CITY OF SUFFOLK, VIRGINIAPOPULAR ANNUAL FINANCIAL REPORT

FOR THE FISCAL YEAR ENDING JUNE 30, 2015

The 2015 Popular Annual Financial Report (PAFR) is a report for our citizens. It provides you and other interested parties with an overview of the City’s financial results. This report is prepared to in-crease awareness throughout the community of the City’s financial operations; therefore, it is written in a user-friendly manner. The information is derived from the audited financial statements in the City’s 2015 Comprehensive Annual Financial Report (CAFR), our formal annual report.

To conform with generally accepted accounting principles (GAAP), the CAFR must include the City’s component units and the presentation of individual funds in much more detail, as well as full disclosure of all material events, financial and non-financial. The 2015 CAFR was audited by Cherry Bekaert LLP and has received an unmodified or “clean” audit opinion. Unlike the CAFR, the PAFR is not an audited document and it does not include details by fund nor does it include the other disclosures required by GAAP. The PAFR is not required to present the same level of detail as the CAFR and, therefore, does not fully conform to GAAP.

This report, in a summarized version, highlights the overall financial condition and trends of the City.

IN THIS REPORTMAYOR’S MESSAGE 2CITY LEADERSHIP 3SUFFOLK’S PROFILE 4SUFFOLK PRIORITIES: Expanded Economic Development / Public Education 5Growth Management & Comprehensive Planning/Transportation 6Leisure, Health, and Wellness / Public Safety/Civic Engagement and Responsive Citizen Services 7Financial Stability 8WHERE THE MONEY COMES FROM 9WHERE THE MONEY GOES 10THE CITY’S NET POSITION 11THE CITY’S ASSETS 12THE CITY’S DEBT ADMINISTRATION 13MORE INFORMATION 14

TO THE CITIZENS OF SUFFOLK

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The Government Finance Officers Association of the United States and Canada (GFOA) has given an Award for Outstanding Achievement in Popular Annual Financial Reporting to the City of Suffolk, VA for its Popular Annual Financial Report for the fiscal year ended June 30, 2014. The Award for Outstanding Achievement in Popular Annual

Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government unit must publish a Popular Annual Financial Report, whose contents conform to program standards of creativity, presentation, understandability and reader appeal. We believe our current report continues to conform to the Popular Annual Financial Reporting requirements, and we are submitting it to GFOA.

FOR MORE DETAILED INFORMATION, YOU MAY OBTAIN A COPY OF THE CAFR ON THE CITY’S WEB-SITE AT WWW.SUFFOLKVA.US OR BY CONTACTING THE FINANCE DEPARTMENT AT (757) 514-7500.

Continual Improvement is the Order of the Day

On behalf of the Suffolk City Council, it is my pleasure to present the 2015 Popular Annual Financial Report to our citizens. Our “Progress Report for 2015” showcases another banner year for Suffolk as the City continues to strive towards excellence. We have continued our constant, focused effort to steer the City of Suffolk with perpetual forward momentum.

Whether it’s an emphasis on transportation, the education of our youth, new business development, or health and wellness, we are increasing the pace towards our evolution from what many believed was a quaint little town into a thriving City still known for its warmth and charm.

To push towards an even better City, one that performs for and meets the expectations of all, we must constantly be mindful of the past while pursuing a new vision for the future. In that progression, one of our most important achievements is keeping our financial house in order. In addition to the Triple AAA rating received last year by Standard & Poor’s, this year the Fitch Rating Agency also upgraded the City to Triple AAA status. Both agencies recognized and praised the City for its strong management, balanced budgets, and thriving economy. In fact, our sound and fiscally-responsible financial policies have enabled us to become one of only a handful of Virginia’s Triple AAA cities.

Suffolk is growing. That is clear. What is also clear is that most importantly, we are growing smartly. We know that we must prepare today so that we can capably and competently address both positive and negative issues that may arise.

Cost savings from City-driven initiatives have allowed us to make much-needed investments into our infrastructure. The new business and citizen-friendly one-stop-shop City Hall is convenient for both newly arriving citizens as well as those that have always called Suffolk home.

It’s evident that innovation is what fuels the future of Suffolk. And each New Year presents another twelve months for this wonderful city to blaze a trail to even greater heights. The City of Suffolk, Virginia City Council Members and City Management are united in purpose to deliver the very best service in 2016 to our citizens. We hope you join us in looking forward to a 2016 where anything is possible in this great City!

~Mayor Linda T. Johnson

MAYOR’S MESSAGE

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The City of Suffolk is governed by a Mayor and seven City Council members who are elected by borough. Appointed by the Council, the City employs a full-time City Manager (2015: Patrick Roberts) to oversee the operations.

