5th Floor Board Room, Water Board Building 735 Randolph ... · 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES A. June 16, 2017 (Page 1) 5. PUBLIC PARTICIPATION 6. OLD BUSINESS A. Presentation:

Audit Committee

Friday, July 28, 2017 at 8:00 a.m.

5th Floor Board Room, Water Board Building 735 Randolph Street, Detroit, Michigan 48226

GLWater.org

AGENDA 1. CALL TO ORDER 2. ROLL CALL 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES

A. June 16, 2017 (Page 1) 5. PUBLIC PARTICIPATION 6. OLD BUSINESS

A. Presentation: City of Detroit Water & Sewerage Department Audited Financial Report as of December 31, 2015 and Related Reports (Page 5)

B. Presentation: Draft Great Lakes Water Authority Financial Report as of June 30, 2016 and Related Reports (will be distributed on July 28, 2017)

C. Update: Audit Status for the Year Ended June 30, 2016 (verbal) 7. NEW BUSINESS

A. Five Year Financial Plan Document (verbal update) 8. REPORTS

A. Treasury Report – Cash Transfers through July 1, 2017 (Page 6) B. Monthly Revenue & Collections Report for June 2017 (Page 9) C. Investment Strategy Update (Page 36) D. CFO Update (verbal update)

- Key Performance Indicators - Procurement Team Presentation at Analytical Workgroup - Cost Allocation Plan (Expenses) and Capital Asset Cost Allocation Plan - FY 2019 Financial Planning Cycle

9. LOOK AHEAD Next Audit Committee Meeting – August 18, 2017 at 8 am Regular Meeting

10. INFORMATION A. None

11. OTHER MATTERS 12. ADJOURNMENT

735 Randolph Street

Detroit, Michigan 48226

https://glwater.legistar.com

Great Lakes Water Authority

Meeting Minutes - Draft

Audit Committee

8:00 AM Water Board Building 5th FloorFriday, June 16, 2017

1. Call To Order

Chairman Baker called the meeing to order at 8:02 a.m.

2. Quorum Call

Chairman Brian Baker, Director Robert Daddow, and Director Abe MunfakhPresent: 3 -

3. Approval of Agenda

Nicolette Bateson, Chief Financial Officer/Treasurer, requested to amend the

agenda to move Item 8A (Quarterly Investment Report through March 31, 2017)

after Item 5. (Public Participation).

Chairman Baker requested a Motion to Approve the Agenda as amended.

Motion By: Robert Daddow, Support By: Abe Munfakh

Action: Approved as Amended

The motion carried by a unanimous vote.

4. Approval of Minutes

A. 2017-299 Audit Committee Meeting Minutes May 19, 2017

Indexes: Finance

4A May 19 2017 Audit Committee Meeting Minutes.DraftAttachments:


Action: Approved


5. Public Comment

None

8. A. 2017-300 Quarterly Investment Report through March 31, 2017

Indexes: Finance

Quarterly Investment Report through March 31, 2017

Memo Investment Reporting through 3.31.2017

Attachments:


Page 1Great Lakes Water Authority Printed on 7/7/2017

Page 1

AGENDA ITEM #4A

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http://glwater.legistar.com/gateway.aspx?M=F&ID=4d7ccbfb-94df-4fea-b168-e608f34ba16b.pdf

June 16, 2017Audit Committee Meeting Minutes - Draft

Action: Received and Filed


6. Old Business

A. 2017-304 Update: FY 2016 Update

Indexes: Finance

Addendum #1 to Meeting Binder 6.16.17: 6AAttachments:




B. 2017-297 Closeout Report: Final FY 2018 Wholesale Service Charges

Indexes: Finance

Closeout Report: Final FY 2018 Wholesale Service ChargesAttachments:




7. New Business

A. 2017-306 FY 2016 and FY 2017 Budget to Actual Report

Indexes: Finance

FY 2016 and FY 2017 Budget to Actual Report - Addendum #2Attachments:




B. 2017-298 Trust Receipts and Disbursements Report - 3rd Quarter FY 2017

Indexes: Finance

Trust Receipts and Disbursements Report - 3rd Quarter FY 2017Attachments:




C. 2017-305 Procurement Policy Review

Indexes: Finance

Addendum #1 to Meeting Binder 6.16.17: 7CAttachments:





