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HomeMy WebLinkAboutN-15-06-26 Framingham POS NOTICEOFSALEANDPRELIMINARYOFFICIALSTATEMENTDATEDJUNE10,2015 Moody’sInvestorsService,Inc.: IntheopinionofLockeLordLLP,BondCounsel,baseduponananalysisofexistinglawandassuming,amongothermatters, compliancewithcertaincovenants,interestontheNotesisexcludedfromgrossincomeforfederalincometaxpurposesunder theInternalRevenueCodeof1986,asamended(the“Code”).InterestontheNotesisnotaspecificpreferenceitemfor purposesofthefederalindividualorcorporatealternativeminimumtaxes,althoughsuchinterestisincludedinadjustedcurrent earningswhencalculatingcorporatealternativeminimumtaxableincome.Underexistinglaw,interestontheNotesisexempt fromMassachusettspersonalincometaxes,andtheNotesareexemptfromMassachusettspersonalpropertytaxes.Bond Counselexpressesnoopinionregardinganyothertaxconsequencesrelatedtotheownershipordispositionof,ortheaccrualor receiptofintereston,theNotes.See“TaxExemption”herein.TheNoteswillnotbedesignatedas“qualifiedtax-exempt obligations”forpurposesofSection265(b)(3)oftheCode. TOWNOFFRAMINGHAM,MASSACHUSETTS $17,281,057GENERALOBLIGATIONBONDANTICIPATIONNOTES TheTownofFramingham,Massachusetts(the“Town”),willreceiveelectronicbids(asdescribedbelow)ortelephonebidsat FirstSouthwestCompany,LLC(617)619-4400,until11:00A.M.(EasternTime)onWednesday,June17,2015,forthe purchaseofthefollowingdescribedGeneralObligationBondAnticipationNotes(the“Notes”)oftheTown: $17,281,057GeneralObligationBondAnticipationNotes(newmoney)datedJune26,2015andpayableonDecember 11,2015.InterestontheNoteswillbecalculatedona30day-month/360day-yearbasis(165/360).The Noteswillnotbesubjecttoredemptionpriortotheirstatedmaturitydate. TheNoteswillbeissuedbymeansofabook-entrysystem,evidencingownershipoftheNotesintheprincipalamountof $1,000orintegralmultiplesthereof,withtheexceptionofonedenominationof$1,057,withtransfersofownershipeffectedon therecordsofTheDepositoryTrustCompany(DTC)anditsparticipantspursuanttotherulesandproceduresadoptedbyDTC, unlesstheissuanceofafullyregisterednotecertificateisrequestedbythewinningbidderandtheissuanceofsuchcertificate isapprovedbytheTown.(SeePreliminaryOfficialStatement,“Book-Entry-TransferSystem.”)Principalandinterestonthe NoteswillbepayableuponmaturityinfederalreservefundsbyU.S.BankNationalAssociation,oritssuccessor,asPaying Agent.DisbursementsofsuchpaymentstotheDTCParticipantsistheresponsibilityofDTC,anddisbursementsofsuch paymentstotheBeneficialOwnersistheresponsibilityoftheDTCParticipantsandtheIndirectParticipants. NoticeisherebygiventhatelectronicproposalswillbereceivedviaPARITY,inthemannerdescribedabove,until11:00A.M., EasternTime,onJune17,2015.BidsmaybesubmittedelectronicallyviaPARITYpursuanttothisNoticeofSaleuntil11:00 A.M.,EasternTime,butnobidwillbereceivedafterthetimeforreceivingbidsspecifiedabove.Totheextentanyinstructions ordirectionssetforthinPARITYconflictwiththisNoticeofSale,thetermsofthisNoticeofSaleshallcontrol.Forfurther informationaboutPARITY,potentialbiddersmaycontacttheFirstSouthwestCompany,LLCorPARITYat(212)404-8102. BidsmaybesubmittedforallorpartoftheNotesatasingleorvariousratesofinterestinmultiplesofone-hundredth(1/100)or plusapremiumofat one-eighth(1/8)ofonepercent(1%).Nobidoflessthanparandaccruedinteresttodateofdelivery least$1.50per$1,000 willbeconsidered.TheNoteswillbeawardedonthebasisoflowestnetinterestcosttotheTown.The NoteswillbeawardedonthebasisofthelowestnetinterestcosttotheTownafterdeductionsofpremiumifany.Intheeventa bidderofferingapremiumfortheNotesisawardedalesseramountoftheNotesthanbid,thepremiumshallbereduced proportionately.TherightisreservedtorejectanyandallbidsnotcomplyingwiththisNoticeofSaleand,sofaraspermitted bylaw,towaiveanyirregularitywithrespecttoanybid. AnybidderwhosubmitsawinningbidbytelephoneinaccordancewiththisNoticeofSaleshallberequiredtoprovidewritten confirmationofthetermsofthebidbyfaxingore-mailingacompleted,signedbidformtoFirstSouthwestCompany,LLCby notlaterthan12:00Noon,EasternTime,onthedateofthesale.AnelectronicbidmadeinaccordancewiththisNoticeofSale shallbedeemedanoffertopurchasetheNotesinaccordancewiththetermsprovidedinthisNoticeofSaleandshallbe bindinguponthebidderasifmadebyasignedandsealedwrittenbiddeliveredtotheTown. TheawardoftheNotestothewinningbidderwillnotbeeffectiveuntilthebidhasbeenapprovedbytheTreasurerandthe BoardofSelectmenoftheTown. OnorpriortothedateofdeliveryoftheNotes,thesuccessfulbiddershallfurnishtotheTownacertificateacceptabletoBond Counselgenerallytotheeffectthat(i)asofJune17,2015(the“SaleDate”),thepurchaserhadofferedorreasonablyexpected toofferalloftheNotestothegeneralpublic(excludingbondhouses,brokers,orsimilarpersonsactinginthecapacityof underwritersorwholesalers)inabonafidepublicofferingatthepricessetforthinsuchcertificate,plusaccruedinterest,ifany, (ii)suchpricesrepresentfairmarketpricesoftheNotesasoftheSaleDate,and(iii)asofthedateofsuchcertificate,allofthe Noteshavebeenofferedtothegeneralpublicinabonafideofferingatthepricessetforthinsuchcertificate,andatleast10% ofeachmaturityoftheNotesactuallyhasbeensoldtothegeneralpublicatsuchprices.Totheextentthecertifications describedintheprecedingsentencearenotfactuallyaccuratewithrespecttothereofferingoftheNotes,BondCounselshould beconsultedbythebidderastoalternativecertificationsthatwillbesuitabletoestablishthe“issueprice”oftheNotesfor federaltaxlawpurposes.IfthepurchaserispurchasingtheNotesforitsownaccountandnotonbehalfofanotherparty,and thepurchaserdoesnotpresentlyintendtoreselltheNotes,thesuccessfulbidderwillberequiredtosocertify. Thepurchaser(s)willbefurnished,withoutcost,theopinionofLockeLordLLP,Boston,Massachusetts,approvingthelegality oftheNotes.TheopinionwillindicatethattheNotesandtheenforceabilitythereofmaybesubjecttobankruptcyandother lawsaffectingcreditor'srightsandthattheirenforceabilitymayalsobesubjecttotheexerciseofjudicialdiscretionin appropriatecases.PaymentoftheprincipalofandinterestontheNotesisnotlimitedtoaparticularfundorsourceofrevenue norisanylienorpledgeforsuchpaymentcreatedwithrespecttoanysuchfundorsource.TheNoteswillbevalidgeneral obligationsoftheTownofFraminghamand,excepttotheextenttheyarepaidfromthebondproceedsinanticipationofwhich theyareissued,orfromanyotheravailablemoneys,theprincipalofandinterestontheNotesarepayablefromtaxeswhich maybelevieduponalltaxablepropertyintheTownsubjecttothelimitimposedbyChapter59,Section21CoftheGeneral Laws(Proposition21/2). Itshallbeaconditionofthesuccessfulbidder’sobligationtoacceptdeliveryofandpayfortheNotesthat,contemporaneously withorbeforeacceptingtheNotesandpayingtherefore,itshallbefurnished,withoutcost,with(a)theapprovingopinionofthe firmofLockeLordLLP,Boston,Massachusetts,withrespecttotheNotes,(b)acertificateinformsatisfactorytosaidfirm,dated asofthedateofdeliveryofsuchNotesandreceiptofpaymenttherefore,totheeffectthatthereisnolitigationpending,ortothe knowledgeofthesignerorsignersthereof,threatenedaffectingthevalidityofsuchNotesorthepoweroftheTowntolevyand collecttaxestopaythem,and(c)acertificateoftheTown’sInterimTreasurertotheeffectthat,tothebestofherknowledgeand belief,boththePreliminaryOfficialStatementasofthedateofsaleandtheFinalOfficialStatementasofthedateofdeliveryof suchNotesreferredtobelow,donotcontainanyuntruestatementofamaterialfactanddonotomittostateamaterialfact necessarytomakethestatementsmadetherein,inlightofthecircumstancesunderwhichtheyweremade,notmisleading. ThesuccessfulbidderforalloftheNotesmayrequestthattheNotesbeissuedintheformofonefullyregisteredphysical certificate,ratherthaninbook-entryformthroughthefacilitiesofTheDepositoryTrustCompany.Thesuccessfulbidder seekingtheissuanceoftheNotesinthismannershallbearanyandallcostsofanyre-registrationortransferofNotesfrom timetotime.AnybidderseekingtohavetheNotesissuedintheformoffullyregisteredphysicalcertificates,ratherthanin book-entryform,shallindicatethispreferencetotheTownatthetimeofthesubmissionofthewinningbid.TheTownreserves therighttodeclineanyrequesttoissuetheNotesinnon-bookentryformifitshoulddetermine,initssolediscretion,that issuingtheNotesinthismannerisnotinitsbestinterests. ItisanticipatedthatCUSIPidentificationnumberswillbeprintedontheNotes.AllexpensesinrelationtotheprintingofCUSIP numbersonsaidNotesshallbepaidbytheTown,however,theTownassumesnoresponsibilityforanyCUSIPServiceBureau orotherchargethatmaybeimposedfortheassignmentofsuchnumber. AdditionalinformationconcerningtheTownofFraminghamandtheNotesiscontainedinthePreliminaryOfficialStatement datedJune10,2015,towhichprospectivebiddersaredirected.ThePreliminaryOfficialStatementisprovidedforinformational purposesonly,andisnotapartofthisNoticeofSale.ThePreliminaryOfficialStatementhasbeendeemedfinalbytheTown asofitsdateforpurposesofSECRule15c2-12(b)(1)exceptfortheomissionofthereofferingprices,interestrates,andother termsoftheNotesdependingonsuchmattersandtheidentityoftheunderwriters,butissubjecttochangewithoutnoticeand tocompletionoramendmentinaFinalOfficialStatement.WithinsevenbusinessdaysfollowingtheawardoftheNotesand receiptofnecessaryinformationfromthesuccessfulbidder(s),atleast5copiesoftheFinalOfficialStatementwillbemade availabletothesuccessfulbidder(s).Uponrequest,additionalcopieswillbeprovidedtothesuccessfulbidder(s)toamaximum ofoneper$100,000ofparamountpurchased. Inordertoassistbiddersincomplyingwiththerequirementsofparagraph(b)(5)(i)(C)ofRule15c2-12promulgatedbythe SecuritiesandExchangeCommission,theIssuerwillundertaketoprovidenoticesofcertainsignificantevents.Adescriptionof thisundertakingissetforthinthePreliminaryOfficialStatementdatedJune10,2015. TheNotes,indefinitiveform,willbedeliveredtoDTC,ortotheofficeofitscustodialagent,ortotheregisteredownerifafully registeredcertificateisrequestedbythewinningbidderandapprovedbytheTown,onoraboutJune26,2015,against paymenttotheTowninfederalreservefunds. TOWNOFFRAMINGHAM,MASSACHUSETTS /s/CarolynLyons,Treasurer Bondcounselarenotpassinguponanddonotassumeanyresponsibilityfortheaccuracyoradequacyoftheinformation containedhereinotherthanmatterssetforthastheopinionofbondcounsel,andmakenorepresentationthattheyhave independentlyverifiedthesame. 2 PRELIMINARYOFFICIALSTATEMENT TOWNOFFRAMINGHAM,MASSACHUSETTS $17,281,057GENERALOBLIGATIONBONDANTICIPATIONNOTES ThepurposeofthisOfficialStatementistofurnishcertaininformationregardingtheTownofFramingham, Massachusetts(hereafterreferredtoasthe“Town")and$17,281,057principalamountofGeneralObligationBond AnticipationNotes(hereafterreferredtoasthe“Notes").Theinformationcontainedhereinhasbeenfurnishedbythe Townexceptinformationattributedtoanothergovernmentalagencyorofficialasthesource. TheNotesarebeingofferedforsaleatpublicbiddingonWednesday,June17,2015,andaNoticeofSaledatedJune 10,2015,hasbeenfurnishedtoprospectivebiddersforthetermsandconditionsofbidding. TheNotes TheNoteswillbedatedJune26,2015andwillbepayablebyU.S.BankNationalAssociation,Boston,Massachusetts, oritssuccessorasPayingAgent.TheNoteswillbearinterestpayableatmaturityattherateorratesdeterminedupon theirsaleinaccordancewiththeNoticeofSaledatedJune10,2015.TheNoteswillbeissuedbymeansofabook- entry-onlysystem,evidencingownershipoftheNotesinprincipalamountsof$1,000orintegralmultiplesthereof, withthe withtransfersofownershipeffectedontherecordsofTheDepositoryTrust exceptionofonedenominationof$1,057, Company(DTC)anditsParticipantspursuanttotherulesandproceduresadoptedbyDTC,unlessthedeliveryofafully registerednotecertificateisrequestedbythewinningbidderandtheissuanceofsuchcertificateisapprovedbythe Town.(See“Book-Entry-TransferSystem”herein.) AuthorizationoftheNotesandUseofProceeds Setforthonthefollowingpageispurpose,dateofapproval,statutoryreference,existingbondanticipationnotes outstanding,totaloriginalauthorizationandprincipalamountforthecurrentissueofNotes. This DateArticleStatutoryBANsOutstandingTotalAmount Issue PurposeAuthorizedNumberReferenceDue12/11/2015Authorized $175,000 WastewaterPumpingStationsReplacementProject(CWS-07-27-A&CW-07-27-A)5/16/200751J448(15)$430,000$8,009,800 175,000 NorthConcordSt.WaterMainReplcement-Design5/13/200846J447(22)25,000600,000 50,000 UnionAve/MainSt.WaterMainReplacement-Design5/13/200846O448(5)85,000320,000 49,500 NetworkInfrastructureImprovements5/13/200939DD447(9)-250,535 90,020 BirchRoadWellReactivationProject5/13/200940B448(5)-40,337,900 2,409 CoburnStreetAreaWaterMainReplacement5/13/200940J448(5)100,0001,540,000 5,000 TownBuildings5/19/201131QQ447(9)-385,000 13,381 MobilFieldInspections5/19/201131TT447(28)2,00046,381 23,902 AssetManagement5/19/201131UU447(29)-52,759 274,000 72,000GVWCab&Chassiswith31CYRefusePacker&SnowPlow5115/3/201231O447(9)-274,000 390,000 Irving,Loring,andHerbertStreetIntersectionWaterImprovementsConstruction5/8/201232A448(5)350,0001,791,590 1,780,000 BeebeWaterStorageTasksUpgradeConstructionproject5/8/201232C448(4)14,0003,214,000 90,000 WastewaterBack-upSystemsUpgrades5/8/201233A448(15)-550,000 7,700 EastFraminghamSewerImprovementProject&CentralStreetSiphon/SudburyRiver5/8/201233F448(15)200,0002,400,000 1,120,000 Irving,Herbert,LoringSewerConstructionProjectConstruction5/8/201233I448(15)355,0002,311,000 SpeenStreetInterceptorSewerReplacementProjectDesign&Construction5/8/201233J448(15)750,0001,342,000496,000 800,000 McAuliffeBrnchLibrary5/1/20131447(3)or7(3A)-7,988,329 36,500 TransferStationDemolitionConceptualDesign5/3/201318R447(22)-80,000 135,000 CushingMemorialParkPhase5-PlayArea5/7/201318L447(25)70,000665,000 321,500 72,000GVWCab&Chasisw/RefusePacker&SnowPlow5/8/201318AA447(9)-321,500 TrafficCalmingProgram5/8/201318NN447(6)150,000200,0005,700 3,900 PublicSafetyServerReplacement5/8/201318OO447(28)-88,900 472,000 Water-BethanyRd&Winthrop/WaverlyIntersectionImprovements5/9/201319C448(5)100,000855,000 65,169 WaterMainReplacementVarious5/9/201319F448(5)-300,000 100,000 WaterHydrant&GateValve5/9/201319G448(7C)-200,000 22,000 Sewer-TrailerMountedGenerators5/9/201320B447(9)-131,000 295,000 BaitingBrookSewerImprovements5/9/201320D448(15)-6,563,000 60,000 BethanyRd.&Winthrop/WaverlyIntersectionSewer5/9/201320E448(15)120,0001,240,000 175,000 SewerMainReplacementVarious5/9/201320F447(1)-253,212 1,260,000 Replacementof(4)68,000GVWCab&Chassisw/AutomaticRefusePackerandPlow#511-#5145/6/201416AB447(9)-1,337,440 Continuedtonextpage. 3 Continuedfrompreviouspage. This DateArticleStatutoryBANsOutstandingTotalAmount Issue PurposeAuthorizedNumberReferenceDue12/11/2015Authorized $453,000 TechnologyUpgradesThroughoutDistrict(Phase4)-Hardware5/6/201416AC447(28)&7(29)$-$950,000 80,000 KingSchoolElevator5/6/201416AD447(3A)-320,188 68,000 FurnishNew&ReplaceOutdatedFurnitire-PhasedProject5/6/201416AF447(9)-300,000 175,000 ReplaceDeterioratedAsbestosFloorTileinMainAreasandinCorridors(Phase2)5/6/201416AG7(3A)-445,000 55,000 FoodServicesEquipment-PhasedProject#15/6/201416AH447(9)-140,000 240,000 PavingReplacement/StormWaterAllSchools-PhasedProject5/6/201416AJ447(5)/7(6)-600,000 70,000 ADAUpgrades-MultipleSchools-PhasedProject5/6/201416AK7(5)7(9)-300,000 24,000 HVAC-ReplaceRooftopAirHandlingUnits&VentilationEquipment-MultipleSchools5/6/201416AL447(3A)-325,000 28,000 Mechanical,Electrical,PlumbingUpgrades-AllSchools-MultipleSystems5/6/201416AM447(3A)-150,000 37,378 RackStyleTruckwithLiftGate-VehicleReplacement5/6/201416AN447(9)-37,500 43,000 UtilityBodyTruck-VehicleReplacement5/6/201416AO447(9)-43,000 66,500 FireDepartmentMobileDataUpgrade5/6/201416AR447(14)-78,375 83,000 ArchivedDocumentScanning-PhaseIII5/6/201416AT447(29)-275,949 293,000 ComputerServerRoomUpgrade5/6/201416AU447(29)-293,000 17,100 Phase2SpaceStudy-Danforth&Annex5/6/201416AV447(9)-52,500 57,137 SignalDivisionPickUpReplacement5/6/201416C447(9)-57,695 12,000 RFIDCollectionSecurity&Self-CheckStations5/6/201416D447(9)-194,560 106,000 CallahamSeniorCenter-FrontEntranceRedesign5/6/201416F447(6)-138,612 67,245 FordF650J-Hook5/6/201416G447(9)-67,245 41,710 F3504x4CrewCabPickup10,000GVW5/6/201416H447(9)-43,665 37,395 F3504x4RegularCabPickup5/6/201416I447(9)-39,155 60,000 MaryDennisonMasterPlan&SkateParkFeasibilityStudy5/6/201416J447(22)-60,000 127,000 EmergenyGenerator(Phase2)5/6/201416K447(9)-349,000 16,000 AnnualOpenConveyanceDrainageSystem&WaterQualityRestorationProject-20155/6/201416L448(15)-175,000 16,150 WesternAveFuelIsland(General)5/6/201416M447(9)-16,150 3,000,000 AnnualRoadwayImprovements20155/6/201416N447(5)/7(6)-4,000,000 30,000 AnnualTrafficCalming-20155/6/201416O447(9)-200,000 42,067 Replacementof8,800GVW4WDHDCab&Chassisw/PickupBodyandSnowPlow#4025/6/201416P447(9)-46,550 44,092 Replacementof15,000GVW4WDRackTruckw/LiftGateandPlow#4095/6/201416Q447(9)-73,300 67,350 Replacementof18,000GVW4WDCab&Chassisw/DumpBodyandPlow#4115/6/201416R447(9)-67,350 105,980 FrontEndLoaderMountedSnowBlower#451A5/6/201416S447(9)-106,000 37,085 Replacementofa6CYMaterialSpreaderw/Controls#422A5/6/201416V447(9)-40,800 136,021 ReplacementofaSidewalkTractor-Tracked#4645/6/201416W447(9)-167,400 196,450 Replacementofa40,000GVWCab&Chassisw/DumpBodyandPlow#4215/6/201416X447(9)-215,800 35,965 Replacementofa6CYMaterialSpreaderw/Controls#421A5/6/201416Y447(9)-40,800 54,687 11,000GVW4WDCabandChassisw/ServiceBody&Plow#6145/6/201417A448(7C)-55,000 67,350 15,000GVW4WDCabandChassisw/DumpBody&Plow#6255/6/201417B448(7C)-67,350 54,687 11,000GVW4WDCabandChassisw/ServiceBody#6015/6/201417C448(7C)-55,000 77,800 MiniExcavator#6505/6/201417D448(5)-78,000 205,000 UnionAveWaterMainConstruction5/6/201417F448(5)-12,145,000 67,316 VariousWaterImprovements-20155/6/201417H448(5)-300,000 55,000 SpeenStreet&CochituateRoadWaterMainReplacement-Design5/6/201417I447(22)-640,000 55,000 VariousHydrant&ValveImprovements-20155/6/201417J448(4)-200,000 16,150 WesternAveFuelIsland(water)5/6/201417M447(9)-16,150 899,900 PurchaseofCurbsideRefuseCollectionCarts5/6/2014A16AA447(9)-1,000,000 64,500 DigitalDirectControlEnergyConservationProgram(SchoolDepartment)5/6/2014A16AE447(29)-235,000 44,963 UtilityBodyTruck-VehicleReplacement5/6/2014A16AP447(9)-45,000 54,240 11,000GVW4WDCabandChassisw/ServiceBody&Plow#7225/7/201418A447(9)-55,000 50,000 WastewaterMasterPlan5/7/201418C447(22)-250,000 110,000 WastewaterPumpStationCapitalEquipmentReplacement5/7/201418D447(9)-400,000 600,000 Waverly/WinthropIntersectionSewerRealignment-Design&Construction5/7/201418F447(1)-1,400,000 91,000 UnionAveSewerConstruction5/7/201418H448(15)-1,880,000 149,000 VariousSewerImprovements-20155/7/201418I448(15)-300,000 10,000 OldDanforthStreetBridgeSewerMainImprovement5/7/201418J448(15)-700,000 4,400 Eastleigh,LittleFarms&FlanaganSewerPumpingStationReplacement-Design5/7/201418K447(22)-810,000 16,150 WesternAveFuelIsland(sewer)5/7/201418L447(9)-16,150 10,000 ElmRoadSewerImprovements5/7/201418M448(15)-1,585,000 2,500 HopBrookSewerRealignment5/7/201418N448(15)-420,000 59,108 MaryDennisonParkRemediationPlanning10/23/201417447(22)-180,000 $17,281,057 $2,751,000 4 TaxExemption IntheopinionofLockeLordLLP,BondCounseltotheTown(“BondCounsel”),baseduponananalysisofexistinglaws, regulations,rulings,andcourtdecisions,andassuming,amongothermatters,compliancewithcertaincovenants,interest ontheNotesisexcludedfromgrossincomeforfederalincometaxpurposesunderSection103oftheInternalRevenue Codeof1986(the“Code”).BondCounselisofthefurtheropinionthatinterestontheNotesisnotaspecificpreference itemforpurposesofthefederalindividualorcorporatealternativeminimumtaxes,althoughBondCounselobservesthat suchinterestisincludedinadjustedcurrentearningswhencalculatingcorporatealternativeminimumtaxableincome. BondCounselexpressesnoopinionregardinganyotherfederaltaxconsequencesarisingwithrespecttotheownership ordispositionof,ortheaccrualorreceiptofintereston,theNotes.TheNoteswillnotbedesignatedas“qualifiedtax- exemptobligations”forpurposesofSection265(b)(3)oftheCode. TheCodeimposesvariousrequirementsrelatingtotheexclusionfromgrossincomeforfederalincometaxpurposesof interestonobligationssuchastheNotes.FailuretocomplywiththeserequirementsmayresultininterestontheNotes beingincludedingrossincomeforfederalincometaxpurposes,possiblyfromthedateoforiginalissuanceoftheNotes. TheTownhascovenantedtocomplywithsuchrequirementstoensurethatinterestontheNoteswillnotbeincludedin federalgrossincome.TheopinionofBondCounselassumescompliancewiththeserequirements. BondCounselisalsooftheopinionthat,underexistinglaw,interestontheNotesisexemptfromMassachusettspersonal incometaxes,andtheNotesareexemptfromMassachusettspersonalpropertytaxes.BondCounselhasnotopinedas tootherMassachusettstaxconsequencesarisingwithrespecttotheNotes.ProspectiveNoteholdersshouldbeaware, however,thattheNotesareincludedinthemeasureofMassachusettsestateandinheritancetaxes,andtheNotesand theinterestthereonareincludedinthemeasureofcertainMassachusettscorporateexciseandfranchisetaxes.Bond CounselhasnotopinedastothetaxabilityoftheNotesortheincometherefromunderthelawsofanystateotherthan Massachusetts. TotheextenttheissuepriceoftheNotesislessthantheamounttobepaidatmaturityofsuchNotes(excludingamounts statedtobeinterestandpayableatleastannuallyoverthetermofsuchNotes),thedifferenceconstitutes“originalissue discount,”theaccrualofwhich,totheextentproperlyallocabletoeachownerthereof,istreatedasinterestontheNotes whichisexcludedfromgrossincomeforfederalincometaxpurposesandisexemptfromMassachusettspersonalincome taxes.Forthispurpose,theissuepriceoftheNotesisthefirstpriceatwhichasubstantialamountofsuchNotesissold tothepublic(excludingbondhouses,brokers,orsimilarpersonsororganizationsactinginthecapacityofunderwriters, placementagentsorwholesalers).TheoriginalissuediscountwithrespecttotheNotesaccruesdailyoverthetermto maturityofsuchNotesonthebasisofaconstantinterestratecompoundedsemiannually(withstraight-lineinterpolations betweencompoundingdates).TheaccruingoriginalissuediscountisaddedtotheadjustedbasisofsuchNotesto determinetaxablegainorlossupondisposition(includingsale,redemption,orpaymentonmaturity)ofsuchNotes. NoteholdersshouldconsulttheirowntaxadvisorswithrespecttothetaxconsequencesofownershipofNoteswith originalissuediscount,includingthetreatmentofpurchaserswhodonotpurchasesuchNotesintheoriginalofferingto thepublicatthefirstpriceatwhichasubstantialamountofsuchNotesissoldtothepublic. Notespurchased,whetheratoriginalissuanceorotherwise,foranamountgreaterthanthestatedprincipalamounttobe paidatmaturityofsuchNotes,or,insomecases,attheearlierredemptiondateofsuchNotes("PremiumNotes"),willbe treatedashavingamortizablenotepremiumforfederalincometaxpurposesandMassachusettspersonalincometax purposes.Nodeductionisallowablefortheamortizablenotepremiuminthecaseofobligations,suchasthePremium Notes,theinterestonwhichisexcludedfromgrossincomeforfederalincometaxpurposes.However,aNoteholder’s basisinaPremiumNotewillbereducedbytheamountofamortizablenotepremiumproperlyallocabletosuch Noteholder.HoldersofPremiumNotesshouldconsulttheirowntaxadvisorswithrespecttothepropertreatmentof amortizablenotepremiumintheirparticularcircumstances. BondCounselhasnotundertakentodetermine(ortoinformanyperson)whetheranyactionstaken(ornottaken)or eventsoccurring(ornotoccurring)afterthedateofissuanceoftheNotesmayadverselyaffectthevalueof,orthetax statusofintereston,theNotes. ProspectiveNoteholdersshouldbeawarethatfromtimetotimelegislationisormaybeproposedwhich,ifenactedinto law,couldresultininterestontheNotesbeingsubjectdirectlyorindirectlytofederalincometaxation,orotherwise preventNoteholdersfromrealizingthefullbenefitprovidedundercurrentfederaltaxlawoftheexclusionofinterestonthe Notesfromgrossincome.Todate,nosuchlegislationhasbeenenactedintolaw.However,itisnotpossibletopredict whetheranysuchlegislationwillbeenactedintolaw.Further,noassurancecanbegiventhatanypendingorfuture legislation,includingamendmentstotheCode,ifenactedintolaw,oranyproposedlegislation,includingamendmentsto theCode,oranyfuturejudicial,regulatoryoradministrativeinterpretationordevelopmentwithrespecttoexistinglaw,will notadverselyaffectthemarketvalueandmarketabilityof,orthetaxstatusofintereston,theNotes.Prospective 5 Noteholdersareurgedtoconsulttheirowntaxadvisorswithrespecttoanysuchlegislation,interpretationor development. AlthoughBondCounselisoftheopinionthatinterestontheNotesisexcludedfromgrossincomeforfederalincometax purposesandisexemptfromMassachusettspersonalincometaxes,theownershipordispositionof,ortheaccrualor receiptofintereston,theNotesmayotherwiseaffectthefederalorstatetaxliabilityofaNoteholder.Amongother possibleconsequencesofownershipordispositionof,ortheaccrualorreceiptofintereston,theNotes,theCode requiresrecipientsofcertainsocialsecurityandcertainrailroadretirementbenefitstotakeintoaccountreceiptsor accrualsofinterestontheNotesindeterminingtheportionofsuchbenefitsthatareincludedingrossincome.Thenature andextentofallsuchothertaxconsequenceswilldependupontheparticulartaxstatusoftheNoteholderorthe Noteholder’sotheritemsofincome,deductionorexclusion.BondCounselexpressesnoopinionregardinganysuch othertaxconsequences,andNoteholdersshouldconsultwiththeirowntaxadvisorswithrespecttosuchconsequences. SecurityandRemedies FullFaithandCredit.Generalobligationbondsandnotesofacityortown,intheCommonwealthofMassachusetts(the “Commonwealth”or“Massachusetts”)constituteapledgeofitsfullfaithandcredit.Paymentisnotlimitedtoaparticularfund orrevenuesource.Exceptfor“qualifiedbonds”asdescribedabove(see“TYPESOFOBLIGATIONS-SerialBondsand Notes”under“INDEBTEDNESS”below)andsetoffsofstatedistributionsasdescribedbelow(see“StateDistributions”below), noprovisionismadebytheMassachusettsstatutesforprioritiesamongbondsandnotesandothergeneralobligations, althoughtheuseofcertainmoneysmayberestricted. TaxLevy.TheMassachusettsstatutesdirectthemunicipalassessorstoincludeannuallyinthetaxlevyforthenextfiscal year“alldebtandinterestchargesmaturedandmaturingduringthenextfiscalyearandnototherwiseprovidedfor\[and\]all amountsnecessarytosatisfyfinaljudgments”.Specificprovisionisalsomadeforincludinginthenexttaxlevypaymentsof rebateamountsnototherwiseprovidedforandpaymentofnotesinanticipationoffederalorstateaid,iftheaidisnolonger forthcoming. Thetotalamountofataxlevyislimitedbystatute.However,thevotersineachmunicipalitymayvotetoexcludefromthe limitationanyamountsrequiredtopaydebtserviceonindebtednessincurredbeforeNovember4,1980.Localvotersmay alsovotetoexemptspecificsubsequentbondissuesfromthelimitation.(See“TaxLimitations”Under“PROPERTY TAXATION”below.)Inaddition,obligationsincurredbeforeNovember4,1980maybeconstitutionallyentitledtopayment fromtaxesinexcessofthestatutorylimit. Exceptfortaxesontheincreasedvalueofcertainpropertyindesignateddevelopmentdistrictswhichmaybepledgedforthe paymentofdebtserviceonbondsissuedtofinanceeconomicdevelopmentprojectswithinsuchdistricts,noprovisionismade foralienonanyportionofthetaxlevytosecureparticularbondsornotesorbondsandnotesgenerally(orjudgmentson bondsornotes)inprioritytootherclaims.Provisionismade,however,forborrowingtopayjudgments,subjecttotheGeneral DebtLimit.(See“DEBTLIMITS”below.)SubjecttotheapprovaloftheStateDirectorofAccountsforjudgmentsabove $10,000,judgmentsmayalsobepaidfromavailablefundswithoutappropriationandincludedinthenexttaxlevyunlessother provisionismade. CourtProceedings.Massachusettscitiesandtownsaresubjecttosuitontheirgeneralobligationbondsandnotesandcourts ofcompetentjurisdictionhavepowerinappropriateproceedingstoorderpaymentofajudgmentonthebondsornotesfrom lawfullyavailablefundsor,ifnecessary,toorderthecityortowntotakelawfulactiontoobtaintherequiredmoney,including theraisingofitinthenextannualtaxlevy,withinthelimitsprescribedbylaw.