2014-2015 CITY COUNCIL

2015CITY LEADERSHIP

The Suffolk City Council recently adopted a new vision for the City which sets the course for Suffolk over the next 20 years. Vision 2035 is as follows:

Suffolk is a vibrant and fiscally strong community leading the region in advancements in education, comprehensive transportation, public safety and diverse economic growth while continuing to preserve its rural heritage and enhancing its neighborhoods and urban centers. Throughout 430 square miles of rich land and pristine waterways, citizens and tourists treasure the beautiful trails, rivers and open spaces. Residents, visitors and merchants delight in the revitalized downtown featuring cultural, educational and recreational opportunities. Diverse shopping, businesses and entertainment venues abound. A sense of harmony and pride permeates this rare community, where crime is low; where schools are cutting edge; where people and goods move safely and efficiently throughout the City; and where citizens receive valuable services and have opportunities to be engaged. Suffolk is the desired destination of the Hampton Roads Region.

The City will achieve this by focusing on the following Priorities, each of which will be highlighted within this report:• Expanded Economic Development• Public Education• Leisure, Health, and Wellness• Transportation• Public Safety• Financial Stability• Growth Management and Comprehensive Planning• Civic Engagement and Responsive Citizen Services

IF YOU HAVE QUESTIONS ABOUT THIS REPORT, OR NEED ADDITIONAL FINANCIAL INFORMATION, PLEASE CONTACT THE FINANCE DEPARTMENT OF THE CITY OF SUFFOLK BY EMAIL, FINANCEEMAIL@SUFFOLKVA.US, BY PHONE AT 757-514-7500, OR BY MAIL AT FINANCE DEPARTMENT, CITY OF SUFFOLK, P.O. BOX 1858, SUFFOLK, VA 23434.

CITY MANAGER

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2015ABOUT OUR CITY SUFFOLK’S PROFILE - FISCAL YEAR 2015

QUICK FACTSConsolidated as City of Suffolk and City of Nansemond (formerly Nansemond County) January 1, 1974

GEOGRAPHYLand 400 square milesWater ` 30 square miles

GOVERNMENTForm of Government Council-Manager Chief Elected Official Mayor 8-Member City Council 4-Year Terms Full Time Equivalent City Employees 1321

DEMOGRAPHICS*Population 89,586Unemployment Rate 5.2%Per Capita Income** $45,390Median Household Income** $66,822Median Home Cost $251,000

*Sources: Weldon Cooper Center for Public Service, Virginia Employment Commission, Bureau of Economic Analysis, U.S. Census Bureau.**Most recent data available for Per Capita Income and Median Household Income is Calendar Year 2014.

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The present City of Suffolk was formed January 1, 1974, from the consolidation of the City of Suffolk and the City of Nansemond (formerly Nansemond County). The City is Virginia’s largest city in land area and one of the top fifteen largest cities in land area in the nation with over 400 square miles of land mass and 30 square miles of waterways. The diverse landscape includes a mix of rural, suburban and urban development areas. The City is situated in the western portion of Hampton Roads, Virginia’s coastal plain area, and is bound by the James River to the north, the Cities of Chesapeake and Portsmouth to the east, the State of North Carolina to the south, and the Counties of Southampton and Isle of Wight to the west. The City of Suffolk is one of seven major cities that form the Norfolk-Virginia Beach-Newport News metropolitan area with 1.6 million people. This region is also known as the Hampton Roads area. The City’s government is organized under the Council-Manager form of government. The governing body, the City Council, is composed of seven members and a Mayor who collectively develop policies for the administration of the City. The Mayor is elected at large and each Council Member is elected by borough in a city-wide election every other year, with terms of office being four years. The City Council appoints a City Manager to act as administrative head of the City. The City Manager serves at the pleasure of City Council and carries out the City Council’s policies and directs business procedures. The City Manager also appoints the Directors of all Departments. As a full service City, Suffolk provides a broad range of municipal services authorized by statute or charter. These services include education, public safety, highways and streets, parks and recreation, sanitation, health and social services, public improvements, planning and zoning, public utilities, storm water management and general administrative.

Suffolk is one of the fastest growing Cities in Hampton Roads and is well positioned for continued growth and prosperity. With a diversified and skilled workforce, proximity to the Port of Virginia, available land for development, efficient transportation access, high quality of life, a regard for its historic past and a dynamic vision for the future, Suffolk continues to attract new business and investment, create jobs, and provide an invigorating economic climate for expansion. Noted nationally for job creation and as one of the most livable cities, Suffolk continues to capitalize on its assets in a top-ranked business-friendly state, and was a top pick for business development in 2014.