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8. Reports

B. 2017-301 Monthly Revenue & Collections Report for June 2017

Indexes: Finance

Monthly Revenue & Collections Report for June 2017

AR Aging 5.31.17

Attachments:




C. 2017-302 Treasury Report - Cash Transfers to DWSD through June 1, 2017

Indexes: Finance

Treasury Report - Cash Transfers to DWSD through June 1, 2017

Monthly Transfers to DWSD June 2017

Attachments:




D. CFO Update

2017-303 FSA Staffing Level Report as of 6.9.2017

Indexes: Finance

FSA Staffing Level Report as of 6.9.2017Attachments:




9. Look Ahead

Next Audit Committee Meeting - July 14, 2017 at 8 am Regular Meeting

10. Information

None

11. Other Matters

A. 2017-317 Final Follow-Up Report - CGAP Grant FY 2014 (Round 2)

Dept of Treasury CGAP Final Follow-Up Report

Response to Dept Treasury RE CGAP Final Follow-Up Report

Attachments:


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http://glwater.legistar.com/gateway.aspx?M=F&ID=c7a59590-c244-4217-b03b-b254c9b7b36d.pdf

http://glwater.legistar.com/gateway.aspx?M=F&ID=c5023af1-ffa9-493e-abb6-fd946e486f7a.pdf


http://glwater.legistar.com/gateway.aspx?M=F&ID=9f97c5bd-9afc-4cf6-992f-4ce4567bcab2.pdf


http://glwater.legistar.com/gateway.aspx?M=F&ID=b16984ad-da04-44d2-9d0a-cc2ebf589306.pdf

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12. Adjournment

Chairman Baker requested a Motion to Adjourn.

Motion By: Abe Munfakh, Support By: Robert Daddow

Action: Approved


There being no further business, the meeting was adjourned at 10:10 a.m.


Page 4

Date: July 28, 2017

To: Great Lakes Water Authority Audit Committee

From: Nicolette N. Bateson, CPA, Chief Financial Officer/Treasurer

Re: Presentation: City of Detroit Water & Sewerage Department Audited Financial Report as of December 31, 2015 and Related Reports

Background: The predecessor obligor of the Great Lakes Water Authority (GLWA) is the City of Detroit Water & Sewerage Department (DWSD). The effective date of the transfer of that debt occurred at the same time as the GLWA regional operations began on January 1, 2016. For executing the lease transaction, the ending balances of the predecessor entity on December 31, 2015 are critical for the opening balance sheet of the new entity, ensuring that all financial transaction matters are identified, and transparency in reporting to stakeholders. Working in conjunction with parties to the lease transaction at the City of Detroit and DWSD, the City’s audit contract terms with Plante & Moran, auditors for the City of Detroit, were extended to GLWA to obtain an audit for the six-month period ending December 31, 2015.

Analysis: Mr. Joe Heffernan of Plante & Moran will attend the Audit Committee meeting to address questions of the Audit Committee related to the three reports listed below.

City of Detroit Water Fund Basic Financial Statements for the Six Months EndedDecember 31, 2015 (With Independent Auditors’ Report Thereon)

City of Detroit Sewage Disposal Fund Basic Financial Statements for the Six MonthsEnded December 31, 2015 (With Independent Auditors’ Report Thereon)

City of Detroit Water and Sewerage Disposal Fund Internal Control Report as of for theSix Months Ended December 31, 2015

Proposed Action: Receive and file report.

Page 5

Date: July 28, 2017


From: Deirdre Henry, Treasury Manager

Re: Master Bond Ordinance Monthly Cash Transfers to Detroit Water & Sewerage Department (DWSD) and Great Lakes Water Authority (GLWA)

Background: The attached documents summarize the monthly cash transfers to DWSD and GLWA as stipulated by the Master Bond Ordinance for the period January 2016 – July 2017.