(See“TaxLimitations”under“PROPERTY TAXATION”below.)Inexercisingtheirdiscretionastowhethertoentersuchanorder,thecourtscouldtakeintoaccountall relevantfactorsincludingthecurrentoperatingneedsofthecityortownandtheavailabilityandadequacyofotherremedies. TheMassachusettsSupremeJudicialCourthasstatedinthepastthatajudgmentagainstamunicipalitycanbeenforcedby thetakingandsaleofthepropertyofanyinhabitant.However,therehasbeennojudicialdeterminationastowhetherthis remedyisconstitutionalundercurrentdueprocessandequalprotectionstandards. RestrictedFunds.Massachusettsstatutesalsoprovidethatcertainwater,gasandelectric,communityantennatelevision system,telecommunications,sewer,parkingmeterandpassengerferryfee,communitypreservationandaffordablehousing receiptsmaybeusedonlyforwater,gasandelectric,communityantennatelevisionsystem,telecommunications,sewer, parking,mitigationofferryserviceimpacts,communitypreservationandaffordablehousingpurposes,respectively; accordingly,moneysderivedfromthesesourcesmaybeunavailabletopaygeneralobligationbondsandnotesissuedfor otherpurposes.Acityortownthatacceptscertainotherstatutoryprovisionsmayestablishanenterprisefundforautility, healthcare,solidwaste,recreationalortransportationfacilityandforpoliceorfireservices;underthoseprovisionsanysurplus inthefundisrestrictedtouseforcapitalexpendituresorreductionofusercharges.Inaddition,subjecttocertainlimits,acity ortownmayannuallyauthorizetheestablishmentofoneormorerevolvingfundsinconnectionwithuseofcertainrevenues forprogramsthatproducethoserevenues;interestearnedonarevolvingfundistreatedasgeneralfundrevenue.Acityor 6 townmayalsoestablishanenergyrevolvingloanfundtoprovideloanstoownersofprivately-heldpropertyinthecityortown forcertainenergyconservationandrenewableenergyprojects,andmayborrowtoestablishsuchafund.Theloan repaymentsandinterestearnedontheinvestmentofamountsinthefundshallbecreditedtothefund.Also,theannual allowancefordepreciationofagasandelectricplantoracommunityantennatelevisionandtelecommunicationssystemis restrictedtouseforplantorsystemrenewalsandimprovements,fornucleardecommissioningcosts,andcostsofcontractual commitments,or,withtheapprovaloftheStateDepartmentofTelecommunicationsandEnergy,topaydebtincurredforplant orsystemreconstructionorrenewals.Revenuebondsandnotesissuedinanticipationofthemmaybesecuredbyapriorlien onspecificrevenues.Receiptsfromindustrialusersinconnectionwithindustrialrevenuefinancingsarealsonotavailablefor generalmunicipalpurposes. StateDistributions.Stategrantsanddistributionsmayinsomecircumstancesbeunavailabletopaygeneralobligationbonds andnotesofacityortowninthattheStateTreasurerisempoweredtodeductfromsuchgrantsanddistributionstheamount ofanydebtservicepaidon“qualifiedbonds”(See“SerialBondsandNotes”under“TYPESOFOBLIGATIONS”below)and anyothersumsdueandpayablebythecityortowntotheCommonwealthorcertainotherpublicentities,includinganyunpaid assessmentsforcostsofanypublictransportationauthority(suchastheMassachusettsBayTransportationAuthorityora regionaltransitauthority)ofwhichitisamember,forcostsoftheMassachusettsWaterResourcesAuthorityifthecityortown iswithintheterritoryservedbytheAuthority,foranydebtservicedueonobligationsissuedtotheMassachusettsSchool BuildingAuthority,orforchargesnecessarytomeetobligationsundertheCommonwealth’sWaterPollutionAbatementor DrinkingWaterRevolvingLoanPrograms,includingsuchchargesimposedbyanotherlocalgovernmentalunitthatprovides wastewatercollectionortreatmentservicesordrinkingwaterservicestothecityortown. Ifacityortownis(orislikelytobe)unabletopayprincipalorinterestonitsbondsornoteswhendue,itisrequiredtonotify theStateCommissionerofRevenue.TheCommissionershallinturn,afterverifyingtheinability,certifytheinabilitytothe StateTreasurer.TheStateTreasurershallpaythedueoroverdueamounttothepayingagentforthebondsornotes,intrust, withinthreedaysafterthecertificationoronebusinessdaypriortotheduedate(whicheverislater).Thispaymentislimited, however,totheestimatedamountotherwisedistributablebytheCommonwealthtothecityortownduringtheremainderof thefiscalyear(afterthedeductionsmentionedintheforegoingparagraph).Ifforanyreasonanyportionofthecertifiedsum hasnotbeenpaidattheendofthefiscalyear,theStateTreasurershallpayitassoonaspracticableinthenextfiscalyearto theextentoftheestimateddistributionsforthatfiscalyear.Thesumssopaidshallbecharged(withinterestand administrativecosts)againstthedistributionstothecityortown. TheforegoingdoesnotconstituteapledgeofthefaithandcreditoftheCommonwealth.TheCommonwealthhasnotagreed tomaintainexistinglevelsofstatedistributions,andthedirectiontouseestimateddistributionstopaydebtservicemaybe subjecttorepealbyfuturelegislation.Moreover,adoptionoftheannualappropriationacthassometimesbeendelayed beyondthebeginningofthefiscalyearandestimateddistributionswhicharesubjecttoappropriationmaybeunavailableto paylocaldebtserviceuntiltheyareappropriated. Bankruptcy.Enforcementofaclaimforpaymentofprincipalorinterestongeneralobligationbondsornoteswouldbesubject totheapplicableprovisionsofFederalbankruptcylawsandtotheprovisionsofotherstatutes,ifany,hereafterenactedbythe CongressortheStatelegislatureextendingthetimeforpaymentorimposingotherconstraintsuponenforcementinsofaras thesamemaybeconstitutionallyapplied.MassachusettsmunicipalitiesarenotgenerallyauthorizedbytheMassachusetts GeneralLawstofileapetitionforbankruptcyunderFederalBankruptcylaws.Incasesinvolvingsignificantfinancialdifficulties facedbyasinglecity,townorregionalschooldistrict,theCommonwealthhasenactedspeciallegislationtopermitthe appointmentofafiscaloverseer,financecontrolboardor,inthemostextremecases,astatereceiver.Inalimitednumberof thesesituations,suchspeciallegislationhasalsoauthorizedthefilingoffederalbankruptcyproceedings,withtheprior approvaloftheCommonwealth.Ineachcasewheresuchauthoritywasgranted,itexpiredattheterminationofthe Commonwealth’soversightofthefinanciallydistressedcity,townorregionalschooldistrict.Todate,nosuchfilingshave beenapprovedormade. Book-EntryTransferSystem ThissectionshallonlyapplytoNotesissuedbymeansofabook-entrysystemthroughthefacilitiesofDTC,NewYork, NewYork(“DTC”). DTCwillactassecuritiesdepositoryfortheNotes.TheNoteswillbeissuedinfully-registeredformregisteredinthename ofCede&Co.(DTC’spartnershipnominee)orsuchothernameasmayberequestedbyanauthorizedrepresentativeof DTC.One-fullyregisteredNotecertificatewillbeissuedforeachinterestrate,eachintheaggregateprincipalamount bearingsuchinterestrate,andwillbedepositedwithDTC. DTC,theworld’slargestdepository,isalimited-purposetrustcompanyorganizedundertheNewYorkBankingLaw,a “bankingorganization”withinthemeaningoftheNewYorkBankingLaw,amemberoftheFederalReserveSystem,a “clearingcorporation”withinthemeaningoftheNewYorkUniformCommercialCode,anda“clearingagency”registered 7 pursuanttotheprovisionsofSection17AoftheSecuritiesExchangeActof1934.DTCholdsandprovidesassetservicing forover3.5millionissuesofU.S.andnon-U.S.equity,corporateandmunicipaldebtissues,andmoneymarket instruments(fromover100countries)thatDTC’sparticipants(“DirectParticipants”)depositwithDTC.DTCalsofacilitates thepost-tradesettlementamongDirectParticipantsofsalesandothersecuritiestransactionsindepositedsecurities, throughelectroniccomputerizedbook-entrytransfersandpledgesbetweenDirectParticipants’accounts.Thiseliminates theneedforphysicalmovementofsecuritiescertificates.DirectParticipantsincludebothU.S.andnon-U.S.securities brokersanddealers,banks,trustcompanies,clearingcorporations,andcertainotherorganizations.DTCisawholly- ownedsubsidiaryofTheDepositoryTrust&ClearingCorporation(“DTCC”).DTCCistheholdingcompanyforDTC, NationalSecuritiesClearingCorporationandFixedIncomeClearingCorporation,allofwhichareregisteredclearing agencies.DTCCisownedbytheusersofitsregulatedsubsidiaries.AccesstotheDTCsystemisalsoavailabletoothers suchasbothU.S.andnon-U.S.securitiesbrokersanddealers,banks,trustcompanies,andclearingcorporationsthat clearthroughormaintainacustodialrelationshipwithaDirectParticipant,eitherdirectlyorindirectly(“Indirect Participants”).DTChasaStandard&Poor’sratingofAA+.TheDTCRulesapplicabletoitsParticipantsareonfilewith www.dtcc.com. theSecuritiesandExchangeCommission.MoreinformationaboutDTCcanbefoundat PurchasesofsecuritiesdepositedwithDTCmustbemadebyorthroughDirectParticipants,whichwillreceiveacreditfor suchsecuritiesonDTC’srecords.TheownershipinterestofeachactualpurchaserofeachsecuritydepositedwithDTC (“BeneficialOwner”)isinturntoberecordedontheDirectandIndirectParticipants’records.BeneficialOwnerswillnot receivewrittenconfirmationfromDTCoftheirpurchase.BeneficialOwnersare,however,expectedtoreceivewritten confirmationsprovidingdetailsofthetransaction,aswellasperiodicstatementsoftheirholdings,fromtheDirector IndirectParticipantthroughwhichtheBeneficialOwnerenteredintothetransaction.Transfersofownershipinterestsin securitiesdepositedwithDTCaretobeaccomplishedbyentriesmadeonthebooksofDirectandIndirectParticipants actingonbehalfofBeneficialOwners.BeneficialOwnerswillnotreceivecertificatesrepresentingtheirownershipinterests insecuritiesdepositedwithDTC,exceptintheeventthatuseofthebook-entrysystemforsuchsecuritiesisdiscontinued. Tofacilitatesubsequenttransfers,allsecuritiesdepositedbyDirectParticipantswithDTCareregisteredinthenameof DTC’spartnershipnominee,Cede&Co.,orsuchothernameasmayberequestedbyanauthorizedrepresentativeof DTC.ThedepositofsecuritieswithDTCandtheirregistrationinthenameofCede&Co.orsuchotherDTCnomineedo noteffectanychangeinbeneficialownership.DTChasnoknowledgeoftheactualBeneficialOwnersofthesecurities depositedwithit;DTC’srecordsreflectonlytheidentityoftheDirectParticipantstowhoseaccountssuchsecuritiesare credited,whichmayormaynotbetheBeneficialOwners.TheDirectandIndirectParticipantswillremainresponsiblefor keepingaccountoftheirholdingsonbehalfoftheircustomers. ConveyanceofnoticesandothercommunicationsbyDTCtoDirectParticipants,byDirectParticipantstoIndirect Participants,andbyDirectParticipantsandIndirectParticipantstoBeneficialOwnerswillbegovernedbyarrangements amongthem,subjecttoanystatutoryorregulatoryrequirementsasmaybeineffectfromtimetotime. NeitherDTCnorCede&Co.(norsuchotherDTCnominee)willconsentorvotewithrespecttosecuritiesdepositedwithit unlessauthorizedbyaDirectParticipantinaccordancewithDTC’sMMIProcedures.Underitsusualprocedures,DTC mailsanOmnibusProxytotheTownassoonaspossibleaftertherecorddate.TheOmnibusProxyassignsCede&Co.’s consentingorvotingrightstothoseDirectParticipantstowhoseaccountsthesecuritiesarecreditedontherecorddate (identifiedinalistingattachedtotheOmnibusProxy). PrincipalandinterestpaymentsonsecuritiesdepositedwithDTCwillbemadetoCede&Co.,orsuchothernomineeas mayberequestedbyanauthorizedrepresentativeofDTC.DTC’spracticeistocreditDirectParticipants’accountsupon DTC’sreceiptoffundsandcorrespondingdetailinformationfromtheissuerofsuchsecuritiesoritspayingagent,onthe payabledateinaccordancewiththeirrespectiveholdingsshownonDTC’srecords.PaymentsbyParticipantsto BeneficialOwnerswillbegovernedbystandinginstructionsandcustomarypractices,asisthecasewithsecuritiesheld fortheaccountsofcustomersinbearerformorregisteredin“streetname,”andwillbetheresponsibilityofsuch ParticipantandnotofDTC(noritsnominee),theTownoritspayingagent,subjecttoanystatutoryorregulatory requirementsasmaybeineffectfromtimetotime.PaymentofprincipalandinteresttoCede&Co.(orsuchother nomineeasmayberequestedbyanauthorizedrepresentativeofDTC)istheresponsibilityoftheissuerTownorits payingagent,disbursementofsuchpaymentstoDirectParticipantswillbetheresponsibilityofDTC,anddisbursementof suchpaymentstotheBeneficialOwnerswillbetheresponsibilityofDirectandIndirectParticipants. DTCmaydiscontinueprovidingitsservicesasdepositorywithrespecttothesecuritiesheldbyitatanytimebygiving reasonablenoticetotheissuerofsuchsecuritiesoritspayingagent.Undersuchcircumstances,intheeventthata successordepositoryisnotobtained,physicalcertificatesarerequiredtobeprintedanddelivered. TheTownmaydecidetodiscontinueuseofthesystemofbook-entry-onlytransfersthroughDTC(orasuccessor securitiesdepository).Inthatevent,physicalcertificateswillbeprintedanddeliveredtotheBeneficialOwners. 8 TheinformationinthissectionconcerningDTCandDTC’sbook-entrysystemhasbeenobtainedfromsourcesthatthe Townbelievestobereliable,buttheTowntakesnoresponsibilityfortheaccuracythereof. OpinionofBondCounsel TheunqualifiedapprovingopinionastothevalidityoftheNoteswillberenderedbyLockeLordLLP,Boston, Massachusetts,BondCounsel.TheopinionwillbedatedthedateoforiginaldeliveryoftheNotesandwillspeakonlyas ofsuchdate. Exceptastomattersexpresslysetforthintheiropinion,thescopeofengagementofBondCounseldoesnotextendto passinguponorassumingresponsibilityfortheaccuracyoradequacyofanystatementmadeinthisOfficialStatement, andtheymakenorepresentationthattheyhaveindependentlyverifiedthesameotherthanmattersexpresslysetforthas theiropinion. FinancialAdvisoryServicesofFirstSouthwestCompany,LLC FirstSouthwestCompany,LLCofBoston,MassachusettsservesasfinancialadvisortotheTownofFramingham, Massachusetts. DisclosureofSignificantEvents Inordertoassistunderwritersincomplyingwiththerequirementsofparagraph(b)(5)(i)(C)ofRule15c2-12promulgated bytheSecuritiesandExchangeCommission(the“Rule”)applicabletomunicipalsecuritieshavingastatedmaturityof18 monthsorless,theTownwillcovenantforthebenefitoftheownersoftheNotestofilewiththeMunicipalSecurities RulemakingBoard(the“MSRB”),noticesoftheoccurrenceofanyofthefollowingeventswithrespecttotheNoteswithin tenbusinessdaysofsuchoccurrence:(a)principalandinterestpaymentdelinquencies;(b)non-paymentrelated defaults,ifmaterial;(c)unscheduleddrawsondebtservicereservesreflectingfinancialdifficulties;(d)unscheduleddraws oncreditenhancementsreflectingfinancialdifficulties;(e)substitutionofcreditorliquidityproviders,ortheirfailureto perform;(f)adversetaxopinions,theissuancebytheInternalRevenueServiceofproposedorfinaldeterminationof taxability,NoticesofProposedIssue(IRSForm5701-TEB)orothermaterialnoticesordeterminationswithrespecttothe taxstatusoftheNotes,orothermaterialeventsaffectingthetaxstatusoftheNotes;(g)modificationstorightsofowners oftheNotes,ifmaterial;(h)optionalcontingentorunscheduledcallsofbonds,ifmaterial;(i)defeasances;(j)release, substitutionorsaleofpropertysecuringtherepaymentoftheNotes,ifmaterial;(k)ratingschangesontheNotes;(l) bankruptcy,insolvency,receivershiporsimilareventoftheIssuer;(m)theconsummationofamerger,consolidation,or acquisitioninvolvingtheIssuerorthesaleofallorsubstantiallyalloftheassetsoftheIssuer,otherthanintheordinary courseofbusiness,theentryintoadefinitiveagreementtoundertakesuchanactionortheterminationofadefinitive agreementrelatingtoanysuchactions,otherthanpursuanttoitsterms,ifmaterial;and(n)appointmentofasuccessoror additionaltrusteeorthechangeofnameofatrustee,ifmaterial. OtherthantheTown,therearenoobligatedpersonswithrespecttotheNoteswithinthemeaningoftheRule.The covenantwillbeincludedinaSignificantEventsDisclosureCertificatetobeexecutedbythesignersoftheNotesand incorporatedbyreferenceintheNotes.ThesoleremedyavailabletotheownersoftheNotesforthefailureoftheTown tocomplywithanyprovisionofthecertificateshallbeanactionforspecificperformanceoftheTown’sobligationsunder thecertificateandnotformoneydamages;nootherpersonshallhaveanyrighttoenforceanyprovisionofthecertificate. Inthepastfiveyears,theTownbelievesithascomplied,inallmaterialrespects,withit’spreviousundertakings toprovideannualreportsornoticesofsignificanteventsinaccordancewiththeRule. 9 TOWNOFFRAMINGHAM,MASSACHUSETTS General TheTownislocatedinMiddlesexCountyapproximately20mileswestofBoston.Incorporatedasatownin1700, Framinghamhasapopulationofapproximately68,318(2010Census)andoccupiesalandareaof25.65squaremiles. TheTownisgovernedbyarepresentativetownmeetingandadministeredbyaboardoffiveselectmen. PRINCIPALTOWNOFFICIALS TitleNameSelection/TermTermExpires Selectman,ChairmanCharlieSisitskyElected-3Years2016 SelectmanLaurieLeeElected-3Years2017 SelectmanMichaelJ.BowerElected-3Years2016 SelectmanJasonA.SmithElected-3Years2018 SelectmanCherylTullyStollElected-3Years2017 TownManagerRobertHalpinAppointed2018 ChiefFinancialOfficerMaryEllenKelleyAppointed2017 Treasurer/CollectorCarolynLyonsAppointed2018 TownAccountantRichardG.Howarth,Jr.Appointed2018 TownClerkValerieW.MulveyElected-3Years2017 TownCounselChristopherJ.PetriniAppointed2016 MunicipalServices TheTownprovidesgovernmentalservicesfortheterritorywithinitsboundaries,includingpoliceandfireprotection,solid wastedisposal,publiceducationingradesK-12,streetmaintenance,parksandrecreationalfacilities.Sewerservicesare providedviaconnectionstotheMassachusettsWaterResourcesAuthority(MWRA)andwaterispurchasedfromthe MWRA.Waterandsewerservicesarecurrentlyself-supporting.See“TOWNFINANCES–Revenues”foradescription ofwaterandsewerrates.TheFraminghamHousingAuthorityadministers374unitsoffamilyhousingand671unitsof elderlyhousinginadditiontocoordinatingrentalassistancefromfederalandstatefunds. Education TheTownpresentlyoperateseightelementaryschools(K-5),threemiddleschools(6-8)andoneseniorhighschool (9-12).TotalcapacityintheFraminghamK-12schoolsiscurrentlyestimatedat9,675. Thefollowingtablesetsforththetrendinpublicschoolenrollments. PUBLICSCHOOLENROLLMENTS–OCTOBER1 Actual 20102011201220132014 Elementary(K-5)4,3424,1894,2484,3614,591 Middle/JuniorHigh(6-8)1,5761,7921,7111,6551,632 SeniorHigh(9-12)2,4902,2002,0041,9722,022 Totals8,4088,1817,9637,9888,245 TheTownisamemberoftheSouthMiddlesexRegionalVocationalTechnicalSchoolDistrictlocatedinFramingham. OthermembertownsincludeAshland,Holliston,HopkintonandNatick.AsofOctober1,2014therewere694students enrolledintheSchoolDistrict,and503ofthosestudentswereFraminghamresidents. 10 BuildingPermits Thetablebelowsetsforththenumberofbuildingpermitsissuedandtheestimateddollarvalueofnewconstructionand alterationsforcalendaryears2010through2014. NewConstruction CalendarResidentialNon-ResidentialAdditions/AlterationsTotals YearNo.ValueNo.ValueNo.ValueNo.Value 201451$10,505,6246$19,542,9143,000$131,467,4043,057$161,515,942 2013255,280,0452570,0002,45765,985,0272,48471,835,072 2012173,055,02521,185,0002,29847,260,7792,31751,500,804 2011142,491,545612,374,3002,28858,933,3772,30873,799,222 2010101,783,115631,351,20878846,757,55880479,891,881 _______________ SOURCE:TownBuildingCommissioner. EconomicDevelopment FraminghamistherecognizedeconomicengineoftheMetroWestareaofBoston.Recentlyrankedastheninth“leading location”outof380MetropolitanStatisticalAreas(MSAs)nationwideby“AreaDevelopmentMagazine”,theTownisanet importerofjobswithover45,000jobsandanannualpayrollinexcessof$3.1billion.ThearticlecitedFraminghamasone of“theLeadingLocations…thathavemanagedtothrive,emergingfromtherecessionaseconomicleaders.TheseMSAs areleadersbasedontheireconomicstrengthsandyear-over-yeareconomicgrowth;growthoftheiryoung,educated workforces;andtheirabilitytobouncebacktoeconomiclevelsseenbeforetherecession’sonset.Theydeservespecial recognitionfortheirefforts.” TheTowniscommittedtocontinuingandexpandingthoseefforts,inwaysthatwillreinforcetheTown’seconomic stability,strengthenitstaxbase,andcontributetothecommunity’seconomicpotential.Toachievetheseends,the Town’snear-termeffortsarefocusedonafivepointplan: Earn“TrustedPartner”statuswiththebusinesscommunity PromotevitalityandTransitOrientedDevelopmentintheDowntown PursuedevelopmentopportunitiesaroundMassachusettsTurnpike(“MassPike”)Exit12 Pursueopportunitiestopromoteincreaseddensity,height,andtransitimprovementsaroundMassPikeExit13 Determinedevelopmentopportunitiesaroundneighborhoodshoppingcenters EarnTrustedPartnerStatuswiththeBusinessCommunity Localofficialsandstaffarededicatedtoimplementingabusiness-friendlyenvironmentandstreamliningTown-processes whileplanningforgrowththroughinfrastructureandre-zoning.Towardtheseends,theTownhasimplementedexpedited permittingzonesintheMassPikeExits12and13areas.FormedunderMassachusettsChapter43D,theTownwill addressallpermittingissuesinthesezonesinlessthansixmonths.Increatingthesezones,theTowndevelopeda streamlinedpermittingprocessitappliestoprojectstownwide.TheTown’scommitmenttoimprovedcustomerserviceis reflectedintheadditionofpermittingstaffandhiringanexperiencedeconomicdevelopmentexecutive.TheTownhas alsodesignatedprioritydevelopmentareas,whichthestatehasagreedtoprioritizefordevelopmentassistance.Finally, theTownisimplementinganaggressivemarketingplan,focusedoneducatingtargetaudiencesontheTown’sfocusand successes.PlanexecutionfocusesonreachingFraminghamresidentsandbusinessleaders,aswellasregion-and state-levelindustryleaders,theirconsultants,andothers,withabasicmessage:theTowniscommittedtoproviding timelysupportforbusiness–andisacompetitive,“top-of-mind”optionforgrowingcompanies. PromoteVitalityandTransitOrientedDevelopmentinourDowntown thth LyingintheTown’ssoutheastquadrant,theDowntownreflectsitsroleasa19centuryrailtransithubanda20century manufacturingcenter.AdvancingtheDowntownturnsonfullyleveragingthearea’sarchitecturalrichnessanddiversity, leveragingsubstantialfutureinvestmentsbyMassachusettsBayCommunityCollege(MassBay),andattractingother investmentleveragingtheTown’sMBTACommuterRailstation. DowntownRevitalization.TherevitalizationofDowntownFraminghamcontinuestobeamajorgoaloftheBoardof Selectmen.Plansforsignificantimprovementstotrafficflow,pedestriancirculation,andstreetscapehavebeen 11 completed,andtheMassachusettsDepartmentofTransportation(“MassDOT”)beganworkinFall2014.This approximately$10millionprojectisfundedexclusivelywithstateandfederalfunds Alonger-termproject,designedtoaddressthenineat-graderailcrossingswithinthecentralbusinessdistrict,hasbeen transferredtoMassDOT,thestatetransportationagency.Theprojectisnowundergoingastate-mandatedenvironmental review.Giventhestate’spartnershipwiththeTowntocontinueeconomicrevitalizationeffortsintheDowntown, Massachusettsstateofficialscommittedanadditional$350,000tocontinuetheenvironmentalanalysisoflong-term approachestoaddressingthegradecrossingissues. Brownfields.TheTownalsohasanactiveBrownfieldsAssessmentprogramusingU.S.EnvironmentalProtection Agency(EPA)grantfundstoassistwiththeredevelopmentofunderutilizedproperties.Townstaffisnowadministeringa $400,000EPAgrant,focusingonthetown’sSouthsideneighborhood,includingtheDowntown. FraminghamDowntownRenaissance(“FDR”).TheTownfundsandworkscloselywithFDR,alocalnon-profit,to revitalizetheDowntownarea.BasedontheNationalTrustforHistoricPreservation’sMainStreetsmodel.Initsfirstthree yearsFDRhasachievedseveralsignificantaccomplishments,includingworkingwiththeMBCR/Keolis(commuterrail)to beautifyitslots,hostingevents—includingahugecelebrationoftheBostonMarathonthroughFraminghamdubbedthe “SixMileMoment”—andworkingdirectlytosupportnewandexistingbusinesses,thathaveresultedinanewvibrancyin DowntownFramingham.FDRplayedakeyroleintheopeningoftheDeluxeDepotDiner. MassBayCommunityCollege.MassBayCommunityCollege,whichcurrentlyleasesspaceinbothFraminghamand neighboringAshland,hasformallyannouncedplanstocreatea160,000square-footMetroWestcampusinDowntown Framinghamataprojectedcostof$59million.Todate,theCommonwealthofMassachusettshasreleased$22million fromtheHigherEducationBondBilltoMassBayforthisproject.TheCollegeanticipatesissuingbondstoraisean additional$23million.InAugust2014,thestateDepartmentofCapitalAssetManagementandMaintenance(DCAMM), onbehalfofMassBay,releasedanRFPseekinglandand/orbuildingsforaDowntownsite,withresponsesdueon October31,2014.TheTownawaitstheresultsofDCAMM’sRFPprocess.Thecampuswillintroducenewvitalityand energyaswellasastrongandincrementalconsumerbasetotheDowntownandwillservetoleveragenewdevelopment andeconomicactivity. Jack’sAbbyBrewing,LLC.TheTownrecentlyenteredintoa7-yearTIFagreementwithJack’sAbbyBrewing.Under agreementterms,thecompanyiscommittingtoa$6MMexpansionofitscraftbeerbrewingoperationsinourdowntown. Thecompanyalsocommitstocreating35netnew,full-timejobswhileretainingitscorporateheadquartersin Framingham.Thecompany’sexpansionhighlightsourdowntownasagreatlocationforgrowingbusinesses.Thefacility willalsoincludeanexpandedrestaurant&taproom,creatinganotheramenitybuildingtheattractivenesstoresidents& out-of-townvisitors. TransitOrientedDevelopment(“TOD”).In2013,asafollowuptothe2012MasterPlan,theTowninitiatedaTOD planningprocessfortheDowntown,tounderstandwhydevelopmentwasslow,despitethepresenceofsignificantassets. ADowntownstakeholdersworkinggroup,includingseveraldevelopers,identifiedmarketandzoningfactorsimpacting projectfeasibility,thenadoptedastrongvisionstatementforDowntownTOD.Earlierthisyear,thestakeholdergroup completedworkwithaconsultingteam,supportedwith$165,000instatefunding,toassessmixeduseinvestment opportunitiesintermsofmarketfeasibility,zoning,andinfrastructure.Thisworkresultedinprogressivebutrealistic proposedrevisionstotheTown’szoningcodethatallowsformoredensityandmoreas-of-rightallowabledevelopment. TheTownisworkingwithnumerousstakeholdersandplanstopresentzoningcoderevisiontoaSpecialTownMeetingin Fall2015.Uponadoption,newzoningruleswillencouragehigherresidentialdensityandfosteramorewalkable, bikeable,andlivelyDowntowncommunity. PursueDevelopmentOpportunitiesaroundMassPikeExit12 TheTechnologyParkandthe9/90CorporateCenter,bothlocatedattheconvergenceoftheMassPikeandRoute9-two majorstatehighways–formacriticalcommercialcenterfortheTownandregion.Thesetwodevelopmentparks,home to10,000workersservingknowledge-intensivebusinesses,offerafoundationforattractingadditionaldevelopment throughinfillopportunities,repositioningexistingproperties,andnewinvestment. FocusonLifeSciences.TheTownisencouragingtheexpansionandattractionofsciencesandresearchand development,particularlyinthisarea.TheTownhasearnedtheMassachusettsBiotechnologyCouncil’scoveted “Platinum”bio-readyrating–reflectingthehighestlevelofreadinesstosupportbiotechbusinesses.Thisrankingreflects theTown’soutstandingaccesstoatrainedworkforceandacademicinstitutions,availabilityofamplewaterand wastewaterresources,andattractivenessprovenbythepresenceofestablishedandearly-stagelifesciencescompanies. 12 In2008,TownMeetingapprovedzoningchangesthatallowgreaterbuild-outatTechnologyPark,thusenhancingthis locationforfuturebiotechdevelopment,whichwillservetostrengthentheTown’staxbase.TheTownreceiveda$12.9 milliongrantfromthestateMOREfundtoconstructapumpingstationtosupportfuturedevelopmentinTechPark.Other waterandsewerplans,includingcreatingaredundantwatersupply,areeithercurrentlyunderwayorprogrammedfor construction.TownofficialsparticipatewithownersandbusinesseswhoserveontheTechParkAdvisoryCommitteethat meetsonanongoingbasistoaddressissuesofmutualconcernandbenefit.2013AnnualTownMeetingpassed amendmentstotheTown’sZoningBylawstoallowanexpeditedpermittingprocess(M.G.L43d)inTechParkandtwo othermajorcommercialandindustrialareasinFramingham,whichwillstimulatenewdevelopmentintargetedareas. Genzyme,aninternationallifesciencescompanywithsignificantfacilitiesinFramingham’sTechnologyPark,formally openeditsBioManufacturingBuildingat68NewYorkAvenueinOctoberof2012.Representinganestimatedinvestment of$400millionandgeneratingasignificantincreaseinnewjobs,thisnewsix-storystructurestandsasphysicaltestimony tothecommitmentofboththeTownandthestatetosupportbiotechnologyandmedicalresearchwithinFramingham’s TechPark.Genzymeisalsodevelopingasix-storybuildinginexcessof100,000squarefeet,whichisunderconstruction at74-76-78NewYorkAvenue.Genzyme,whichhasmadeacorporatedecisiontofocusexpansioneffortsin Framingham,hasdevelopedaMasterPlanconsistingoftwodevelopmentphases.TheMasterPlanprojectsmajor expansioninFraminghamoverthenextfiveyearswithsignificantimplicationsfortheTown’staxbase.PhaseIincludes constructionoffourbuildingsforatotalof507,000squarefeetofnewresearchanddevelopment,manufacturingand officespace.PhaseIIincludesaprojected414,000squarefeetofscience,manufacturing,officeandstructuredparking. Genzyme’sMasterPlaniscurrentlyinthestate’senvironmentalreviewprocess.AlsoinTechnologyPark,TheBose Corporationrecentlypurchasedthreeparcels(125,135and137PennsylvaniaAvenue)whichpreviouslyreceived approvalfromtheTowntobuilda350,000squarefootofficeandresearchfacility.Theprojectisprojectedtogeneratean additional$1.98millioninincreasedtaxes. Creatingamixed-usedevelopmentcenter.IncooperationwithMassDevelopment,theTowninvestigatedthefeasibility ofcreatingahigh-density,mixedusedevelopmentcenterbetweentheTechnologyParkandthe9/90CorporateCenter. TheTownrecentlycompletedastudypointingtopotentialfeasibilityofaregionaltransithub,includinghousingthatcan serveregionalemployers,reduceareatraffic,andfreelandfordevelopment.TheTownisrefiningtheconceptand bringingitforwardforconsiderationbylocallandownersandstateofficials. Pursuedensity,height,andtransitImprovementsaroundMassPikeExit13 ThisdevelopmentareaisdefinedbythepresenceoftheheadquartersofglobalretailerTJX,aswellasretailcenterinthe “GoldenTriangle”area,boundedbyMassachusettsRoutes9and30,inFraminghamandborderingNatick.TheTownis activelyworkingwithTJXandotherareabusinesses,tosupportopportunitiesfornewconstructionandinvestment.The TownisalsoworkingwiththestateandtheTownofNaticktoimproveaccesstoMassPikeExit13,tothebenefitof surroundingbusinessesandresidents. TJX.TheTownrecentlyenteredintoaTaxIncrementFinancing(TIF)agreementwithTJX,whoseinternationalcorporate headquartersarelocatedinFramingham.Theagreementguaranteesanestimatednetincreasein(discounted)property taxesof$7to$9millionoverthenexttwodecadesinadditiontoretainingmorethan$64.8millioninbasepropertytaxes overthesametimeframe.TheTIFisindicativeoftheTown’scommitmenttoretainandexpandjobsandtoencourage privateinvestment.Inaddition,thispropertyisoneofthethreepropertiesbeingconsideredforexpeditedpermitting overlaysthatwillhelpTJXgrowinplace. AMCTheatre.AMCrecentlyannouncedits$11millionplantooverhaulandupdateits16-theaterfacilityonFlutiePass. Thecompanyplanreflectsacommitmenttolargescreenentertainment,inthedigitalage,relyingonprovendevelopment model.TheTownhassupportedtheprojectthroughpermittingandprovidedforanexpandedliquorlicense.Going forward,theTownexpectstheupdatedtheatercomplextohelpmaintaintheGoldenTriangle’sreputationastheregion’s leadingretailcenter. TheTownisnowworkingwiththeTownofNatickandstatetransportationofficialstodevelopoptionsforimproving accesstoMassPikeExit13.TheStatehasidentifiedseveralinfrastructureimprovementoptions.TheTownsare planningtodefineasharedvisionfordevelopmentinthearea,withbuildoutanalysestoestimatefuturetrafficdemand. Thisworkwillinformfuturezoningchanges,identifyopportunitiestopromotealternativetransit,andvalidatetheutilityof infrastructureimprovementoptions. 13 DetermineDevelopmentOpportunitiesaroundNeighborhoodShoppingCenters TheTown’sEconomicandIndustrialCorporationiscurrentlysolicitingconsultantsforacomprehensivemarketdemand andurbandesignstudyfortwounderdevelopedneighborhoodcommercialdistricts,NobscotandSaxonville.Thestudy willinformpublicsectorinvestmentandprovidezoningrecommendationstosupportandencouragedevelopmentthat enhancesthesurroundingneighborhoods. SelectedAdditionalRecentlyApprovedProjectsthatarePendingorunderConstruction DanforthGreen:TheTownhasapprovedaformalproposaltoconstruct360residentialunitsinaplanned unitdevelopmentinthenorthernquadrantoftheTown.Inconjunction,theTownreceiveda$1million MassWorksgranttocompleteinfrastructureupgradesintheareatosupportthedevelopment. 15PleasantStreetConnector:TheTownhasapprovedtherenovationandadditiontotheunderutilized officebuildingwhichwillresultin150,000availablesquarefeetofClassAofficespace,directlyadjacentto boththeMassPike,Route9andtheTechPark. 740-770CochituateRoad:TheTJXCorporationhasbegunconstructionofanew96,000squarefoot "CorporateSupportCenter"hostingspaceforemployeetraining,aproductdevelopmentlibrary,a merchandisepresentationcenter,andanemployeefitnesscenter.Theprojectincludesanenclosed walkwaytoadjacentgarage,additionalsurfaceoff-streetparking,andsupportingutilities&lighting.The Townsuccessfullyapplieditsexpeditedpermittingprocesstotheproject,underM.G.L.43(d).This$23 millioninvestmentreflectsTJX’slong-termcommitmenttotheTown. Wayte–: Uptown/Mt.480FranklinStreetTheownerofthiscurrentlyunderutilizedshoppingplazarecently receivedTownapprovalstosignificantlyredeveloptheproperty,includingapartialdemolitiontoallowfor increaseddensityandtheadditionofanewbuildingalongFranklinStreettoimprovethepedestrianrealm alongthestreetedge. FraminghamLibrarySystem:TheTownofFraminghamiscommittedtomaintainingandimprovingits publicfacilities.TheTownrecentlyreceiveda$4.2millionstategranttobuildanewbranchlibrary,tobe constructedintheNobscotVillageofFramingham.2013AnnualTownMeetingauthorizedtheappropriation offundstoproceed.TheprojectbrokegroundinOctober2014.TheTownisalsoinvestinginexcessof $1.5milliontoimprovethemainlibrary,locatedintheDowntown,andhasallocatedfederalCDBGfunds toimprovebathroomsandmeetingareasforadultliteracyprogramsinthefacility. TransportationActivities Inordertoensuresustainablegrowth,theTownhasmadeenhancedroadwaycapacityandsafetyforbothmotorizedand non-motorizedvehiclesandpedestriansamajorpriority.Strategicandlong-rangetransportationplanningandproject implementationarecriticaltasks.Anumberofprojectsareunderwaytorelievetrafficandimprovethephysical appearanceoftheTown’smajoreconomiccenters.Forexample,theDepartmentofPublicWorkshasmadesignificant trafficimprovementstoamajorintersectionwithintheDowntown,andhascompletedthereconstructionofaroadwaythat feedsintothecentralbusinessdistrict.Inaddition,theTowniscapitalizingonmajorsewerimprovementworktomake neededroadwayimprovementsinspecificareas,includingtheDowntown,aswellasadvanceasignificantrail-trail project,theCochituateRailTrail.Therailtrailwascompletedinsummer2014withtheassistanceofa$600,000grant fromtheState.TheTownisalsoworkingcloselywiththeStateHighwayDepartmenttoinvestigatelongtermsolutionto theissueofat-graderailcrossingsintheDowntown.Inthemeantime,roadwayandstreetscapeimprovementsbeganin October2014asdescribedabove. MetropolitanPlanningOrganization(“MPO”): TheMPOisafederallymandatedtransportationplanningand programmingorganizationthathasleadresponsibilityforsettingtransportationpoliciesforBostonandthe100 communitiesthatsurroundit.Thisgroupsetspolicy,identifiestypesofprojectsthatwouldbestimplementthatpolicy, collectsdata,performsresearchandthenselectsspecifictransportationprojectstoreceiveyearlystateandfederal fundingoversix-yearincrements.Framinghamwaselectedbythe101chiefelectedofficialsasoneofonlythreetownsto serveontheMPO,aseatthatFraminghamhasheldsince1997. TransitServices MetroWestRegionalTransitAuthority(“MWRTA”): AsofJuly1,2007,theMetroWestRegionalTransitAuthority (MWRTA)officiallybeganoperatingtheregionaltransitsystem,whichincludedamulti-routeinter-municipalbussystem knownastheLIFTthathadbeenoperatedbytheTownofFramingham.TheMWRTAsystemnowincludesthefollowing 13communities:Ashland,Dover,Framingham,Holliston,Hopkinton,Marlborough,Natick,Sherborn,Southborough, Sudbury,Wayland,Wellesley,andWeston.Aswithotherregionaltransitauthoritiesacrossthestate,federalandstate fundsareprovidedtoreimbursecertaincosts,includingaportionoftheTown’sassessmenttotheMassachusettsBay TransitAuthority(MBTA),directedthroughthestate’scherrysheets. 