NEW AND EXPANDING BUSINESS HIGHLIGHTS JANUARY 1 – DECEMBER 31, 2014NEW BUSINESS SECTOR INVESTMENTFriant & Associates Advanced Manufacturing $17,400,000Hampton Inn Hospitality $8,000,000First Team Subaru Retail $7,000,000Riverfront Shoppes Retail $6,000,000Harbour View Health Building Office & Administrative $5,750,000Madison Building Office & Administrative $4,600,000

EXPANDING BUSINESS SECTOR INVESTMENTUnilever Lipton Food & Beverage Processing $29,500,000Sentara Medical $6,900,000BASF Advanced Manufacturing $4,500,000Walgreens Retail $4,500,000J. M. Smucker Company Food & Beverage Processing $4,000,000Massimo Zanetti Beverage USA Food & Beverage Processing $4,000,000Bennetts Creek Veterinary Clinic Medical $2,015,000

NEW AND EXISTING BUSINESSES HAVE INVESTED $116 MILLION IN CREATING OR EXPANDING BUSINESS IN SUFFOLK.

SCHOOL ENROLLMENT HAS INCREASED BY 7% OVER THE LAST 10 YEARS.

THE ECONOMY OF SUFFOLK IS CONTINUING TO GROW AS EVIDENCED BY THE FOLLOWING TRENDS: • Unemployment is 5.2%,

down from 6.0% in the previous year.

• Median Home sales price is $251,000, up from $247,800 last year.

• Median Household Income is $66,822, up from 66,085 last year.

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MEDIAN HOUSEHOLD INCOME (MHI) HAS GROWN IN THE CITY BY 63% FROM 2000 TO 2014. THE CITY OF SUFFOLK NOW HAS THE THIRD HIGHEST MHI IN THE REGION WHICH IS ALSO HIGHER THAN BOTH THE STATE AND NATIONAL MHI.

THE CITY COUNCIL AND CITY MANAGEMENT PLACE A HIGH PRIORITY ON EDUCATION IN THE CITY; OVER THE NEXT FIVE YEARS, APPROXIMATELY $53 MILLION HAS BEEN APPROPRIATED OR PLANNED FOR IN THE CAPITAL IM-PROVEMENTS PLAN TO BUILD A NEW ELEMENTARY AND A NEW MIDDLE SCHOOL.

SUFFOLK PRIORITIESEXPANDED ECONOMIC DEVELOPMENT

9TH BEST COMMUNITY ON BEST PLACES TO LIVE TOP 25 LIST OF “WHERE THE JOBS ARE” – CNN MONEY MAGAZINE – 2012

PUBLIC EDUCATION TWO ADDITIONAL SUFFOLK PUBLIC SCHOOLS ACHIEVED FULL ACCREDITA-TION FROM THE VIRGINIA BOARD OF EDUCATION.

Suffolk Public SchoolsEvery Child a Star...Together We Help Them Shine!Vision: The vision of Suffolk Public Schools is that all students will become life-long learners equipped with the skills, knowledge and attitudes to succeed as produc-tive citizens in a local, national and global society.

SUFFOLK MIDDLE SCHOOLS SAW AN INCREASE IN STUDENTS PASSING THE STATE’S STANDARDS OF LEARNING (SOL) TEST FROM 76% TO 80% AND HIGH SCHOOLS SAW AN EVEN BIGGER JUMP, FROM 59% TO 77%!

SUFFOLK PRIORITIES

Growth Management and Comprehensive Planning The City Council has adopted the 2015 City of Suffolk Comprehensive Plan entitled Suffolk 2035: A Vision for the Future.

Suffolk features many development types and character types, from dense, walkable urban neighborhoods, to riverside communities and rural villages. The plan emphasizes enhancing existing character and promoting quality new development.

Through the proficient management of residential and commercial development, the City continues to offer families and businesses plenty of room to live, work and play.

Over the past 14 years, the population in Suffolk has grown by 40.7%. This population trend is projected to continue over the foreseeable future.

By 2040, we expect to see an increase in population by 48%.

Suffolk has many unique neighborhoods, beautiful natural landscapes and small-town charm. The City faces the challenge of maintaining these and other valued assets while experiencing sustained growth. This desire to accommodate growth while preserving Suffolk’s special features has prompted the City to address service provisions, connectivity, environmental protection, and the quality of life and traditions as the City continues to grow and develop.

334 New Residential Building Permits were issued in calendar year 2014. Significant capacity of 5,471 approved, but yet un-built, residential units have potential to absorb approximately 13 years of forecasted residential demand.

Upcoming Capital Project: Public Works Operational and Maintenance Facility.