Proposed Action: Receive and File Report

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AGENDA ITEM #8A


Funds Transferred to DWSD per Master Bond Ordinance

Through July 1, 2017

DWSD WATER

Operations &

Maintenance Pension

Lease Payment

(I&E Fund) Total Water

Total FY 2016 26,185,600$ 4,262,700$ 20,173,100$ 50,621,400$

FY 2017July 2016 2,799,700$ 355,200$ 1,875,000$ 5,029,900$ August 2016 2,799,700 355,200 1,875,000 5,029,900 September 2016 2,799,700 355,200 1,875,000 5,029,900 October 2016 2,799,700 355,200 1,875,000 5,029,900 November 2016 2,799,700 355,200 1,875,000 5,029,900 December 2016 2,799,700 355,200 1,875,000 5,029,900 January 2017 2,799,700 355,200 1,875,000 5,029,900 February 2017 2,799,700 355,200 1,875,000 5,029,900 March 2017 2,799,700 355,200 1,875,000 5,029,900 April 2017 2,799,700 355,200 1,875,000 5,029,900 May 2017 2,799,700 355,200 1,875,000 5,029,900 June 2017 2,799,700 355,200 1,875,000 5,029,900

Total FY 2017 33,596,400$ 4,262,400$ 22,500,000$ 60,358,800$

FY 2018July 2017 2,799,700$ 356,000$ 1,875,000$ 5,030,700$ August 2017 ‐ September 2017 ‐ October 2017 ‐ November 2017 ‐ December 2017 ‐ January 2018 ‐ February 2018 ‐ March 2018 ‐ April 2018 ‐ May 2018 ‐ June 2018 ‐

Total FY 2018 2,799,700$ 356,000$ 1,875,000$ 5,030,700$

Total Water Since Jan 1 2016 62,581,700$ 8,881,100$ 44,548,100$ 116,010,900$

DWSD SEWER

Operations &

Maintenance Pension

Lease Payment

(I&E Fund) Total Sewer

Total FY 2016 19,774,300$ 2,861,800$ 7,508,500$ 30,144,600$

FY 2017July 2016 3,461,300$ 238,500$ 2,291,700$ 5,991,500$ August 2016 3,461,300 238,500 2,291,700 5,991,500 September 2016 3,461,300 238,500 2,291,700 5,991,500 October 2016 3,461,300 238,500 2,291,700 5,991,500 November 2016 3,461,300 238,500 2,291,700 5,991,500 December 2016 3,461,300 238,500 2,291,700 5,991,500 January 2017 3,461,300 238,500 2,291,700 5,991,500 February 2017 3,461,300 238,500 2,291,700 5,991,500 March 2017 3,461,300 238,500 2,291,700 5,991,500 April 2017 3,461,300 238,500 2,291,700 5,991,500 May 2017 3,461,300 238,500 2,291,700 5,991,500 June 2017 3,461,300 238,500 2,291,300 5,991,100 1)

Total FY 2017 41,535,600$ 2,862,000$ 27,500,000$ 71,897,600$

FY 2018July 2017 3,461,300$ 238,000$ 2,291,667$ 5,990,967$ August 2017 ‐ September 2017 ‐ October 2017 ‐ November 2017 ‐ December 2017 ‐ January 2018 ‐ February 2018 ‐ March 2018 ‐ April 2018 ‐ May 2018 ‐ June 2018 ‐

Total FY 2018 3,461,300$ 238,000$ 2,291,667$ 5,990,967$

Total Sewer Since Jan 1 2016 64,771,200$ 5,961,800$ 37,300,167$ 108,033,167$

Total FY 2016 Water & Sewer 45,959,900$ 7,124,500$ 27,681,600$ 80,766,000$

Total FY 2017 Water & Sewer 75,132,000$ 7,124,400$ 50,000,000$ 132,256,400$

Total FY 2018 Water & Sewer 6,261,000$ 594,000$ 4,166,667$ 11,021,667$

Note 1:

Note 2:

1) Final Lease transfer adjusted so total annual transfers meet requirements per Lease 3.4(a)

For FY 2016, $22,318,500 million of the lease payment was directed by the City of Detroit to offset a portion of its FY 2016

water and sewer debt service in lieu of a cash transfer.

Per Section 3.5 of the Lease, the Lease Payment may be used for:

(a) bond principal and interest for Local System Improvements,

(b) bond principal and interest for the City's share of common‐to‐all System Improvements, and

(c) Local System improvements paid from the lease payment deposited to the Improvement & Extension (I&E) Fund.