14 TheMWRTA’sroleasatrulyregionalsystemwillbeenhancedwiththeopeningofitsexpandedBlandinAvenue operatingheadquarters,whichwillimprovebusaccessRoutesinFraminghamandbeyond.TheMWRAisalsoworkingto improveintermodaltransitattheMBTACommuterRailstationandprovideaconnectiontoitsnewoperating headquartersthrougharailbed-basedwalkingtrail.TheseeffortshighlightthekeyroleMWRTAserviceswillplayin supportingtheTODeffortdescribedabove. ThefollowingtableliststhemajorcategoriesofincomeandemploymentfortheTown. EMPLOYMENTANDPAYROLLS CalendarYearAverage Industry20092010201120122013 Construction1,4841,1881,3201,2991,313 Manufacturing3,7753,6693,7303,9714,232 Trade,TransportationandUtilities7,0496,9447,5297,5937,924 Information2,1692,0662,1652,1722,025 FinancialActivities1,1451,0041,0471,0851,180 ProfessionalandBusinessServices12,88412,91312,93313,23213,361 EducationandHealthServices10,31310,71910,52710,16210,529 LeisureandHospitality3,2483,5463,5033,3723,350 OtherServices1,0971,0671,0601,101996 PublicAdministration1,5321,5111,5121,5261,699 TotalEmployment44,69644,62745,32645,51346,609 NumberofEstablishments2,1932,2212,2982,2272,262 AverageWeeklyWages$1,305$1,325$1,388$1,392$1,437 TotalWages$3,033,919,607$3,074,086,876$3,271,139,961$3,295,044,313$3,484,151,174 _______________ SOURCE:MassachusettsDepartmentofEmploymentandSecurity.Databaseduponplaceofemployment,notplaceofresidence.Duetothe reclassificationtheU.S.DepartmentofLabornowusestheNorthAmericanIndustryClassificationSystem(NAICS)asthebasisforthe assignmentandtabulationofeconomicdatabyindustry.2012isthemostrecentdataavailable. LargestEmployers ThefollowingtablelistsFramingham’scurrentlargestemployers,exclusiveoftheTownitself. Numberof NameProduct/FunctionEmployees StaplesInternational,Inc.OfficeSupplyStores3,500 TheTJXCompanies,Inc.ClothingStores3,000 MassachusettsDepartmentofStatePoliceUSState&RegionalGovernmentAgencies2,300 BoseCorporationAudio&VideoEquipmentManufacturing2,000 PREducationLLC(PrincetonReview)ConsultingServices1,500 MetroWestMedicalCenterHospitals1,100 LifelineSystemsCompanySecurity&MonitoringEquipmentManufacturing544 FraminghamStateUniversityColleges&Universities480 SaintPatrick'sManor,Inc.NursingHomes&Long-TermCareFacility451 IDCResearch,Inc.MarketResearch&PollingServices400 _______________ Source:TownofFramingham,DepartmentofCommunityandEconomicDevelopment,May2015. 15 LaborForce,UnemploymentRate Asindicatedinthefollowingtable,unemploymentinFraminghamhasconsistentlybeenwellbelowthenationalandstate averagesforthepastfiveyears.AccordingtotheMassachusettsDepartmentofEmploymentandTraining,asofMarch 2015,theTownhadatotallaborforceof39,873ofwhich38,428wereemployedand1,445,or3.6%,wereunemployed, ascomparedwith5.0%fortheCommonwealth. ThefollowingtablesetsforththeTown’saveragelaborforceandunemploymentratesforeachofthelastfivecalendar yearsandtheunemploymentratefortheCommonwealthandtheUnitedStatesasawholeforthesameperiod. UNEMPLOYMENTRATES TownofFraminghamMassachusettsUnitedStates CalenderUnemploymentUnemploymentUnemployment YearLaborForceRateRateRate 201439,2734.3%5.8%6.2% 201338,5875.47.17.4 201238,3915.06.78.1 201138,0895.36.68.3 201038,0676.48.59.6 _______________ SOURCE:Mass.DivisionofEmploymentSecurity,FederalReserveBankofBostonandU.S.BureauofLaborStatistics.Databaseduponplaceof residence,notplaceofemployment. TransportationandUtilities TheprincipalhighwaysservingtheTownareInterstateRoute90(theMassachusettsTurnpike),whichhastwoexitsin FraminghamandStateRoute9.PublictransportationisfurnishedbytheMassachusettsBayTransportationAuthority (commuterrailandbus)andbyvariousbuslines.Freightserviceisprovidedbyseveralcompetitivebuslines. WaterandsewerservicesareprovidedforviaconnectionstotheMassachusettsWaterResourcesAuthority(MWRA). Gasandelectricservicesareprovidedbyestablishedprivateutilities. POPULATIONTRENDS 2010200019901980 68,31866,91064,98965,113 _______________ SOURCE:FederalCensus. Onthebasisofthe2010FederalCensus,theTownhasapopulationdensityof2,719personspersquaremile. IncomeandWealthLevels ThefollowingtablecomparesvariouscensusyearaveragesforFramingham,theCommonwealth,andtheUnitedStates. FraminghamMassachusettsUnitedStates MedianAge: 201038.039.137.2 200036.236.535.3 199033.633.632.9 198031.231.230.0 MedianFamilyIncome: 2010$84,362$81,165$51,144 200067,42061,66450,046 199053,27044,36735,225 198026,11021,16619,908 PerCapitaIncome: 2010$33,287$33,966$27,334 200027,75825,95221,587 199020,40717,22414,420 19809,1377,4597,313 _______________ SOURCE:FederalCensus. 16 PROPERTYTAXATION TaxLevyComputation TheprincipalrevenuesourceoftheTownisthetaxonrealandpersonalproperty.Theamounttobeleviedineachyear istheamountappropriatedorrequiredbylawtoberaisedformunicipalexpenditureslessestimatedreceiptsfromother sourcesandlessappropriationsvotedfromavailablefunds.Thetotalamountleviedissubjecttocertainlimitsprescribed bylaw;foradescriptionofthoselimits,(see“TaxLimitations”below).Theestimatedreceiptsforafiscalyearfromother sourcesmaynotexceedtheactualreceiptsduringtheprecedingfiscalyearfromthesamesourcesunlessapprovedby theStateCommissionerofRevenue.Exceptingspecialfundstheuseofwhichisotherwiseprovidedforbylaw,the deductionforappropriationsvotedfromavailablefundsforafiscalyearcannotexceedthe“freecash”asofthebeginning ofthepriorfiscalyearascertifiedbytheStateDirectorofAccountsplusuptoninemonths’collectionsandreceiptson accountofearlieryears’taxesafterthatdate.Subjecttocertainadjustments,freecashissurplusrevenueless uncollectedoverduepropertytaxesfromearlieryears. Althoughanallowanceismadeinthetaxlevyforabatements(see“AbatementsandOverlay”below)noreserveis generallyprovidedforuncollectiblerealpropertytaxes.Sincesomeofthelevyisinevitablynotcollected,duringthefiscal oflevythiscreatesacashdeficiencywhichmayormaynotbeoffsetbyotheritems.(See“TaxationtoMeetDeficits”). Thetablebelowillustratesthemannerinwhichthetaxlevyisdeterminedforthefollowingfiscalyears. TAXLEVYCOMPUTATION FiscalYear 20112012201320142015 TotalAppropriations(1)$235,326,537$243,965,027$260,621,647$272,232,137$283,085,952 Additions: StateandCountyAssessments3,946,7514,338,6135,065,8645,544,8826,262,422 OverlayReserve1,835,3861,806,0302,001,8662,101,9432,154,866 CherrySheetOffsets(2)104,769110,627562,941112,284137,398 OtherAdditions(3)1,796,1802,875,657-1,002,433818,843 TotalAdditions7,683,0869,130,9277,630,6718,761,5429,373,529 GrossAmounttobeRaised$243,009,623$253,095,954$268,252,318$280,881,395$292,459,481 Deductions: LocalEstimatedReceipts49,645,00652,662,89157,031,18661,933,28965,304,662 StateAid(4) CurrentYear32,106,18833,928,32640,686,54844,615,53046,852,864 PriorYear'sOverestimate----- AvailableFunds(5) FreeCash1,606,3281,920,0002,974,6642,479,3904,777,446 Other(3)1,481,402861,270534,4121,562,7441,874,813 TotalDeductions84,838,92489,372,487101,226,810110,590,953118,809,785 NetAmounttobeRaised(TaxLevy)$158,170,699$163,723,467$167,025,508$170,290,442$173,649,696 _______________ (1)Includesadditionalappropriationsfromtaxationvotedsubsequenttoadoptionoftheannualbudgetbutpriortosetting ofthetaxrate. (2)Thesestateaidfundsareallocatedtotheschoolsandlibrarywithoutappropriation. (3)Includesteachersalarydeferral(seeTeacherPayDeferralRetirement). (4)Estimatedbyvariousstateagenciesandrequiredbylawtobeusedinsettingofthetaxrate.Actualstateaid paymentsmayvaryupwardordownwardfromsaidestimates,andtheStatemaywithhold(generallyquarterly) paymentspendingreceiptofStateandCountyassessments.See“TOWNFINANCES–Revenues–StateAid”. (5)Transfersfromavailablefunds,including“freecash”(see“TOWNFINANCES–FreeCash”),generallymadeasan offsettoaparticularappropriationitem. 17 AssessedValuationsandTaxLevies Propertyisclassifiedforthepurposeoftaxationaccordingtoitsuse.Thelegislaturehasinsubstancecreatedthreeclassesof taxableproperty:(1)residentialrealproperty,(2)openspaceland,and(3)allother(commercial,industrialandpersonal property).Withinlimits,citiesandtownsaregiventheoptionofdeterminingtheshareoftheannuallevytobebornebyeach ofthethreecategories.Thesharerequiredtobebornebyresidentialrealpropertyisatleast50percentofitsshareofthe totaltaxablevaluation;theeffectiverateforopenspacemustbeatleast75percentoftheeffectiverateforresidentialreal property;andtheshareofcommercial,industrialandpersonalpropertymustnotexceed175percentoftheirshareofthetotal valuation.Acityortownmayalsoexemptupto20percentofthevaluationofresidentialrealproperty(whereusedasthe taxpayer’sprincipalresidence)andupto10percentofthevaluationofcommercialrealproperty(whereoccupiedbycertain smallbusinesses).PropertymaynotbeclassifiedinacityortownuntiltheStateCommissionerofRevenuecertifiesthatall propertyinthecityortownhasbeenassessedatitsfaircashvalue.Suchcertificationmusttakeplaceeverythreeyears,or pursuanttoarevisedscheduleasmaybeissuedbytheCommissioner. Relatedstatutesprovidethatcertainforestland,agriculturalorhorticulturalland(assessedatthevalueithasforthese purposes)andrecreationalland(assessedonthebasisofitsuseatamaximumof25percentofitsfaircashvalue)areallto betaxedattherateapplicabletocommercialproperty.Landclassifiedasforestlandisvaluedforthispurposeatfivepercent offaircashvaluebutnotlessthantendollarsperacre. ThefollowingtablesetsforththetrendintheTown’sassessedvaluations,taxrates,taxlevies,andtaxleviespercapita. PersonalTotal FiscalRealEstatePropertyAssessedTaxLevy YearValuationValuationValuationTaxLevyPerCapita(1) 2015$7,386,329,150$223,149,421$7,609,478,571$173,512,298$2,540 20147,014,519,990227,073,7977,241,593,787170,290,4422,493 20137,025,866,828242,767,5407,268,634,368167,025,5082,445 20127,281,405,539248,330,9387,529,736,477163,723,4672,396 20117,193,054,678266,559,0867,459,613,764158,170,6992,315 _______________ (1)2010FederalCensus(68,318). ClassificationofProperty ThefollowingisabreakdownoftheTown’sassessedvaluationofrealestateinfiscalyears2013,2014and2015. 201320142015 PropertyTypeAmount%ofTotalAmount%ofTotalAmount%ofTotal Residential$5,581,503,79376.8%$5,569,402,37876.9%$5,818,671,30076.5% Commercial1,204,498,23516.61,200,300,51216.61,299,872,35017.1 Industrial239,864,8003.3244,817,1003.4267,785,5003.5 Personal242,767,5403.3227,073,7973.1223,149,4212.9 TotalRealEstate$7,268,634,368100.0%$7,241,593,787100.0%$7,609,478,571100.0% ThetablebelowisabreakdownoftheTown’staxratesforthefollowingfiscalyears. FiscalResidentialCommercial,Industrial YearProperty&PersonalProperty 2015$17.82$38.99 201418.2940.92 201317.8439.98 201216.9438.05 201116.0337.11 18 LargestTaxpayers ThefollowingisalistofthetenlargesttaxpayersintheTownbasedupontaxespaidforfiscalyear2015.Alltaxpayers listedarecurrentintheirpayments. NatureofTotalAsPercentage NameBusinessTaxesofTotalLevy DDRMDTShoppersWorldLLCRetail/Cinema2.18% $3,787,539 Staples,Inc.Office/Retail1.37 2,379,614 MeditechOffice1.28 2,229,452 BoseCorporationOffice/Retail/Electronics1.07 1,861,624 GenzymeCorporation,aSanoficompanyBiotech1,712,3320.99 TJXCompanies(500OldConnecticutRd.)Offices0.76 1,315,183 TJXCompanies(750CochituateRd.)Offices0.70 1,212,948 JeffersonApartments(1400WorcesterRd.)Apartments0.47 808,832 AIMCOBayberryHillApartments708,7740.41 JeffersonApartments(1296WorcesterRd.)Apartments1.93 551,631 Total$16,567,93011.16% StateEqualizedValuation Inordertodetermineappropriaterelativevaluesforthepurposesofcertaindistributionstoandassessmentsuponcities andtowns,theCommissionerofRevenuebienniallymakesaredeterminationofthefaircashvalueofthetaxable propertyineachmunicipalityasofJanuary1ofevennumberedyears.Thisisknownasthe“equalizedvalue”. ThefollowingtablesetsforththetrendinequalizedvaluationsoftheTown. StateEqualized January1,Valuation%Change 2014$7,611,237,700(2.99)% 20127,846,077,200(7.23) 20108,457,816,600(11.41) 20089,547,281,8002.42 20069,322,116,00013.29 20048,228,519,70026.53 19 AbatementsandOverlay TheTownisauthorizedbylawtoincludeineachtaxlevyanamountapprovedasreasonablebytheCommissionerof Revenueforan“overlay”toprovidefortaxabatements.Ifabatementsaregrantedinexcessoftheapplicableoverlay reserve,theresultant“overlaydeficit”isrequiredtobeaddedtothenexttaxlevy.Anabatementgrantedafteratax paymenthasbeenmadeisaccountedforasarefundonthebooksoftheTown.Anybalanceintheoverlayaccount,in excessoftheamountofthewarrantremainingtobecollectedorabated,istransferredduringthefiscalyeartoareserve fundtobeusedforextraordinaryorunforeseenexpenses.Attheendofthefiscalyear,thereservesareclosedto availablefundbalance(freecash)orappropriatedfordirectexpenditures.Abatementsaregrantedwhereexemptrealor personalpropertyhasbeenassessedorwheretaxablerealorpersonalpropertyhasbeenovervaluedor disproportionatelyvalued.Theassessorsmayalsoabateuncollectiblepersonalpropertytaxes.Theymayabaterealand personalpropertytaxesonbroadgrounds(includinginabilitytopay)withtheapprovaloftheStateCommissionerof Revenue.Butuncollectedrealpropertytaxesareordinarilynotwrittenoffuntiltheybecomemunicipal“taxtitles”by purchaseatthepublicsaleorbytaking,atwhichtimethetaxiswrittenoffinfullbyreservingtheamountofthetaxand chargingsurplus. Thetablebelowsetsforththetrendintheamountoftheoverlayreserveandactualabatementsgrantedduringthefiscal yearagainsteachlevy. OverlayReserveAbatements FiscalNetTaxDollarAsa%ofGrantedThrough YearLevy(1)AmountNetLevyJune30,2014 2014$168,188,499$2,101,9431.2$1,093,609 2013165,023,6422,001,8661.21,151,989 2012161,917,4371,806,0301.11,785,471 2011156,335,3131,835,3861.21,638,064 2010150,818,6011,749,4481.21,749,448 _______________ (1)Taxlevypriortoadditionofoverlayreserve. TaxCollections TaxbillsareduequarterlypayableAugust1,November1,February1,andMay1ofeachfiscalyear.Interestaccrueson delinquenttaxesattherateof14percentperannum.Realproperty(landandbuildings)issubjecttoalienforthetaxes assesseduponit,subjecttoanyparamountfederallienandsubjecttobankruptcyandinsolvencylaws.Iftheproperty hasbeentransferred,anunenforcedlienexpiresonthefourthDecember31aftertheendofthefiscalyeartowhichthe taxrelates.IfthepropertyhasnotbeentransferredbythefourthDecember31,anunenforcedlienexpiresuponalater transferoftheproperty.Provisionismade,however,forcontinuationofthelienwhereitcouldnotbeenforcedbecause ofalegalimpediment.Thepersonsagainstwhomrealorpersonalpropertytaxesareassessedarepersonallyliablefor thetax(subjecttobankruptcyandinsolvencylaws).Inthecaseofrealproperty,thispersonalliabilityiseffectively extinguishedbysaleortakingofthepropertyasdescribedbelow.ThetablebelowcomparestheTown’snettax collectionswithitsnet(grosstaxlevylessoverlayreserveforabatements)taxleviesforthefollowingfiscalyears. TAXCOLLECTIONS Collectionsasof OverlayFiscalYearPayable(1)May15,2015(1) FiscalGrossTaxReserveforNetDollar%ofDollar%of YearLevyAbatementsTaxLevyAmountNetLevyAmountNetLevy 2015$173,649,696$2,154,866$171,494,830N.A.N.A.$161,154,35994.0% 2014170,290,4422,101,943168,188,499$167,003,15399.3%167,003,15399.3 2013167,025,5082,001,866165,023,642163,797,02799.3164,969,069100.0 2012163,723,4671,806,030161,917,437160,532,84699.1161,866,023100.0 2011158,170,6991,835,386156,335,313154,693,32698.9156,250,65699.9 2010152,568,0491,749,448150,818,601150,211,40799.6150,767,184100.0 _______________ (1)Actualdollarcollectionsnetofrefunds.Doesnotincludeabatements,proceedsoftaxtitlesortaxpossessionsattributableto eachlevyorothernon-cashcredits. 20 TaxTitlesandPossessions Massachusettslawpermitsamunicipalityeithertosellbypublicsale(atwhichthemunicipalitymaybecomethe purchaser)ortotakerealpropertyfornon-paymentoftaxes.Ineithercasethepropertyownercanredeemtheproperty bypayingtheunpaidtaxes,withinterestandothercharges,butiftherightofredemptionisnotexercisedwithinsix months(whichmaybeextendedanadditionalyearinthecaseofcertaininstallmentpayments)itcanbeforeclosedby petitiontotheLandCourt.ItisthepolicyoftheTowntoplaceallpropertieswithunpaidtaxesintotaxtitlewithinsix monthsoftheendofthefiscalyearforwhichthetaxesareunpaid. Uponforeclosure,ataxtitlepurchasedortakenbythemunicipalitybecomesa"taxpossession"andmaybeheldand disposedofinthesamemannerasotherlandheldformunicipalpurposes. Thefollowingtablesetsforththetrendinamountoftaxtitlesandpossessionsoutstandingattheendofthefiscalyear andtheamountrealizedbytheTownthroughtaxtitleredemptionsandsaleoftaxtitleproperty. TotalTaxTotalRealizedThrough FiscalTitlesandSaleofTaxTitleProperty YearPossessions(1)andTaxTitleRedemption(1) 2014$1,857,124$1,570,670 20131,946,3031,730,278 20123,188,9701,325,634 20111,932,5162,055,866 20101,991,1942,172,369 _______________ (1)Includesprincipalamountoftaxesowedandaccruedinteresttothedateoffiling,butnotinterestorpenaltiesafter thatdate. TaxationtoMeetDeficits Asnotedelsewhere(see“AbatementsandOverlay”above)overlaydeficits,i.e.taxabatementsinexcessoftheoverlay includedinthetaxlevytocoverabatements,arerequiredtobeaddedtothenexttaxlevy.Itisgenerallyunderstoodthat revenuedeficits,i.e.thoseresultingfromnon-propertytaxrevenuesbeinglessthananticipated,arealsorequiredtobeadded tothetaxlevy(atleasttotheextentnotcoveredbysurplusrevenue). Amountslawfullyexpendedsincethepriortaxlevyandnotincludedthereinarealsorequiredtobeincludedintheannualtax levy.Thecircumstancesunderwhichthiscanarisearelimitedsincemunicipaldepartmentsaregenerallyprohibitedfrom incurringliabilitiesinexcessofappropriationsexceptformajordisasters,mandateditems,contractsinaidofhousingand renewalprojectsandotherlong-termcontracts.Inaddition,utilitiesmustbepaidatestablishedratesandcertainestablished salaries,e.g.civilservice,mustlegallybepaidforworkactuallyperformed,whetherornotcoveredbyappropriations. Citiesandtownsareauthorizedtoappropriatesums,andthustolevytaxes,tocoverdeficitsarisingfromothercauses,such as“freecash”deficitsarisingfromafailuretocollecttaxes.Thisisnotgenerallyunderstood,however,andithasnotbeenthe practicetolevytaxestocoverfreecashdeficits.Excepttotheextentthatsuchdeficitshavebeenreducedoreliminatedby subsequentcollectionsofuncollectedtaxes(includingsalesoftaxtitlesandtaxpossessions),lapsedappropriations, non-propertytaxrevenuesinexcessofestimates,othermiscellaneousitemsorfundingloansauthorizedbyspecialact,they remaininexistence. TaxLimitations Chapter59,Section21CoftheGeneralLaws,alsoknownas“Proposition2½,”imposestwoseparatelimitsontheannualtax levyofacityortown. Theprimarylimitationisthatthetaxlevycannotexceed2½percentofthefullandfaircashvalue.Ifacityortownexceedsthe primarylimitation,itmustreduceitstaxlevybyatleast15percentannuallyuntilitisincompliance,providedthatthereduction canbereducedinanyyeartonotlessthan7½percentbymajorityvoteofthevoters,ortolessthan7½percentbytwo-thirds voteofthevoters. Forcitiesandtownsatorbelowtheprimarylimit,asecondarylimitationisthatthetaxlevycannotexceedthemaximumlevy limitfortheprecedingfiscalyearasdeterminedbytheStateCommissionerofRevenuebymorethan2½percent,subjectto 21 exceptionsforpropertyaddedtothetaxrollsorpropertywhichhashadanincrease,otherthanaspartofageneral revaluation,initsassessedvaluationovertheprioryear’svaluation. This“growth”limitonthetaxlevymaybeexceededinanyyearbyamajorityvoteofthevoters,butanincreaseinthe secondaryorgrowthlimitunderthisproceduredoesnotpermitataxlevyinexcessoftheprimarylimitation,sincethetwo limitationsapplyindependently.Inaddition,ifthevotersvotetoapprovetaxesinexcessofthe“growth”limitforthepurposeof fundingastabilizationfund,suchincreasedamountmayonlybetakenintoaccountforpurposesofcalculatingthemaximum levylimitineachsubsequentyeariftheboardofselectmenofatownorthecitycouncilofacityvotesbyatwo-thirdsvoteto appropriatesuchincreasedamountinsuchsubsequentyeartothestabilizationfund. Theapplicabletaxlimitsmayalsobereducedinanyyearbyamajorityvoteofthevoters. TheStateCommissionerofRevenuemayadjustanytaxlimit“tocounterbalancetheeffectsofextraordinary,non-recurring eventswhichoccurredduringthebaseyear”. Thestatutefurtherprovidesthatthevotersmayexcludefromthetaxessubjecttothetaxlimitsandfromthecalculationofthe maximumtaxlevy(a)theamountrequiredtopaydebtserviceonbondsandnotesissuedbeforeNovember4,1980,ifthe exclusionisapprovedbyamajorityvoteofthevoters,and(b)theamountrequiredtopaydebtserviceonanyspecific subsequentissueforwhichsimilarapprovalisobtained.Evenwithvoterapproval,theholdersoftheobligationsforwhich unlimitedtaxesmaybeassesseddonothaveastatutorypriorityorsecurityinterestintheportionofthetaxlevyattributableto suchobligations.ItshouldbenotedthatMassachusettsGeneralLawsChapter44,Section20requiresthatthetaxes excludedfromthelevylimittopaydebtserviceonanysuchbondsandnotesbecalculatedbasedonthetrueinterestcostof theissue.Accordingly,theDepartmentofRevenuelimitstheamountoftaxeswhichmaybeleviedineachyeartopaydebt serviceonanysuchbondsandnotestotheamountofsuchdebtservice,lessaprorataportionofanyoriginalissuepremium receivedbythecityortownthatwasnotappliedtopaycostsofissuance. VotersmayalsoexcludefromtheProposition2½limitstheamountrequiredtopayspecifiedcapitaloutlayexpendituresorfor thecityortown’sapportionedshareforcertaincapitaloutlayexpendituresbyaregionalgovernmentalunit.Inaddition,thecity councilofacity,withtheapprovalofthemayorifrequired,ortheboardofselectmenorthetowncouncilofatownmayvoteto excludefromtheProposition2½limitstaxesraisedinlieuofsewerorwaterchargestopaydebtserviceonbondsornotes issuedbythemunicipality(orbyanindependentauthority,commissionordistrict)forwaterorsewerpurposes,providedthat themunicipality’ssewerorwaterchargesarereducedaccordingly. Inaddition,Proposition2½limitstheannualincreaseinthetotalassessmentsoncitiesandtownsbyanycounty,district, authority,theCommonwealthoranyothergovernmentalentity(exceptregionalschooldistricts,theMWRAandcertain districtsforwhichspeciallegislationprovidesotherwise)tothesumof(a)2½percentoftheprioryear’sassessmentsand(b) “anyincreasesincosts,chargesorfeesforservicescustomarilyprovidedlocallyorforservicessubscribedtoatlocaloption”. Regionalwaterdistricts,regionalseweragedistrictsandregionalveteransdistrictsmayexceedtheselimitationsunder statutoryproceduresrequiringatwo-thirdsvoteofthedistrict’sgoverningbodyandeitherapprovalofthelocalappropriating authorities(bytwo-thirdsvoteindistrictswithmorethantwomembersorbymajorityvoteintwo-memberdistricts)orapproval oftheregisteredvotersinalocalelection(inthecaseoftwo-memberdistricts).UnderProposition2½anyStatelawtotake effectonorafterJanuary1,1981imposingadirectserviceorcostobligationonacityortownwillbecomeeffectiveonlyif acceptedorvoluntarilyfundedbythecityortownorifStatefundingisprovided.Similarly,Staterulesorregulationsimposing additionalcostsonacityortownorlawsgrantingorincreasinglocaltaxexemptionsaretotakeeffectonlyifadequateState appropriationsareprovided.Thesestatutoryprovisionsdonotapplytocostsresultingfromjudicialdecisions. TheTownhasbeeninfullcompliancewithProposition2½sincefiscal1982followingcompletionofaprofessional revaluationofallrealandpersonalpropertyintheTowntofullvalue. OnJune24,1991anoperatingoverridefor$4,347,699wasapprovedby51.3%oftheTown'svotingresidentsforvarious municipalservices.Thisoverridewasaddedtothefiscal1992levylimitandremainsasaportionofthelevylimitoffuture years.OnJune11,2002anoperatingoverridefor$7,173,000wasapprovedby51%oftheTown'svotingresidentsfor variousmunicipalservices.Thisoverridewasaddedtothefiscal2003levylimitandwillremainasaportionofthelevy limitoffutureyears. 22 ThetablebelowsetsforththeTown'staxleviesandlevylimitsunderProposition2½forthefollowingfiscalyears. FiscalYear 20112012201320142015 PrimaryLevyLimit(1)$186,490,344$188,243,412$181,715,859$181,039,845$190,236,964 PriorFiscalYearLevyLimit152,369,977157,811,876163,320,829168,270,449173,349,626 2.5%LevyGrowth3,809,2493,945,2974,083,0214,206,7614,333,741 NewGrowth(2)1,632,6501,563,656866,599872,416951,488 Overrides----- GrowthLevyLimit157,811,876163,320,829168,270,449173,349,626178,634,855 DebtExclusions417,180403,817396,682387,637378,997 CapitalExpenditureExclusions----- OtherAdjustments----- TaxLevyLimit158,229,056163,724,646168,667,131173,737,263179,013,852 TaxLevy158,170,699163,723,467167,025,508170,290,442173,512,298 UnusedLevyCapacity(3)58,3571,1791,641,6233,446,8215,501,554 UnusedPrimaryLevyCapacity(4)$28,678,468$24,922,583$13,445,410$7,690,219$11,602,109 _______________ Source:MassachusettsDepartmentofRevenue (1)2.5%ofassessedvaluation. (2)Allowedforincreasefornewvaluations(orrequiredreduction)–certifiedbytheDepartmentofRevenue. (3)TaxLevyLimitlessTaxLevy. (4)PrimaryLevyLimitlessGrowthLevyLimit. PledgedTaxes Taxesoncertainpropertyindesignateddevelopmentdistrictsmaybepledgedforthepaymentofcostsofeconomic developmentprojectswithinsuchdistrictsandmaythereforebeunavailableforothermunicipalpurposes.TheTownhas nosuchDistricts. InitiativePetitions VariousproposalshavebeenmadeinrecentyearsforlegislativeamendmentstotheMassachusettsConstitutionto imposelimitsonstateandlocaltaxes. Tobeadopted,suchamendmentsmustbeapprovedbytwosuccessivelegislaturesandthenbythevotersatastate election. CommunityPreservationAct TheMassachusettsCommunityPreservationAct(the“CPA”)permitscitiesandtownsthatacceptitsprovisionstolevya surchargeonitsrealpropertytaxlevy,dedicaterevenue(otherthanstateorfederalfunds),andtoreceivestatematching fundsfor(i)theacquisition,creation,preservation,rehabilitationandrestorationoflandforrecreationaluse,openspace, andaffordablehousingand(ii)theacquisition,preservation,rehabilitationandrestorationofhistoricresources.The provisionsoftheCPAmustbeacceptedbythevotersofthecityortownatanelectionaftersuchprovisionshavefirst beenacceptedbyeitheravoteofthelegislativebodyofthecityortownoraninitiativepetitionsignedby5%ofits registeredvoters. Acityortownmayapproveasurchargeofupto3%(butnotlessthan1%undercertaincircumstances)andmaymakean additionalcommitmentoffundsbydedicatingrevenueotherthanstateorfederalfunds,providedthatthetotalfunds collecteddonotexceed3%oftherealpropertytaxlevy,lessanyexemptionsadopted(suchasanexemptionforlow- incomeindividualsandfamiliesandforlowandmoderate-incomeseniorcitizens,anexemptionfor$100,000ofthevalue ofeachtaxableparcelofresidentialrealpropertyor$100,000ofthevalueofeachtaxableparcelofclassthree, commercialproperty,andclassfour,industrialpropertyasdefinedinChapter59,Section2AoftheGeneralLaws,andan exemptionforcommercialandindustrialpropertiesincitiesandtownswithclassifiedtaxrates).Intheeventthatthe municipalityshallnolongerdedicateallorpartoftheadditionalfundstocommunitypreservation,thesurchargeonthe 23 realpropertytaxlevyofnotlessthan1%shallremainineffect,providedthatanysuchchangemustbeapproved pursuanttothesameprocessasacceptanceoftheCPA.Thesurchargeisnotcountedinthetotaltaxesassessedforthe purposeofdeterminingthepermittedlevyamountunderProposition2½(see“TaxLimitations”under“PROPERTYTAX” above).AcityortownmayrevokeitsacceptanceoftheprovisionsoftheCPAatanytimeafter5yearsfromthedateof suchacceptanceandmaychangetheamountofthesurchargeortheexemptionstothesurchargeatanytime,including reducingthesurchargeto1%andcommittingadditionalmunicipalfundsasoutlinedabove,providedthatanysuch revocationorchangemustbeapprovedpursuanttothesameprocessasacceptanceoftheCPA. AnycityortownthatacceptstheprovisionsoftheCPAwillreceiveannualstatematchinggrantstosupplementamounts raisedbyitssurchargeanddedicationofrevenue.Thestatematchingfundsareraisedfromcertainrecordingandfiling feesoftheregistersofdeeds.Thoseamountsaredepositedintoastatetrustfundandaredistributedtocitiesandtowns thathaveacceptedtheprovisionsoftheCPA,whichdistributionsarenotsubjecttoannualappropriationbythestate legislature.Theamountdistributedtoeachcityandtownisbasedonastatutoryformulaandthetotalstatedistribution madetoanycityortownmaynotexceed100%oftheamountraisedlocallybythesurchargeontherealpropertytax levy. Theamountsraisedbythesurchargeontaxes,thededicationofrevenueandreceivedinstatematchingfundsare requiredtobedepositedinadedicatedcommunitypreservationfund.Eachcityortownthatacceptstheprovisionsofthe CPAisrequiredtoestablishacommunitypreservationcommitteetostudythecommunitypreservationneedsofthe communityandtomakerecommendationstothelegislativebodyofthecityortownregardingthecommunitypreservation projectsthatshouldbefundedfromthecommunitypreservationfund.Upontherecommendationsofthecommittee,the legislativebodyofthecityortownmayappropriateamountsfromthefundforpermittedcommunitypreservationpurposes ormayreserveamountsforspendinginfuturefiscalyears,providedthatatleast10%ofthetotalannualrevenuestothe fundmustbespentorsetasideforopenspacepurposes,10%forhistoricresourcepurposesand10%foraffordable housingpurposes. TheCPAauthorizescitiesandtownsthatacceptitsprovisionstoissuebondsandnotesinanticipationofthereceiptof surchargeanddedicatedrevenuestofinancecommunitypreservationprojectsapprovedundertheprovisionsoftheCPA. BondsandnotesissuedundertheCPAaregeneralobligationsofthecityortownandarepayablefromamountson depositinthecommunitypreservationfund.Intheeventthatacityortownrevokesitsacceptanceoftheprovisionsof theCPA,thesurchargeshallremainineffectuntilallcontractualobligationsincurredbythecityortownpriortosuch revocation,includingthepaymentofbondsornotesissuedundertheCPA,havebeenfullydischarged. TheTownhasnotadoptedtheCommunityPreservationAct. 