Tenant to be kept or performed, and a breach shall be established,

Tenant shall pay to Landlord all expenses incurred, including reasonable attorney fees, which

shall be deemed to have been incurred on the commencement of the default and shall be

enforceable wnether or. not the actiOl'l js P"~tec:I. tojtlclgmeflt.

20. Access to Premises.

Landlord shall have the right to enter on the Premises at all reasonable hours to inspect and for

access to the Premises to install, maintain, use, repair, and replace pipes, ducts, lights,

conduits, plants, wires, floor coverings, and all other mechanical equipment serving the

Premises. The Tenant will provide the landlord a key to all areas. The Landlord will maintain a

KNOX .BOX to provicle emet§Sf)CYsooess to theb.U:lldiAg.

21. Rules and regulations.

Landlord reserves the right to adopt from time to time rules and regulations for the operation of

the Building that are not inconsistent with the provisions of this Lease. Tenant and its agents,

employees, invitees, and licensees shall comply with all those rules and regulations as well as

local, state and county laws and ordinances. Any such rules shall not dictate the days or time of

business operation.

22. wawer. The failure of Landlord to insist on a strict perfonnance of any of the terms, covenants, or conditions of this Lease or rules and regulations of the Building shall not be deemed a waiver of any subsequent breach or default in the terms, covenants, and conditions or rules and regulations. This Lease may not be changed, modified, or discharged orally. 23. Notices.

All nmfoe.smqulred under 1hisLaase .shallbe in writing ,and :sl:lall be deemed to hsvebeen ·given

if eittler defivered persona'fly or mailed 'by certifled or regIstered mali to landlord or to Tenant at

their respective addresses set forth above or to such other address as either party may furnish

in writing during the term of this Lease.

24. Quiet enjoyment.

Landlord covenants and agrees with Tenant, its successors, and assigns that on Tenant's

payIng the, rent and obserVing andperfonningall thetenns, co.venants.. and conditions on

Tenant's part to be performed and observed, Tenant may peaceably and quietly hokt, have,

occupy, possess, and enjoy the Premises for the full term of this Lease.

25. Subordination to mortgage. Any mortgage now or hereafter placed on the Premises shall be deemed to be prior in time and senior to the rights of Tenant under this Lease. Tenant subordinates all of its interest in the leasehold estate created by this Lease to the lien of any moJigag'e. ilenaRt ahail, at,Lartdfold's .t'leqUeSt. ~tJtesnyadditional·docwnents necessary to indicate this subordination .nduOOlg, tf requested, an '€IstoppeJ ~etter 'as set forth jn section 15. If Tenant fails to supply the estoppel letter, the provisions in section 15 to cover that failure shall apply. Notwithstanding the foregoing, Tenant's possession of the Premises under this Lease shall not be disturbed by any mortgagee, owner, or holder of note secured by a mortgage placed on the Premises, unless Tenant shall breach any of the provisions of this Lease and the Lease term of Tenant's right to possession shall have been lawfully terminated in accordance with the provisions of this Lease. The Tenant will not include Landlord property as security on a loan or other debt.

26. Building revisions by Landlord. Landlord reserves the absolute right at any time and from time to time to make changes or revisions in the Building, including such changes to the parking lot, driveways, signs, and sidewalks, by making additions to, subtractions from, or rearrangements of the improvements in the Building, as long as the revisions do not materially affect Tenant's use of the Premises.

%1. HoldJngover. 1f Tenant remains In possession of the Premises after the expiration or termination of the Lease, it shall be deemed to be occupying the Premises as a Tenant from month to month, subject to all the conditions, provisions, and obligations of this Lease insofar as the same can be applicable to month~to-month tenancy, except that the rent shall increase to 2 times the rent owing at the end of the Lease term. The month-to-month tenancy shall be cancelable by either party on 30 days written notice to the other. 28. Recording. Tenant shall not record this Lease without the written consent of Landlord; however, on the request of either party the other party shall join in the execution of a memorandum or so-called "short form" of this Lease for the purpose of recordation. The memorandum or short form of this Lease shall describe the parties, the Premises, and the term of this Lease and shall incorporate this Lease by reference.

29. Captions and headings. The captions and headings used in this Lease are intended only for convenience and are not to be used in construing this Lease.