Page 7


Funds Transferred to Accounts Held by GLWA per Master Bond Ordinance

Through July 1, 2017

WATER

Operations &

Maintenance

Pension

Sub Account

Pension

Obligation WRAP

Budget

Stabilization(For Benefit of DWSD)

Extraordinary

Repair &

Replacement

(ER&R) Total Water

Total FY 2016 $71,052,000 $6,037,100 $10,297,200 $1,983,300 $2,326,900 $606,000 $92,302,500

FY 2017July 2016 $9,323,300 $503,100 $858,100 $173,100 $30,000 ‐ $10,887,600

August 2016 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

September 2016 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

October 2016 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

November 2016 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

December 2016 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

January 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

February 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

March 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

April 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

May 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

June 2017 9,323,300 503,100 858,100 173,100 30,000 ‐ 10,887,600

Total FY 2017 $111,879,600 $6,037,200 $10,297,200 $2,077,200 $360,000 $0 $130,651,200

FY 2018July 2017 $10,130,217 $504,000 $891,308 $179,950 ‐ ‐ $11,705,475

August 2017 ‐

September 2017 ‐

October 2017 ‐

November 2017 ‐

December 2017 ‐

January 2018 ‐

February 2018 ‐

March 2018 ‐

April 2018 ‐

May 2018 ‐

June 2018 ‐

Total FY 2018 $10,130,217 $504,000 $891,308 $179,950 $0 $0 $11,705,475

Total Water Since Jan 1 2016 $193,061,817 $12,074,300 $20,594,400 $4,060,500 $2,686,900 $606,000 $222,953,700

SEWER

Operations &

Maintenance

Pension

Sub Account

Pension

Obligation WRAP

Budget

Stabilization(For Benefit of DWSD)

Extraordinary

Repair &

Replacement

(ER&R) Total Water

‐

Total FY 2016 $100,865,600 $10,838,400 $14,025,800 $2,523,400 $5,591,700 $779,600 $134,624,500

FY 2017July 2016 $14,654,900 $903,200 $1,168,900 $221,200 $221,200 ‐ $17,169,400

August 2016 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

September 2016 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

October 2016 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

November 2016 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

December 2016 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

January 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

February 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

March 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

April 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

May 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

June 2017 14,654,900 903,200 1,168,900 221,200 221,200 ‐ 17,169,400

Total FY 2017 $175,858,800 $10,838,400 $14,026,800 $2,654,400 $2,654,400 $0 $206,032,800

FY 2018July 2017 $15,923,283 $902,000 $1,223,958 $230,067 ‐ ‐ $18,279,308

August 2017 ‐

September 2017 ‐

October 2017 ‐

November 2017 ‐

December 2017 ‐

January 2018 ‐

February 2018 ‐

March 2018 ‐

April 2018 ‐

May 2018 ‐

June 2018 ‐

Total FY 2018 $15,923,283 $902,000 $1,223,958 $230,067 $0 $0 $18,279,308

Total Sewer Since Jan 1 2016 $292,647,683 $21,676,800 $28,052,600 $5,177,800 $8,246,100 $779,600 $340,657,300

Total FY 2016 Water & Sewer $171,917,600 $16,875,500 $24,323,000 $4,506,700 $7,918,600 $1,385,600 $226,927,000

Total FY 2017 Water & Sewer $287,738,400 $16,875,600 $24,324,000 $4,731,600 $3,014,400 $0 $336,684,000

Total FY 2018 Water & Sewer $26,053,500 $1,406,000 $2,115,266 $410,017 $0 $0 $29,984,783

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1

Date: July 28, 2017


From: Jon Wheatley, Public Finance Manager

Re: Monthly Revenue & Collections Report for June 2017

The Monthly Revenue & Collections Report includes the following.

1. FY 2017 Retail and Wholesale Sewer Revenue 2. FY 2017 Retail and Wholesale Water Revenue 3. City of Highland Park Billings and Collections 4. City of Flint Billings and Collections 5. Water & Sewer System Wholesale Accounts Receivable Aging Report

Note: Wholesale customer revenues are billed by the Great Lakes Water Authority (GLWA). Pursuant to the terms of the lease agreement between the City of Detroit and the Great Lakes Water Authority, the Detroit Water & Sewerage Department (DWSD) serves as GLWA’s agent for billing activities for the City of Detroit retail customer class. All revenues collected by both GLWA and DWSD are deposited in a trust account in accordance with the GLWA Master Bond Ordinance.