24 TOWNFINANCES BudgetandAppropriationProcess TheannualappropriationsofatownareordinarilymadeattheannualmeetingwhichtakesplaceinFebruary,March,April, MayorJune.Appropriationsmayalsobevotedatspecialmeetings.Everytownmusthaveanappropriation,advisoryor financecommittee.Thecommittee(ortheboardofselectmenifauthorizedbyby-law)isrequiredtosubmitabudgetof proposedexpendituresattheannualtownmeeting. Undercertaincircumstancesandsubjecttocertainlimitsandrequirements,thecitycouncilofacity,uponthe recommendationofthemayor,maytransferamountsappropriatedfortheuseofonedepartment(exceptforamunicipallight departmentoraschooldepartment)toanotherappropriationforthesamedepartmentorfortheuseofanyotherdepartment. Inatown,townmeetingmayatanytimevotetotransferanyamountpreviouslyappropriatedtoanyotherauthorizeduseby law,and,undercertaincircumstancesandsubjecttocertainlimitsandrequirements,theselectmenofatown,withthe concurrenceofthefinancecommittee,maytransferamountsappropriatedfortheuseofanydepartmenttoanyother appropriationforthesamedepartmentortoanyotherdepartment. Waterandsewerdepartmentexpendituresaregenerallyincludedinthebudgetsadoptedbycitycouncilsandtownmeetings butelectricandgasdepartmentfundsmaybeappropriatedbythemunicipallightboards.Undercertainlegislationanycityor townwhichacceptsthelegislationmayprovidethattheappropriationfortheoperatingcostsofanydepartmentmaybeoffset, inwholeorinpart,byestimatedreceiptsfromfeeschargedforservicesprovidedbythedepartment.Itisassumedthatthis generalprovisiondoesnotalterthepre-existingpowerofanelectricorgasdepartmenttoappropriateitsownreceipts. Theschoolbudgetislimitedtothetotalamountappropriatedbythecitycouncilortownmeeting,buttheschoolcommittee retainsfullpowertoallocatethefundsappropriated.StatelegislationknownastheEducationReformActof1993,as amended,imposescertainminimumexpenditurerequirementsonmunicipalitieswithrespecttofundingforeducation.The requirementsaredeterminedonthebasisofformulasaffectedbyvariousmeasuresofwealthandincome,enrollments,prior levelsoflocalspendingandstateaid,andotherfactors.(See“STATEDISTRIBUTIONS”below.) Stateandcountyassessments,abatementsinexcessofoverlays,principalandinterestnototherwiseprovidedfor,andfinal judgmentsareincludedinthetaxlevywhetherornotincludedinthebudget.Revenuesarenotrequiredtobesetforthinthe budgetbutestimatednon-taxrevenuesaretakenintoaccountbytheassessorsinfixingthetaxlevy.(See“PROPERTY TAX”below.) BudgetTrends Thefollowingtablesetsforththetrendinoperatingbudgetsasvotedbytheannualtownmeeting.Assuch,saidbudgets reflectneitherrevenuesnorstateandcountyassessmentsandothermandatoryitems.See“BudgetandAppropriations Process”above.Similarly,thebudgetssummarizedbelowexcludeexpendituresauthorizedfornon-recurring(generally capital)purposesunder“special”warrantarticlesandexcludeappropriationsfromfreecash. BUDGETCOMPARISON FiscalYear 20122013201420152016 GeneralGovernment$7,174,445$8,338,624$8,731,134$9,421,721$9,859,482 EmployeeBenefits36,644,75437,100,24038,717,55336,061,16334,021,695 Pensions11,822,30212,294,40912,911,61014,390,71914,899,645 PublicSafety24,398,46125,931,94427,239,69927,730,44929,589,228 Education100,331,282106,077,923110,452,989118,007,651124,673,163 PublicWorks(1)43,737,25147,121,06851,022,01754,416,72555,376,345 CultureandRecreation5,420,9405,579,5315,908,8256,165,2806,346,188 HumanServices1,312,9701,542,4511,571,4081,917,7621,595,913 DebtService10,506,29810,852,20811,283,80012,074,66911,922,904 Total$241,348,703$254,838,398$267,839,035$280,186,139$288,284,563 _______________ (1)Thewaterandsewerdepartmentshavebeenconvertedtoenterprisefundsforaccountingpurposes.However,their budgetsareincludedinpublicworksforcomparisonpurposes.Infiscalyear2005theTownreorganized,added employeesandmovedtherelateddebtservicetothisbudget. 25 Revenues PropertyTaxes:PropertytaxesarethemajorsourceofrevenuefortheTown.Thetotalamountleviedissubjectto certainlimitsprescribedbylaw;foradescriptionofthoselimitssee"PROPERTYTAXATION--TaxLimitations"above. StateAid:TheTown'sstateaidentitlementisbaseduponanumberofdifferentformulas,andwhilesaidformulasmight indicatethataparticularamountofstateaidisowed,theamountofstateaidactuallypaidislimitedtotheamount appropriatedbythestatelegislature.Thestateannuallyestimatesstateaidbutactualpaymentsmayvaryfromthe estimate.Infiscalyear2012,netdistributionsfromthestatetotaled$29,113,575.Infiscalyear2013,netdistributions fromthestatetotaled$32,264,088.Infiscalyear2014,netdistributionsfromthestatetotaled$36,985,747.Net distributionsfromthestateareexpectedtototal$38,266,633infiscal2015. Inadditiontograntsforspecifiedcapitalpurposes(someofwhicharepayableoverthelifeofthebondsissuedforthe projects),theCommonwealthprovidesfinancialassistancetocitiesandtownsforcurrentpurposes.Paymentstocitiesand townsarederivedprimarilyfromapercentageoftheState’spersonalincome,salesanduse,andcorporateexcisetax receipts,togetherwiththenetreceiptsfromtheStateLottery.Amunicipality’sstateaidentitlementisbasedonanumberof differentformulas,ofwhichthe“schools”and“lottery”formulasarethemostimportant.Bothofthemajorformulastendto providemorestateaidtopoorercommunities.Theformulasfordeterminingamunicipality’sstateaidentitlementaresubject toamendmentbythestatelegislatureand,whileaformulamightindicatethataparticularamountofstateaidisowed,the amountofstateaidactuallypaidislimitedtotheamountappropriatedbythestatelegislature.Thestateannuallyestimates stateaid,buttheactualstateaidpaymentsmayvaryfromtheestimate. Inthefallof1986,boththeStateLegislature(bystatute,repealedasofJuly1,1999)andthevoters(byinitiativepetition) placedlimitsonthegrowthofstatetaxrevenues.Althoughsomewhatdifferentindetail,eachmeasureessentiallylimitedthe annualgrowthinstatetaxrevenuestoanaveragerateofgrowthinwagesandsalariesintheCommonwealthoverthethree previouscalendaryears.Ifnotamended,theremaininglawcouldrestricttheamountofstaterevenuesavailableforstateaid tolocalcommunities. Legislationwasenactedin1991tohelpmunicipalitiescompensateforadditionallocalaidreductionsbytheCommonwealth forfiscalyear1992.Underthatlaw,municipalitieswereallowedtodeferbudgetingforteacher’ssummercompensation payablebytheendofthefiscalyears1992and1993.Municipalitiesthatchosetodefersuchamountsarerequiredto amortizetheresultingbudgetdeficiencybyraisingatleastonefifteenthofthedeferredamountineachofthefiscalyears1997 through2011,orinaccordancewithamorerapidamortizationschedule. StateSchoolBuildingAssistanceProgram Underitsschoolbuildingassistanceprogram,theCommonwealthofMassachusettsprovidesgrantstocities,townsand regionalschooldistrictsforschoolconstructionprojects.UntilJuly26,2004,theStateBoardofEducationwas responsibleforapprovinggrantsforschoolprojectsandotherwiseadministeringtheprogram.Grantamountsrangedfrom 50%to90%ofapprovedprojectcosts.Municipalitiesgenerallyissuedbondstofinancetheentireprojectcost,andthe Commonwealthdisbursedthegrantsinequalannualinstallmentsoverthetermoftherelatedbonds. PursuanttolegislationwhichbecameeffectiveonJuly26,2004,thestatelegislaturecreatedtheMassachusettsSchool BuildingAuthority(the“Authority”)tofinanceandadministertheschoolbuildingassistanceprogram.TheAuthorityhas assumedallpowersandobligationsoftheBoardofEducationwithrespecttotheprogram.Inadditiontocertainother amounts,thelegislationdedicatesaportionofCommonwealthsalestaxreceiptstotheAuthoritytofinancetheprogram. ProjectspreviouslyapprovedforgrantsbytheStateBoardofEducationareentitledtoreceivegrantpaymentsfromthe Authoritybasedontheapprovedprojectcostandreimbursementrateapplicableunderthepriorlaw.TheAuthorityhas paidandisexpectedtocontinuetopaytheremainingamountsofthegrantsforsuchprojectseitherinannualinstallments toreimbursedebtserviceonbondsissuedbythemunicipalitiestofinancesuchprojects,oraslumpsumpaymentsto contributetothedefeasanceofsuchbonds. ProjectsontheprioritywaitinglistasofJuly1,2004arealsoentitledtoreceivegrantpaymentsfromtheAuthoritybased ontheeligibleprojectcostsandreimbursementratesapplicableunderthepriorlaw.Withlimitedexceptions,the Authorityisrequiredtofundthegrantsforsuchprojectsintheorderinwhichtheyappearonthewaitinglist.Grantsfor anysuchprojectsthathavebeencompletedorsubstantiallycompletedhavebeenpaidandareexpectedtocontinueto bepaidbytheAuthorityinlumpsumpayments,therebyeliminatingtheneedfortheAuthoritytoreimburseinterest expensesthatwouldotherwisebeincurredbythemunicipalitiestopermanentlyfinancetheAuthority’sshareofsuch projectcosts.InterestondebtissuedbymunicipalitiespriortoJuly1,2004tofinancesuchprojectcosts,andintereston temporarydebtuntilreceiptofthegrant,isincludedintheapprovedcostsofsuchprojects.Grantsforanysuchprojects thathavenotyetcommencedorthatareunderwayhavebeenandareexpectedtocontinuetobepaidbytheAuthorityas 26 projectcostsareincurredbythemunicipalitypursuanttoaprojectfundingagreementbetweentheAuthorityandthe municipality,eliminatingtheneedforthemunicipalitytoborrowevenonatemporarybasistofinancetheAuthority’sshare oftheprojectcostsinmostcases. TherangeofreimbursementratesfornewprojectgrantapplicationssubmittedtotheAuthorityonorafterJuly1,2007 hasbeenreducedtobetween40%and80%ofapprovedprojectcosts.TheAuthoritypromulgatednewregulationswith respecttotheapplicationandapprovalprocessforprojectssubmittedafterJuly1,2007.TheAuthorityexpectstopay grantsforsuchprojectsasprojectcostsareincurredpursuanttoprojectfundingagreementsbetweentheAuthorityand themunicipalities.Noneoftheinterestexpenseincurredondebtissuedbymunicipalitiestofinancetheirportionofthe costsofnewprojectswillbeincludedintheapprovedprojectcostseligibleforreimbursement. MotorVehicleExcise:Anexciseisimposedontheregistrationofmotorvehicles(subjecttoexemptions)atauniformrate of$25per$1,000ofvaluation.Theexciseiscollectedbyandatthebenefitofthemunicipalityinwhichthemotorvehicle iscustomarilykept.Valuationsaredeterminedbyastatutoryformulabasedonmanufacturer'slistpriceandyearof manufacture.Billsnotpaidwhenduebearinterestat12percentperannum.Provisionisalsomade,afternoticetothe owner,forthesuspensionoftheowner’soperatinglicenseorregistrationbytheregistrarofmotorvehicles.Infiscalyear 2012motorexcisereceiptstotaled$6,495,569.Infiscalyear2013motorexcisereceiptstotaled$6,378,436.Infiscalyear 2014motorexcisereceiptstotaled$7,285,251.Motorvehicleexcisetaxreceiptsareexpectedtototalapproximately $7,285,000forfiscalyear2015. WaterRatesandServices:Asoffiscalyear1993,itbecamethepolicyoftheTownthatthewaterutilitiesintheTownbe self-sufficientandfreefromdependenceonpropertytaxdollarsfortheircapitalcost,operatingexpense,treatment expenseanddebtservice.EnterprisefundswereauthorizedattheMay1993TownMeetingtohelpimplementthis policy.Thewaterratecurrentlyrangesfrom$5.50to$10.15per748gallonsdependinguponusage.TheTown’swater rateshadbeenrestructuredfromathreetier,annualizedusagestructuretoafivetierquarterlyusagestructure.The changefromannualmeasurementtoquarterlymeasurementallowsuserstotakecorrectiveactioneachquarterto conservewater.Thiswasnotworkableinthepreviousstructure.Inaddition,theTownhadchangedthemethodfor measuringusageformulti-dwellingunitsover4units.Multi-dwellingunitsononemeterpreviouslyhadthetotalusage dividedbythenumberofunits.Mostcommunitiesdonotdividebythenumberofunits;actualusageisbilledatthe higherusagefortheentirecomplex.NewwaterratesweresetinJune,2014forthefiscalyearbeginningJuly1,2014 andareasfollows(perunit,whichis748gallonsofusage):Tier1,$5.50/unit;Tier2,$6.11/unit;Tier3,$7.12/unit,Tier4, $8.38/unit;Tier5,$10.15/unit.(SeeAppendixAforadditionalinformation). SewerRatesandServices:Asoffiscalyear1993italsobecameTownpolicythatthesewerutilitiesintheTownbeself- sufficientandfreefromdependenceonpropertytaxdollarsfortheircapitalcost,operatingexpense,debtserviceand treatmentexpense.EnterpriseFundswereauthorizedattheMay1993TownMeetingtohelpimplementthispolicy. Sewerratescurrentlyrangefrom$6.54to$18.88per750gallonsdependinguponusage.TheTownhasamunicipal sewersystemthatservicesapproximately90%ofthepopulationviaconnectionstotheMassachusettsWaterResources Authority.TheTown’ssewerrateshadbeenrestructuredfromathreetier,annualizedusagestructuretoafivetier quarterlyusagestructure.Inaddition,theTownhadchangedthemethodformeasuringusageformulti-dwellingunits over4units.Multi-dwellingunitsononemeterpreviouslyhadthetotalusagedividedbythenumberofunits.Newsewer ratesweresetinJune,2014forthefiscalyearbeginningJuly1,2014andareasfollows(perunit,whichis748gallonsof usage):Tier1,$6.54/unit;Tier2,$6.75/unit;Tier3,$9.04/unit,Tier4,$12.98/unit;Tier5,$18.88/unit.(SeeAppendixA foradditionalinformation). LocalOptionsMealsTax:OnOctober28,2009,theTownadoptedthelocalmealsexcisetaxtobeeffectiveJanuary1, 2010.Thelocalmealsexcisetaxisa0.75%taxonthegrossreceiptsofavendorfromthesaleofrestaurantmeals.The taxispaidbythevendortotheStateCommissionerofRevenue,whointurnpaysthetaxtothemunicipalityinwhichthe mealwassold.Therevenuegeneratedfromthistaxwas$1,285,884infiscalyear2012,$1,294,886infiscal2013and $1,328,443infiscalyear2014. RoomOccupancyTax:Underthistax,localgovernmentsmaytaxtheprovisionofhotel,motel,lodginghouseandbed andbreakfastroomsataratenottoexceedsixpercent(6%)ofthecostofrentingsuchrooms.Thetaxispaidbythe operatorofeachestablishmenttotheStateCommissionerofRevenue,whointurnpaysthetaxbacktothemunicipality inwhichtheroomsarelocated.TheTownhaslevies6%aspermittedunderthelaw.Therevenuegeneratedfromthis taxwas$1,348,505infiscalyear2012,$1,300,067infiscal2013and$1,376,993infiscalyear2014. 27 InvestmentofTownFunds AllfundsoftheTown,exceptfortrustfundsandfundsoftheFraminghamRetirementSystem,areinvestedinaccordance withSection55ofChapter44oftheMassachusettsGeneralLaws(MGL).Thissectionpermitsinvestmentofavailable fundsandbondandnoteproceeds,intermdepositsandcertificatesofdepositsofbanksandtrustcompanies,in obligationsissuedorunconditionallyguaranteedbythefederalgovernmentoranagencythereofwithamaturityofnot morethanoneyear,inrepurchaseagreementswithamaturityofnotmorethan90dayssecuredbyfederalorfederal agencysecurities,inparticipationunitsintheMassachusettsMunicipalDepositoryTrust(MMDT),orinsharesinSEC- registeredmoneymarketfundswiththehighestpossibleratingfromatleastonenationallyrecognizedratingorganization. MMDTisaninvestmentpoolcreatedbytheCommonwealth.TheStateTreasureristhesoletrustee,andthefundsare managedundercontractbyaninvestmentfirmunderthesupervisionoftheStateTreasurer’soffice.AccordingtotheState TreasurertheTrust’sinvestmentpolicyisdesignedtomaintainanaverageweightedmaturityof90daysorlessandislimited tohigh-quality,readilymarketablefixedincomeinstruments,includingU.S.Governmentobligationsandhighly-ratedcorporate securitieswithmaturitiesofoneyearorless. Trustfunds,unlessotherwiseprovidedbythedonor,maybeinvestedinaccordancewithSection54ofChapter44ofthe MGL,whichpermitsabroaderrangeofinvestmentsthanSection55,includinganybondsornotesthatarelegal investmentsforsavingsbanksintheCommonwealth.TherestrictionsimposedbySections54and55donotapplytocity andtownretirementsystems. BreakdownoftheaboveinvestmentsmaybeobtainedfromtheTownTreasurer.Pensionfundsareunderthejurisdiction oftheFraminghamContributoryRetirementSystem.Investmentsandtheretirementsystemarediscussedonpages45 and46andinAppendixA. AccountingMethods SeeAppendixA. Audits TheTownhasannualauditspreparedbyindependentcertifiedpublicaccountingfirms.Themostrecentauditisforfiscal yearendedJune30,2014byMelansonHeath&Company,PCwhichisattachedasAppendixA.Prioryears’auditsare availableuponrequest. Theattachedreportspeaksonlyasofitsdate,andonlytothemattersexpresslysetforththerein. TheauditorshavenotbeenengagedtoreviewthisOfficialStatementortoperformauditproceduresregardingthepost- auditperiod,norhavetheauditorsbeenrequestedtogivetheirconsenttotheinclusionoftheirreportinAppendixA. Exceptasstatedintheirreport,theauditorshavenotbeenengagedtoverifythefinancialinformationsetoutinAppendix Aandarenotpassinguponanddonotassumeresponsibilityforthesufficiency,accuracyorcompletenessofthefinancial informationpresentedinthatappendix. FinancialStatements SetforthonthefollowingpagesareGovernmentalFundsBalanceSheetsforfiscalyears2014,2013and2012, CombinedStatementsofRevenues,Transfers,ExpendituresandChangesinGeneralFundBalanceforfiscalyears2014 through2010,andCombinedStatementofRevenues,Transfers,ExpendituresandChangesinNetAssetsforfiscalyears 2014through2009fortheWaterandSewerfunds.Allstatementswereextractedfromtheauditedfinancialstatementsof theTown. 28 TownofFramingham GovernmentalFundsBalanceSheet AsofJune30,2014(1) NonmajorTotal GovernmentalGovernmental ASSETSGeneralFundsFunds Cash&shortterminvestments$29,612,688$11,446,308$41,058,996 Investments18,812,7732,097,88220,910,655 Receivables: PropertyTaxes4,601,973-4,601,973 MotorVehicleExcise2,692,895-2,692,895 UserFees-191,370191,370 DepartmentalandOther73,9621,038,8511,112,813 Intergovernmental-6,939,0306,939,030 OtherAssets58,124-58,124 TOTALASSETS$55,852,415$21,713,441$77,565,856 LIABILITIES WarrantsPayable$2,375,998$3,770,953$6,146,951 AccountsPayable-76,18776,187 Retainagepayable-100,135100,135 Accruedliabilities8,838,842488,8879,327,729 Taxrefundspayable5,403,785-5,403,785 Notespayable-7,816,7657,816,765 OtherLiabilities167,02129,252196,273 TotalLiabilities$16,785,646$12,282,179$29,067,825 6,973,3233,342,95710,316,280 DEFERREDINFLOWSOFRESOURCES FUNDBALANCES Nonspendable69,704585,195654,899 Restricted57,67011,979,23112,036,901 Committed453,22855,178508,406 Assigned7,536,692-7,536,692 Unassigned23,976,152(6,531,299)17,444,853 TotalFundBalances 32,093,4466,088,30538,181,751 TotalLiabilities,DeferredInflowsofResources,$55,852,415$21,713,441$77,565,856 andFundBalances _______________________ (1)ExtractedfromauditedfinancialstatementsoftheTown. 29 TownofFramingham GovernmentalFundsBalanceSheet AsofJune30,2013(1) NonmajorTotal GovernmentalGovernmental ASSETSGeneralFundsFunds Cash&shortterminvestments$36,597,155$2,450,667$39,047,822 Investments6,732,3588,215,40714,947,765 Receivables: PropertyTaxes5,231,782-5,231,782 MotorVehicleExcise2,275,566-2,275,566 UserFees-340,548340,548 DepartmentalandOther49,546346,381395,927 Intergovernmental-7,394,7497,394,749 OtherAssets56,060-56,060 TOTALASSETS$50,942,467$18,747,752$69,690,219 LIABILITIES WarrantsPayable$3,559,992$2,195,228$5,755,220 AccountsPayable-50,43250,432 AccruedLiabilities8,478,465542,6839,021,148 TaxRefundsPayable5,192,420-5,192,420 NotesPayable-9,582,8109,582,810 OtherLiabilities353,95629,250383,206 TotalLiabilities$17,584,833$12,400,403$29,985,236 7,386,8633,208,75910,595,622 DEFERREDINFLOWSOFRESOURCES FUNDBALANCES Nonspendable61,477585,195646,672 Restricted61,78911,639,59111,701,380 Committed416,46510,672427,137 Assigned4,393,063-4,393,063 Unassigned21,037,977(9,096,868)11,941,109 TotalFundBalances25,970,7713,138,59029,109,361 TotalLiabilities,DeferredInflows$50,942,467$18,747,752$69,690,219 andFundBalances (1)ExtractedfromauditedfinancialstatementsoftheTown. 30 TownofFramingham GovernmentalFundsBalanceSheet AsofJune30,2012(1) NonmajorTotal GovernmentalGovernmental ASSETS General FundsFunds Cash&shortterminvestments$23,092,064$12,270,754$35,362,818 Investments13,022,1941,458,79114,480,985 Receivables: PropertyTaxes5,125,215-5,125,215 MotorVehicleExcise2,219,894-2,219,894 UserFees-385,529385,529 DepartmentalandOther40,731446,066486,797 Intergovernmental-3,331,2063,331,206 OtherAssets46,72815,32162,049 TOTALASSETS$43,546,826$17,907,667$61,454,493 LiabilitiesandFundBalance Liabilities: WarrantsPayable$2,949,831$2,682,592$5,632,423 AccountsPayable-182,992182,992 AccruedLiabilities7,701,325741,1538,442,478 TaxRefundsPayable5,539,839-5,539,839 DeferredRevenues7,026,133618,3987,644,531 NotesPayable-9,889,4479,889,447 OtherLiabilities275,86129,252305,113 TotalLiabilities $23,492,989$14,143,834$37,636,823 FundBalances: Nonspendable64,081585,194649,275 Restricted65,90813,473,79013,539,698 Committed9,331,60632,9099,364,515 Assigned4,845,663-4,845,663 Unassigned5,746,579(10,328,060)(4,581,481) TotalFundBalances20,053,8373,763,83323,817,670 TotalLiabilitiesandFundBalances$43,546,826$17,907,667$61,454,493 (1)ExtractedfromauditedfinancialstatementsoftheTown. 31 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCE FORTHEYEARENDEDJUNE30,2014(1) NonmajorTotal GovernmentalGovernmental GeneralFundsFunds Revenues: Propertytaxes$168,452,607$-$168,452,607 Excises7,285,252-7,285,252 Penalties,interestandothertaxes4,429,096-4,429,096 Chargesforservices2,533,8758,611,44311,145,318 Intergovernmental67,845,96418,865,73486,711,698 Licensesandpermits2,962,35874,1753,036,533 Finesandforfeitures457,68114,954472,635 InvestmentIncome622,707333,754956,461 Contributions-534,642534,642 Miscellaneous1,065,737315,5511,381,288 TotalRevenues$255,655,277$28,750,253$284,405,530 Expenditures: Current: Generalgovernment8,528,9152,505,56011,034,475 Publicsafety25,940,9772,995,14128,936,118 Education131,888,80217,651,807149,540,609 Publicworks11,810,3743,031,88214,842,256 Humanservices1,509,288154,2651,663,553 Cultureandrecreation5,921,964695,9166,617,880 Employeebenefits51,255,806-51,255,806 Debtservice10,812,163-10,812,163 Intergovermental5,446,199-5,446,199 Capitaloutlay-11,277,85711,277,857 Totalexpenditures253,114,48838,312,428291,426,916 Excess(Deficiency)ofrevenues overexpenditures2,540,789(9,562,175)(7,021,386) OtherFinancingSources(Uses): Proceedsfrombondissuances-12,380,74512,380,745 Premiumsonbondissuances1,010,253-1,010,253 Transfersin2,874,564302,9313,177,495 Transfersout(302,931)(171,786)(474,717) Totalotherfinancingsources(Uses)3,581,88612,511,89016,093,776 ChangeinFundBalance6,122,6752,949,7159,072,390 Fundbalance,atbeginningofYear25,970,7713,138,59029,109,361 Fundbalance,atendofyear$32,093,446$6,088,305$38,181,751 ____________ (1)ExtractedfromauditedfinancialstatementsoftheTown. 32 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCE FORTHEYEARENDEDJUNE30,2013(1) NonmajorTotal GovernmentalGovernmental GeneralFundsFunds Revenues: Propertytaxes$165,598,637$-165,598,637 Excises6,265,171-6,265,171 Penalties,interestandothertaxes4,320,764-4,320,764 Chargesforservices2,405,5748,723,56611,129,140 Intergovernmental63,426,17416,741,20780,167,381 Licensesandpermits2,148,12470,8252,218,949 Finesandforfeitures402,59714,939417,536 InvestmentIncome457,428211,916669,344 Contributions-499,812499,812 Miscellaneous241,950354,889596,839 TotalRevenues$245,266,419$26,617,154$271,883,573 Expenditures: Current: Generalgovernment7,570,8913,138,15010,709,041 Publicsafety25,584,4023,885,73529,470,137 Education126,938,50218,059,650144,998,152 Publicworks11,288,9241,977,69813,266,622 Humanservices1,396,876131,2151,528,091 Cultureandrecreation5,569,691657,0096,226,700 Employeebenefits47,508,363-47,508,363 Debtservice10,007,357-10,007,357 Intergovermental4,984,094-4,984,094 Capitaloutlay-8,132,3268,132,326 Totalexpenditures240,849,10035,981,783276,830,883 Excess(deficiency)ofrevenues overexpenditures4,417,319(9,364,629)(4,947,310) OtherFinancingSources(Uses): Proceedsfrombondissuances-8,333,9408,333,940 Proceedsfromrefundingbonds3,225,400-3,225,400 Premiumsonbondissuances2,098,123-2,098,123 Paymenttoescrowagent(4,360,158)-(4,360,158) Transfersin2,781,821660,7493,442,570 Transfersout(2,245,571)(255,303)(2,500,874) Totalotherfinancingsources(uses)1,499,6158,739,38610,239,001 ChangeinFundBalance5,916,934(625,243)5,291,691 Fundbalance,atbeginningofYear,asrestated20,053,8373,763,83323,817,670 Fundbalance,atendofyear$25,970,771$3,138,590$29,109,361 (1)ExtractedfromauditedfinancialstatementsoftheTown. 33 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCE FORTHEYEARENDEDJUNE30,2012(1) NonmajorTotal GovernmentalGovernmental GeneralFundsFunds Revenues: Propertytaxes$161,093,718$-161,093,718 Excises6,495,569-6,495,569 Penalties,interestandothertaxes4,296,859-4,296,859 Chargesforservices2,331,20410,570,47112,901,675 Intergovernmental56,889,77217,113,60774,003,379 Licensesandpermits2,169,81565,6002,235,415 Finesandforfeitures460,50014,636475,136 InvestmentIncome341,99628,082370,078 Contributions-503,028503,028 Miscellaneous334,816154,106488,922 TotalRevenues$234,414,249$28,449,530$262,863,779 Expenditures: Current: Generalgovernment6,832,6171,832,3298,664,946 Publicsafety23,702,9654,855,25428,558,219 Education120,770,41617,160,003137,930,419 Publicworks9,685,4442,896,08512,581,529 Humanservices1,458,095111,4221,569,517 Cultureandrecreation5,439,706570,5306,010,236 Employeebenefits47,659,480-47,659,480 Debtservice10,659,748-10,659,748 Intergovermental4,319,065-4,319,065 Capitaloutlay-8,751,0408,751,040 Totalexpenditures230,527,53636,176,663266,704,199 Excess(deficiency)ofrevenues overexpenditures3,886,713(7,727,133)(3,840,420) OtherFinancingSources(Uses): Transferin2,766,855261,2213,028,076 Transferout(327,892)(90,118)(418,010) Totalotherfinancingsources(uses)2,438,963171,1032,610,066 ChangeinFundBalance6,325,676(7,556,030)(1,230,354) Fundbalance,atbeginningofYear,asrestated13,728,16111,319,86325,048,024 Fundbalance,atendofyear$20,053,837$3,763,833$23,817,670 (1)ExtractedfromauditedfinancialstatementsoftheTown. 34 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCE FORTHEYEARENDEDJUNE30,2011(1) NonmajorTotal GovernmentalGovernmental GeneralFundsFunds Revenues: Propertytaxes$155,068,444$-155,068,444 Excises6,187,030-6,187,030 Penalties,interestandothertaxes4,013,274-4,013,274 Chargesforservices2,237,25610,452,66112,689,917 Intergovernmental53,100,40916,088,48869,188,897 Licensesandpermits1,974,22641,1502,015,376 Finesandforfeitures476,90315,808492,711 InvestmentIncome330,773379,887710,660 Contributions-587,351587,351 Miscellaneous1,095,995301,7751,397,770 TotalRevenues$224,484,310$27,867,120$252,351,430 Expenditures: Current: Generalgovernment6,960,8762,249,7579,210,633 Publicsafety23,315,8594,378,34427,694,203 Education116,764,50515,628,945132,393,450 Publicworks12,231,6341,518,89213,750,526 Humanservices1,177,391116,2821,293,673 Cultureandrecreation5,195,096701,1355,896,231 Employeebenefits47,859,343-47,859,343 Debtservice8,778,853-8,778,853 Intergovermental3,730,333-3,730,333 Capitaloutlay-9,146,5619,146,561 Totalexpenditures226,013,89033,739,916259,753,806 Excess(deficiency)ofrevenues overexpenditures(1,529,580)(5,872,796)(7,402,376) OtherFinancingSources(Uses): Issuanceofdebt-17,765,00017,765,000 Transferin2,785,320-2,785,320 Transferout-(181,420)(181,420) Totalotherfinancingsources(uses)2,785,32017,583,58020,368,900 ChangeinFundBalance1,255,74011,710,78412,966,524 Fundbalance,atbeginningofYear,asrestated12,472,420(390,921)12,081,499 Fundbalance,atendofyear$13,728,160$11,319,863$25,048,023 35 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCE FORTHEYEARENDEDJUNE30,2010(1) MunicipalNonmajorTotal BuildingsGovernmentalGovernmental GeneralFundFundsFunds Revenues: Propertytaxes$152,629,094$-$-152,629,094 Excises5,867,722--5,867,722 Penalties,interestandothertaxes3,293,676--3,293,676 Chargesforservices2,231,916-8,705,85710,937,773 Intergovernmental49,618,731529,88421,665,48571,814,100 Licensesandpermits2,723,946-83,2252,807,171 Finesandforfeitures566,958-16,734583,692 Interestearnings101,547-311,607413,154 Contributions--494,865494,865 Miscellaneous740,54845,000272,8461,058,394 TotalRevenues$217,774,138$574,884$31,550,619$249,899,641 Expenditures: Current: Generalgovernment7,010,626-3,313,43110,324,057 Publicsafety23,341,728-3,426,03026,767,758 Education113,881,557-20,331,400134,212,957 Publicworks11,280,217-1,757,45113,037,668 Humanservices1,101,438-155,0641,256,502 Cultureandrecreation5,213,929-451,8865,665,815 Employeebenefits44,417,063--44,417,063 Debtservice8,768,678--8,768,678 Intergovermental3,487,214--3,487,214 Capitaloutlay-8,589,0412,596,08711,185,128 Totalexpenditures218,502,4508,589,04132,031,349259,122,840 Excess(deficiency)ofrevenues overexpenditures(728,312)(8,014,157)(480,730)(9,223,199) OtherFinancingSources(Uses): Issuanceofdebt-2,139,4452,836,8274,976,272 Transferin2,902,135-877,2843,779,419 Transferout(887,784)(9,042)(362,607)(1,259,433) Totalotherfinancingsources(uses)2,014,3512,130,4033,351,5047,496,258 ChangeinFundBalance1,286,039(5,883,754)2,870,774(1,726,941) Fundbalance,atbeginningofYear,asrestated4,951,196(1,647,484)10,504,72813,808,440 Fundbalance,atendofyear$6,237,235$(7,531,238)$13,375,502$12,081,499 _______________ (1)ExtractedfromauditedfinancialstatementsoftheTown. 36 TOWNOFFRAMINGHAM,MASSACHUSETTS WATERFUND COMPARATIVESTATEMENTOFREVENUES,TRANSFERS, EXPENDITURESANDCHANGESINNETASSETS AsofJune30, 2009(1)2010(1)2011(1)2012(1)2013(1)2014(1) OperatingRevenues: UserCharge$14,547,871$15,106,098$15,127,981$15,330,015$15,712,740$18,422,989 Other662132,505112,771107,246109,355155,776 TotalOperatingRevenue$14,548,533$15,238,603$15,240,752$15,437,261$15,822,095$18,578,765 OperatingExpenses: SalaryandWages3,130,0632,768,0462,936,0383,094,6062,806,0022,816,024 OperatingExpenses1,135,6501,037,3261,487,3551,679,9851,783,8451,699,468 Other22,91022,91022,90922,91022,91021,976 Depreciation1,142,1641,312,8401,536,6072,085,1182,528,6822,594,061 Intergovernmental6,546,6936,553,4226,469,0876,878,5147,375,7117,666,336 TotalOperatingExpenses11,977,48011,694,54412,451,99613,761,13314,517,15014,797,865 OperatingIncome/(Loss)2,601,0533,544,0592,788,7561,676,1281,304,9453,780,900 NonoperatingIncome(Expense): InvestmentIncome15,6942,9165,3117,1724,5774,846 Transfer(1,208,930)(1,321,609)---- InterestExpenses(279,039)(466,879)(710,941)(1,351,587)(1,081,120)(1,503,045) Other468,37869,22457,188107,40413,443 TotalNonoperatingIncome(Expense)(1,472,275)(1,317,194)(636,406)(1,287,227)(969,139)(1,484,756) NetIncome(Loss)1,128,7782,226,8652,152,350388,901335,8062,296,144 Capitalcontributions----187,342- Transfersin---54,000-- Transfersout---(1,372,129)(1,413,293)(1,455,692) ChangeinNetAssets---(929,228)(890,145)840,452 NetAssets(deficit),beginningofyear$32,009,578$33,138,356$35,365,221$36,186,699$35,257,471$34,367,326 NetAssets(deficit),endofyear$33,138,356$35,365,221$37,517,571$35,257,471$34,367,326$35,207,778 _________________________________ (1)ExtractedfromtheauditedfinancialsoftheTown. 