30. AppHe'" Mw. This Lease shall be construed under the laws of the state of Michigan. Venue for any disputes under this agreement shall lie in Lenawee, Michigan. If any provision of this Lease or the application to any person or circumstances shall, to any extent, be invalid or unenforceable, the remainder of this Lease shall not be affected and each provision of this Lease shall be valid and enforceable to the fullest extent permitted by law.

91. '&Icceasons. This Lease and the covenants and conditions shall inure to the benefit of and be binding on Landlord, its successors, and assigns and shall be binding on Tenant and permitted assigns of Tenant.

32. No partnership.

Any intention to create a joint venture or partnership between the parties is expressly

disetaimed.

33. Exhibits.

The following exhibits are attached to and a part of this Lease:

Exhibit A-Layout of Premises and Parking Space{s)

34. Time is of the essence.

Time shaiI be of the esseace oftBis agreement

36. Effective date.

The parties have caused this agreement to be signed and shall be effective as of the day and

year first above written.

36. New space In Building.

Tenant will be given the first right of refusal for new' space that becomes available in the Building

duriflg the term of tI1e I:..ease.

'7.~.

Lease payments will be sent to: Accounts Receivable, City of Tecumseh, 309 E. Chicago Blvd.,

Tecumseh, Michigan 49286. Lease agreement inquiries will be directed to City Manager, 309 E.

Chicago Blvd., Tecumseh,

Michigan 49286.

Building maintenance issues will be directed to the Director of Cultural & Leisure Services, 309

E. Chicago Blvd., Tecumseh, Michigan 49286 Tenant Cluestions will be directed to Jon Treloar, 703 E. Chicago, B1vd., Teeumseh. Michigan 4928Et

38. other Tenants.

Tn. t,"""o witt· not tease spaee to fndustries that are competittve to the Tenant,

including wineries, breweries etc., without Tenant's approval.

39. Signatures.

LANDLORD - City of Tecumseh

8y:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ __

City Clerk

Date:

---------------------

8y: _______________________________________

Mayor Date:

------------------------

TENANT - J. Tr

'!Oil~~;_afiera-.h.

Trees Cellars

Sy: ----R~~_I_LYL~=::::::..-----==-----

Jon Treloar, I Dare: ____~-~~~~~~-------------

Exhibit A LayoutoftJlte Premises and ParklA:9Space{s).

Agenda Item Review Form

City Council

City of Tecumseh

Agenda Item Number:

Submitted by:

9. New Business, Item D

Shelley Lim

Item:

Department:

Renewal of Lenawee Department on Aging Lease Agreement at the Hayden Mill Building

Parks and Recreation

Summary:

The Lenawee Department on Aging leases space from the City of Tecumseh at the Hayden Mill Building to operate the Tecumseh Senior Center. The Senior Center is open Monday through Friday from 8:30 am to 2:30 pm, and offers a wide range of services and activities for senior citizens in Tecumseh and the surrounding area. In addition, staff at the Tecumseh Senior Center also facilitate Meals on Wheels; Monday through Friday, over 100 meals are prepared and delivered daily to homebound residents in and around Tecumseh. The Lenawee Department on Aging would like to remain at the Hayden Mill Building and renew the Tecumseh Senior Center lease for a twelve month period, beginning on January 1, 2016. Space usage and lease rates are stipulated in the attached lease agreement.

Council Action:

Recommendation: RESOLUTION THE CITY COUI\JCIL OF THE CITY OF TECUMSEH RESOLVES: Approve the renewal of the lease agreement between the Lenawee Department on Aging and the City of Tecumseh for the use of suite A at the Hayden Mill Building beginning on January 1,2016 and ending on December 31,2016. Further, the Mayor and City Clerk are authorized to sign the lease agreement.