Transportation The residential growth and change in Suffolk require the City to be proactive in planning for its future to insure efficient and effective delivery of services and a high quality of life for its citizens.

The transportation network plays a key role in accommodating growth within Suffolk and providing connections throughout the region. The 2015 Comprehensive Plan addresses areas of limited connectivity within the City, as well as issues such as congestion, heavy freight traffic, emergency preparedness, and promoting mobility and alternate forms of transportation.

Fiscal Year 2015Accomplishments• Increased transit ridership by

11.3% in calendar year 2014.• Instituted pilot transit routes

for Northern Suffolk and for connector service between Downtown, Chesapeake and North Suffolk. The latter service also provides a critical connection to transit service for the Hampton Roads region.

• Recognized as One of the Top 100 Best Fleets - Government Fleet Magazine - 2012

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GROWTH MANAGEMENT & COMPREHENSIVE PLANNING

The City of Suffolk, Virginia continues to be ranked as among the best places in the United States to live, work, play and more. Here are a few of the City’s fiscal year 2015 accomplishments:

One of America’s Best Small Cities to Live - CNN Money Magazine 2010

LEISURE, HEALTH & WELLNESS • Suffolk was ranked 19th on the list of Best

Cities for Young Families in Virginia for 2015 by NerdWallet, a personal finance site for consumers. Among factors considered were home affordability, prosperity and growth, quality of education, and family friendliness. Suffolk had the 2nd highest ranking in the top 20 when it comes to family income growth from the period of 1999-2013 with a growth rate of 65.95 percent.

• NerdWallet also named Suffolk the 15th Best City for Veterans in the Nation for 2015 as a result of its strong economic indicators and robust veteran community.

• Conceptualized, coordinated and produced the First Annual Suffolk Mystery Authors Festival.

• Hosted the First Hampton Roads LogistiXGames in Suffolk.

Completed and Upcoming Capital Projects: • Whaleyville Community Center• Sleepy Hole Park Renovation• Trail Enhancements• Bennett’s Creek Recreation Center

CIVIC ENGAGEMENT & RESPONSIVE CITY SERVICES • The Suffolk Public Library was awarded the

Innovative Outreach Award and the Outstanding Website Award by the Virginia Public Library Directors Association (VPLDA). The Innovative Outreach Award was given specifically for the work Suffolk Public Library is doing with their Pop-Up Library. The Pop-Up Library allows Suffolk Public Library to expand access to services by setting up temporary locations throughout the community, increase awareness of what the library has to offer and reach out to citizens who may not typically use the traditional library locations.

• Implemented Libraries Transforming Communities initiative by hosting Community Conversations in different areas of the city with a diverse audience.

• Coordinated the 2014 National Night Out celebration and was awarded the top national honor for our population category marking the third time the City of Suffolk has been first in the nation (2008, 2009, and 2014) and the ninth (9th) straight year the City of Suffolk has placed in the top five in the Nation for National Night Out.

• Received a 2015 Silver Award of Distinction from The Academy of Interactive and Visual Arts for the City’s Popular Annual Financial Report (PAFR) for fiscal year 2014. This was the first year that the City had prepared the PAFR.

• The Association of Government Accountants (AGA) awarded a Certificate of Excellence in Citizen-Centric Reporting to the City of Suffolk, Virginia for its report to our citizens for the fiscal year ended June 30, 2014.

PUBLIC SAFETY • Implemented a new Police Body Camera Program. • Revitalized Child Safety Seat Program for our

citizensCompleted and Upcoming Capital Projects: • Fire Station 1 Renovations• Aerial Ladder Truck

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SUFFOLK PRIORITIES

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Financial policies are vital in main-taining consistency and focus. A good measure of the City’s ability to cope with unexpected financial challenges or emergencies is the ratio of unas-signed General Fund Balance as a per-centage of the budgeted governmental funds expenditures. The target for this ratio is 12%. The City has exceeded this target by 3.3% for FY2015.

Other Fiscal Year 2015 Accomplishments• For the second year in a row, the

City of Suffolk has achieved a rat-ing of AAA on the City’s General Obligation (GO) Bonds. Fitch Rat-ings is now the second agency to have bestowed this coveted desig-nation upon the City, and they’ve upgraded the rating on $252.5 million in City GO Bonds to AAA from AA+. Fitch also assigned the AAA rating to approximately $42.58 million GO and Refunding Bonds Series 2015. This rating in-crease follows the City’s very first AAA rating upgrade, which was made by Standard & Poor’s Rating Service in 2014.

• Achieved a current 3-year com-bined real estate and personal property tax collection rate of 99.85%.