37 TOWNOFFRAMINGHAM,MASSACHUSETTS SEWERFUND COMPARATIVESTATEMENTOFREVENUES,TRANSFERS, EXPENDITURESANDCHANGESINNETASSETS 2009(1)2010(1)2011(1)2012(1)2013(1)2014(1) OperatingRevenues: UserCharge$14,473,548$15,201,720$17,347,370$19,312,278$19,491,767$22,342,218 Other20,928109,208108,437115,090131,403122,569 TotalOperatingRevenue$14,494,476$15,310,928$17,455,807$19,427,368$19,623,170$22,464,787 OperatingExpenses: SalaryandWages2,473,8762,468,1322,868,9182,611,2152,343,8702,368,151 OperatingExpenses1,421,0021,332,1451,732,5071,414,297918,9012,080,112 Depreciation886,1011,459,8112,159,1234,497,6366,788,3786,983,594 Intergovernmental8,846,2149,517,5209,983,70410,365,27710,385,74810,691,353 TotalOperatingExpenses13,627,19314,777,60816,744,25218,888,42520,436,89722,123,210 OperatingIncome/(Loss)867,283533,320711,555538,943(813,727)341,577 NonoperatingIncome(Expense): InvestmentIncome45,4082,684-1,4684,0962,349 GrantRevenue10,0287,749,600---- Transfer(1,115,796)(1,198,377)---- InterestExpenses(453,648)(585,748)(1,072,648)(1,295,024)(1,381,939)(1,971,320) Other277,248178,95088,347135,196225,042255,509 TotalNonoperatingIncome(Expense)(1,236,760)6,147,109(984,301)(1,158,360)(1,152,801)(1,713,462) NetIncome(Loss)(369,477)6,680,429(272,746)(619,417)(1,966,528)(1,371,885) CapitalContributions---5,057,349156,58627,072 Transfersin---12,671280,983101,582 TransfersOut---(1,304,608)(1,309,386)(1,348,668) ChangeinNetAssetts---3,145,995(2,838,345)(2,591,899) NetAssets(deficit),beginningofyear(2)$27,709,723$27,340,246$34,020,675$41,223,915$44,369,910$41,531,565 NetAssets(deficit),endofyear$27,340,246$34,020,675$33,747,929$44,369,910$41,531,565$38,939,666 _________________________________ (1)ExtractedfromtheauditedfinancialsoftheTown. 38 FreeCash UnderMassachusettslawanamountknownas"freecash"iscertifiedasofthebeginningofeachfiscalyearbythe MassachusettsDepartmentofRevenue,BureauofAccounts,andthis,togetherwithcertainsubsequenttaxreceipts,is usedasthebasisforsubsequentappropriationsfromavailablefunds,whicharenotrequiredtobeincludedintheannual taxlevy.Subjecttocertainadjustments,freecashisunreservedfundbalanceadjustedtoacashbasis. ThefollowingtablesetsforththetrendinfreecashascertifiedbytheBureauofAccounts. FiscalWaterRevenueSewerRevenue YearGeneralFundFundFund 2014$11,761,832$4,325,300$3,220,979 20139,136,7764,232,8912,753,146 20123,265,6503,189,6051,872,927 20113,318,4335,224,4813,858,310 20102,070,4903,234,2072,078,446 20091,858,8101,209,9152,572,306 StabilizationFunds TheTownmaintainsaStabilizationFundwhichisaccountedforintheTrustFunds.TheStabilizationFundplusinterest incomemaybeappropriatedbyatwo-thirdsvoteatanannualorspecialtownmeetingforanyproject. Thefollowingtablesetsforththetrendinstabilizationfundbalances. Stabilization June30,FundBalance 2015(est.)$13,600,000 201412,733,744 201311,770,275 20128,920,903 20117,284,232 20105,839,577 Inaddition,theTowncreatedanopenspacestabilizationfundwhichmaybeappropriatedbyatwo-thirdsvoteatan annualorspecialtownmeetingforanyopenspaceprojects.Thefollowingtablesetsforththetrendinopenspace stabilizationfundbalances: OpenSpace Stabilization June30,FundBalance 2015(1)$115,000 2014383,669 2013352,548 2012347,670 2011342,807 2010335,317 __________ (1)Atthe2015SpringTownMeeting,theTownvotedtotransfer$275,000fromtheOpenSpaceStabilizationFund forthepurchaseofconservationland. Thefiscal2015budgetalsoincludesanappropriationof$2,284,194toestablishaCapitalStabilizationFund.Town managementhopestobuildthefundoverthenextfewyearstoapproximately$4.5millionanduseittoreducethe amounttobeborrowedforamajorcapitalprojectinfiscal2016or2017.ThebalanceintheCapitalStabilizationFundat June30,2015isestimatedtobeapproximately$2,420,000. TaxIncrementFinancingforDevelopmentDistricts Underrecentlegislation,citiesandtownsareauthorizedtoestablishdevelopmentdistrictstoencourageincreased residential,industrialandcommercialactivity.Alloraportionofthetaxesongrowthinassessedvalueinsuchdistricts maybepledgedandusedsolelytofinanceeconomicdevelopmentprojectspursuanttothecityortown’sdevelopment programforthedistrict.Thisincludespledgingsuch“taxincrements”forthepaymentofbondsissuedtofinancesuch projects.Asaresultofanysuchpledge,taxincrementsraisedfromnewgrowthpropertiesindevelopmentdistrictsare notavailableforothermunicipalpurposes.Taxincrementsaretakenintoaccountindeterminingthetotaltaxesassessed forthepurposeofcalculatingthemaximumpermittedtaxlevyunderProposition2½(see“TaxLimitations”above.) TheTownhasaTaxIncrementFinancing(TIF)AgreementwithTJX(see“EconomicDevelopment”above),whose internationalcorporateheadquartersarelocatedinFramingham.Theagreementguaranteesanestimatednetincreasein (discounted)propertytaxesof$7to$9millionoverthenexttwodecadesinadditiontoretainingmorethan$64.8millionin basepropertytaxesoverthesametimeframe. 39 INDEBTEDNESS AuthorizationProcedureandLimitations Serialbondsandnotesareauthorizedbyatwo-thirdsvoteofthetownmeeting.Refundingbondsandnotesare authorizedbytheselectmen.BorrowingsforsomepurposesrequireStateadministrativeapproval. Whenserialbondsornoteshavebeenauthorized,bondanticipationnotesmaybeissuedbytheofficersauthorizedto issuetheserialbondsornotes.Temporarydebtinanticipationofrevenueofthefiscalyearinwhichthedebtisincurred orinanticipationofauthorizedfederalandstateaidgenerallymaybeincurredbytheTreasurerwiththeapprovalofthe selectmen. DebtLimits GeneralDebtLimit.TheGeneralDebtLimitoftheTownconsistsofaNormalDebtLimitandaDoubleDebtLimit.The NormalDebtLimitfortheTownis5percentofthevaluationoftaxablepropertyaslastequalizedbytheStateDepartment ofRevenue.TheTowncanauthorizedebtuptothisamountwithoutstateapproval.Itcanauthorizedebtuptotwicethis amount(theDoubleDebtLimit)withtheapprovaloftheStateMunicipalFinanceOversightBoardcomposedoftheState Treasurer,theStateAuditor,theAttorneyGeneralandtheDirectorofAccounts. TherearemanycategoriesofgeneralobligationdebtwhichareexemptfromanddonotcountagainsttheGeneralDebt Limit.Amongothers,theseexemptcategoriesincluderevenueanticipationnotesandgrantanticipationnotes, emergencyloans,loansexemptedbyspeciallaws,certainschoolbonds,sewerbonds,solidwastedisposalfacilitybonds andeconomicdevelopmentbondssupportedbytaxincrementfinancing;andsubjecttospecialdebtlimits,bondsfor water(limitedto10percentofequalizedvaluation),housing,urbanrenewalandeconomicdevelopment(subjectto variousdebtlimits),andelectric,gas,communityantennatelevisionsystemsandtelecommunicationssystems(subjectto separatelimits).Revenuebondsarenotsubjecttothesedebtlimits.TheGeneralDebtLimitandthespecialdebtlimitfor waterbondsapplyatthetimethedebtisauthorized.Theotherspecialdebtlimitsgenerallyapplyatthetimethedebtis incurred. TypesofObligations GeneralObligations.Massachusettscitiesandtownsareauthorizedtoissuegeneralobligationindebtednessofthese types: SerialBondsandNotes.Thesearegenerallyrequiredtobepayableinannualprincipalamountsbeginningnolaterthanthe endofthenextfiscalyearcommencingafterthedateofissueandendingwithinthetermspermittedbylaw.Aleveldebt serviceschedule,oraschedulethatprovidesforamorerapidamortizationofprincipalthanleveldebtservice,ispermitted. Theprincipalamountsofcertaineconomicdevelopmentbondssupportedbytaxincrementfinancingmaybepayableinequal, diminishingorincreasingamountsbeginningwithin5yearsafterthedateofissue.Themaximumtermsofserialbondsand notesvaryfromoneyearto40years,dependingonthepurposeoftheissue.Themaximumtermspermittedaresetforthin thestatutes.Inaddition,formanyprojects,themaximumtermmaybedeterminedinaccordancewithusefullifeguidelines promulgatedbytheStateDepartmentofRevenue(“DOR”).Serialbondsandnotesmaybeissuedforthepurposessetforth inthestatutes.Inaddition,serialbondsandnotesmaybeissuedforanyotherpublicworkimprovementorassetnot specificallylistedintheStatutesthathasausefullifeofatleast5years.Bondsornotesmaybemadecallableandredeemed priortotheirmaturity,andaredemptionpremiummaybepaid.Refundingbondsornotesmaybeissuedsubjecttothe maximumapplicabletermmeasuredfromthedateoftheoriginalbondsornotesandmustproducepresentvaluesavings overthedebtserviceoftherefundedbonds.Generally,thefirstrequiredannualpaymentofprincipaloftherefundingbonds cannotbelaterthanthefirstprincipalpaymentofanyofthebondsornotesbeingrefundedthereby,however,principal paymentsmadebeforethefirstprincipalpaymentofanyofthebondsornotesbeingrefundedtherebymaybeinanyamount. Serialbondsmaybeissuedas“qualifiedbonds”withtheapprovalofthestateMunicipalFinanceOversightBoardcomposed oftheStateTreasurer,theStateAuditor,theAttorneyGeneralandtheDirectorofAccounts,subjecttosuchconditionsand limitations(includingrestrictionsonfutureindebtedness)asmayberequiredbytheBoard.Qualifiedbondsmaymaturenot lessthan10normorethan30yearsfromtheirdatesandarenotsubjecttotheamortizationrequirementsdescribedabove. TheStateTreasurerisrequiredtopaythedebtserviceonqualifiedbondsandthereaftertowithholdtheamountofthedebt servicepaidbytheStatefromstateaidorotherstatepayments;administrativecostsandanylossofinterestincometothe Statearetobeassesseduponthecityortown. TaxCreditBondsorNotes.Subjecttocertainprovisionsandconditions,theofficersauthorizedtoissuebondsornotesmay designateanydulyauthorizedissueofbondsornotesas“taxcreditbonds”totheextentsuchbondsandnotesareotherwise permittedtobeissuedwithfederaltaxcreditsorothersimilarsubsidiesforalloraportionoftheborrowingcosts.Taxcredit bondsmaybemadepayablewithoutregardtotheannualinstallmentsrequiredbyanyotherlaw,andasinkingfundmaybe 40 establishedforthepaymentofsuchbonds.Anyinvestmentthatispartofsuchasinkingfundmaymaturenotlaterthanthe datefixedforpaymentorredemptionoftheapplicablebonds. BondAnticipationNotes.Thesegenerallymustmaturewithintwoyearsoftheiroriginaldatesofissuancebutmaybe refundedfromtimetotimeforaperiodnottoexceedfiveyearsfromtheiroriginaldatesofissuance,providedthatforeach yearthatthenotesarerefundedbeyondthesecondyeartheymustbepaidinpartfromrevenuefundsinanamountatleast equaltotheminimumannualpaymentthatwouldhavebeenrequiredifthebondshadbeenissuedattheendofthesecond year.Forcertainschoolprojects,however,notesmayberefundedfromtimetotimeforaperiodnottoexceedsevenyears withouthavingtopayanyportionoftheprincipalofthenotesfromrevenuefunds.Themaximumtermofbondsissuedto refundbondanticipationnotesismeasured(exceptforcertainschoolprojects)fromthedateoftheoriginalissueofthenotes. RevenueAnticipationNotes.Theseareissuedtomeetcurrentexpensesinanticipationoftaxesandotherrevenues.They mustmaturewithinoneyearbut,ifpayableinlessthanoneyear,mayberefundedfromtimetotimeuptooneyearfromthe originaldateofissue.TheTownhasnotborrowedanyrevenueanticipationnotesduringthecurrentorthelastfivefiscal years. GrantAnticipationNotes.Theseareissuedfortemporaryfinancinginanticipationoffederalgrantsandstateandcounty reimbursements.Theymustgenerallymaturewithintwoyearsbutmayberefundedfromtimetotimeaslongasthe municipalityremainsentitledtothegrantorreimbursement.Notesinanticipationofcertainstateandcounty reimbursementsmayberefundedonlyuptotwoyearsfromtheoriginaldateofissue. TOWNOFFRAMINGHAM DirectDebtSummary ProjectedasofJune30,2015(1) GeneralObligationBonds: Outstanding School(2)$21,545,800 Water(3)36,632,004 Sewer(4)29,099,626 GeneralGovernment(5)31,565,570 MCWT(6)53,501,229 MWRA(7)6,884,243 TotalLong-TermDebtOutstanding$179,228,471 ShortTermDebt: BondAnticipationNotesOutstanding(8)20,967,117 ThisIssueNewMoneyBondAnticipationNotes(8)17,281,057 TotalShort-TermDebtOutstanding(8)38,248,174 TotalDirectDebt$217,476,645 _______________ (1)Excludesleaseandinstallmentpurchaseobligations,overlappingdebt,interimloannotesissuedthroughtheMassachusettsClean WaterTrust(MCWT),unfundedpensionliabilityandotherpostemploymentbenefitliabilities. (2)$8,136,000isnotsubjecttotheTown’sdebtlimit.$2,719,400hasbeenexcludedfromthelimitsofProposition2½.Theunpaid . balanceofstateschoolconstructiongrantspayableoverthelifeofoutstandingschooldebtisestimatedat$11,350,951Saidgrant paymentsareapplicabletobothprincipalandinterestandaresubjecttoannualappropriationbytheStatelegislature. (3)$36,277,004issubjecttoaseparatewaterdebtlimitof10%oftheTown’sequalizedvaluation($784,607,720).$355,000issubject totheTown’sdebtlimit. (4)$23,551,914isnotsubjecttotheTown’sdebtlimit. (5)$35,000isnotsubjecttotheTown’sdebtlimit.DoesnotreflectremaininggrantpaymentsfromtheMassachusettsSchoolBuilding Authority(MSBA). (6)DoesnotreflectsubsidyfromtheMCWT,whichisapplicabletobothprincipalandinterest. (7)$6,714,270isoutsidetheTown’sdebtlimit. (8)PayableDecember11,2015. 41 DebtRatios Thetablebelowsetsforththetrendindebtasapercentofassessedvaluationandpercapita.Thetableconsidersthe principalamountofgeneralobligationbondsoftheTownonly.Thetabledoesnotdeductanticipatedstategrant paymentsapplicabletotheprincipalamountofoutstandingbondsordebtthatmaybesupportedinwhole,orpart,by non-taxrevenues.(See"DirectDebtSummary"). GeneralPopulationLocalDebtasa% FiscalObligationBonds(FederalAssessedPerCapitaofFull YearEndOutstandingCensus)ValuationDebt(1)Valuation 2014$167,274,54768,318$7,241,593,787$2,4482.31% 2013159,926,94068,3187,268,634,3682,3412.20 2012136,225,81968,3187,529,736,4771,9941.81 2011127,830,20068,3187,459,613,7641,8711.71 201082,127,62868,3187,934,481,3141,2021.04 _______________ (1)PopulationBasedon2010FederalCensus. DebtServiceRequirements Thefollowingtablesetsforththerequiredprincipalandinterestpaymentsonoutstandinggeneralobligationbondsofthe TownprojectedasofJune30,2015. GeneralObligationBonds DebtServiceRequirements ProjectedasofJune30,2015 FiscalOutstandingMCWTMSBANetDebt YearPrincipalInterestSubsidySubsidy(1)Service 2016$16,273,912$5,597,280$(16,592)$(2,510,995)$19,343,605 201715,305,4065,054,201(15,822)(2,510,995)17,832,791 201814,359,2514,545,798(15,224)(2,510,995)16,378,830 201913,275,2904,045,809(14,721)(2,510,995)14,795,383 202011,861,5653,575,535(13,383)(1,306,971)14,116,745 202110,722,2223,178,325(12,754)-13,887,793 202210,575,0492,808,731(12,204)-13,371,575 202310,464,1872,461,268(10,992)-12,914,463 20249,754,2252,124,803(1,348)-11,877,680 20259,187,0331,802,063--10,989,096 20268,458,1421,534,931--9,993,074 20278,112,8231,308,640--9,421,463 20287,878,9651,093,312--8,972,276 20296,716,972889,150--7,606,121 20306,260,728708,766--6,969,494 20315,876,081535,725--6,411,806 20323,933,950385,225--4,319,176 20333,927,830279,594--4,207,424 20341,363,417204,881--1,568,298 20351,256,424162,985--1,419,409 2036820,000123,906--943,906 2037805,00093,475--898,475 2038800,00062,700--862,700 2039795,00031,619--826,619 2040445,0008,066--453,066 Total$179,228,471$42,616,787$(113,039)$(11,350,951)$210,381,268 _______________ (1)MSBAsubsidyreflectsreductionsingrantpaymentsasaresultoftheTown’srefundingbondsissuedinApril,2009. 42 PrincipalPaymentsbyPurpose ThefollowingtablesetsforththeprincipalpaymentsbypurposeonoutstandingdebtoftheTown. GeneralObligationBonds PrincipalPaymentsbyPurpose ProjectedasofJune30,2015 FiscalGeneral YearSchool(1)Water(2)Sewer(3)Government(4)MCWT(5)MWRA(6)TotalOutstanding 2016$3,456,825$2,619,254$1,684,226$4,665,695$2,749,550$1,098,362$16,273,912 20173,299,1252,548,2501,576,5004,172,1252,810,954898,45215,305,406 20183,016,1252,494,3501,556,5003,610,0252,868,785813,46614,359,251 20192,790,8252,464,6501,547,5002,726,0252,932,824813,46613,275,290 20201,821,8252,344,6501,522,5002,366,0252,993,099813,46611,861,565 2021961,9252,264,5501,512,5002,211,0253,054,638717,58410,722,222 2022951,8502,244,7001,482,5002,060,9503,117,465717,58410,575,049 2023941,8502,184,7001,482,5001,955,9503,181,603717,58410,464,187 2024908,6502,141,1001,487,5001,852,7503,217,085147,1409,754,225 2025756,8001,955,8001,482,4001,580,0003,264,893147,1409,187,033 2026565,0001,865,0001,425,0001,270,0003,333,142-8,458,142 2027550,0001,750,0001,375,0001,035,0003,402,823-8,112,823 2028415,0001,740,0001,375,000875,0003,473,965-7,878,965 2029280,0001,715,0001,205,000560,0002,956,972-6,716,972 2030225,0001,700,0001,185,000290,0002,860,728-6,260,728 2031190,0001,420,0001,155,000190,0002,921,081-5,876,081 2032155,0001,085,000830,00075,0001,788,950-3,933,950 2033155,0001,075,000825,00045,0001,827,830-3,927,830 203485,000190,000695,00025,000368,417-1,363,417 203520,000175,000685,000-376,424-1,256,424 2036-160,000660,000---820,000 2037-160,000645,000---805,000 2038-155,000645,000---800,000 2039-150,000645,000---795,000 2040-30,000415,000---445,000 Total$21,545,800$36,632,004$29,099,626$31,565,570$53,501,229$6,884,243$179,228,471 _______________ (1)$8,136,000isnotsubjecttotheTown’sdebtlimit.$2,719,400hasbeenexcludedfromthelimitsofProposition2½.Theunpaid . balanceofstateschoolconstructiongrantspayableoverthelifeofoutstandingschooldebtisestimatedat$11,350,951Said grantpaymentsareapplicabletobothprincipalandinterestandaresubjecttoannualappropriationbytheStatelegislature. (2)$36,277,004issubjecttoaseparatewaterdebtlimitof10%oftheTown’sequalizedvaluation($784,607,720).$355,000is subjecttotheTown’sdebtlimit. (3)$23,551,914isnotsubjecttotheTown’sdebtlimit. (4)$35,000isnotsubjecttotheTown’sdebtlimit.DoesnotreflectremaininggrantpaymentsfromtheMassachusettsSchool BuildingAuthority(MSBA). (5)DoesnotreflectsubsidyfromtheMCWT,whichisapplicabletobothprincipalandinterest. (6)$6,714,270isoutsidetheTown’sdebtlimit. AuthorizedUnissuedDebtandProspectiveFinancing Currently,theTownhasapproximately$156millionauthorizedunissueddebtforvariousmunicipalpurposes.Onemajor projectisthereactivationoftheBirchRoadWell,whichisapproximately$38million.TheTownanticipatesauthorizinga $48millionschoolproject,forwhichitwillseekMSBAapprovalandfundingwhichisestimatedatapproximately51%. Constructionforsaidprojectisexpectedtocommenceintheyear2017.Permanentfinancingisexpectedatproject completionin2018. 43 OverlappingDebt TheTownisamemberoftheMassachusettsWaterResourcesAuthority(MWRA.),theMassachusettsBay TransportationAuthority(MBTA),MetroWestRegionalTransitAuthority,andtheSouthMiddlesexRegionalVocational TechnicalSchoolDistrict.Thefollowingtablesetsforththeoutstandingbondeddebt,exclusiveoftemporaryloansin anticipationofbondsorcurrentrevenue,ofMiddlesexCounty,theMWRA,theMBTA,MetroWestRegionalTransit Authority,andtheSouthMiddlesexRegionalVocationalTechnicalSchoolDistrictandtheTown'sestimatedgrossshare ofsuchdebtandthefiscalyear2015dollarassessmentforeach. OutstandingFramingham'sFiscal2015Dollar OverlappingEntityDebtEstimatedShare(1)Assessment(2) MassachusettsWaterResourcesAuthority(3) Water$2,111,387,0003.76%$7,645,878 Sewer3,898,585,0002.8010,069,135 MassachusettsBayTransportationAuthority andMetroWestRegionalTransitAuthority(4)(5)5,499,988,0000.31453,299 SouthMiddlesexRegional VocationalTechnicalSchoolDistrict(6)073.168,638,850 _______________ (1)Estimatedsharebasedondebtserviceonly. (2)Estimateddollarassessmentbasedupontotalnetoperatingexpenses,inclusive(whereapplicable)ofdebtservice. (3)SOURCE:MassachusettsWaterResourcesAuthority.DebtasofJune30,2014.TheMassachusettsWaterResourcesAuthority (the“MWRA”)provideswholesaledrinkingwaterservicesinwholeorinpartto48cities,townsandspecialpurpose entitiesandprovideswastewatercollectionandtreatmentservicesto43cities,townsandspecialpurposeentities.Under itsenablinglegislation,asamended,theaggregateprincipalamountofallbondsissuedbytheMWRAforitscorporate purposesmaynotexceed$6.1billionoutstandingatanytime.ItsobligationsaresecuredbyrevenuesoftheMWRA. TheMWRAassessesmembercities,townsandspecialpurposeentities,whichcontinuetoprovidedirectretailwaterand sewerservicestousers.Thecities,townsandotherentitiescollectfeesfromtheuserstopayallorpartofthe assessments;somemunicipalitieslevypropertytaxestopaypartoftheamountsassesseduponthem. S (4)OURCE:MBTA.DebtasofJune30,2014.TheMassachusettsBayTransportationAuthority(the“MBTA”)wascreatedin 1964tofinanceandoperatemasstransportationfacilitieswithinthegreaterBostonmetropolitanarea.Underits enablingact,theMBTAisauthorizedtoissuebondsforcapitalpurposes,otherthanrefundingbonds,andforcertain specifiedpurposestoanoutstandingamount,whichdoesnotexceedtheaggregateprincipalamountof $3,556,300,000.Inaddition,pursuanttocertainoftheCommonwealth’stransportationbondbills,theMBTAis authorizedtoissueadditionalbondsforparticularcapitalprojects.TheMBTAalsoisauthorizedtoissuebondsofthe purposeofrefundingbonds.UndertheMBTA’senablingactdebtservice,aswellasotheroperatingexpensesofthe MBTA,aretobefinancedbyadedicatedrevenuestreamconsistingoftheamountsassessedonthecitiesandtownsof theMBTAandadedicatedportionofthestatewidesalestax.Theamountassessedtoeachcityandtownisbasedonits weightedpercentageofthetotalpopulationoftheauthorityasprovidedintheenablingact.Theaggregateamountof suchassessmentsisgenerallynotpermittedtoincreasebymorethan2.5percentperyear. (5)SOURCE:MetroWestRegionalTransitAuthority.EstablishedJuly1,2007.AportionoftheTown’sassessmenttotheMBTA, directedthroughthestate’scherrysheets,willberedirectedfromtheMBTAtotheMWRTA. (6)SOURCE:SouthMiddlesexRegionalVocationalTechnicalSchoolDistrict.DebtasofJune30,2014.Townsmayorganize regionalschooldistrictstocarryoutgeneralorspecializededucationalfunctions.Theoperatingexpensesanddebt serviceofregionalschooldistrictsareapportionedamongthemembermunicipalitiesinaccordancewiththe agreementsestablishingthedistrict.TheDistricthasnotemporarydebtoutstandingandnoauthorizedunissued debt. 44 ContractualObligations Municipalcontractsaregenerallylimitedtocurrentlyavailableappropriations.Acityortowngenerallyhasauthoritytoenter intocontractsfortheexerciseofanyofitscorporatepowersforanyperiodoftimedeemedtoserveitsbestinterests,but generallyonlywhenfundsareavailableforthefirstfiscalyear;obligationsforsucceedingfiscalyearsgenerallyareexpressly subjecttoavailabilityandappropriationoffunds.Municipalitieshavespecificauthorityinrelativelyfewcasestoenterlong-term contractualobligationsthatarenotsubjecttoannualappropriation,includingcontractsforrefusedisposalandsewage treatmentanddisposal.Municipalitiesmayalsoenterintolong-termcontractsinaidofhousingandrenewalprojects.There maybeimpliedauthoritytomakeotherlong-termcontractsrequiredtocarryoutauthorizedmunicipalfunctions,suchas contractstopurchasewaterfromprivatewatercompanies. Municipalcontractsrelatingtosolidwastedisposalfacilitiesmaycontainprovisionsrequiringthedeliveryofminimumamounts ofwasteandpaymentsbasedthereonandrequiringpaymentsincertaincircumstanceswithoutregardtotheoperational statusofthefacilities. TheTownhasthefollowinglong-termcontractsofasubstantialnature: Fiscal2013Fiscal2014Fiscal2015 PurposeVendorExpirationActualCostActualCostBudgetedCost SolidWasteDisposalWasteManagementJune30,2017$691,986$831,457$1,042,500 RecyclablesCollection& ProcessingServicesE.L.Harvey&Sons,Inc.June30,2016532,300(1)537,653549,086 MunicipalandCondominium ContainerizedTrashandCasellaWasteManagement CardboardCollectionofMassachusetts,Inc.June30,2015199,860244,892252,473 MunicipalandCondominium ContainerizedRecycling CollectionAlliedWasteServicesofMA,LLCJune30,201517,89323,67725,000 _______________ (1)Unitpricecontract. Municipalelectricdepartmentshavestatutorypowertoenterintolong-termcontractsforjointownershipandoperationof generatingandtransmissionfacilitiesandforthepurchaseorsaleofcapacity,includingcontractsrequiringpaymentswithout regardtotheoperationalstatusofthefacilities. PursuanttotheHomeRuleAmendmenttotheMassachusettsConstitution,(see“CONSTITUTIONALSTATUSANDFORM OFGOVERNMENT”above),citiesandtownsmayalsobeempoweredtomakeothercontractsandleases. RETIREMENTPLAN TheMassachusettsGeneralLawsprovidefortheestablishmentofcontributoryretirementsystemsforstateemployees,for teachersandforcounty,cityandtownemployeesotherthanteachers.Teachersareassignedtoaseparatestatewide teachers’systemandnottothecityandtownsystems.Forallemployeesotherthanteachers,thislawissubjectto acceptanceineachcityandtown.Substantiallyallemployeesofanacceptingcityortownarecovered.Ifatownhasa populationoflessthan10,000whenitacceptsthestatute,itsnon-teacheremployeesparticipatethroughthecountysystem anditsshareofthecountycostisproportionatetotheaggregateannualrateofregularcompensationofitscovered employees.Inadditiontothecontributorysystems,citiesandtownsprovidenon-contributorypensionstoalimitednumberof employees,primarilypersonswhoenteredservicepriortoJuly1,1937andtheirdependents.ThePublicEmployee RetirementAdministrationCommission(“PERAC”)providesoversightandguidanceforandregulatesallstateandlocal retirementsystems. Theobligationsofacityortown,whetherdirectorthroughacountysystem,arecontractuallegalobligationsandarerequired tobeincludedintheannualtaxlevy.Ifacityortown,orthecountysystemofwhichitisamember,hasnotestablisheda retirementsystemfundingscheduleasdescribedbelow,thecityortownisrequiredtoprovideforthepaymentoftheportion ofitscurrentpensionobligationswhichisnototherwisecoveredbyemployeecontributionsandinvestmentincome.“Excess earnings,”orearningsonindividualemployees’retirementaccountsinexcessofapredeterminedrate,arerequiredtobeset asideinapensionreservefundforfuture,notcurrent,pensionliabilities.Citiesandtownsmayvoluntarilyappropriatetotheir system’spensionreservefundinanygivenyearuptofivepercentoftheprecedingyear’staxlevy.Theaggregateamountin thefundmaynotexceedtenpercentoftheequalizedvaluationofthecityortown. 45 Ifacityortown,oreachmembercityandtownofacountyretirementsystem,hasacceptedtheapplicablelaw,itisrequiredto annuallyappropriateanamountsufficienttopaynotonlyitscurrentpensionobligations,butalsoaportionofitsfuturepension liability.Theportionofeachsuchannualpaymentallocabletofuturepensionobligationsisrequiredtobedepositedinthe pensionreservefund.Theamountoftheannualcityortownappropriationforeachsuchsystemisprescribedbyaretirement systemfundingschedulewhichisperiodicallyreviewedandapprovedbyPERAC.Eachsystem’sretirementfundingschedule isdesignedtoreducetheunfundedactuarialpensionliabilityofthesystemtozerobynotlaterthanJune30,2030,with annualincreasesinthescheduledpaymentamountsofnotmorethan4.5percent.Thefundingschedulemustprovidethat paymentinanyyearofthescheduleisnotlessthan95percentoftheamountappropriatedinthepreviousfiscalyear.City, townandcountysystemswhichhaveanapprovedretirementfundingschedulereceiveannualpensionfundinggrantsfrom theCommonwealthforthefirst16yearsofsuchfundingschedule.Pursuanttorecentlegislation,asystem(otherthanthe stateemployees’retirementsystemandtheteachers’retirementsystem)whichconductsanactuarialvaluationasof January1,2009,orlater,mayestablisharevisedschedulewhichreducestheunfundedactuarialliabilitytozerobynot laterthanJune30,2040,subjecttocertainconditions.Ifthescheduleissoextendedundersuchprovisionsandalater updatedvaluationallowsforthedevelopmentofarevisedschedulewithreducedpayments,therevisedscheduleshallbe adjustedtoprovidethattheappropriationforeachyearshallnotbelessthanthatforsuchyearunderthepriorschedule, thusprovidingforashorterscheduleratherthanreducedpayments. City,townandcountysystemsmaychoosetoparticipateinthePensionReservesInvestmentTrustFund(the“PRITFund”), whichreceivesadditionalstatefundstooffsetfuturepensioncostsofparticipatingstateandlocalsystems.Ifalocalsystem participatesinthePRITFund,itmusttransferownershipandcontrolofallassetsofitssystemtothePensionReserves InvestmentManagementBoard,whichmanagestheinvestmentandreinvestmentofthePRITFund.Citiesandtownswith systemsparticipatinginthePRITFundcontinuetobeobligatedtofundtheirpensionobligationsinthemannerdescribed above.Theadditionalstateappropriationstooffsetfuturepensionliabilitiesofstateandlocalsystemsparticipatinginthe PRITFundarerequiredtototalatleast1.3percentofstatepayroll.Suchadditionalstateappropriationsaredepositedinthe PRITFundandsharedbyallparticipatingsystemsinproportiontotheirinterestsintheassetsofthePRITFundasofJuly1 foreachfiscalyear. Cost-of-livingincreasesforeachlocalretirementsystemmaybegrantedandfundedonlybythelocalsystem,andonlyifit hasestablishedafundingschedule.Thosestatutoryprovisionsaresubjecttoacceptancebythelocalretirementboardand approvalbythelocallegislativebody,whichacceptancemaynotberevoked. PensionbenefitsforsubstantiallyallTownemployees,exceptschoolteachers,areprovidedbytheTownRetirement System,amultipleemployerpublicemployeeretirementsystemthatactsastheinvestmentandadministrativeagentfor theTown.Schoolteachers’pensionsarecoveredbytheCommonwealthofMassachusettsTeachers'Retirement SystemtowhichtheTowndoesnotcontribute.Participationismandatoryforallfull-timenonteachingemployeeswhose employmentcommencespriortoage65.Thissystemispartiallyfundedbyemployeecontributions.Certaintown employeesarecoveredbytheTown'snon-contributorypensionplan. TheTownmakesannualcontributionstothepensionplanequaltotheamountsetforthinthefundingplanapprovedby PERACinfiscalyear1991.TheannualtrendincontributionsoftheTowntotheretirementsystemisasfollows: YearEndingContributoryNon-Contributory June30,2015(budgeted)$11,806,955$38,292 June30,201411,298,40643,356 June30,201310,729,96849,695 June30,201210,270,19567,900 June30,201110,127,17771,805 TheTown’scurrentfundingscheduleamortizestheunfundedactuarialliabilitytozerobyJune30,2030asshownonthe followingpage.AsofJanuary1,2014,theunfundedactuarialaccruedliability(UAAL)oftheTown’spensionobligation was$110,444,086assuminganactuarialaccruedliabilityof$339,182,790,anactuarialvalueofassetsof$228,738,704 andan7.75%investmentrateofreturnasdeterminedbyastudydonefortheFraminghamRetirementBoardbyPERAC. 46 CurrentFundingSchedule ______________ Source:January1,2014ActuarialValuationReportoftheFraminghamContributoryRetirementSystem,PERAC. ForadditionalinformationontheContributoryRetirementSystem,seeAppendixA. OtherPost-EmploymentBenefits Inadditiontopensionbenefits,citiesandtownsmayprovideretiredemployeeswithhealthcareandlifeinsurance benefits.Theportionofthecostofsuchbenefitspaidbycitiesortownsisgenerallyprovidedonapay-as-you-gobasis. TherecenttrendintheTown’sannualcontributionsforitsotherpost-employmentbenefitsisasfollows: FiscalYearEndedPay-As-You-Go June30,Cost 2015(budgeted)$11,985,000 201411,524,321 201311,396,090 20129,421,703 201110,482,431 201013,038,426 TheGovernmentalAccountingStandardsBoard(“GASB”)recentlypromulgateditsStatementNos.43and45,whichwillfor thefirsttimerequirepublicsectorentitiestoreportthefuturecostsofthesenon-pension,post-employmentbenefitsintheir financialstatements.Thesenewaccountingstandardsdonotrequirepre-fundingthepaymentofthesecostsastheliability forsuchcostsaccrues,butthebasisappliedbythestandardsformeasurementofcostsandliabilitiesforthesebenefitsis conservativeiftheycontinuetobefundedonapay-as-you-gobasisandwillresultinlargeryearlycostandliabilityaccruals thanifthecostofsuchbenefitswerepre-fundedinatrustfundinthesamemannerastraditionalpensionbenefits.Citiesand townsthatchoosetoself-insurealloraportionofthecostofthehealthcarebenefitstheyprovidetoemployeesandretirees mayestablishatrustfundforthepurposeofpayingclaims.Inaddition,citiesandtownsmayestablishatrustfundforthe purposeofpre-fundingotherpost-employmentbenefitsliabilityinthesamemannerastraditionalpensionbenefits. 