Shelley Lim

CLS Director Signature

Signed by Daniel E, Swallow Dan'lei E• SwaIlow Digitally Dala: 2015,12,1510:53:43 ·05'00'

Signature

Department Head

City Manager City Manager

D D

o

Approved Denied Continued

Bid/Purchase Item:

o o

Budgeted "'_ _ __ Page(s) in FY Budget Not Budgeted

11/18/2015 Date

12/15/15 Date

MEMORANDUM OF AGREEMENT

BETWEEN

CITY OF TECUMSEH

AND

THE LENAWEE COUNTY DEPARTMENT ON AGING

INTENT: The City of Tecumseh and the lenawee County Department on Aging having in common the goal of providing quality services to meet the needs of Senior Citizens In the City of Tecumseh and lenawee County, enter in this SITE AGREEMENT for the use of a portion of the Hayden Mill Building by the lenawee Department on Aging for development, administration and provision of program activities and service for Older Adults, 60 years or older, and their spouse, who may be under 60 years of age. USE OF FACILITIES: The Department on Aging will have sale use of the space titled Suite A as Indicated In Attachment A. HEALTH AND SAFETY CODES/STANDARDS: The Department on Aging will comply with Health and Safety Codes and Standards applicable to the operation of its daily Nutrition Program and other program services. The Department on Aging must, under the requirement of its Federal and State Grants, have local Health Department Sanitation Inspections on a regular basis and have a facility fire inspection annually. All health and safety inspections will be brought to the attention of the City of Tecumseh by the Department on Aging staff. Should physical plant or equipment violations be noted, the Department on Aging Director or Nutrition Director will meet with the Tecumseh Recreation Director to seek corrective measures. Procedural violations will be the responsibility of the Department on Aging. STAFFING: The Department on Aging is responsible for staffing the Senior Center Nutrition and Program services. The City will not have staff at the building on a daily basis. JANITORIAL SERVICES:

The Department on Aging is responsible for daily cleaning of the kitchen,

restrooms, its equipment, and general pickup of the space titled Suite A as Indicated in Attachment A. BUILDING REPAIRS: The City will be responsible for all building repairs. The Department of Aging will be responsible for repairs to their own equipment. SNOW REMOVAL: Snow removal of walkways and parking areas will be primarily the responsibility of the City of Tecumseh. Such removal will be done following the clearing of snow in the City. It is understood that City street snow removal will take priority before any other areas. EQUIPMENT: A separate addendum to this agreement lists an inventory of equipment owned by the Department of Aging, the Tecumseh Senior Center and the City. It is understood that upon termination of this agreement, the Department on Aging will remove all unattached equipment it owns, unless the two (2) parties make other arrangements. Repairs and replacement of equipment purchased by the Department on Aging shall be the responsibility of the Department. Repairs or replacement of City owned equipment shall primarily be the responsibility of the City, with Department on Aging cooperating when feasible.

SUPPLIES: The Department on Aging and/or the Senior Center will provide all nutrition program and office supplies. The City will provide all paper products and other supplies for the bathrooms. FINANCIAL ARRANGEMENTS/TELEPHONE: The Department on Aging will pay $1000 per month to the City of Tecumseh to help offset costs incurred by the City of Tecumseh due to the Department on Aging use of this facility. The Department on Aging will pay for its own phone service and internet charges. INSURANCES:

Insurance coverage for the building and grounds is the responsibility of the City of

Tecumseh. Insurance coverage for volunteer drivers and bulk food drivers is covered by lenawee County with each driver's personal Insurance being primary. Insurances will provide for a minimum of $1,000,000 in general liability, naming the City ofTecumseh as additional insured. DISPUTES: Any disputes arising between the Tecumseh Senior Center staff and the Tecumseh Recreation Director, which these parties cannot resolve, will be referred to the City Manager and the Department on Aging Director who jointly will resolve the issue. TERMINATION: This agreement shall be from January 1, 2016 through December 31, 2016 but be terminated with ninety (90) days written notice by either party to the other showing just and reasonable cause. Both parties may extend the agreement for subsequent years, by mutual written consent. This agreement is subject to review by either party at any time. Modification to the agreement may be made at any time with agreement by both parties,

Lenawee Department on Aging 1040 S. Winter Street Adrian, Michigan 49221 Name:

City of Tecumseh 309 E. Chicago Boulevard Tecumseh, Michigan 49286 Name:

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Agenda Item Review Form

City Council

City of Tecumseh

Agenda Item Number: 9. New Business, Item E

Submitted by: Dan Swallow !