• The Real Estate tax rate of $1.03 per $100 of assessed value is the 2nd lowest in the region.

Financial Reporting AwardsComprehensive Annual Financial Report• The Government Finance Officers

Association of the United States and Canada (GFOA) awarded a

Certificate of Achievement for Ex-cellence in Financial Reporting to the City of Suffolk, Virginia for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2014, representing the thirty-first consecutive year that the City has received this award. The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achieve-ment, a governmental unit must publish an easily readable and effi-ciently organized Comprehensive Annual Financial Report, whose contents conform to program standards. Such reports must satisfy both accounting principles generally accepted in the United States of America and applicable legal requirements.

Annual Budget• The Government Finance Officers

Association of the United States and Canada (GFOA) presented a Distinguished Budget Presenta-tion Award to the City of Suffolk, Virginia for its annual budget for the fiscal year beginning July 1, 2014. In order to receive this award, a governmental unit must publish a budget document that meets program criteria as a policy document, as an operations guide, as a financial plan, and as a com-munications device. This is the seventh consecutive year for this recognition as it is valid for a one year period.

THE CITY IS COMMITTED TO BEING RESPONSIBLE STEWARDS OF OUR TAXPAYER DOLLARS AND WILL CONTINUE TO ADDRESS THE STRATEGIC NEEDS AND PRIORITIES OF THE CITY THROUGH THE IMPLEMENTATION OF COST REDUCTION STRATEGIES.

SUFFOLK PRIORITIESFINANCIAL STABILITY

WHERE THE MONEY COMES FROMWhen assessing the financial results of the City, it is important that we focus on the City’s General Fund. This page and the next report General Fund financial data only. The General Fund is the general operating fund of the City and supports the regular day-to-day operations of the City. It is used to account for all revenues and expenditures of the City, except those required to be accounted for in another fund such as Capital Projects, Grants and Debt Service Funds, and Utility, Refuse and Stormwater Activities.

GENERAL FUND REVENUE BY SOURCE (IN MILLIONS) FYE 06/30/15

Like all governments, the City must raise funds to pay for the services that it provides to its citizens and businesses. These sources of funds, referred to as revenue, are raised through grants, charges and taxes.

IN TOTAL, 2015 REVENUE INCREASED BY $6.1 MILLION WHEN COMPARED TO 2014.

THE CITY OF SUFFOLK HAS A VARIETY OF SOURCES OF REVENUES TO FUND OPERATIONS. THE LARGEST GENERAL FUND REVENUE SOURCES ARE REAL ESTATE AND PERSONAL PROPERTY TAXES, FOLLOWED BY OTHER LOCAL TAXES AND STATE REVENUE.

The chart above indicates the growth in the General Property Taxes revenue over the past ten years. The increase in the real estate and personal property taxes is due to both increased assessed value and growth and development within the City.

THE FY15 REAL ESTATE TAX RATE OF $1.03 PER $100 OF ASSESSED VALUE IS THE 2ND LOWEST IN THE REGION. IN FY16 THE CITY RAISED THE TAX RATE TO $1.07 PER $100 OF ASSESSED VALUE TO PROVIDE ADDITIONAL FUNDING TO THE SCHOOLS. THE RATE STILL REMAINS ONE OF THE LOWEST IN THE REGION. PAGE 9

12

0

20

40

60

80

100

120

Mill

ions

Source: Comprehensive Annual Financial Reports 2006 - 2015

General Property Tax Revenue

General Fund Revenue By Source (In Millions)

Revenue by Source: FY Ending 06/30/2014

FY Ending 06/30/2015

Real Estate and Personal Property Taxes 108.3$ 110.6$ Other Local Taxes 36.1 39.7 Permits, Fees and Regulatory Licenses 1.0 1.1 Fines and forfeitures 0.9 1.0 Revenue from Use of Money and Property 0.6 0.6 Charges for Services 3.5 3.6 Miscellaneous 1.2 1.3 State Revenue 20.0 19.8 Federal Revenue 5.0 5.0 Total Revenues 176.6$ 182.7$

Real Estate and Personal Property

Taxes, $110.6 - 60.5%

Other Local Taxes, $39.7 - 21.7%

Permits, Fees and Regulatory Licenses,

$1.1 - 0.6%

Fines and forfeitures, $1.0 - 0.5%

Revenue from Use of Money and Property,

$0.6 - 0.3%

Charges for Services, $3.6 - 2.0%

Miscellaneous, $1.3 - 0.7%

State Revenue, $19.8 - 10.8%

Federal Revenue, $5.0 - 2.7%

General Fund Revenue By Source (In Millions)