47 TheTownwasrequiredtoimplementthenewGASBreportingrequirementsforotherpost-employmentbenefitsbeginningin fiscalyear2008.TheTownhiredDanzinger&MarkhoffLLCtoperformanactuarialvaluationofitspost-employmentbenefit liability.TheresultsoftheactuarialvaluationindicatethatasofJuly1,2014atotalunfundedactuarialaccruedliability(UAAL) of$286,128,910assuminga4%discountrateona‘pay-as-you-go’basis,oralternatively,$162,163,855assumingan8% discountrateassumingtheobligationisfullyprefunded.Theannualrequiredcontribution(ARC)forfiscalyear2015tofund thisliabilityis$21,976,575assumingthe‘pay-as-you-go’interestrateof4%,and$14,496,353assumingthefullprefunding interestrateof8%.InApril2012theTownvotedtoestablishatrustfundforotherpost-employmentbenefits.Thebalanceas ofJune30,2014inthefundis$2,516,635andthebudgetedcontributionforfiscalyear2015is$913,678. EffectiveJuly1,2014,theTowntransferredtotheGroupInsuranceCommission(GIC),andprojectssavingsof approximately$17millioninhealthcostsoverthenext3years. EMPLOYEERELATIONS TheTownemploysapproximately2,389full-timeworkers,ofwhom1,673areemployedbytheschooldepartment,157by thepublicworksdepartment,156bythefiredepartment,156bythepolicedepartmentandthebalancebyvariousother departmentsoftheTown.Townemployees(otherthanmanagerialandconfidentialemployees)areentitledtojoinunions andtobargaincollectivelyonquestionsofwages,hoursandothertermsandconditionsofemployment. ThefollowingtablesetsforththestatusoftheTown'svariouslaborcontracts. #ofContract UnionMembersExpirationDate FirefightersLocal1652...................................................................1376-30-14(1) FraminghamPoliceOfficersUnion................................................996-30-15 FraminghamSuperiorOfficersAssn..............................................266-30-15 PublicEmployeesLocal1156–Parks&Recreation.....................136-30-16 PublicEmployeesLocal1156–DepartmentofPublicWorks.......796-30-16 Parks1116&RecreationSupervisors...........................................86-30-15 DepartmentofPublicWorks1116.................................................346-30-15 FireDeputyChiefs.........................................................................56-30-17 SEIULocal888FraminghamLibraryStaffAssoc..........................536-30-16 SchoolPoliceAssociation..............................................................156-30-16 Teacher’sAssociation....................................................................8608-31-15 TitleOneTeachersofFramingham...............................................228-31-15 AdministratorsAssociation.............................................................436-30-15 Custodians.....................................................................................716-30-15 AssistantTeacher’s&AidesAssoc...............................................2448-31-15 FoodServices................................................................................758-31-15 Secretaries’Association.................................................................676-30-15 SEIULocal888PoliceDispatchers...............................................86-30-16 SEIULocal888ProfessionalAdministrators................................286-30-17 ___________________________________ (1)Expiredcontractiscurrentlyinarbitration. LITIGATION AtpresentthereareseveralcasespendinginvariousstateandfederalcourtsthroughouttheCommonwealthwherethe TownofFraminghamisadefendant.IntheopinionoftheTownCounsel,noneofthependinglitigationislikelytoresult, eitherindividuallyorintheaggregate,infinaljudgmentsagainsttheTownthatwouldmateriallyaffectitsfinancialposition. ___________________________ TOWNOFFRAMINGHAM,MASSACHUSETTS /s/CarolynLyons,Treasurer/Collector June10,2015 48 TOWNOF FRAMINGHAM,MASSACHUSETTS AnnualFinancialStatements FortheYearEndedJune30,2014 TABLEOFCONTENTS PAGE INDEPENDENTAUDITORS’REPORT 1 MANAGEMENT’SDISCUSSIONANDANALYSIS 4 BASICFINANCIALSTATEMENTS: Government-wideFinancialStatements: StatementofNetPosition16 StatementofActivities17 FundFinancialStatements: GovernmentalFunds: BalanceSheet18 ReconciliationofTotalGovernmentalFundBalancesto NetPositionofGovernmentalActivitiesintheStatement ofNetPosition19 StatementofRevenues,Expenditures,andChanges inFundBalances20 ReconciliationoftheStatementofRevenues,Expenditures, andChangesinFundBalancesofGovernmentalFundsto theStatementofActivities21 StatementofRevenuesandOtherSources,andExpenditures andOtherUses-BudgetandActual-GeneralFund22 ProprietaryFunds: StatementofNetPosition23 StatementofRevenues,Expenses,andChangesinFund NetPosition24 StatementofCashFlows25 FiduciaryFunds: StatementofFiduciaryNetPosition26 StatementofChangesinFiduciaryNetPosition27 NotestoFinancialStatements 28 REQUIREDSUPPLEMENTARYINFORMATION: ScheduleofFundingProgress62 ('!6<J!2C>A8C;!/HF@C<FF 0<CG<E!1E&!7H@G<!('+ K .C;DI<E$!5.!'(,(' "-+,#+)-%'''* INDEPENDENTAUDITORS’REPORT B<A8CFDC?<8G?&9DB #''*/*-,%+!$))*&(." TotheBoardofSelectmen 68F?H8$!64 TownofFramingham,Massachusetts 58C9?<FG<E$!64 3E<<C=@<A;$!5. 2AAFJDEG?$!52 ReportontheFinancialStatements Wehaveauditedtheaccompanyingfinancialstatementsofthegovernmentalactivi- ties,thebusiness-typeactivities,eachmajorfund,andtheaggregateremainingfund informationoftheTownofFramingham,Massachusetts,asofandfortheyear endedJune30,2014(exceptfortheFraminghamContributoryRetirementSystem whichisasofandfortheyearendedDecember31,2013),andtherelatednotesto thefinancialstatements,whichcollectivelycomprisetheTown’sbasicfinancial statementsaslistedintheTableofContents. Management’sResponsibilityfortheFinancialStatements TheTown’smanagementisresponsibleforthepreparationandfairpresentation ofthesefinancialstatementsinaccordancewithaccountingprinciplesgenerally acceptedintheUnitedStatesofAmerica;thisincludesthedesign,implementation, andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentation offinancialstatementsthatarefreefrommaterialmisstatement,whetherdueto fraudorerror. Auditor’sResponsibility Ourresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonour audit.Weconductedourauditinaccordancewithauditingstandardsgenerally acceptedintheUnitedStatesofAmericaandthestandardsapplicabletofinancial auditscontainedinGovernmentAuditingStandards,issuedbytheComptroller GeneraloftheUnitedStates.Thosestandardsrequirethatweplanandperformthe audittoobtainreasonableassuranceaboutwhetherthefinancialstatementsare freefrommaterialmisstatement. Anauditinvolvesperformingprocedurestoobtainauditevidenceabouttheamounts anddisclosuresinthefinancialstatements.Theproceduresselecteddependonthe auditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementof thefinancialstatements,whetherduetofraudorerror.Inmakingthoseriskassess- ments,theauditorconsidersinternalcontrolrelevanttotheentity’spreparationand fairpresentationofthefinancialstatementsinordertodesignauditproceduresthat areappropriateinthecircumstances,butnotforthepurposeofexpressinganopinion ontheeffectivenessoftheentity’sinternalcontrol.Accordingly,weexpressnosuch opinion.Anauditalsoincludesevaluatingtheappropriatenessofaccountingpolicies usedandthereasonablenessofsignificantaccountingestimatesmadebymanage- ment,aswellasevaluatingtheoverallpresentationofthefinancialstatements. Webelievethattheauditevidencewehaveobtainedissufficientandappropriateto provideabasisforourauditopinions. Opinions Inouropinion,thefinancialstatementsreferredtoabovepresentfairly,inallmaterial respects,therespectivefinancialpositionofthegovernmentalactivities,thebusiness- typeactivities,eachmajorfund,andtheaggregateremainingfundinformationofthe TownofFramingham,asofJune30,2014(exceptfortheFraminghamContributory RetirementSystemwhichisasofandfortheyearendedDecember31,2013),and therespectivechangesinfinancialpositionand,whereapplicable,cashflowsthereof andtherespectivebudgetarycomparisonforthegeneralfundfortheyearthenended inaccordancewithaccountingprinciplesgenerallyacceptedintheUnitedStatesof America. OtherMatters RequiredSupplementaryInformation AccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequire thatManagement’sDiscussionandAnalysisandScheduleofFundingProgressbe presentedtosupplementthebasicfinancialstatements.Suchinformation,although notapartofthebasicfinancialstatements,isrequiredbytheGovernmental AccountingStandardsBoard,whoconsidersittobeanessentialpartoffinancial reportingforplacingthebasicfinancialstatementsinanappropriateoperational, economic,orhistoricalcontext.Wehaveappliedcertainlimitedprocedurestothe requiredsupplementaryinformationinaccordancewithauditingstandardsgenerally acceptedintheUnitedStatesofAmerica,whichconsistedofinquiriesofmanage- mentaboutthemethodsofpreparingtheinformationandcomparingtheinformation forconsistencywithmanagement’sresponsestoourinquiries,thebasicfinancial statements,andotherknowledgeweobtainedduringourauditofthebasicfinancial statements.Wedonotexpressanopinionorprovideanyassuranceontheinfor- mationbecausethelimitedproceduresdonotprovideuswithevidencesufficientto expressanopinionorprovideanyassurance. 2 OtherReportingRequiredby GovernmentAuditingStandards InaccordancewithGovernmentAuditingStandards,wehavealsoissuedourreport datedMarch25,2015onourconsiderationoftheTown'sinternalcontrolover financialreportingandonourtestsofitscompliancewithcertainprovisionsoflaws, regulations,contracts,andgrantagreementsandothermatters.Thepurposeofthat reportistodescribethescopeofourtestingofinternalcontroloverfinancialreport- ingandcomplianceandtheresultsofthattesting,andnottoprovideanopinionon internalcontroloverfinancialreportingoroncompliance.Thatreportisanintegral partofanauditperformedinaccordancewithGovernmentAuditingStandardsin consideringtheTown’sinternalcontroloverfinancialreportingandcompliance. March25,2015 3 MANAGEMENT’SDISCUSSIONANDANALYSIS AsmanagementoftheTownofFramingham,weofferreadersthisnarrativeover- viewandanalysisofthefinancialactivitiesoftheTownofFraminghamforthefiscal yearendedJune30,2014.Unlessotherwisenoted,allamountsreportedinthis analysisareexpressedinthousands. A.OVERVIEWOFTHEFINANCIALSTATEMENTS Thisdiscussionandanalysisisintendedtoserveasanintroductiontothebasic financialstatements.Thebasicfinancialstatementsarecomprisedofthreecom- ponents:(1)government-widefinancialstatements,(2)fundfinancialstatements, and(3)notestofinancialstatements.Thisreportalsocontainsothersupple- mentaryinformationinadditiontothebasicfinancialstatementsthemselves. Government-widefinancialstatements. Thegovernment-widefinancialstate- mentsaredesignedtoprovidereaderswithabroadoverviewofourfinancesin amannersimilartoaprivate-sectorbusiness. TheStatementofNetPositionpresentsinformationonallassetsandliabilities, withthedifferencebetweenthetworeportedasnetposition.Overtime,increases ordecreasesinnetpositionmayserveasausefulindicatorofwhetherthefinan- cialpositionisimprovingordeteriorating. TheStatementofActivitiespresentsinformationshowinghowthegovernment’s netpositionchangedduringthemostrecentfiscalyear.Allchangesinnetposi- tionarereportedassoonastheunderlyingeventgivingrisetothechange occurs,regardlessofthetimingofrelatedcashflows.Thus,revenuesand expensesarereportedinthisstatementforsomeitemsthatwillonlyresultin cashflowsinfuturefiscalperiods(e.g.,uncollectedtaxesandearnedbutunused vacationleave). Bothofthegovernment-widefinancialstatementsdistinguishfunctionsthatare principallysupportedbytaxesandintergovernmentalrevenues(governmental activities)fromotherfunctionsthatareintendedtorecoverallorasignificant portionoftheircoststhroughuserfeesandcharges(business-typeactivities). Thegovernmentalactivitiesincludegeneralgovernment,publicsafety,educa- tion,publicworks,healthandhumanservices,andcultureandrecreation.The business-typeactivitiesincludewaterandseweractivities. Fundfinancialstatements. Afundisagroupingofrelatedaccountsthatisused tomaintaincontroloverresourcesthathavebeensegregatedforspecificactivi- tiesorobjectives.Fundaccountingisusedtoensureanddemonstratecompli- ancewithfinance-relatedlegalrequirements.Allofthefundscanbedividedinto threecategories:governmentalfunds,proprietaryfundsandfiduciaryfunds. 4 Governmentalfunds. Governmentalfundsareusedtoaccountforessentially thesamefunctionsreportedasgovernmentalactivitiesinthegovernment-wide financialstatements.However,unlikethegovernment-widefinancialstatements, governmentalfundfinancialstatementsfocusonnear-terminflowsandoutflows ofspendableresources,aswellasonbalancesofspendableresourcesavailable attheendofthefiscalyear.Suchinformationmaybeusefulinevaluatingagov- ernment’snear-termfinancingrequirements. Becausethefocusofgovernmentalfundsisnarrowerthanthatofthegovernment- widefinancialstatements,itisusefultocomparetheinformationpresentedfor governmentalfundswithsimilarinformationpresentedforgovernmentalactivities inthegovernment-widefinancialstatements.Bydoingso,readersmaybetter understandthelong-termimpactofthegovernment’snear-termfinancingdeci- sions.Boththegovernmentalfundbalancesheetandthegovernmentalfund statementofrevenues,expendituresandchangesinfundbalancesprovidea reconciliationtofacilitatethiscomparisonbetweengovernmentalfundsandgov- ernmentalactivities. Anannualappropriatedbudgetisadoptedforthegeneralfund.Abudgetary comparisonstatementhasbeenprovidedforthegeneralfundtodemonstrate compliancewiththisbudget. Proprietaryfunds. Proprietaryfundsaremaintainedasfollows: Enterprisefundsareusedtoreportthesamefunctionspresentedasbusiness- typeactivitiesinthegovernment-widefinancialstatements.Specifically,enter- prisefundsareusedtoaccountforwaterandseweroperations. Internalservicefundsareanaccountingdeviceusedtoaccumulateandallocate costsinternallyamongvariousfunctions.Specifically,internalservicefundsare usedtoaccountforself-insuredemployeehealthprograms.Becausetheseser- vicespredominantlybenefitgovernmentalratherthanbusiness-typefunctions, theyhavebeenincludedwithingovernmentalactivitiesinthegovernment-wide financialstatements.TheTownconvertedfromaself-insuranceprogramtoa premium-basedprogramthroughGICinsuranceforfiscalyear2015. Proprietaryfundsprovidethesametypeofinformationasthebusiness-typeactiv- itiesreportedinthegovernment-widefinancialstatements,onlyinmoredetail. Theproprietaryfundfinancialstatementsprovideseparateinformationforthe waterandseweroperations,bothofwhichareconsideredtobemajorfunds. Fiduciaryfunds. Fiduciaryfundsareusedtoaccountforresourcesheldforthe benefitofpartiesoutsidethegovernment.Fiduciaryfundsarenotreflectedinthe government-widefinancialstatementsbecausetheresourcesofthosefundsare notavailabletosupporttheTown’sownprograms.Theaccountingusedforfidu- ciaryfundsismuchlikethatusedforproprietaryfunds. 5 Notestofinancialstatements. Thenotesprovideadditionalinformationthatis essentialtoafullunderstandingofthedataprovidedinthegovernment-wideand fundfinancialstatements. Otherinformation. Inadditiontothebasicfinancialstatementsandaccom- panyingnotes,thisreportalsopresentscertainrequiredsupplementaryinfor- mationwhichisrequiredtobedisclosedbyaccountingprinciplesgenerally acceptedintheUnitedStatesofAmerica. B.FINANCIALHIGHLIGHTS Asofthecloseofthecurrentfiscalyear,thetotalofassetsexceededliabili- " tiesby$174,776(i.e.,netposition),achangeof$(9,668)incomparisontothe prioryear. Asofthecloseofthecurrentfiscalyear,governmentalfundsreportedcom- " binedendingfundbalancesof$38,182,achangeof$9,072incomparisonto theprioryear. Attheendofthecurrentfiscalyear,unassignedfundbalanceforthegeneral " fundwas$24,264,achangeof$3,226incomparisontotheprioryear,while committedfundbalancewas$2,179,achangeof$1,762incomparisontothe prioryear. Totalbondspayableatthecloseofthecurrentfiscalyearwas$167,274,a " changeof$7,347incomparisontotheprioryear.TheTownalsohad$48,826 inbondanticipationnotesoutstandingatyear-end. C.GOVERNMENT-WIDEFINANCIALANALYSIS Thefollowingisasummaryofcondensedgovernment-widefinancialdataforthe currentandpriorfiscalyears(inthousands). 6 (continued) 7 (continued) Expenses: Generalgovernment12,10911,254--12,10911,254 Publicsafety31,95732,155--31,95732,155 Education161,376155,281--161,376155,281 Publicworks16,23915,037--16,23915,037 Humanservices1,7911,712--1,7911,712 Cultureandrecreation7,8507,213--7,8507,213 Employeebenefits62,81858,360--62,81858,360 Interest2,6782,237--2,6782,237 Intergovernmental5,4464,984--5,4464,984 Water--16,30115,59816,30115,598 Sewer--24,09521,81824,09521,818 Totalexpenses302,264288,23340,39637,416342,660325,649 Changeinnetposition beforetransfers(10,619)(5,575)951(1,286)(9,668)(6,861) Transfersin(out)2,7032,442(2,703)(2,442)-- Changeinnetposition(7,916)(3,133)(1,752)(3,728)(9,668)(6,861) Netposition-beginningofyear108,545111,67875,89979,627184,444191,305 Netposition-endofyear$100,629$108,545$74,147$75,899$174,776$184,444 Asnotedearlier,netpositionmayserveovertimeasausefulindicatorofagovern- ment’sfinancialposition.Atthecloseofthemostrecentfiscalyear,totalnetposi- tionwas$174,776,achangeof$(9,668)fromtheprioryear. Thelargestportionofnetposition,$192,323reflectsourinvestmentincapital assets(e.g.,land,constructioninprogress,buildingsandimprovements,vehicles, machinery,equipment,andinfrastructure);lessanyrelateddebtusedtoacquire thoseassetsthatarestilloutstanding.Thesecapitalassetsareusedtoprovide servicestocitizens;consequently,theseassetsarenotavailableforfuturespend- ing.Althoughtheinvestmentincapitalassetsisreportednetofrelateddebt,it shouldbenotedthattheresourcesneededtorepaythisdebtmustbeprovided fromothersources,sincethecapitalassetsthemselvescannotbeusedtoliqui- datetheseliabilities. Anadditionalportionofnetposition,$10,472representsresourcesthataresub- jecttoexternalrestrictionsonhowtheymaybeused.Theremainingbalance ofunrestrictednetposition,$(28,019)maybeusedtomeetthegovernment’s ongoingobligationstocitizensandcreditors. 8 Governmentalactivities. Governmentalactivitiesfortheyearresultedina changeinnetpositionof$(7,917).Keyelementsofthischangeareasfollows: Excessofrevenuesover(under)expenditures: Generalfund$2,541 Internalservicefund(1,421) Generalfundtransfersfromenterprisefunds,net2,703 Subtotal3,823 IncreaseinnetOPEBobligation(10,381) Other(1,359) Total$(7,917) Business-typeactivities. Business-typeactivitiesfortheyearresultedina changeinnetpositionof$(1,752).Keyelementsofthischangeareasfollows: Wateroperations$840 Seweroperations(2,592) Total$(1,752) Thereductioninthenetpositionprimarilyresultsfromcurrentyeardepreciation (notfundedintherates)exceedinglong-termdebtprincipalpayments(fundedin therates). D.FINANCIALANALYSISOFTHEGOVERNMENT’SFUNDS Asnotedearlier,fundaccountingisusedtoensureanddemonstratecompliance withfinance-relatedlegalrequirements. Governmentalfunds. Thefocusofgovernmentalfundsistoprovideinformation onnear-terminflows,outflowsandbalancesofspendableresources. Suchinformationisusefulinassessingfinancingrequirements.Inparticular, unassignedfundbalancemayserveasausefulmeasureofagovernment’snet resourcesavailableforspendingattheendofthefiscalyear. Asoftheendofthecurrentfiscalyear,governmentalfundsreportedcombined endingfundbalancesof$38,182,achangeof$9,072incomparisontotheprior year. 9 TheTownimplementedGovernmentalAccountingStandardsBoardStatement #54FundBalanceReportingandGovernmentalFundTypeDefinitions.Ingen- eral,amountspreviouslyreportedasundesignatedfundbalance,arenow reportedasunassignedfundbalance.Fulldefinitionsofallfundbalanceclassi- ficationscanbefoundinthenotestothefinancialstatements.Additionally, amountspreviouslyreportedinstabilizationandconservationfunds,arenow requiredtobepresentedascommittedfundbalanceinthegeneralfund. Thegeneralfundisthechiefoperatingfund.Attheendofthecurrentfiscalyear, unassignedfundbalanceofthegeneralfundwas$24,264(including$12,734of generalstabilizationfunds),whiletotalfundbalancewas$32,094.Asameasure ofthegeneralfund’sliquidity,itmaybeusefultocomparebothunassignedfund balanceandtotalfundbalancetototalgeneralfundexpenditures.Refertothe tablebelow. %of TotalGeneral GeneralFund6/30/146/30/13ChangeFundExpenditures Unassignedfundbalance$24,264$21,038$3,2269.6% Totalfundbalance32,09425,9716,12312.7% Thetotalfundbalanceofthegeneralfundchangedby$6,123duringthecurrent fiscalyear.Keyfactorsinthischangeareasfollows: GeneralFundComponents Open GeneralSpaceGeneral GeneralFundHighlightsOperatingStabilizationStabilizationConservationFund Useofotherfundingsources,net oftransferstostabilization$(3,419)$590$-$-$(2,829) Revenuesinexcessofbudget3,005---3,005 Expenditureslessthanbudget3,619---3,619 Raisingofprioryearsnowandicedeficit374---374 Taxcollectionsmorethanlevy1,073---1,073 Expendituresofprioryearencumbrances inexcessofcurrentyearencumbrances(212)---(212) Other6823743161,093 Total$5,122$964$31$6$6,123 IncludedinthetotalgeneralfundbalancearetheTown’sstabilizationand conservationaccountswiththefollowingbalances: 6/30/146/30/13Change Generalstabilization$12,734$11,770$964 Openspacestabilization38435331 Conservation70646 Total$13,188$12,187$1,001 10 Proprietaryfunds. Proprietaryfundsprovidethesametypeofinformationfound inthebusiness-typeactivitiesreportedinthegovernment-widefinancialstate- ments,butinmoredetail. Unrestrictednetpositionoftheenterprisefundsattheendoftheyearamounted to$15,162,adecreaseof$(1,556)fromtheprioryear,mainlyasaresultofcur- rentyeardepreciationexpenseinexcessofpaydownsonbonds.Otherfactors concerningthefinancesofproprietaryfundshavealreadybeenaddressedinthe entity-widediscussionofbusiness-typeactivities. E.GENERALFUNDBUDGETARYHIGHLIGHTS Differencesbetweentheoriginalbudgetandthefinalamendedbudgetresulted inanoverallchangeinappropriationsof$2,519,duetoachangeingeneralgov- ernmentof$(4)publicsafetyof$(101),educationof$229,publicworksof $1,092,humanservicesof$23,cultureandrecreationof$133,employeebene- fitsof$(498),debtserviceof$(4),andtransfersoutof$1,649.Theadditional appropriationswerefundedbythetaxlevyandtransfersfromotherfunds. Revenuesinexcessofbudgetmainlyconsistofbondpremiums,andexcise revenues. F.CAPITALASSETANDDEBTADMINISTRATION Capitalassets. Totalinvestmentincapitalassetsforgovernmentalandbusiness- typeactivitiesatyear-end,amountedto$391,729(netofaccumulateddeprecia- tion),achangeof$8,285fromtheprioryear.Thisinvestmentincapitalassets includesland,constructioninprogress,buildingsandimprovements,vehicles, machinery,equipment,andinfrastructure. Thefollowingisasummaryofcapitalassetsforthecurrentyearandpriorfiscal year: CAPITALASSETS (netofdepreciation) June30,2014and2013 GovernmentalBusiness-Type ActivitiesActivitiesTotal 201420132014201320142013 Land$19,329$19,329$1,108$1,108$20,437$20,437 Buildingsandimprovements121,835123,80628,05824,429149,893148,235 Vehicles,machinery, andequipment15,40614,5063,6153,84619,02118,352 Infrastructure36,61932,825153,737151,427190,356184,252 Constructioninprogress1,15549910,86711,66912,02212,168 Total$194,344$190,965$197,385$192,479$391,729$383,444 11 Significantcapitalassetactivityforfiscalyear2014included: SewerImprovementsatConcordandSchoolStreetswereappropriatedfor " $5,557andwassubstantiallycompletedattheendofthefiscalyearhaving incurred$5,511ofexpenditures.Thedesignforwastewaterpumpingstations projects,appropriatedfor$8,009andstartedinthefallof2007,hasexpended $6,740. Atthe2008AnnualTownMeeting,theTownauthorizedover$21,000in " watercapitalprojectsand$9,000insewercapitalprojects.$2107hasbeen expendedonGroveStreetwaterpumpstationappropriatedfor$2,932.In addition,$2,183and$2,296hasbeenexpendedontheProspectStreetarea waterandsewermainreplacementprojects,originallyappropriatedfor$3,000 and$2,783respectfully. Atthe2009AnnualTownMeeting,$40,337wasanappropriatedtoconstruct " theBirchRoadwatertreatmentcenter.Theprojectproposestore-activatethe BirchRoadwellswhicharelocatedinthenortheastcornerofFramingham. TheprojectwillprovidetheTownwithanindependentanddependablesource ofdrinkingwater.TheTownhasbeenworkingwiththeUnitedStatesGeolog- icalSurvey(USGS)torefineasophisticatedgroundwatermodel.TheTown hadpreviouslyappropriated$5,530.Intotal,$7,312hasbeenexpendedon studiesanddesignonthisproject. TocomplywiththeAdministrativeConsentOrderissuedbytheDepartmentof " EnvironmentalProtectionandSettlementAgreementwiththeMassachusetts WaterResourcesAuthority,$40,407wasvotedtoreconfigurethesewer systeminEastFramingham.Thisprojecthasbeenapprovedfor$38,066in loansfromCleanWaterStateRevolvingFundloanprogramforwhich$34,814 hasbeenissuedwhichincludes$4,461ofARRAfunding.Todate,$40,044 hasbeenexpendedonPhaseI. Atthe2010AnnualTownMeeting,$17,967wasvotedforadditionalwater " capitalprojects.Currently,$4,316hasbeenexpendedfromthe$9,619 appropriatedforNorthConcordStreetwatermainsproject.Further,$5,747 hasbeenexpendedfromthe$6,263appropriationforGrantandPondStreets project.TheGoodnowPumpStationauthorizedfor$1,385hasnotstarted.In addition,$7,402wasappropriatedforsewerprojectsofwhich$6,552wasfor sewerlinesintheGrantandPondStreetarea.Atyear-end,$4,076hasbeen expendedonthisproject. Atthe2011AnnualTownMeeting,$2,680and$1,765wasauthorizedforthe " Downtownwaterandsewerutilities,andatyear-end,$941and$702was expended,respectively.Inaddition,$4,984hasbeenexpendedfromthe $6,310authorizedfortheNorthFraminghamprojectandtheWorcesterRoad pumpstationsappropriatedfor$1,925hashad$1,136ofexpenditures. Atthe2012AnnualTownMeeting,$2,500wasauthorizedforroadway " improvementswhichhavebeensubstantiallyexpended.Waterandsewer improvementsattheintersectionsofIrving,Loring,andHerbertStreets 12 appropriatedat$1,795and$2,475wasstillinitsinitialphaseattheendof thefiscalyear.$210wasexpendedfromthe$3,214appropriationforBeebe waterstoragetanks;and$2,189wasexpendedonthe$2,400appropriation forEastFraminghamsewerimprovementsandCentralStreetSiphon SudburyRiverprojects. AtaSpring2013SpecialTownMeeting,theTownauthorized$7,988forthe " constructionoftheChristaMcAuliffeBranchLibrary.Thesefundsareinaddi- tiontothe$710foralandpurchaseapprovedinJanuary.Agrantof$4,186 wasreceivedfromtheMassachusettsBoardofLibraryCommissionerstofund aportionoftheproject.Thelandwaspurchasedfor$709and$579hasbeen incurredonarchitecturalandrelatedexpenses. Atthe2013AnnualTownMeeting,$12,265wasappropriatedforavariety " ofTowncapitalandmajorequipmentprojects,thelargestbeing$3,200for roadwayimprovementsofwhich$2,743hasbeenexpended.$4,529was appropriatedforwatercapitalandmajorequipmentpurchaseofwhich$2,990 wasfortheWarrenRoadandPrindivillewatermains.$25,630wasappropri- atedforsewercapitalandmajorequipmentpurchasesincluding$17,220for theWorcesterRoadpumpstationeliminationproject,$6,563fortheBaiting Roadsewerimprovementsand$1,240forBethanyRoadsewerimprove- mentsforwhich$103hasbeenexpendedonBethanyRoad.Theother projectsarestillintheirinitialstages. Atthe2014AnnualTownMeeting,$14,867wasappropriatedforavarietyof " Towncapitalandmajorequipmentprojectsthelargestbeing$4,000forroad- wayimprovements,$1,000forrefusecollectionbinsand$1,337forautomatic refusepackerstomodernizetherefusecollectionoperations.$18,016was appropriatedforwatercapitalandmajorequipmentpurchaseofwhich$3,325 fortheMainStreetareaand$12,145fortheUnionAvenueareawatermains. $9,005wasappropriatedforsewercapitalandmajorequipmentpurchases including$1,400WaverlyandWinthropintersectionrealignmentdesignand construction,$1,880UnionAvenuesewerimprovementsand$1,585Elmfield Roadsewerimprovements. AdditionalinformationoncapitalassetscanbefoundintheNotestoFinancial Statements. Long-termdebt. Attheendofthecurrentfiscalyear,totalbondeddebtand bondanticipationnotesoutstandingwas$216,100,allofwhichwasbackedby thefullfaithandcreditofthegovernment. 13 ThefollowingisasummaryoftheTown’soutstandingdebtforthecurrentand priorfiscalyears: OUTSTANDINGDEBT GeneralObligationBondsandBondAnticipationNotes June30,2014and2013 GovernmentalBusiness-Type ActivitiesActivitiesTotal 201420132014201320142013 Generalobligationbonds$55,871$51,880$111,403$108,047$167,274$159,927 Bondanticipationnotes7,8179,58341,00935,15448,82644,737 Total$63,688$61,463$152,412$143,201$216,100$204,664 Changeincreditrating. TheTownofFraminghammaintainsanAa2ratingfrom Moody’sforgeneralobligationdebt. Statestatuteslimittheamountofgeneralobligationdebtagovernmentalentity mayissueto5%ofitstotalassessedvaluation.Thecurrentdebtlimitationis $380,562,whichissignificantlyinexcessofoutstandinggeneralobligationdebt. Additionalinformationonlong-termdebtcanbefoundintheNotestoFinancial Statements. G.ECONOMICFACTORSANDNEXTYEAR’SBUDGETSANDRATES TheunadjustedunemploymentratefortheTownofFraminghamiscurrently " 4.5%(June),whichisdownfromthe6.0%ratefromJune2013.Thiscom- parestotheState’sunemploymentrateof5.5%andthenationalrateof6.1% Inflationarytrendsintheregioncomparefavorablytonationalindices. " TheabovefactorswereconsideredinpreparingtheTownofFramingham’s " budgetforthe2015fiscalyear. Duringthecurrentfiscalyear,unassignedfundbalanceinthegeneralfund " increasedto$24,264.Inaddition,theTownofFraminghamhasappropriated $3,837of“freecash’tofinancetheFY15generalfundoperatingbudgetof which$640forStabilizationand$2,284toaCapitalStabilizationfund. InFY14,theTowntransferredanet$589intotheStabilizationfund,aswell " as,appropriatedatransferof$640forFY15.TheStabilizationfundis currentlymaintainedat5%oftheTown’soperatingbudget. The$11,761offreecashcertifiedbytheMassachusettsDepartmentof " RevenueasofJuly1,2014isavailable,subjecttoappropriation,tofinance FY15andFY16expenditures. 