Item:

Department:

Designation of Street Administrator for Public Act 51 Transportation Funds

Tecumseh City Manager

Summary: Under Michigan Public Act 51 of 1951, city's and villages that receive State of Michigan transportation funds must designate a "Street Administrator" who is authorized to represent the municipality in transactions with the Michigan Department of Transportation (MDOT). Examples of functions that the Street Administrator include execution of agreements, review and receipt of invoices and payments, and oversight of project status. The City Manager is a logical choice to serve as the Street Administrator and the former City Manager, Kevin Welch, served in that role. Therefore, I am recommending that City Council designate me as the Street Administrator. Attached is the resolution template from MDOT that will need to be adopted by City Council.

(Continued on Page 2)

Recommendation:

Council Action:

D D

RESOLUTION THE CITY COUNCIL OF THE CITY OF TECUMSEH RESOLVES: To designate Dan Swallow, City Manager, as the single Street Administrator for the City of Tecumseh in all transactions with the State Transportation Department; and further authorize the City Clerk to execute the required resolution.

D

Approved

Denied

Continued

Bid/Purchase Item:

D

Budgeted $,_ _ __

__ _ _ Page(s) in FY Budget

D

12-16-15

Dan Swallow Signature signed by Daniel E. Swallow Dan 'lel E • Swallow Digitally Date: 2015.12.16 12:38:52.05'00'

Signature

Not Budgeted

Department Head

Date

12-16-15

Dan Swa10w City Manager

Date

Michigan Department of Transportation 2012 (03/13)

RESOLUTION FOR DESIGNATION OF STREET ADMINISTRATOR This information is required by Act 51, P.A 1951 as amended. Failure to suppJy this information will result in funds being withheld.

MAIL TO: Michigan Department of Transportation, Financial Operations Division, P.O. Box 30050, Lansing, M148909. or Fax to: 517-373-6266 NOTE: Indicate, if possible, where Street Administrator can usually be reached during normal working hours, if different than City or Village Office. List any other office held by the Administrator. Councilpe~onorCommissioner ~~~~~~~~~~~~~~~~~~~~~~~~~~~~~ offered the following resolution and moved its adoption:

Whereas, Section 13(9} of Act 51, Public Acts of 1951 provided that each incorporated city and village to which funds are returned under the provisions of this section, that, "the responsibility for street improvements, maintenance, and traffic operations work, and the development, construction, or repair of off-street parking facilities and construction or repair of street lighting shall be coordinated by a single administrator to be designated by the governing body who shall be responsible for and shall represent the municipality in transactions with the State Transportation Department pursuant to this act." Therefore, be it resolved, that this Honorable Body designate~~~_ _~~~~~~~~_ _~~~~ ~~~~_ _ _~~~~~~~_ _~~~_ _~~~~_~~~_~~_ _~_ _ _ _ _

as the single Street Administrator for the City or Village of

in all transactions with the State Transportation Department

as provided in Section 13 of the Act. Supported by the Councilperson or Commissioner _ _~~_~_ _ _~~~~~~_ _~~~~~_ Yeas_~~