Revenue by Source: FY Ending 06/30/2014

FY Ending 06/30/2015

Real Estate and Personal Property Taxes 108.3$ 110.6$ Other Local Taxes 36.1 39.7 Permits, Fees and Regulatory Licenses 1.0 1.1 Fines and forfeitures 0.9 1.0 Revenue from Use of Money and Property 0.6 0.6 Charges for Services 3.5 3.6 Miscellaneous 1.2 1.3 State Revenue 20.0 19.8 Federal Revenue 5.0 5.0 Total Revenues 176.6$ 182.7$

Real Estate and Personal Property

Taxes, $110.6 - 60.5%

Other Local Taxes, $39.7 - 21.7%

Permits, Fees and Regulatory Licenses,

$1.1 - 0.6%

Fines and forfeitures, $1.0 - 0.5%

Revenue from Use of Money and Property,

$0.6 - 0.3%

Charges for Services, $3.6 - 2.0%

Miscellaneous, $1.3 - 0.7%

State Revenue, $19.8 - 10.8%

Federal Revenue, $5.0 - 2.7%

WHERE THE MONEY GOESOnce the City collects taxes and other revenues, the monies must be spent efficiently to provide services to the citizens and businesses of the City. As this section will further detail, the City provides a variety of services to its residents and businesses.

GENERAL FUND EXPENDITURE BY FUNCTION(IN MILLIONS) FYE 06/30/15

EDUCATION IS A TOP PRIORITY FOR THE CITY AS EVIDENCED BY THE FACT THAT IT IS THE LARGEST BUDGETED GENERAL FUND EXPENDITURE IN FY15 AND INCREASED BY $2 MILLION OVER FY14 EXPENDITURES.

The City is committed to ensuring the highest level of safety for its citizens and has expended $49 million towards Public Safety efforts in FY15, which represents an increase of $1 million over FY14 expenditures. Other increases are attributable to new Parks and Recreation programs and a growth in Economic Development incentive payments for new and expanding businesses and education.

Annually, the City Manager submits a Budget for City Council’s adoption. The proposed budget must not include expenditures that exceed estimated opening balances and anticipated income. The budget process is approached with a focus on maintaining core services critical to residents, while simultaneously identifying sustainable savings that strengthen the City’s ability to deliver services more efficiently and effectively.

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General Fund Expenditures by Function (In Millions)

Expenditures by Function: FY Ending 06/30/2014

FY Ending 06/30/2015

General Government Administration 14.0$ 14.8$ Judicial Administration 7.3 7.6 Public Safety 48.0 49.0 Public Works 1.3 0.9 Health and Welfare 12.9 12.8 Education 49.1 51.1 Parks, Recreation and Cultural 7.8 9.0 Community Development 7.6 8.6 Nondepartmental 0.5 1.8 Total Expenditures 148.5$ 155.6$

General Fund Expenditures by Function (In Millions)

Expenditures by Function: FY Ending 06/30/2014

FY Ending 06/30/2015

General Government Administration 14.0$ 14.8$ Judicial Administration 7.3 7.6 Public Safety 48.0 49.0 Public Works 1.3 0.9 Health and Welfare 12.9 12.8 Education 49.1 51.1 Parks, Recreation and Cultural 7.8 9.0 Community Development 7.6 8.6 Nondepartmental 0.5 1.8 Total Expenditures 148.5$ 155.6$

NET POSITIONThe Statement of Net Position presents information on all City assets and deferred outflows of resources, and liabilities and deferred inflows of resources, with the difference reported as net position. This data is inclusive of all the activities of the City but does not include City component units. Net position is one way to measure the City’s financial health, or financial position.

THE CITY’S COMBINED NET POSITION (WHICH IS THE CITY’S “BOTTOM LINE”) INCREASED BY $9.7 MILLION IN FISCAL YEAR 2015, OF WHICH APPROXIMATELY 1.4% REPRESENTS RESOURCES THAT ARE SUBJECT TO EXTERNAL RESTRICTIONS OR ENABLING LEGISLATION.

THE CITY HAS A SOLID FINANCIAL POSITION WITH 12.8% OF NET POSITION, OR $65.8 MILLION, AS UNRESTRICTED. THE UNRESTRICTED PORTION OF NET POSITION IS AVAILABLE TO ALLOW THE CITY TO PROVIDE SERVICES TO CITIZENS.

Net investment in Capital Assets (land, buildings, infrastructure, improvements, machinery and equipment, less accumulated depreciation and related outstanding debt used to acquire those assets) of $437.9 million comprises 85.7% of the net position. These assets are not available for future spending because they are assets used to provide services to citizens.