14 REQUESTSFORINFORMATION ThisfinancialreportisdesignedtoprovideageneraloverviewoftheTownof Framingham’sfinancesforallthosewithaninterestinthegovernment’sfinances. Questionsconcerninganyoftheinformationprovidedinthisreportorrequests foradditionalfinancialinformationshouldbeaddressedto: TownAccountant TownofFramingham MemorialBuilding 150ConcordStreet Framingham,Massachusetts01702 15 TOWNOFFRAMINGHAM,MASSACHUSETTS STATEMENTOFNETPOSITION JUNE30,2014 GovernmentalBusiness-Type ActivitiesActivitiesTotal ASSETS Current: Cashandshort-terminvestments$49,675,601$21,225,525$70,901,126 Investments20,910,655-20,910,655 Receivables,netofallowanceforuncollectibles: Propertytaxes1,457,933-1,457,933 Motorvehicleexcise1,013,194-1,013,194 Userfees191,37013,169,34413,360,714 Departmentalandother159,934-159,934 Intergovernmental9,450,0252,480,75611,930,781 Assessments-2,2292,229 Otherassets58,124-58,124 Noncurrent: Receivables,netofallowanceforuncollectibles: Taxtitle1,589,819-1,589,819 Departmentalandother1,038,850-1,038,850 Intergovernmental9,825,6551,124,83110,950,486 Assessments-901,103901,103 Landandconstructioninprogress20,484,11611,974,97232,459,088 Othercapitalassets,net ofaccumulateddepreciation173,860,278185,410,468359,270,746 DEFERREDOUTFLOWSOFRESOURCES438,500-438,500 TOTALASSETSANDDEFERRED OUTFLOWSOFRESOURCES 290,154,054236,289,228526,443,282 LIABILITIES Current: Warrantspayable9,773,7021,421,33211,195,034 Accountspayable76,18714,59290,779 Retainagepayable100,135-100,135 Accruedliabilities14,090,787768,83814,859,625 Taxrefundspayable5,403,785-5,403,785 Notespayable7,816,76541,009,23648,826,001 Otherliabilities196,273-196,273 Currentportionoflong-termliabilities: Bondspayable9,308,6187,847,15617,155,774 Compensatedabsences2,414,947140,0262,554,973 Otherliabilities75,642196,955272,597 Noncurrent: Bondspayable46,562,343103,556,430150,118,773 NetOPEBobligation90,652,8503,383,22194,036,071 Compensatedabsences1,192,76613,0211,205,787 Otherliabilities1,553,8333,513,7785,067,611 DEFERREDINFLOWSOFRESOURCES306,717277,199583,916 TOTALLIABILITIESANDDEFERRED INFLOWSOFRESOURCES189,525,350162,141,784351,667,134 NETPOSITION Netinvestmentincapitalassets133,338,27758,985,142192,323,419 Restrictedfor: Grantsandotherstatutoryrestrictions7,662,235-7,662,235 Permanentfunds: Nonexpendable585,195-585,195 Expendable2,224,125-2,224,125 Unrestricted(43,181,128)15,162,302(28,018,826) TOTALNETPOSITION $100,628,704$74,147,444$174,776,148 Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 16 7 1 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS BALANCESHEET JUNE30,2014 NonmajorTotal GovernmentalGovernmental GeneralFundsFunds ASSETS Cashandshort-terminvestments$29,612,688$11,446,308$41,058,996 Investments18,812,7732,097,88220,910,655 Receivables: Propertytaxes4,601,973-4,601,973 Motorvehicleexcise2,692,895-2,692,895 Userfees-191,370191,370 Departmentalandother73,9621,038,8511,112,813 Intergovernmental-6,939,0306,939,030 Otherassets58,124-58,124 TOTALASSETS55,852,41521,713,44177,565,856 $$$ LIABILITIES Warrantspayable$2,375,998$3,770,953$6,146,951 Accountspayable-76,18776,187 Retainagepayable-100,135100,135 Accruedliabilities8,838,842488,8879,327,729 Taxrefundspayable5,403,785-5,403,785 Notespayable-7,816,7657,816,765 Otherliabilities167,02129,252196,273 TOTALLIABILITIES16,785,64612,282,17929,067,825 DEFERREDINFLOWSOFRESOURCES6,973,3233,342,95710,316,280 FUNDBALANCES Nonspendable69,704585,195654,899 Restricted57,67011,979,23112,036,901 Committed2,179,31455,1782,234,492 Assigned5,522,512-5,522,512 Unassigned24,264,246(6,531,299)17,732,947 TOTALFUNDBALANCES32,093,4466,088,30538,181,751 TOTALLIABILITIES,DEFERREDINFLOWS OFRESOURCES,ANDFUNDBALANCES$55,852,415$21,713,441$77,565,856 Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 18 19 TOWNOFFRAMINGHAM,MASSACHUSETTS GOVERNMENTALFUNDS STATEMENTOFREVENUES,EXPENDITURESANDCHANGESINFUNDBALANCES FORTHEYEARENDEDJUNE30,2014 NonmajorTotal GovernmentalGovernmental GeneralFundsFunds Revenues: Propertytaxes$168,452,607$-$168,452,607 Excises7,285,252-7,285,252 Penalties,interestandothertaxes4,429,096-4,429,096 Chargesforservices2,533,8758,611,44311,145,318 Intergovernmental67,845,96418,865,73486,711,698 Licensesandpermits2,962,35874,1753,036,533 Finesandforfeitures457,68114,954472,635 Investmentincome622,707333,754956,461 Contributions-534,642534,642 Miscellaneous1,065,737315,5511,381,288 TotalRevenues255,655,27728,750,253284,405,530 Expenditures: Current: Generalgovernment8,528,7762,505,56011,034,336 Publicsafety25,940,9772,995,14128,936,118 Education131,888,80217,651,807149,540,609 Publicworks11,810,3743,031,88214,842,256 Humanservices1,509,427154,2651,663,692 Cultureandrecreation5,921,964695,9166,617,880 Employeebenefits51,255,806-51,255,806 Debtservice10,812,163-10,812,163 Intergovernmental5,446,199-5,446,199 Capitaloutlay-11,277,85711,277,857 TotalExpenditures253,114,48838,312,428291,426,916 Excess(Deficiency)ofrevenues2,540,789(9,562,175)(7,021,386) overexpenditures OtherFinancingSources(Uses): Proceedsfrombondissuances-12,380,74512,380,745 Premiumsonbondissuances1,010,253-1,010,253 Transfersin2,874,564302,9313,177,495 Transfersout(302,931)(171,786)(474,717) TotalOtherFinancingSources(Uses)3,581,88612,511,89016,093,776 Changeinfundbalance6,122,6752,949,7159,072,390 FundBalance,atBeginningofYear25,970,7713,138,59029,109,361 FundBalance,atEndofYear32,093,4466,088,30538,181,751 $$$ Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 20 21 2 2 TOWNOFFRAMINGHAM,MASSACHUSETTS PROPRIETARYFUNDS STATEMENTOFNETPOSITION JUNE30,2014 Business-TypeActivitiesGovernmental EnterpriseFundsActivities Internal WaterSewerService Fund FundTotalFunds ASSETS Current: Cashandshort-terminvestments$10,084,119$11,141,406$21,225,525$8,616,605 Userfees,netofallowance foruncollectibles6,006,1467,163,19813,169,344- Intergovernmental-2,480,7562,480,756- Assessments2,229-2,229- Otherassets---85,971 Totalcurrentassets16,092,49420,785,36036,877,8548,702,576 Noncurrent: Intergovernmental-1,124,8311,124,831- Assessments901,103-901,103- Landandconstructioninprogress10,451,5311,523,44111,974,972- Othercapitalassets,net ofaccumulateddepreciation63,120,911122,289,557185,410,468- Totalnoncurrentassets74,473,545124,937,829199,411,374- TOTALASSETS90,566,039145,723,189236,289,2288,702,576 LIABILITIES Current: Warrantspayable582,691838,6411,421,3323,626,751 Accountspayable13,88770514,592- Accruedliabilities240,688528,150768,8384,222,048 Notespayable6,267,08534,742,15141,009,236- Currentportionoflong-termliabilities: Bondspayable3,812,4774,034,6797,847,156- Compensatedabsences87,31652,710140,026- Otherliabilities136,45860,497196,955- Totalcurrentliabilities11,140,60240,257,53351,398,1357,848,799 Noncurrent: Bondspayable39,781,31263,775,118103,556,430- NetOPEBobligation1,767,6551,615,5663,383,221- Compensatedabsences8,9894,03213,021- Otherliabilities2,403,7701,110,0083,513,778- Totalnoncurrentliabilities43,961,72666,504,724110,466,450- 255,93321,266277,199 DEFERREDINFLOWSOFRESOURCES TOTALLIABILITIESANDDEFERRED INFLOWSOFRESOURCES55,358,261106,783,523162,141,7847,848,799 NETPOSITION Netinvestmentincapitalassets28,665,47230,319,67058,985,142- Unrestricted6,542,3068,619,99615,162,302853,777 TOTALNETPOSITION$35,207,778$38,939,666$74,147,444$853,777 Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 23 TOWNOFFRAMINGHAM,MASSACHUSETTS PROPRIETARYFUNDS STATEMENTOFREVENUES,EXPENSESANDCHANGESINFUNDNETPOSITION FORTHEYEARENDEDJUNE30,2014 Business-TypeActivities Governmental EnterpriseFundsActivities Internal WaterSewerService FundFundTotalFund OperatingRevenues: Chargesforservices$18,422,989$22,342,218$40,765,207$41,785,951 Other155,776122,569278,345- TotalOperatingRevenues18,578,76522,464,78741,043,55241,785,951 OperatingExpenses: Salariesandwages2,816,0242,368,1515,184,175- Operatingexpenses1,699,4682,080,1123,779,58043,777,708 Depreciation2,594,0616,983,5949,577,655- Intergovernmental7,666,33610,691,35318,357,689 - Other21,976-21,976- TotalOperatingExpenses14,797,86522,123,21036,921,07543,777,708 OperatingIncome3,780,900341,5774,122,477(1,991,757) NonoperatingRevenues(Expenses): Investmentincome4,8462,3497,195570,484 Interestexpense(1,503,045)(1,971,320)(3,474,365)- Othernonoperatingincome13,443255,509268,952- TotalNonoperatingRevenues(Expenses),Net(1,484,756)(1,713,462)(3,198,218)570,484 Income(Loss)BeforeCapitalContributions andTransfers2,296,144(1,371,885)924,259(1,421,273) Capitalcontributions-27,07227,072- Transfersin-101,582101,582- Transfersout(1,455,692)(1,348,668)(2,804,360)- ChangeinNetPosition840,452(2,591,899)(1,751,447)(1,421,273) NetPositionatBeginningofYear34,367,32641,531,56575,898,8912,275,050 NetPositionatEndofYear$35,207,778$38,939,666$74,147,444$853,777 Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 24 TOWNOFFRAMINGHAM,MASSACHUSETTS PROPRIETARYFUNDS STATEMENTOFCASHFLOWS FORTHEYEARENDEDJUNE30,2014 Business-TypeActivitiesGovernmental EnterpriseFundsActivities Internal WaterSewerService FundFundTotalFund CashFlowsFromOperatingActivities: Receiptsfromcustomersandusers$18,429,276$21,920,775$40,350,051$41,764,347 Paymentstovendors(10,130,590)(13,030,031)(23,160,621)(42,714,167) Paymentstoemployees(2,675,863)(2,209,450)(4,885,313)- NetCashProvidedByOperatingActivities5,622,8236,681,29412,304,117(949,820) CashFlowsFromNoncapitalFinancingActivities: Transfersin-101,582101,582- Transfersout(1,455,692)(1,348,668)(2,804,360)- Othernonoperatingincome180,308255,507435,815- NetCash(UsedFor)NoncapitalFinancingActivities(1,275,384)(991,579)(2,266,963)- CashFlowsFromCapitalandRelatedFinancingActivities: Proceedsfromissuanceofbonds4,205,6277,081,75411,287,381- Proceedsfromissuanceofshort-termnotes6,267,08542,869,40949,136,494- Acquisitionandconstructionofcapitalassets,netofdisposals(3,261,148)(11,222,987)(14,484,135)- Principalpaymentsonbonds(3,616,530)(4,313,846)(7,930,376)- Principalpaymentsonshort-termnotes(5,997,418)(29,157,055)(35,154,473)- Interestexpense(1,433,667)(1,847,454)(3,281,121)- Capitalcontributions-222,700222,700- Net(UsedFor)CapitalandRelatedFinancingActivities(3,836,051)3,632,521(203,530)- CashFlowsFromInvestingActivities: Investmentincome4,8462,3497,195570,484 NetCashProvidedByInvestingActivities4,8462,3497,195570,484 NetChangeinCashandShort-TermInvestments516,2349,324,5859,840,819(379,336) CashandShort-TermInvestments,BeginningofYear9,567,8851,816,82111,384,7068,995,941 CashandShort-TermInvestments,EndofYea$10,084,119$11,141,406$21,225,525$8,616,605 r ReconciliationofOperatingIncometoNetCash ProvidedbyOperatingActivities: Operatingincome$3,780,900$341,577$4,122,477$(1,991,757) Adjustmentstoreconcileoperatingincometonet cashprovidedbyoperatingactivities: Depreciation2,594,0616,983,5949,577,655- Changesinassetsandliabilities: Userfees(421,533)(544,012)(965,545)- Assessments84,702-84,702- Otherassets210,250-210,250(21,604) Warrantspayable(720,733)(688,037)(1,408,770)3,159,971 Accountspayable(44,985)(17,434)(62,419)- Accruedliabilities4,34322,54026,883(2,096,430) Otherliabilities-446,905446,905- Compensatedabsences15,37623,21438,590- NetOPEBobligation120,442112,947233,389- NetCashProvidedByOperatingActivities$5,622,823$6,681,294$12,304,117$(949,820) Theaccompanyingnotesareanintegralpartofthesefinancialstatements. 25 26 27 TOWNOFFRAMINGHAM,MASSACHUSETTS NotestoFinancialStatements 1.SummaryofSignificantAccountingPolicies TheaccountingpoliciesoftheTownofFramingham(theTown)conformto generallyacceptedaccountingprinciples(GAAP)asapplicabletogovern- mentalunits.Thefollowingisasummaryofthemoresignificantpolicies: A.ReportingEntity ThegovernmentisamunicipalcorporationgovernedbyanelectedBoard ofSelectmen.Asrequiredbygenerallyacceptedaccountingprinciples, thesefinancialstatementspresentthegovernmentandapplicablecompo- nentunitsforwhichthegovernmentisconsideredtobefinanciallyaccount- able.Infiscalyear2014,itwasdeterminedthatnoentitiesmettherequired GASB14(asamended)criteriaofcomponentunits. IntheFiduciaryFunds:TheFraminghamContributoryRetirement Systemwhichwasestablishedtoprovideretirementbenefitsprimarily toemployeesandtheirbeneficiaries.TheSystemispresentedusing theaccrualbasisofaccountingandisreportedasapensiontrustfund inthefiduciaryfundfinancialstatements.Additionalfinancialinforma- tionoftheSystemcanbeobtainedbycontactingtheSystemlocatedat 150ConcordStreet,Framingham,MA01702. B.Government-wideandFundFinancialStatements Government-wideFinancialStatements Thegovernment-widefinancialstatements(i.e.,theStatementofNet PositionandtheStatementofActivities)reportinformationonallofthe nonfiduciaryactivitiesoftheprimarygovernment.Forthemostpart,the effectofinterfundactivityhasbeenremovedfromthesestatements. Governmentalactivities,whichnormallyaresupportedbytaxesand intergovernmentalrevenues,arereportedseparatelyfrombusiness-type activities,whichrelytoasignificantextentonfeesandchargesfor support.Likewise,theprimarygovernmentisreportedseparatelyfrom certainlegallyseparatecomponentunitsforwhichtheprimarygovern- mentisfinanciallyaccountable. TheStatementofActivitiesdemonstratesthedegreetowhichthedirect expensesofagivenfunctionorsegmentisoffsetbyprogramrevenues. Directexpensesarethosethatareclearlyidentifiablewithaspecificfunc- tionorsegment.Programrevenuesinclude(1)chargestocustomersor applicantswhopurchase,use,ordirectlybenefitfromgoods,services,or privilegesprovidedbyagivenfunctionorsegmentand(2)grantsand 28 contributionsthatarerestrictedtomeetingtheoperationalorcapital requirementsofaparticularfunctionorsegment.Taxesandotheritems notproperlyincludedamongprogramrevenuesarereportedinsteadas generalrevenues. FundFinancialStatements Separatefinancialstatementsareprovidedforgovernmentalfunds,propri- etaryfundsandfiduciaryfunds,eventhoughthelatterareexcludedfrom thegovernment-widefinancialstatements.Majorindividualgovernmental fundsandmajorindividualenterprisefundsarereportedasseparatecol- umnsinthefundfinancialstatements. C.MeasurementFocus,BasisofAccounting,andFinancialStatement Presentation Government-wideFinancialStatements Thegovernment-widefinancialstatementsarereportedusingtheeconomic resourcesmeasurementfocusandtheaccrualbasisofaccounting,asis theproprietaryfundandfiduciaryfundfinancialstatements.Revenuesare recordedwhenearnedandexpensesarerecordedwhenaliabilityisincurred, regardlessofthetimingofrelatedcashflows.Propertytaxesarerecognized asrevenuesintheyearforwhichtheyarelevied.Grantsandsimilaritems arerecognizedasrevenueassoonasalleligibilityrequirementsimposedby theproviderhavebeenmet.Asageneralrule,theeffectofinterfundactivity hasbeeneliminatedfromthegovernment-widefinancialstatements. Amountsreportedasprogramrevenuesinclude(1)chargestocustomers orapplicantsforgoods,services,orprivilegesprovided,(2)operating grantsandcontributions,and(3)capitalgrantsandcontributions,includ- ingspecialassessments.Internallydedicatedresourcesarereportedas generalrevenuesratherthanasprogramrevenues.Likewise,general revenuesincludealltaxesandexcises. FundFinancialStatements Governmentalfundfinancialstatementsarereportedusingthecurrent financialresourcesmeasurementfocusandthemodifiedaccrualbasisof accounting.Revenuesarerecognizedassoonastheyarebothmeasur- ableandavailable.Revenuesareconsideredtobeavailablewhenthey arecollectiblewithinthecurrentperiodorsoonenoughthereaftertopay liabilitiesofthecurrentperiod.Forthispurpose,thegovernmentconsiders propertytaxrevenuestobeavailableiftheyarecollectedwithin60days oftheendofthecurrentfiscalperiod.Allotherrevenueitemsareconsid- eredtobemeasurableandavailableonlywhencashisreceivedbythe government.Expendituresgenerallyarerecordedwhenaliabilityis incurred,asunderaccrualaccounting.However,debtserviceexpendi- tures,aswellasexpendituresrelatedtocompensatedabsencesand claimsandjudgments,arerecordedonlywhenpaymentisdue. 29 Thegovernmentreportsthefollowingmajorgovernmentalfunds: Thegeneralfundisthegovernment’sprimaryoperatingfund. Itaccountsforallfinancialresourcesofthegeneralgovernment, exceptthoserequiredtobeaccountedforinanotherfund. Proprietaryfundsdistinguishoperatingrevenuesandexpensesfromnon- operatingitems.Operatingrevenuesandexpensesgenerallyresultfrom providingservicesandproducinganddeliveringgoodsinconnectionwith aproprietaryfund’sprincipalongoingoperations.Theprincipaloperating revenuesoftheenterprisefundarechargestocustomersforsalesand services.Operatingexpensesforenterprisefundsincludethecostof salesandservices,administrativeexpensesanddepreciationoncapital assets.Allrevenuesandexpensesnotmeetingthisdefinitionarereported asnonoperatingrevenuesandexpenses. Thegovernmentreportsthefollowingmajorproprietaryfunds: ThewaterfundisusedtoreporttheTown’swaterenterprisefund operations. ThesewerfundisusedtoreporttheTown’ssewerenterprisefund operations. Theself-insuredemployeehealthprogram,reportedasaninternalservice fundintheaccompanyingfinancialstatements,wasconvertedfromaself- insuranceprogramtotheGICinsuranceplanstartinginfiscalyear2015. Theremainingbalanceinthefundistopayunanticipatedrun-offclaims. TheOtherPost-employmentTrustfundisusedtoaccumulateresources forhealthandlifeinsurancebenefitsforretiredemployees. ThepensiontrustfundaccountsfortheactivitiesoftheEmployees ContributoryRetirementSystem,whichaccumulatesresourcesfor pensionbenefitpaymentstoqualifiedemployees. Theagencyfundiscustodialinnatureandisusedtoaccountforfunds heldforothers.Agencyfundsreportonlyassetsandliabilities,andthus havenomeasurementfocus. D.CashandShort-TermInvestments Cashbalancesfromallfunds,exceptthoserequiredtobesegregatedby law,arecombinedtoformaconsolidationofcash.Cashbalancesare investedtotheextentavailable,andinterestearningsarerecognizedinthe GeneralFund.Certainspecialrevenue,proprietary,andfiduciaryfunds segregatecash,andinvestmentearningsbecomeapartofthosefunds. 30 Depositswithfinancialinstitutionsconsistprimarilyofdemanddeposits, certificatesofdeposits,andsavingsaccounts.Acashandinvestmentpool ismaintainedthatisavailableforusebyallfunds.Eachfund’sportionof thispoolisreflectedonthecombinedfinancialstatementsunderthecaption “cashandshort-terminvestments”.Theinterestearningsattributableto eachfundtypewereincludedunderinvestmentincome. ForpurposeoftheStatementofCashFlows,theproprietaryfundscon- siderinvestmentswithoriginalmaturitiesofthreemonthsorlesstobe short-terminvestments. E.Investments Stateandlocalstatutesplacecertainlimitationsonthenatureofdeposits andinvestmentsavailable.Depositsinanyfinancialinstitutionmaynot exceedcertainlevelswithinthefinancialinstitution.Non-fiduciaryfund investmentscanbemadeinsecuritiesissuedbyorunconditionallyguar- anteedbytheU.S.Governmentoragenciesthathaveamaturityofone yearorlessfromthedateofpurchaseandrepurchaseagreementsguar- anteedbysuchsecuritieswithmaturitydatesofnomorethan90days fromthedateofpurchase. InvestmentsfortheContributoryRetirementSystemarefullyinvestedin theCommonwealth’sPensionReserveInvestmentTrust,andarecarried atfairvalue. F.PropertyTaxLimitations Legislationknownas“Proposition2½”haslimitedtheamountofrevenue thatcanbederivedfrompropertytaxes.Thepriorfiscalyear’staxlevy limitisusedasabaseandcannotincreasebymorethan2.5percent (excludingnewgrowth),unlessanoverrideisvoted.Theactualfiscal year2014taxlevyreflectedanexcesscapacityof$3,446,821. G.Inventories Inventoriesarevaluedatcostusingthefirst-in/first-out(FIFO)method. Thecostsofgovernmentalfund-typeinventoriesarerecordedasexpendi- tureswhenpurchasedratherthanwhenconsumed.Nosignificantinven- torybalanceswereonhandingovernmentalfunds. H.CapitalAssets Capitalassets,whichincludeproperty,plant,equipment,andinfra- structureassetsarereportedintheapplicablegovernmentalorbusiness- typeactivitiescolumnsinthegovernment-widefinancialstatements.Capi- talassetsaredefinedbythegovernmentasassetswithaninitialindivid- ualcostofmorethan$5,000andanestimatedusefullifeinexcessoftwo years.Suchassetsarerecordedathistoricalcostorestimatedhistorical 31 costifpurchasedorconstructed.Donatedcapitalassetsarerecordedat estimatedfairmarketvalueatthedateofdonation. Thecostsofnormalmaintenanceandrepairsthatdonotaddtothevalue oftheassetormateriallyextendassetslivesarenotcapitalized. Majoroutlaysforcapitalassetsandimprovementsarecapitalizedaspro- jectsareconstructed.Interestincurredduringtheconstructionphaseof capitalassetsofbusiness-typeactivitiesisincludedaspartofthecapital- izedvalueoftheassetsconstructed. Property,plant,equipment,andinfrastructureoftheprimarygovernment, aswellasthecomponentunits,aredepreciatedusingthestraight-line methodoverthefollowingestimatedusefullives: AssetsYears Buildings40 Buildingimprovements7-20 Infrastructure50-100 Vehicles5-10 Machinery,equipmentandfurnishings5-10 Computerequipment5 I.CompensatedAbsences Itisthegovernment’spolicytopermitemployeestoaccumulateearned butunusedvacationandsickpaybenefits.Allvestedsickandvacation payisaccruedwhenincurredinthegovernment-wide,proprietary,and fiduciaryfundfinancialstatements.Aliabilityfortheseamountsisreported ingovernmentalfundsonlyiftheyhavematured,forexample,asaresult ofemployeeresignationsandretirements. J.Long-TermObligations Inthegovernment-widefinancialstatements,andproprietaryfundtypes inthefundfinancialstatements,long-termdebt,andotherlong-term obligationsarereportedasliabilitiesintheapplicablegovernmental activities,business-typeactivities,orproprietaryfundtypeStatementof NetPosition. K.FundEquity Fundequityatthegovernmentalfundfinancialreportinglevelisclassified as“fundbalance”.Fundequityforallotherreportingisclassifiedas“net position”. 32 FundBalance-Generally,fundbalancerepresentsthedifference betweenthecurrentassetsandcurrentliabilities.TheTownreserves thoseportionsoffundbalancethatarelegallysegregatedforaspecific futureuseorwhichdonotrepresentavailable,spendableresourcesand therefore,arenotavailableforappropriationorexpenditure.Unassigned fundbalanceindicatesthatportionoffundbalancethatisavailablefor appropriationinfutureperiods. TheTown’sfundbalanceclassificationpoliciesandproceduresareas follows: 1)Nonspendablefundsareeitherunspendableinthecurrentform (i.e.,inventory,pettycash,orprepaiditems)orcanneverbespent (i.e.,perpetualcare). 2)Restrictedfundsareusedsolelyforthepurposeinwhichthefund wasestablished.Inthecaseofspecialrevenuefunds,thesefunds arecreatedbystatuteorotherwisehaveexternalconstraintson howthefundscanbeexpended. 3)Committedfundsarereportedandexpendedasaresultofmotions passedbythehighestdecisionmakingauthorityinthegovernment (i.e.,TownMeeting). 4)Assignedfundsareusedforspecificpurposesasestablishedby management.Thesefunds,whichincludeencumbrances,have beenassignedforspecificgoodsandservicesorderedbutnotyet paidfor.Thisaccountalsoincludesfundbalancevotedtobeused inthesubsequentfiscalyear. 5)Unassignedfundsareavailabletobespentinfutureperiods. Whenanexpenditureisincurredthatwouldqualifyforpaymentfrommulti- plefundbalancetypes,theTownusesthefollowingordertoliquidatelia- bilities:restricted,committed,assigned,andunassigned. NetPosition-Netpositionrepresentsthedifferencebetweenassets/ deferredoutflowsandliabilities/deferredinflows.Netinvestmentincapital assets,netofrelateddebt,consistofcapitalassets,netofaccumulated depreciation,reducedbytheoutstandingbalancesofanyborrowingused fortheacquisition,constructionorimprovementofthoseassets.Net positionisreportedasrestrictedwhentherearelimitationsimposedon theiruseeitherthroughtheenablinglegislationadoptedbytheTownor throughexternalrestrictionsimposedbycreditors,grantors,orlawsor regulationsofothergovernments.Theremainingnetpositionisreported asunrestricted. 33 L.UseofEstimates Thepreparationofbasicfinancialstatementsinconformitywithgenerally acceptedaccountingprinciplesrequiresmanagementtomakeestimates andassumptionsthataffectthereportedamountsofassetsandliabilities anddisclosuresforcontingentassetsandliabilitiesatthedateofthebasic financialstatements,andthereportedamountsoftherevenuesand expenditures/expensesduringthefiscalyear.Actualresultscouldvary fromestimatesthatwereused. 2.Stewardship,Compliance,andAccountability A.BudgetaryInformation Attheannualtownmeeting,theChiefFinancialOfficerpresentsanoper- atingandcapitalbudgetfortheproposedexpendituresofthefiscalyear commencingthefollowingJuly1.Thebudget,asenactedbytownmeet- ing,establishesthelegallevelofcontrolandspecifiesthatcertainappro- priationsaretobefundedbyparticularrevenues.Theoriginalbudgetis amendedduringthefiscalyearatspecialtownmeetingsasrequiredby changingconditions.Incasesofextraordinaryorunforeseenexpenses, theFinanceCommitteeisempoweredtotransferfundsfromtheReserve Fund(acontingencyappropriation)toadepartmentalappropriation. “Extraordinary”includesexpenseswhicharenotintheusualline,orare greatorexceptional.“Unforeseen”includesexpenseswhicharenotfore- seenasofthetimeoftheannualmeetingwhenappropriationsarevoted. Departmentsarelimitedtothelineitemsasvoted.Certainitemsmay exceedthelineitembudgetasapprovedifitisforanemergencyandfor thesafetyofthegeneralpublic.TheseitemsarelimitedbytheMassa- chusettsGeneralLawsandmustberaisedinthenextyear’staxrate. Formalbudgetaryintegrationisemployedasamanagementcontrol deviceduringtheyearfortheGeneralFundandProprietaryFunds.Effec- tivebudgetarycontrolisachievedforallotherfundsthroughprovisionsof theMassachusettsGeneralLaws. Atyear-end,appropriationbalanceslapse,exceptforcertainunexpended capitalitemsandencumbranceswhichwillbehonoredduringthesubse- quentyear. B.BudgetaryBasis TheGeneralFundfinalappropriationappearingonthe“Budgetand Actual”pageofthefundfinancialstatementsrepresentsthefinalamended budgetafterallreservefundtransfersandsupplementalappropriations. 34 C.Budget/GAAPReconciliation Thebudgetarydataforthegeneralandproprietaryfundsisbasedupon accountingprinciplesthatdifferfromgenerallyacceptedaccountingprin- ciples(GAAP).Therefore,inadditiontotheGAAPbasisfinancialstate- ments,theresultsofoperationsofthegeneralfundarepresentedin accordancewithbudgetaryaccountingprinciplestoprovideameaningful comparisontobudgetarydata. Thefollowingisasummaryofadjustmentsmadetotheactualrevenues andothersources,andexpendituresandotheruses,toconformtothe budgetarybasisofaccounting. RevenuesExpenditures andOtherandOther GeneralFundFinancingSourcesFinancingUses Revenues/Expenditures (GAAPBasis)$255,655,277$253,114,488 Otherfinancingsources/uses (GAAPBasis)3,884,817302,931 Subtotal(GAAPBasis)259,540,094253,417,419 Adjusttaxrevenuetoaccrualbasis(1,072,723)- Reverseexpendituresofprior yearcarryforwards-(1,897,051) Addend-of-yearappropriation carryforwardsfromexpenditures-1,685,066 Toreversetheeffectofnon- budgetedStatecontributions forteachersretirement(21,232,607)(21,232,607) Toreversenon-budgetedactivity402,2022,030,703 Recognizeothersourcesanduses3,419,390428,787 BudgetaryBasis$241,056,356$234,432,317 D.DeficitFundEquity ThefollowingfundshaddeficitsasofJune30,2014: 35 CapitalProjectFunds: $ ADAUpgrades(134,064) PavingStormwaterStudy(703,358) Mechanical,Electrical,Plumbing(20,686) PavingStormwaterStudy(225,965) Maynard/MemorialBldg(52,000) Memorial/MaynardBldgImprov(876,156) IngroundFuelTank(6) StormwaterManagement(99,916) TownBuildings(4,750) TownBuildingSecurity(32,419) PlaygroundSafetyMulch(20,520) MaynardBuildingDrainage(107,086) PearlStreetGarageRepairs(8,000) SaxonvilleLeveePump(1,495) CampelloRoadDrain(12,836) RepairShopMakeUp(26,000) FY14RoadwayImprovements(2,743,849) BeaverDamBrook(228,014) FY14TrafficCalming(48,630) MemorialBuildingStudy(40,121) AthenaeumHallStudy(26,995) NetworkInfrastructureImprovements(3,576) MobileFieldInspection(1,490) AerialBucketTruck(198,301) ProtectiveClothReplacement(54,764) Zamboni(120,934) ToroGrandmaster580-D4(3,945) 8,800GVW(285) SidewalkTractor(146,757) LoaderPlow(12,255) SanderCopsprd(5,500) CabChsRll(200,971) PublicSafetyServer(84,674) ArchivedDocScan(4,114) SpecialRevenueFunds: CommunityDevelopmentBlockGrant(47,525) WestMetroHOMEConsortium(41,065) DepartmentofHousingCommunityService(24,342) EPABrownsfieldGrant(47,845) MassExecutiveOfficeofPublicSafety(89,229) MassDOTGrants(598) M/WHealthFHSClinicalCare(9,039) NIH/NEVUSStudy(21,224) $ Total (6,531,299) 36 Thedeficitsinthesefundswillbeeliminatedthroughfuturedepartmental revenues,bondproceeds,andtransfersfromotherfunds. 3.CashandShort-TermInvestments CustodialCreditRisk-Deposits.Custodialcreditriskistheriskthatinthe eventofabankfailure,theTown’sandContributoryRetirementSystem’s (theSystem)depositsmaynotbereturned.MassachusettsGeneralLaw Chapter44,Section55,limitstheTown’sdeposits“inabankortrust companyorbankingcompanytoanamountnotexceedingsixtypercentof thecapitalandsurplusofsuchbankortrustcompanyorbankingcompany, unlesssatisfactorysecurityisgiventoitbysuchbankortrustcompanyor bankingcompanyforsuchexcess.”TheTown’sdepositpolicyforcustodial creditriskistolimitunsecuredbankdepositstonomorethan5%ofthe institution’sassetsandnomorethan10%ofthemunicipality’scash. MassachusettsGeneralLawChapter32,Section23,limitstheSystem’s deposits“inabankortrustcompanytoanamountnotexceedingtenpercent ofthecapitalandsurplusofsuchbankortrustcompany.”TheSystemdoes nothaveadepositpolicyforcustodialcreditrisk. AsofJune30,2014andDecember31,2013,$26,767,151and$1,190,968 oftheTown’sandSystem’sbankbalancesof$79,302,134and$1,613,979 respectively,wasexposedtocustodialcreditriskasuninsuredor uncollateralized. OftheTown’sbalanceexposedtocustodialcreditrisk,$14,923,322ison depositwithMassachusettsMunicipalDepositoryTrust. OftheSystem’sbalanceexposedtocustodialcreditrisk,$1,014,164ison depositwiththePensionReserveInvestmentTrustand$176,804ison depositwithMassachusettsMunicipalDepositoryTrust. 4.Investments A.CreditRisk Generally,creditriskistheriskthatanissuerofaninvestmentwillnot fulfillitsobligationtotheholderoftheinvestment.Forshort-terminvest- mentsthatwerepurchasedusingsurplusrevenues,Massachusetts GeneralLaw,Chapter44,Section55,limitstheTown’sinvestmentstothe topratingissuedbyatleastonenationallyrecognizedstatisticalrating organization(NRSROs). 37 Presentedbelow(inthousands)istheactualratingasofyear-endfor eachinvestmentoftheTown.(Allfederalagencysecuritieshavean impliedcreditratingofAAA): RatingasofYear-end FairNot InvestmentTypeValueAAAA2BBBRated Corporatestocks$6,378$-$-$-$6,378 Corporatebonds1,294-1,294 - Certificateofdeposit6,990---6,990 Mutualfunds5,119---5,119 USTreasurynotes1,5091,509-- Federalagencysecurities2,2972,297--- Totalinvestments$23,587$3,806$1,294$-$18,487 , MassachusettsGeneralLaw,Chapter32,Section23,limitstheinvest- mentofSystemfunds,totheextentnotrequiredforcurrentdisburse- ments,inthePRITFundorinsecurities,otherthanmortgagesorcollat- eralloans,whicharelegalfortheinvestmentoffundsinsavingsbanks underthelawsoftheCommonwealth,providedthatnomorethanthe establishedpercentageofassets,isinvestedinanyonesecurity. AtDecember31,2013,theContributoryRetirementSystemmaintainedits investmentsintheStateInvestmentPool*withafairvalueof$242,598,940. Thisinvestmenttypeisnotrated. *Fairvalueisthesameasthevalueofthepoolshare.ThePensionReservesInvestment TrustwascreatedunderMassachusettsGeneralLaw,Chapter32,Section22,in December1983.ThePensionReservesInvestmentTrustisoperatedundercontractwith aprivateinvestmentadvisor,approvedbythePensionReservesInvestmentManage- mentBoard.ThePensionReservesInvestmentManagementBoardshallchoosean investmentadvisorbyrequestingproposalsfromadvisorsandreviewingsuchproposals basedoncriteriaadoptedunderMassachusettsGeneralLaw,Chapter30B. B.CustodialCreditRisk Thecustodialcreditriskforinvestmentsistheriskthat,intheeventofthe failureofthecounterparty(e.g.,broker-dealer)toatransaction,agovern- mentwillnotbeabletorecoverthevalueofitsinvestmentorcollateral securitiesthatareinthepossessionofanotherparty.TheTown’spolicy forcustodialcreditriskistolimitinvestmentstothestateinvestmentpool, U.S.Treasuryobligations,U.S.Agencyobligations,andcertificatesof deposit.TheSystemdoesnothavepoliciesforcustodialcreditrisk. TheTown’sinvestmentswereexposedtocustodialcreditriskbecausethe relatedsecuritiesareuninsured,unregistered,and/orheldbytheTown’s brokeragefirm,whichisalsotheCounterpartytothesesecurities.The TownmanagesthiscustodialcreditriskwithSIPCandexcessSIPC. 