_ _ _ _ _~_ _~_ _ _ _~~~~~_____~~~_ _ _ _~___~~~___

Nays~_~_~~~~~~~

___

~

__

~~~~

____

~~_~~~

____

~~~

___

I hereby certify that the foregoing is a true and correct copy of a resolution made and adopted at a regular meeting of the governing body of this municipality on the

~~~~_ _ _ _ _~_~_ _ _ _ _ _ _~_

CITY OR VILLAGE CLERK (SIGNATURE)

EMAIL ADDRESS

DATE

STREET ADMINISTRATOR (SIGNATURE)

EMAIL ADDRESS

DATE

P.O.BOX

ADDRESS OF CITY OR VILLAGE OFFICE CITY OR VILLAGE

I ZIP CODE

PHONE NUMBER

day of

Agenda Item Review Form

City Council

City of Tecumseh

Agenda Item Number:

Submitted by:

9. New Business. Item F

Jessica Emrick

Item:

Department:

2015 Annual Permits and Performance Resolution

City Clerk

Summary:

Attached is the performance resolution required by the Michigan Department of Transportation (MOOT) for miscellaneous operations within the State Trunk Line (M50/Chicago Blvd.) right of way. This resolution allows for display of banners. parades. planting of flowers in the medians and miscellaneous work on M50/Chicago Blvd. and authorizes City Manager Dan Swallow to apply to MOOT for the necessary permit to work within State Highway Right of Way on behalf of the City of Tecumseh.

Council Action:

Recommendation:

RESOLUTION THE CITY COUNCIL OF CITY OF TECUMSEH RESOLVES:

D D

to adopt the 2016 Annual Permits Performance resolution for governmental agencies.

D

Approved Denied Continued

Bid/Purchase Item:

Jessica Emrick

D

Budgeted $"'_ _ __

_

_ _ Page(s) in FY Budget

D

Not Budgeted

City Clerk

Signature

Dan 'lel E • SwallowDigila"YSignedbYDanie'E,swa"ow Date: 2015,12,17 08:21 :28 -05'00' Signature

--~---------------

Department Head

Dan Swallow

----------------City Manager

12/16/15 Date

12/17/15 Date

Michigan Department Of Transportation 22079 (10/14)

Page 1 of2

PERFORMANCE RESOLUTION FOR GOVERNMENTAL AGENCIES

This Performance Resolution is required by the Michigan Department of Transportation for purposes of issuing to a municipality an "Individual Permit for Use of State Highway Right of Way" or an "Annual Application and Permit for Miscellaneous Operations Within State Highway Right of Way".

RESOLVED WHEREAS, the __C_I_TY_O_F_T_E_C_U_M_S_E_H _ _ _ _ _ _ _ _ _ _ _ _ __ (city, village, township, etc.) hereinafter referred to as the "GOVERNMENTAL AGENCY," periodically applies to the Michigan Department of Transportation, hereinafter referred to as the "DEPARTMENT," for permits, referred to as "PERMIT," to construct, operate, use and/or maintain utility or other facilities, or to conduct other activities, on, over, and under State Highway right of way at various locations within and adjacent to its corporate limits; NOW THEREFORE, in consideration GOVERNMENTAL AGENCY agrees that:

of

the

DEPARTMENT

granting

such

PERMIT, the

1. Each party to this Agreement shall remain responsible for any claims arising out of their own acts and/or omissions during the performance of this Agreement, as provided by law. This Agreement is not intended to increase either party's liability for, or immunity from, tort claims, nor shall it be interpreted, as giving either party hereto a right of indemnification, either by Agreement or at law, for clai ms arising out of the performance of this Agreement. 2. Any work performed for the GOVERNMENTAL AGENCY by a contractor or subcontractor will be solely as a contractor for the GOVERNMENTAL AGENCY and not as a contractor or agent of the DEPARTMENT. The DEPARTMENT shall not be subject to any obligations or liabilities by vendors and contractors of the GOVERNMENTAL AGENCY, or their subcontractors or any other person not a party to the PERMIT without its specific prior written consent and notwithstanding the issuance of the PERMIT. Any claims by any contractor or subcontractor will be the sole responsibility of the GOVERNMENTAL AGENCY. 3. The GOVERNMENTAL AGENCY shall take no unlawful action or conduct, which arises either directly or indirectly out of its obligations, responsibilities, and duties under the PERMIT which results in claims being asserted against or judgment being imposed against the State of Michigan, the Michigan Transportation Commission, the DEPARTMENT, and all officers, agents and employees thereof and those contracting governmental bodies performing permit activities for the DEPARTMENT and a" officers, agents, and employees thereof, pursuant to a maintenance contract. In the event that the same occurs, for the purposes of the PERMIT, it will be considered as a breach of the PERMIT thereby giving the State of Michigan, the DEPARTMENT, and/or the Michigan Transportation Commission a right to seek and obtain any necessary relief or remedy, including, but not by way of limitation, a judgment for money damages. 