NET POSITION (IN MILLIONS)

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Net Position

2015 2014* 2015 2014* 2015 2014*Current and other assets 160.2$ 152.9$ 49.3$ 60.5$ 209.5$ 213.4$Capital and other non-current assets 525.2 503.2 466.9 441.4 992.1 944.6

Total assets 685.4 656.1 516.2 501.9 1,201.6 1,158.0

Deferred Outflows of Resources 11.1 2.9 8.2 3.3 19.3 6.2

Current and other liabilities 45.6 52.2 31.5 18.3 77.1 70.5Long-term liabilities 274.1 257.1 342.7 332.2 616.8 589.3

Total liabilities 319.7 309.3 374.2 350.5 693.9 659.8

Deferred Inflows of Resources 14.5 3.2 1.6 - 16.1 3.2

Net position: *Net investment in capital assets 312.4 290.3 125.5 145.1 437.9 435.4Restricted 5.0 9.6 2.2 2.1 7.2 11.7Unrestricted 44.9 46.6 20.9 7.5 65.8 54.1

Net position 362.3$ 346.5$ 148.6$ 154.7$ 510.9$ 501.2$

* Net position for 2014 restated due to implementation of GASB No.'s 68 and 71

Net Position(In Millions)

Governmental Activities Business-type Activities Total

The City has a solid financial position with 12.8% of net position, or $65.8 million, as unrestricted. The unrestricted portion of net position is available to allow the City to provide services to citizens.

Net investment in capital assets (land, buildings, infrastructure, improvements, machinery and equipment, less accumulated depreciation and related outstanding debt used to acquire those assets) of $437.9 million comprises 85.7% of the net position. These assets are not available for future spending because they are assets used to provide services to citizens.

The Statement of Net Position presents information on all City assets and deferred outflows of resources, and liabilities and deferred inflows of resources, with the difference reported as net position. This data is inclusive of all the activities of the City but does not include City component units. Net position is one way to measure the City’s financial health, or financial position.

The City’s combined net position (which is the City’s “bottom line”) increased by $9.7 million in fiscal year 2015, of which

approximately 1.4% represents resources that are subject to external

restrictions or enabling legislation.

THE CITY’S CAPITAL ASSETS FOR ITS GOVERNMENTAL AND BUSINESS-TYPE ACTIVITIES AS OF JUNE 30, 2015, TOTALED $992.1 MILLION, NET OF ACCUMULATED DEPRECIATION. THIS INVESTMENT IN CAPITAL ASSETS INCLUDES LAND, BUILDINGS, IMPROVEMENTS OTHER THAN BUILDINGS, INFRASTRUCTURE, MACHINERY AND EQUIPMENT AND CONSTRUCTION IN PROGRESS.

ASSETS ARE INCREASING DUE TO THE CITY’S COMMITMENT TO MAINTAINING AND ADDING TO THE INFRASTRUCTURE OF THE CITY THROUGH THE CAPITAL IMPROVEMENT PLAN. SOME OF THE IMPROVEMENTS CONTAINED IN THE CITY’S ADOPTED TEN YEAR CAPITAL IMPROVEMENT PLAN ARE AS FOLLOWS: • NEW ELEMENTARY SCHOOL• NEW MIDDLE SCHOOL• FIRE STATION 1 RENOVATIONS• PUBLIC WORKS OPERATIONS

AND MAINTENANCE FACILITY• BENNETT’S CREEK RECREATION CENTER

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Capital Assets

2015 2014 2015 2014 2015 2014Land $ 22.9 $ 22.9 $ 5.6 $ 5.6 $ 28.5 $ 28.5Construction in progress 28.8 93.9 71.7 99.2 100.5 193.1Buildings 96.7 47.6 77.9 58.3 174.6 105.9Infrastructure 295.6 286.5 - - 295.6 286.5Improvements other than buildings 34.5 19.2 252.0 225.9 286.5 245.1Machinery and equipment 45.4 31.3 59.7 52.3 105.1 83.6Intangibles 1.3 1.2 - - 1.3 1.2

Total $ 525.2 $ 502.6 $ 466.9 $ 441.3 $ 992.1 $ 943.9

Capital Assets(net of depreciation)

(in Millions)

Governmental Activities Business-type Activities Total

308.8Land3%

Construction in progress

10%Buildings

18%

Infrastructure30%

Improvements other than buildings

29%

Machinery and equipment

10%

Capital Assets

The City’s capital assets for its governmental and business-type activities as of June 30, 2015, totaled $992.1 million, net of accumulated depreciation. This investment in capital assets includes land, buildings, improvements other than buildings, infrastructure, machinery and equipment and construction in progress.