1. FY 2017 Retail and Wholesale Sewer Revenue Report

Table 1 summarizes the unaudited FY 2017 billed revenues through May 30, 2017 and do not reflect collections of those revenues. It should also be noted that the revenues are shown in the month that the billed flow was accrued and not the following month when the bills are usually sent out to customers.

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AGENDA ITEM #8B

Table 1 – Combined DWSD and GLWA Wholesale FY 2017 Sewer Revenue

Month Volume Revenue Volume Revenue Volume RevenueMcf $ Mcf $ Mcf $

July 270,300 25,613,200 251,821 24,419,060 (18,479) (1,194,140) August 263,000 25,233,200 257,478 24,729,771 (5,522) (503,429) September 242,400 24,161,000 225,712 23,257,189 (16,688) (903,811) October 225,500 23,281,300 199,901 23,743,488 (25,599) 462,188 November 204,800 22,203,900 186,365 23,074,289 (18,435) 870,389 December 222,200 23,109,500 201,554 23,981,301 (20,646) 871,801 January 229,200 23,473,900 198,567 23,814,137 (30,633) 340,237 February 221,600 23,078,300 183,305 23,731,656 (38,295) 653,356 March 221,900 23,093,900 206,905 24,914,478 (14,995) 1,820,578 April 208,500 22,396,500 198,011 24,244,848 (10,489) 1,848,348 May 233,800 23,713,300 213,991 25,200,025 (19,809) 1,486,725 June 256,800 24,910,500 - -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------Total 2,800,000 284,268,500 2,323,609 265,110,243 (219,591) 5,752,243 Subtotals ytd 2,543,200 259,358,000 2,323,609 265,110,243 (219,591) 5,752,243 Achievement of Budget 91.37% 102.22%


July N/A 22,206,400 N/A 22,206,400 N/A - August N/A 22,206,400 N/A 22,206,400 N/A - September N/A 22,206,400 N/A 22,206,400 N/A - October N/A 22,206,400 N/A 22,206,400 N/A - November N/A 22,206,400 N/A 22,206,400 N/A - December N/A 22,206,400 N/A 22,206,400 N/A - January N/A 22,206,400 N/A 22,206,400 N/A - February N/A 22,206,400 N/A 22,206,400 N/A - March N/A 22,206,400 N/A 22,206,400 N/A - April N/A 22,206,400 N/A 22,206,400 N/A - May N/A 22,206,400 N/A 22,206,400 N/A - June N/A 22,206,400 N/A - N/A -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------Total 266,476,800 244,270,400 - Subtotals ytd 244,270,400 244,270,400 - Achievement of Budget 100.00%


July 270,300 47,819,600 251,821 46,625,460 (18,479) (1,194,140) August 263,000 47,439,600 257,478 46,936,171 (5,522) (503,429) September 242,400 46,367,400 225,712 45,463,589 (16,688) (903,811) October 225,500 45,487,700 199,901 45,949,888 (25,599) 462,188 November 204,800 44,410,300 186,365 45,280,689 (18,435) 870,389 December 222,200 45,315,900 201,554 46,187,701 (20,646) 871,801 January 229,200 45,680,300 198,567 46,020,537 (30,633) 340,237 February 221,600 45,284,700 183,305 45,938,056 (38,295) 653,356 March 221,900 45,300,300 206,905 47,120,878 (14,995) 1,820,578 April 208,500 44,602,900 198,011 46,451,248 (10,489) 1,848,348 May 233,800 45,919,700 213,991 47,406,425 (19,809) 1,486,725 June 256,800 47,116,900 - - - -

---------------- ---------------- ---------------- ---------------- ---------------- ----------------Total 2,800,000 550,745,300 2,323,609 509,380,643 (219,591) 5,752,243 Subtotals ytd 2,543,200 503,628,400 2,323,609 509,380,643 (219,591) 5,752,243 Achievement of Budget 91.37% 101.14%

FY 2017 - Budget FY 2017 - Actual

TOTAL - ALL CUSTOMERS

WHOLESALE SEWER CUSTOMERS

RETAIL SEWER CUSTOMERSFY 2017 - Budget FY 2017 - Actual


Variance

Variance

Variance

Page 10

DWSD Retail Billings: Table 1 shows the FY 2017 sewer billed usage and billed revenue which are provided by DWSD staff. As of May 30, 2017, the DWSD usage was at 91.37% of budget and billed revenue was at 102.22% of budget.