4. The GOVERNMENTAL AGENCY It will, by its own volition and/or request by the DEPARTMENT, promptly restore and/or correct physical or operating damages to any State Highway Right of Way resulting from the installation construction, operation and/or maintenance of the GOVERNMENTAL AGENCY'S facilities according to a PERMIT issued by the DEPARTMENT. 5. With respect to any activities authorized by PERMIT, when the GOVERNMENTAL AGENCY requires insurance on its own or its contractor's behalf it shall also require that such policy include as named insured the State of Michigan, the Transportation Commission, the DEPARTMENT, and all officers, agents, and employees thereof and those governmental bodies performing permit activities for the DEPARTMENT and all officers, agents, and employees thereof, pursuant to a maintenance contract.

MOOT 22078 (10/14)

Page 2 of 2

6. The incorporation by the DEPARTMENT of this resolution as part of a PERMIT does not prevent he DEPARTMENT from requiring additional performance security or insurance before issuance of a PERMIT. 7. This resolution shall continue in force from this date until cancelled by the GOVERNMENTAL AGENCY or the DEPARTMENT with no less than thirty (30) days prior written notice to the other party. It will not be cancelled or otherwise terminated by the GOVERNMENTAL AGENCY with regard to any PERMIT which has already been issued or activity which has already been undertaken. BE IT FURTHER RESOLVED, that the following position(s) are authorized to apply to the DEPARTMENT for the necessary permit to work within State Highway Right of Way on behalf of the GOVERNMENTAL AGENCY. NAME ANDIOR TITLE

DAN SWALLOW, CITY MANAGER

I HEREBY CERTIFY that the foregoing is a true copy of a resolution adopted by the TECUMSEH CITY COUNCIL (Name of Board, etc)

of the

of

CITY OF TECUMSEH (Name of GOVERNMENTAL AGENCY)

at a

CITY COUNCIL MEETING

of DECEMBER

SIGNATURE

A.D.

LENAWEE (County)

meeting held on the 21 ST day 2015

TITLE

CLERK

PRINT NAME

JESSICA EMRICK

Agenda Item Review Form

City of Tecumseh

Planning Commission

Agenda Item Number:

Submitted by:

9. New Business, Item G

Bradley A. Raymond

Item: Special Land Use Request for an expansion of the existing drive-through ATM to include drive-through

tellers at Old National Bank 205 E. Chicago Blvd ..

Building Services Department

Summary:

The applicant has requested a special land use for an expansion of the existing drive-through ATM to include drive-through tellers at Old National Bank 205 E. Chicago Blvd .. The property is zoned B-2, Downtown Core District. Drive-through's are allowed as a Special Land Use in the B-2, Downtown Core District. and requires a public hearing and review and recommendation by the Planning Commission to the City Council.

Motion to Approve:

Making a recommendation to City Council to approve the special land use to allow expansion of the existing drive-through at 205 E. Chicago Boulevard.

Action:

D

D D Bradley A. Raymond

Digitally signed by Bradley A. Raymond

Date: 2015.12.0907:08:22 ·05'00'

Signature

Approved

Denied

Continued

Building Services Director 12-09-2015 Title

Date

City of

~~ To: From: Date:

City Council of the City of Tecumseh City Planning Commission of the City of Tecumseh December 9, 2015

Report and Recommendations of comments relative to the Special Land Use to all for the expansion of an existing drive-through ATM to include drive-through tellers at Old National Bank, 205 East Chicago Boulevard. General Discussion: (Public hearing opened 7:05 pm) Mike Nicklowitz of Adrian Design Group spoke on behalf of Old National Bank and presented plans for additional teller drive-through facilities to the existing bank site at 205 E. Chicago Blvd. The petitioner intends to expand the drive-through A TM to include four tellers and an overhead pneumatic tube system. Parking will be reconfigured to open up additional spaces. (Public hearing closed 7:08 pm) Paul Lippens of McKenna & Associates gave a brief synopsis of the special land use review letter dated November 17,2015. He stated that the applicant has provided a site plan and supporting use material that meet the standards for special land use approval. Lippens recommends approval of the special land use. MOTION to Recommend A motion was made to recommend approval of the Special Land Use to City Council to allow for expansion of existing drive-through ATM to include drive-through tellers at Old National Bank, 205 E. Chicago Blvd. The motion was moved by Malmquist and Seconded by Weitzel. A roll call vote was taken. Yes: Fox, B. Hammond, Malmquist, Ruhl, Weitzel No: None Motion carried unanimously.

Innovative

•

Timeless

•

Inviting

P.O. Box 396 .. 309 East Chicago Boulevard .. Tecumseh. Michigan 49286 517.423.2107" Fax: 517.423.3610" WVIIW.mytecumseh.org

M