Assets are increasing due to the City’s commitment to maintaining and adding to the infrastructure of the City through the Capital Improvement Plan. Some of the improvements contained in the City’s adopted ten year Capital Improvement Plan are as follows:

• New Elementary School • New Middle School • Fire Station 1 Renovations • Public Works Operations and

Maintenance Facility • Bennett’s Creek Recreation

Center

15

Capital Assets

2015 2014 2015 2014 2015 2014Land $ 22.9 $ 22.9 $ 5.6 $ 5.6 $ 28.5 $ 28.5Construction in progress 28.8 93.9 71.7 99.2 100.5 193.1Buildings 96.7 47.6 77.9 58.3 174.6 105.9Infrastructure 295.6 286.5 - - 295.6 286.5Improvements other than buildings 34.5 19.2 252.0 225.9 286.5 245.1Machinery and equipment 45.4 31.3 59.7 52.3 105.1 83.6Intangibles 1.3 1.2 - - 1.3 1.2

Total $ 525.2 $ 502.6 $ 466.9 $ 441.3 $ 992.1 $ 943.9

Capital Assets(net of depreciation)

(in Millions)

Governmental Activities Business-type Activities Total

308.8Land3%

Construction in progress

10%Buildings

18%

Infrastructure30%

Improvements other than buildings

29%

Machinery and equipment

10%

Capital Assets

The City’s capital assets for its governmental and business-type activities as of June 30, 2015, totaled $992.1 million, net of accumulated depreciation. This investment in capital assets includes land, buildings, improvements other than buildings, infrastructure, machinery and equipment and construction in progress. CAPITAL ASSETS

CAPITAL ASSETS

2015 2014 2015 2014 2015 2014Bonds payable $ 231.0 $ 220.0 $ 323.4 $ 309.6 $ 554.4 $ 529.6

Capital leases 11.5 10.7 1.4 1.8 12.9 12.5

Loans payable 2.3 2.5 - - 2.3 2.5

Total $ 244.8 $ 233.2 $ 324.8 $ 311.4 $ 569.6 $ 544.6

Outstanding Debt (in millions)

Governmental Activities Business-type Activities Total

DEBT ADMINISTRATIONLONG-TERM DEBT: AT THE END OF THE CURRENT FISCAL YEAR, THE CITY HAD TOTAL OUTSTANDING DEBT OF $569.6 MILLION.

OUTSTANDING DEBT (IN MILLIONS)

THE COMMONWEALTH OF VIRGINIA LIMITS THE AMOUNT OF GENERAL OBLIGATION DEBT OUTSTANDING TO 10% OF THE LOCALITY’S ASSESSED VALUE OF REAL PROPERTY, WHICH IS $883.0 MILLION FOR 2015. THE CITY CHARTER FURTHER LIMITS THIS GENERAL OBLIGATION LIMIT TO 7% OF THE CITY’S ASSESSED VALUE OF REAL

PROPERTY OR $618.1 MILLION. OF THE DEBT SHOWN ABOVE, ONLY $449.5 MILLION IS GENERAL OBLIGATION DEBT THAT IS APPLICABLE TO THE LEGAL DEBT LIMITS. THE CITY HAS MET BOTH OF THE LEGAL DEBT LIMITS. ACHIEVING THESE LIMITS REPRESENTS THE CITY’S CONSERVATIVE DEBT BORROWING POLICY.

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The Government Finance Officers Association (GFOA) has been promoting the preparation of high quality Popular Annual Financial Reports since 1991. More than 140 governments participate in the program each year. The Popular Annual Financial Reporting Awards Program is specifically designed to encourage state and local governments to prepare and issue a high quality Popular Annual Financial Report. Popular Annual Financial Reports can play an important role in making financial information accessible to ordinary citizens and other interested parties who may be challenged by more detailed traditional financial reports. Additional details can be found at the GFAO website: www.gfoa.org.

DO YOU LIKE THIS REPORT? WHAT OTHER INFORMATION WOULD YOU LIKE TO SEE CONTAINED IN THIS REPORT? PLEASE LET US KNOW BY CONTACTING THE FINANCE DEPARTMENT AT FINANCEEMAIL@SUFFOLKVA.US OR 757-514-7500.

PLEASE SEE THE CITY’S WEBSITE AT WWW.SUFFOLKVA.US FOR ADDITIONAL INFORMATION, INCLUDING THE CITY’S COMPREHENSIVE ANNUAL FINANCIAL REPORT AND THE CITY PROFILE AND STATISTICAL DIGEST.

MORE INFORMATION

WE WANT TO HEAR FROM YOU

PAGE 14

DEBT ADMINISTRATION

CITY OF SUFFOLK442 W. WASHINGTON STREET

SUFFOLK, VA 23434757-514-4000

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