38 TheSystem’sinvestmentswereexposedtocustodialcreditriskasunin- suredanduncollateralized.However,theseinvestmentswereheldinthe StateInvestmentPool. C.ConcentrationofCreditRisk TheTown’spolicyforconcentrationofcreditriskistolimitinvestmentsin asinglefinancialinstitutiontonomorethan10%oftheTown’sinvest- mentswiththeexceptionofU.S.Treasuryobligationsorinvestmentsfully collateralizedbyU.S.Treasuriesoragencies,andstatepools. TheTown’sinvestmentsinanyoneissuer(otherthanU.S.Treasury securitiesandmutualfunds)thatrepresent5%ormoreoftotalinvest- ments,was$1,345,520heldinFederalHomeLoanBanknotes. MassachusettsGeneralLawChapter32,Section23limitstheamountthe Systemmayinvestinanyoneissuerorsecuritytype,withtheexceptionof thePRITFund. TheContributoryRetirementSystemdoesnothaveaninvestmentinone issuergreaterthan5%oftotalinvestments. D.InterestRateRisk Interestrateriskistheriskthatchangesinmarketinterestrateswill adverselyaffectthefairvalueofaninvestment.Generally,thelonger thematurityofaninvestment,thegreaterthesensitivityofitsfairvalue tochangesinmarketinterestrates.TheTown’spolicyforinterestraterisk istostructuretheportfoliososecuritiesmaturetomeetalloperating requirementsthatmaybereasonablyanticipated,thusavoidingtheneed tosellsecuritiesontheopenmarketpriortomaturity.TheSystemdoes nothaveaformalinvestmentpolicythatlimitsinvestmentmaturitiesasa meansofmanagingitsexposuretofairvaluelossesarisingfromincreas- inginterestrates. InformationaboutthesensitivityofthefairvaluesoftheTown’sinvest- mentstomarketinterestratefluctuationsisasfollows(inthousands): InvestmentMaturities(inYears) FairLess InvestmentTypeValueThan11-56-10>10 Debt-relatedSecurities: Corporatebonds$1,294$$1,294$-$- Certificateofdeposit6,9902,0094,981-- USTreasurynotes1,5091,509 Federalagencysecurities2,297-2,297-- Total$12,090$2,009$10,081$-$- 39 TheRetirementsystemdoesnotmaintaininvestmentsthataresensitive tomarketinterestratefluctuations. E.ForeignCurrencyRisk Foreigncurrencyriskistheriskthatchangesinforeignexchangerates willadverselyaffectthefairvalueofaninvestment.TheTownandSystem donothavepoliciesforforeigncurrencyrisk. 5.TaxesReceivable Realestateandpersonalpropertytaxesareleviedandbasedonvalues assessedonJanuary1stofeveryyear.Assessedvaluesareestablishedby theBoardofAssessor’sfor100%oftheestimatedfairmarketvalue.Taxes aredueonaquarterlybasisandaresubjecttopenaltiesandinterestifthey arenotpaidbytherespectiveduedate.Realestateandpersonalproperty taxesleviedarerecordedasreceivablesinthefiscalyeartheyrelateto. Fourteendaysaftertheduedateforthefinaltaxbillforrealestatetaxes,a demandnoticemaybesenttothedelinquenttaxpayer.Fourteendaysafter thedemandnoticehasbeensent,thetaxcollectormayproceedtofilealien againstthedelinquenttaxpayers’property.TheTownhasanultimaterightto forecloseonpropertyforunpaidtaxes.Personalpropertytaxescannotbe securedthroughthelienprocess. TaxesreceivableatJune30,2014consistofthefollowing(inthousands): RealEstate 2014$1,171 201334 201227 201120 Prior15 1,267 PersonalProperty 201415 201320 201225 201135 Prior313 408 TaxLiens2,484 DeferredTaxes443 Total$4,602 40 6.AllowanceforDoubtfulAccounts Thereceivablesreportedintheaccompanyingentity-widefinancialstate- mentsreflectthefollowingestimatedallowancesfordoubtfulaccounts(in thousands): Governmental Business-Type Propertytaxes$1,554$- Excises$1,680$- Utilities$-$175 7.IntergovernmentalReceivables ThisbalancerepresentsreimbursementsrequestedfromFederalandState agenciesforexpendituresincurredinfiscal2014,aswellasfundingtobe providedbytheMassachusettsSchoolBuildingAuthorityforreimbursement ofapprovedschoolcapitalprojectexpenditures. 8.InterfundFundTransfers TheTownreportsinterfundtransfersbetweenmanyofitsfunds.Thesumof alltransferspresentedinthetableagreeswiththesumofinterfundtransfers presentedinthegovernmentalandproprietaryfundfinancialstatements.The followingisananalysisofinterfundtransfersmadeinfiscalyear2014: TransfersInTransfersOutNet GovernmentalFunds: GeneralFund$2,874,564$302,931$2,571,633 NonmajorGovernmentalFunds302,931171,786131,145 Subtotal-Governmental3,177,495474,7172,702,778 ProprietaryFunds: WaterEnterpriseFund-1,455,692(1,455,692) SewerEnterpriseFund101,5821,348,668(1,247,086) Subtotal-Proprietary101,5822,804,360(2,702,778) Total$3,279,077$3,279,077$- TransferstotheGeneralFundfromtheWaterandSewerfundsaretocover indirectcostsincurredbytheGeneralFund. 41 9.CapitalAssets CapitalassetactivityfortheyearendedJune30,2014wasasfollows(in thousands): BeginningEnding BalanceIncreasesDecreasesBalance GovernmentalActivities: Capitalassets,beingdepreciated: Buildingsandimprovements$196,488$4,076$-$200,564 Vehicles,machinery,equipment andfurnishings45,9134,422-50,335 Infrastructure53,9866,157-60,143 Totalcapitalassets,beingdepreciated296,38714,655-311,042 Lessaccumulateddepreciationfor: Buildingsandimprovements(72,682)(6,047)-(78,729) Vehicles,machinery,equipment andfurnishings(31,407)(3,522)-(34,929) Infrastructure(21,161)(2,363)-(23,524) Totalaccumulateddepreciation(125,250)(11,932)-(137,182) Totalcapitalassets,beingdepreciated,net171,1372,723-173,860 Capitalassets,notbeingdepreciated: Land19,329--19,329 Constructioninprogress499656-1,155 Totalcapitalassets,notbeingdepreciated19,828656-20,484 Governmentalactivitiescapitalassets,net$190,965$3,379$-$194,344 42 DepreciationexpensewaschargedtofunctionsoftheTownasfollows(in thousands): GovernmentalActivities: Generalgovernment$1,165 Publicsafety1,379 Education4,848 Publicworks3,511 Healthandhumanservices115 Cultureandrecreation914 Totaldepreciationexpense-governmentalactivities$11,932 Business-TypeActivities: Water$2,594 Sewer6,984 Totaldepreciationexpense-business-typeactivities$9,578 10.DeferredOutflowsofResources Deferredoutflowsofresourcesrepresenttheconsumptionofnetassetsby theTownthatisapplicabletofuturereportingperiods.Deferredoutflowsof resourceshaveapositiveeffectonnetposition,similartoassets. Thefollowingisasummaryofdeferredoutflowofresourcesbalancesasof June30,2014(inthousands): Entity-wideBasis Governmental Activities Lossonbondrefunding$439 11.WarrantsandAccountsPayable Warrantspayablerepresent2014expenditurespaidbyJuly15,2014. Accountspayablerepresentadditional2014expenditurespaidafterJuly15, 2014. 12.TaxRefundsPayable Thisbalanceconsistsofanestimateofrefundsduetopropertytaxpayersfor potentialabatements.Thesecasesarecurrentlypendingwiththestate AppellateTaxBoard. 43 13.AnticipationNotesPayable TheTownhadthefollowingnotesoutstandingatJune30,2014: InterestDateofDateofBalanceat RateIssueMaturity6/30/14 Bondanticipation0.17%12/13/1312/12/14$27,478,989 Bondanticipation0.90%06/17/1412/12/1412,379,410 project Staterevolvingloan0.13%06/01/12completion3,142,896 project Staterevolvingloan0.00%11/08/12completion133,266 project Staterevolvingloan0.13%06/15/13completion3,515,998 project Staterevolvingloan0.11%03/31/14completion2,175,442 Total$48,826,001 Thefollowingsummarizesactivityinnotespayableduringfiscalyear2014: 44 14.Long-TermDebt A.GeneralObligationBonds TheTownissuesgeneralobligationbondstoprovidefundsforthe acquisitionandconstructionofmajorcapitalfacilities.Generalobligation bondshavebeenissuedforbothgovernmentalandbusiness-typeactivi- ties.Generalobligationbondscurrentlyoutstandingareasfollows: 45 46 B.FutureDebtService Theannualpaymentstoretireallgeneralobligationlong-termdebt outstandingasofJune30,2014areasfollows: GovernmentalPrincipalInterestTotal 2015$9,308,618$2,038,552$11,347,170 20167,405,2111,750,0959,155,306 20176,811,6221,464,7328,276,354 20185,977,0941,225,6557,202,749 20194,914,3771,001,9395,916,316 2020-202413,935,6092,800,55816,736,167 2025-20296,231,794696,8326,928,626 2030-20341,286,63691,7271,378,363 Total$55,870,961$11,070,090$66,941,051 Thegeneralfundhasbeendesignatedasthesourcetorepaythe governmental-typegeneralobligationdebtoutstandingasofJune30, 2014. Business-TypePrincipalInterestTotal 2015$7,847,156$3,135,713$10,982,869 20166,896,4942,940,6669,837,160 20176,630,1402,750,2049,380,344 20186,532,9572,559,0369,091,993 20196,551,0362,350,2988,901,334 2020-202431,866,2288,756,35240,622,580 2025-202927,814,5714,439,94432,254,515 2030-203415,500,0041,182,68516,682,689 2034-20381,765,000182,9371,947,937 Total$111,403,586$28,297,835$139,701,421 C.BondAuthorizations Long-termdebtauthorizationswhichhavenotbeenissuedorrescinded asofJune30,2014areasfollows: 47 48 D.OverlappingDebt TheTown'sproportionateshareofdebtofothergovernmentalunitswhich provideserviceswithintheTown'sboundaries,andwhichmustbeborne bytheresourcesoftheTown,issummarizedbelow(inthousandsand unaudited): Town's EstimatedShare RelatedEntityPrincipal MWRA-Water$2,116,8273.76%$79,593 MWRA-Sewer4,033,8562.80%112,948 MBTAandMWRTA5,561,3830.31%17,240 $209,781 E.LegalDebtMargin TheTownissubjecttotheGeneralLawsoftheCommonwealthof Massachusettswhich,ingeneral,limitstheamountofbondeddebt theTownmayhaveoutstandingto5percentofthevaluationoftaxable propertyaslastequalizedbytheCommonwealth’sDepartmentof Revenue.Thefollowingisacomputationofthelegaldebtmarginas ofJune30,2014(inthousands): Revisedequalizedvaluation-FY2014$7,611,238 Debtlimit-5%ofequalizedvaluation$380,562 Totaldebtoutstanding167,275 Less:debtexemptfromlimit(68,417)98,858 LegalDebtMargin$281,704* *Excludesbondanticipationnotesandauthorizedbutunissueddebt. F.DebtRefunding PriorYear Intheprioryear,theTowndefeasedvariousbondissuesbycreating separateirrevocabletrustfunds.Theproceedsfromthenewissuanceof thegeneralobligationbondswereusedtopurchaseU.S.government securities,andthosesecuritiesweredepositedinanirrevocabletrustwith anescrowagenttoprovidedebtservicepaymentsuntiltherefunded bondsmatureinMarch2015.Forfinancialreportingpurposes,thedebt hasbeenconsidereddefeased,andtherefore,removedasaliabilityfrom theTown’sbalancesheet.AsofJune30,2014,theamountofdefeased debtoutstandingbutremovedfromthegovernmentalactivitiesand business-typeactivitieswas$880,000. 49 G.ChangesinGeneralLong-TermLiabilities DuringtheyearendedJune30,2014,thefollowingchangesoccurredin long-termliabilities(inthousands): 15.DeferredInflowsofResources DeferredinflowsofresourcesaretheacquisitionofnetassetsbytheTown thatareapplicabletofuturereportingperiods.Deferredinflowsofresources haveanegativeeffectonnetposition,similartoliabilities. Thefollowingisasummaryofdeferredinflowofresourcesbalancesasof June30,2014(inthousands): Entity-wideBasisFundBasis GovernmentalBusiness-typeGovernmentalFundsProprietaryFunds ActivitiesActivitiesGeneralFundNonmajorWaterSewer Unavailablerevenues$-$-$6,973$3,343$-$- Gainonbondrefunding307277--25621 Total$307$277$6,973$3,343$256$21 50 16.RestrictedNetPosition Theaccompanyingentity-widefinancialstatementsreportrestrictednet positionwhenexternalconstraintsfromgrantorsorcontributorsareplaced onnetposition. Permanentfundrestrictednetpositionissegregatedbetweennonexpendable andexpendable.Thenonexpendableportionrepresentstheoriginalrestricted principalcontribution,andtheexpendablerepresentsaccumulatedearnings whichareavailabletobespentbasedondonorrestrictions. 17.GovernmentalFunds-Balances Fundbalancesaresegregatedtoaccountforresourcesthatareeithernot availableforexpenditureinthefutureorarelegallysetasideforaspecific futureuse. TheTownimplementedGASBStatementNo.54(GASB54),FundBalance ReportingandGovernmentalFundTypeDefinitions,whichenhancesthe usefulnessoffundbalanceinformationbyprovidingclearerfundbalance classificationsthatcanbemoreconsistentlyappliedandbyclarifyingexisting governmentalfundtypedefinitions. ThefollowingtypesoffundbalancesarereportedatJune30,2014: Nonspendable-Representsamountsthatcannotbespentbecausethey areeither(a)notinspendableformor(b)legallyorcontractuallyrequiredto bemaintainedintact.Thisfundbalanceclassificationincludesgeneralfund reservesforprepaidexpenditures,pettycash,andnonmajorgovernmental fundreservesfortheprincipalportionofpermanenttrustfunds. Restricted-Representsamountsthatarerestrictedtospecificpurposesby constraintsimposedbycreditors,grantors,contributors,orlawsorregulations ofothergovernments,orconstraintsimposedbylawthroughconstitutional provisionsorenablinglegislation.Thisfundbalanceclassificationincludes generalfundencumbrancesfundedbybondissuances,variousspecial revenuefunds,andtheincomeportionofpermanenttrustfunds. Committed-Representsamountsthatcanonlybeusedforspecificpur- posespursuanttoconstraintsimposedbyformalactionoftheTown’shighest levelofdecision-makingauthority.Thisfundbalanceclassificationincludes generalfundencumbrancesfornon-lapsing,specialarticleappropriations approvedatTownMeeting,stabilizationfundssetasidebyTownMeeting voteforfuturecapitalacquisitionsandimprovements(nowreportedaspartof thegeneralfundperGASB54),andvariousspecialrevenuefunds. Assigned-RepresentsamountsthatareconstrainedbytheTown’sintentto usetheseresourcesforaspecificpurpose.Thisfundbalanceclassification includesgeneralfundencumbrancesthathavebeenestablishedbyvarious 51 Towndepartmentsfortheexpenditureofcurrentyearbudgetaryfinancial resourcesuponvendorperformanceinthesubsequentbudgetaryperiod. Unassigned-Representsamountsthatareavailabletobespentinfuture periods. FollowingisabreakdownoftheTown'sfundbalancesatJune30,2014: NonmajorTotal GeneralGovernmentalGovernmental FundFundsFunds Nonspendable Prepaidexpenditures$69,154$-$69,154 Pettycash550-550 Nonexpendablepermanentfunds-585,195585,195 TotalNonspendable69,704585,195654,899 Restricted Debtservice57,670-57,670 Bondedprojects BowditchMasterPlan-1,042,3981,042,398 McAuliffeBranchLibrary-385,041385,041 Otherprojects-665,432665,432 Specialrevenuefunds Statespecialedreimbfund-941,380941,380 Governmentaccesscabletelevision-933,808933,808 Schoolfoodservice-688,821688,821 Civicuse-television-536,798536,798 Tuition-blocks-617,262617,262 Saleofrealestate-264,518264,518 Otherspecialrevenuefunds-3,679,6493,679,649 Expendablepermanentfunds EdgellGroveCemeterytrust-1,213,6031,213,603 Scotttrustfund-363,125363,125 Otherexpendablepermanentfunds-647,396647,396 TotalRestricted57,67011,979,23112,036,901 Committed Articles1,726,086-1,726,086 OpenSpaceconservationstabilization453,228-453,228 Capitalprojectfunds-55,17855,178 TotalCommitted2,179,31455,1782,234,492 (continued) 52 (continued) NonmajorTotal GeneralGovernmentalGovernmental FundFundsFunds Assigned Encumberedfor: Generalgovernment792,962-792,962 Publicworks376,987-376,987 Employeebenefits331,782-331,782 Other183,335-183,335 Fornextyear'sexpenditures3,837,446-3,837,446 TotalAssigned5,522,512-5,522,512 (1) Unassigned24,264,246(6,531,299)17,732,947 TotalUnassigned24,264,246(6,531,299)17,732,947 TotalFundBalance$32,093,446$6,088,305$38,181,751 (1) IncludesGeneralStabilizationfundbalanceof$12,733,744. 18.GeneralFundUnassignedFundBalance Theunassignedgeneralfundbalancereportedonthebalancesheetisstated inaccordancewithgenerallyacceptedaccountingprinciples(GAAP),which differsincertainrespectsfromtheMassachusettsUniformMunicipalAccount- ingSystem(UMAS).Thefollowingparagraphssummarizethemajordiffer- ences. MassachusettsGeneralLawsincludeprovisionstoallowmunicipalitiestoover- expendcertainappropriationsiftheyareincurredinanemergencysituation andforthesafetyofthepublic.Themostcommonexampleinvolvesthe“snow andice”appropriation.Allsuchoverexpenditures,however,mustbefundedin thesubsequentyear’staxrate. Theaccompanyingfinancialstatementsincludeanestimateforfuturepoten- tialtaxrefunds,whichisnotrecognizedunderUMAS. ThefollowingsummarizesthespecificdifferencesbetweenGAAPbasisand budgetarybasisofreportingthegeneralfundunassignedfundbalance: UnassignedGAAPbasisbalance$24,264,246 Less:GeneralStabilization(12,733,744) Unfundedtaxrefundestimate3,976,989 Statutory(UMAS)Balance$15,507,491 53 19.SubsequentEvents Debt SubsequenttoJune30,2014,theTownhasincurredthefollowingadditional debt: InterestIssueMaturity AmountRateDateDate Generalobligation$20,974,0003.94%12/11/1412/01/39 Bondanticipationnote$20,967,1170.17%12/12/1412/11/15 20.CommitmentsandContingencies OutstandingLegalIssues-Thereareseveralpendinglegalissuesinwhich theTownisinvolved.TheTown’smanagementisoftheopinionthatthe potentialfuturesettlementofsuchclaimswouldnotmateriallyaffectitsfinan- cialstatementstakenasawhole. Grants-Amountsreceivedorreceivablefromgrantoragenciesaresubjectto auditandadjustmentbygrantoragencies,principallythefederalgovernment. Anydisallowedclaims,includingamountsalreadycollected,mayconstitute aliabilityoftheapplicablefunds.Theamountofexpenditureswhichmay bedisallowedbythegrantorcannotbedeterminedatthistime,althoughthe Townexpectssuchamounts,ifany,tobeimmaterial. Abatements-ThereareseveralcasespendingbeforetheAppellateTax Boardinregardtoallegeddiscrepanciesinpropertyassessments.According totheTown’scounsel,theprobableoutcomeofthesecasesatthepresent timeisindeterminable. 21.Post-EmploymentHealthcareandLifeInsuranceBenefits OtherPost-EmploymentBenefits GASBStatement45,AccountingandFinancialReportingbyEmployersfor Post-EmploymentBenefitsOtherThanPensions,requiresgovernmentsto accountforotherpost-employmentbenefits(OPEB),primarilyhealthcare, onanaccrualbasisratherthanonapay-as-you-gobasis.Theeffectisthe recognitionofanactuariallyrequiredcontributionasanexpenseonthe StatementofActivitieswhenafutureretireeearnstheirpost-employment benefits,ratherthanwhentheyusetheirpost-employmentbenefit.Tothe extentthatanentitydoesnotfundtheiractuariallyrequiredcontribution,a post-employmentbenefitliabilityisrecognizedontheStatementofNet Positionovertime. 54 A.PlanDescription Inadditiontoprovidingthepensionbenefitsdescribed,theTownpro- videspost-employmenthealthcareandlifeinsurancebenefitsforretired employeesthroughtheTown’splan.Thebenefits,benefitlevels,employee contributionsandemployercontributionsaregovernedbyChapter32ofthe MassachusettsGeneralLaws.AsofJuly1,2014,theactuarialvaluation date,approximately1,495retireesand1,695activeemployeesmeetthe eligibilityrequirements.Theplandoesnotissueaseparatefinancialreport. B.BenefitsProvided TheTownprovidesmedical,prescriptiondrug,mentalhealth/substance abuseandlifeinsurancetoretireesandtheircovereddependents.All activeemployeeswhoretirefromtheTownandmeettheeligibilitycriteria willreceivethesebenefits. C.FundingPolicy Retireescontributevariouspercentagesofthecostofthehealthplan,as determinedbytheTown.TheTowncontributestheremainderofthe healthplancostsonapay-as-you-gobasis. D.AnnualOPEBCostsandNetOPEBObligation TheTown’sfiscal2014annualOPEBexpenseiscalculatedbasedonthe annualrequiredcontributionoftheemployer(ARC),anamountactuarially determinedinaccordancewiththeparametersofGASBStatementNo.45. TheARCrepresentsaleveloffundingthat,ifpaidonanongoingbasis,is projectedtocoverthenormalcostperyearandamortizetheunfunded actuarialliabilityoveraperiodofthirtyyears.Thefollowingtableshowsthe componentsoftheTown’sannualOPEBcostfortheyearendingJune30, 2014,theamountactuallycontributedtotheplan,andthechangeinthe Town’snetOPEBobligationbasedonanactuarialvaluationasofJuly1, 2014. AnnualRequiredContribution(ARC)$22,337,884 InterestonnetOPEBobligation3,107,594 AdjustmenttoARC(2,606,523) AnnualOPEBcost22,838,955 Contributionsmade(12,224,321) IncreaseinnetOPEBobligation10,614,634 NetOPEBobligation-beginningofyear83,421,437 NetOPEBobligation-endofyear$94,036,071 55 TheTown’sannualOPEBcost,thepercentageofannualOPEBcost contributedtotheplan,andthenetOPEBobligationwereasfollows: Percentageof AnnualOPEBOPEBNetOPEB FiscalYearEndedCostCostContributedObligation 201422,838,955$53.5%94,036,071$ 201322,589,477$57.1%83,421,437$ 201227,009,304$41.6%73,728,050$ 201125,300,181$41.4%57,944,179$ 201027,798,877$46.9%43,126,429$ 200926,539,476$45.9%28,365,978$ 200825,839,476$45.8%14,007,989$ E.FundedStatusandFundingProgress ThefundedstatusoftheplanasofJuly1,2014,thedateofthemost recentactuarialvaluationwasasfollows: Actuarialaccruedliability(AAL)$288,645,545 Actuarialvalueofplanassets(7/1/14)(2,516,635) Unfundedactuarialaccruedliability(UAAL)$286,128,910 Fundedratio(actuarialvalueofplanassets/AAL)0.9% Coveredpayroll(activeplanmembers)$111,670,636 UAALasapercentageofcoveredpayroll256% Actuarialvaluationsofanongoingplaninvolveestimatesofthevalueof reportedamountandassumptionsabouttheprobabilityofoccurrenceof eventsfarintothefuture.Examplesincludedassumptionsaboutfuture employment,mortality,andthehealthcarecosttrend.Amountsdeter- minedregardingthefundedstatusoftheplanandtheannualrequired contributionsoftheemployeraresubjecttocontinualrevisionasactual resultsarecomparedwithpastexpectationsandnewestimatesaremade aboutthefuture.Thescheduleoffundingprogress,presentedasrequired supplementaryinformationfollowingthenotestothefinancialstatements, presentsmultiyeartrendinformationthatshowswhethertheactuarial valueofplanassetsisincreasingordecreasingovertimerelativetothe actuarialaccruedliabilitiesforbenefits. F.ActuarialMethodsandAssumptions Projectionsofbenefitsforfinancialreportingpurposesarebasedonthe planasunderstoodbytheTownandtheplanmembersandincludethe typesofbenefitsprovidedatthetimeofeachvaluationandthehistorical 56 patternofsharingofbenefitcostsbetweentheTownandplanmembers tothatpoint.Theactuarialmethodsandassumptionsusedincludetech- niquesthataredesignedtoreduceshort-termvolatilityinactuarialaccrued liabilitiesandtheactuarialvalueofassets,consistentwiththelong-term perspectiveofthecalculations. IntheJuly1,2014actuarialvaluationtheprojectedunitcreditcostmethod wasused.TheactuarialvalueofassetswasnotdeterminedastheTown hasnotadvancefundeditsobligation.Theactuarialassumptionsincludeda 4%investmentrateofreturnandaninitialannualhealthcarecosttrendrate of8%whichdecreasestoa5%long-termrateforallhealthcarebenefits afterfiveyears.TheamortizationcostsfortheinitialUAALisalevelper- centageofpayrollforaperiodof30years,onanopenbasis.Thishasbeen calculatedassumingtheamortizationpaymentincreasesatarateof4.0%. 22.ContributoryRetirementSystem TheTownfollowstheprovisionsofGASBStatementNo.27,Accountingfor PensionsforStateandLocalGovernmentEmployees,(asamendedby GASB50)withrespecttotheemployees’retirementfunds. A.PlanDescriptionandContributionInformation SubstantiallyallemployeesoftheTown(exceptteachersandadministra- torsundercontractemployedbytheSchoolDepartment)aremembersof theFraminghamContributoryRetirementSystem(FCRS),acostsharing, multipleemployerdefinedbenefitPERS.Eligibleemployeesmustpartici- pateintheFCRS.Thepensionplanprovidespensionbenefits,deferred allowances,anddeathanddisabilitybenefits.Chapter32oftheMassa- chusettsGeneralLawsestablishestheauthorityoftheFCRSRetirement Board.Chapter32alsoestablishescontributionpercentagesandbenefits paid.TheFCRSRetirementBoarddoesnothavetheauthoritytoamend benefitprovisions.AsrequiredbyMassachusettsGeneralLaws,the SystemissuesaseparatereporttotheCommonwealth’sPublicEmployee RetirementAdministrationCommission. MembershipofeachplanconsistedofthefollowingatDecember31,2013: Retireesandbeneficiariesreceivingbenefits767 Terminatedplanmembersentitledtobutnotyet receivingbenefits270 Activeplanmembers1,130 Total2,167 Numberofparticipatingemployers3 57 EmployeecontributionpercentagesarespecifiedinChapter32ofthe MassachusettsGeneralLaws.Thepercentageisdeterminedbythe participant’sdateofentryintothesystem.Allemployeeshiredafter January1,1979contributeanadditional2%onallgrossregularearnings overtherateof$30,000peryear.Thepercentagesareasfollows: BeforeJanuary1,19755% January1,1975-December31,19837% January1,1984-June30,19968% BeginningJuly1,19969% Employersarerequiredtocontributeatactuariallydeterminedratesas acceptedbythePublicEmployeeRetirementAdministrationCommission (PERAC).TheTown’sScheduleofEmployerContributionsisasfollows: ScheduleofEmployerContributions: AnnualRequired YearEndedPercentage June30ContributionContributed 7,399,266 2005$100% 7,755,370 2006$100% 8,166,783 2007$100% 8,841,122 2008$100% 9,303,259 2009$100% 9,869,454 2010$100% 10,127,177 2011$100% 10,270,195 2012$100% 10,729,968 2013$100% 11,823,000 2014$100% B.SummaryofSignificantAccountingPolicies BasisofAccounting-Contributoryretirementsystemfinancialstatements arepreparedusingtheaccrualbasisofaccounting.Planmembercontri- butionsarerecognizedintheperiodinwhichthecontributionsaredue. Employercontributionsarerecognizedwhendueandtheemployerhas madeaformalcommitmenttoprovidethecontributions.Benefitsand refundsarerecognizedwhendueandpayableinaccordancewiththe termsoftheplan. MethodUsedtoValueInvestments-Investmentsarereportedatfair valueinaccordancewithPERACrequirements. 58 C.FundedStatusandFundingProgress TheinformationpresentedbelowisfromtheFraminghamContributory RetirementSystem’smostrecentvaluation(inthousands). ActuarialUAALas AccruedaPercent- ActuarialLiabilityUnfundedageof ActuarialValueof(AAL)-AALFundedCoveredCovered ValuationAssetsEntryAge(UAAL)RatioPayrollPayroll Date(a)(b)(b-a)(a/b)(c)\[(b-a)/c\] 01/01/12208,294$309,696$101,402$67.3%51,902$195% TheScheduleofFundingProgressfollowingthenotestothefinancial statementspresentsmulti-yeartrendinformationabouttheactuarialvalue ofplanassetsrelativetotheactuarialaccruedliabilityforbenefits. D.ActuarialMethodsandAssumptions Theannualrequiredcontributionforthecurrentyearwasdeterminedas partoftheactuarialvaluationusingtheentryagenormalactuarialcost method.Underthismethodanunfundedactuarialaccruedliabilityof $101.4millionwascalculated.Theactuarialassumptionsincluded(a)8% investmentrateofreturnand(b)aprojectedsalaryincreaseof4.75-5.25% peryear.Liabilitiesforcostoflivingincreaseshavebeenassumedatan annualincreaseof3%,onthefirst$12,000ofbenefitpayments.The actuarialvalueofassetsisdeterminedbyprojectingthemarketvalueof assetsasofthebeginningofthepriorplanyearwiththeassumedrateof returnduringthatyear(8%)andaccountingfordepositsanddisbursements withinterestattheassumedrateofreturn.Anadjustmentisthenappliedto recognizethedifferencebetweentheactualinvestmentreturnandexpected returnoverafive-yearperiod.AsofDecember31,2013,theunfunded actuariallyaccruedliabilityisbeingamortizedover17yearsusinga5.00% annualincreasingbasis. E.Teachers AsrequiredbyStatestatutes,teachersoftheTownarecoveredbythe MassachusettsTeachersRetirementSystem(MTRS).TheMTRSis fundedbycontributionsfromcoveredemployeesandtheCommonwealth ofMassachusetts.TheTownisnotrequiredtocontribute.Allpersons employedonatleastahalf-timebasis,whoarecoveredunderacontrac- tualagreementrequiringcertificationbytheBoardofEducationareeligi- ble,andmustparticipateintheMTRS. BasedontheCommonwealthofMassachusetts’retirementlaws,employ- eescoveredbythepensionplanmustcontributeapercentageofgross earningsintothepensionfund.Thepercentageisdeterminedbythe 59 participant’sdateofentryintothesystemandgrossearnings,upto $30,000,asfollows: BeforeJanuary1,19755% January1,1975-December31,19837%* January1,1984-June30,19968%* July1,1996-June30,20019%* BeginningJuly1,200111% *EffectiveJanuary1,1990,allparticipantshiredafterJanuary1,1979, whohavenotelectedtoincreaseto11%,contributeanadditional2%of salaryinexcessof$30,000. TheTown’scurrentyearcoveredpayrollforteachersandadministrators wasunavailable. Infiscalyear2014,theCommonwealthofMassachusettscontributed $21,232,607totheMTRSonbehalfoftheTown.Thisisincludedinthe educationexpendituresandintergovernmentalrevenuesinthegeneral fund. 23.Self-insurance TheTownself-insuresagainstclaimsforworkerscompensation,unemploy- mentandmostemployeehealthcoverage.Annualestimatedrequirementsfor claimsareprovidedintheTown’sannualoperatingbudget. HealthInsurance TheTowncontractswithaninsurancecarrierforexcessliabilitycoverage andaninsuranceconsultantforclaimsprocessing.Underthetermsofits insurancecoverage,theTownisliableforclaimsupto$150,000perincident, withamaximumlifetimecoverageof$2,000,000.Theclaimsliabilityrepre- sentsanestimateofclaimsincurredbutunpaidatyear-end,basedonpast historicalcostsandclaimspaidsubsequenttoyear-end. ChangesintheaggregateliabilityforclaimsfortheyearendedJune30,2014 areasfollows: 60 Health Coverage Claimsliability,beginningofyear$6,318,478 Claimsincurred/recognized infiscalyear201443,777,708 Claimspaidinfiscalyear2014(45,874,138) Claimsliability,endofyear$4,222,048 The$4,222,048estimatedliabilityforclaimsincurredbutnotreportedincludes onlyanestimateforknownlosseventsexpectedtolaterbepresentedas claims.TheTownisunabletoestimatetheamountofunknownlossevents expectedtobecomeclaimsandexpectedfuturedevelopmentsonclaims alreadyreported. 24.RiskManagement TheTownisexposedtovariousrisksoflossrelatedtotorts;theftof,damage toanddestructionofassets;errorsandomissions;andnaturaldisastersfor whichthegovernmentcarriescommercialinsurance.Therewerenosignifi- cantreductionsininsurancecoveragefromthepreviousyearandhavebeen nomaterialsettlementsinexcessofcoverageinanyofthepastthreefiscal years. 25.ImplementationofNewGASBStandards TheGASBhasissuedStatementNo.68AccountingandFinancialReporting forPensions,whichisrequiredtobeimplementedinfiscalyear2015.Manage- ment’scurrentassessmentisthatthispronouncementwillhaveasignificant impactontheTown’sbasicfinancialstatementsbyrecognizingasaliability andexpense,theTown’sapplicableportionoftheTownofFramingham ContributoryRetirementSystem’sactuariallyaccruedliability. 61 TOWNOFFRAMINGHAM,MASSACHUSETTS SCHEDULEOFFUNDINGPROGRESS REQUIREDSUPPLEMENTARYINFORMATION June30,2014 (Unaudited) (AmountsExpressedinthousands) Employees'RetirementSystem ActuarialUAALas AccruedaPercent- ActuarialLiabilityUnfundedageof ActuarialValueof(AAL)-AALFundedCoveredCovered ValuationAssetsEntryAge(UAAL)RatioPayrollPayroll Date(a)(b)(b-a)(a/b)(c)\[(b-a)/c\] 01/01/9140,645$92,433$51,788$44.0%27,351$189% 01/01/9562,360$122,220$59,860$51.0%29,168$205% 01/01/98105,941$156,983$51,042$67.5%33,120$154% 01/01/00147,572$181,149$33,577$81.5%39,871$84% 01/01/02142,893$206,810$63,917$69.1%42,132$152% 01/01/04148,125$220,001$71,876$67.3%41,233$174% 01/01/06157,611$241,752$84,141$65.2%45,439$185% 01/01/08197,875$262,770$64,895$75.3%48,878$133% 01/01/10192,219$283,867$91,648$67.7%53,311$172% 1/1/2012208,294$309,696$101,402$67.3%51,902$195% OtherPost-EmploymentBenefits ActuarialUAALas AccruedaPercent- ActuarialLiabilityUnfundedageof ActuarialValueof(AAL)-AALFundedCoveredCovered ValuationAssetsEntryAge(UAAL)RatioPayrollPayroll Date(a)(b)(b-a)(a/b)(c)\[(b-a)/c\] 07/01/08-$389,843$389,843$0.0%97,125$401% 07/01/10-$371,530$371,530$0.0%113,924$326% 07/01/12-$327,067$327,067$0.0%104,423$313% 07/01/142,516$288,645$286,129$0.9%111,671$256% SeeIndependentAuditors'Report. 62