GLWA Wholesale Customer Billings: Table 1 shows the FY 2017 sewer billed revenue. As a result of the sewer rate simplification which provides a more stable revenue stream, the wholesale sewer customers are billed a fixed monthly fee. The results of this effort can be seen as the billed revenue is at 100.0% of budget through May 30, 2017.

Total System Billings: Table 1 shows the FY 2017 combined DWSD and GLWA Wholesale sewer billed usage and billed revenue. Based on the combined billings, the GLWA Sewer System had billed revenues of 101.14% of budget based upon the most current information available as of this report.

2. FY 2017 Retail and Wholesale Water Revenue Report

Table 2 summarizes the unaudited FY 2017 wholesale customer water revenues billed by GLWA and the retail water revenues billed by DWSD. Please note these are billed revenues and do not reflect collections of those revenues. It should also be noted that the revenues are shown in the month that the billed flow was accrued and not the following month when the bills are usually sent out.

Page 11

Table 2 – Combined DWSD and GLWA Wholesale FY 2017 Water Revenue Report

RETAIL WATER CUSTOMERS

Unit UnitMonth Volume Revenue Revenue Volume Revenue Revenue Volume Revenue

Mcf $ $/Mcf Mcf $ $/Mcf Mcf $

July 287,000 9,203,000 32.07 286,452 9,248,558 32.29 (548) 45,558 August 291,300 9,069,000 31.13 294,876 9,415,124 31.93 3,576 346,124 September 252,800 8,450,500 33.43 260,282 8,619,218 33.11 7,482 168,718 October 247,100 8,156,500 33.01 224,211 7,769,846 34.65 (22,889) (386,654) November 220,200 7,545,000 34.26 213,455 7,514,457 35.20 (6,745) (30,543) December 238,400 8,095,300 33.96 233,948 8,010,628 34.24 (4,452) (84,672) January 235,800 8,250,600 34.99 222,510 7,760,925 34.88 (13,290) (489,675) February 237,700 8,015,400 33.72 208,483 7,448,922 35.73 (29,217) (566,478) March 242,500 8,163,500 33.66 233,060 8,021,779 34.42 (9,440) (141,721) April 224,500 7,796,700 34.73 221,229 7,713,262 34.87 (3,271) (83,438) May 266,000 8,452,800 31.78 247,201 8,291,871 33.54 (18,799) (160,929) June 290,700 8,946,700 30.78 - - - -

------------------ ------------------ ------------- ------------------ ------------------ ------------- ------------------ ------------------Total 3,034,000 100,145,000 33.01 2,645,707 89,814,589 33.95 (97,593) (1,383,711) Subtotals ytd 2,743,300 91,198,300 33.24 2,645,707 89,814,589 33.95 (97,593) (1,383,711) Achievement of Budget 96.4% 98.5%

WHOLESALE WATER CUSTOMERS*



July 1,460,300 28,995,300 19.86 1,876,004 33,846,550 18.04 415,704 4,851,250 August 1,446,500 28,870,800 19.96 1,641,782 31,604,507 19.25 195,282 2,733,707 September 1,305,800 27,601,300 21.14 1,357,967 28,334,832 20.87 52,167 733,532 October 1,095,200 25,701,100 23.47 1,053,703 25,311,628 24.02 (41,497) (389,472) November 947,400 24,367,500 25.72 904,264 24,043,057 26.59 (43,136) (324,443) December 1,021,500 25,036,100 24.51 994,161 24,673,766 24.82 (27,339) (362,334) January 1,063,000 25,410,600 23.90 982,270 24,629,916 25.07 (80,730) (780,684) February 966,200 24,537,200 25.40 852,593 23,531,569 27.60 (113,607) (1,005,631) March 1,072,900 25,499,900 23.77 984,638 24,653,545 25.04 (88,262) (846,355) April 990,800 24,759,100 24.99 939,934 24,254,270 25.80 (50,866) (504,830) May 1,115,500 25,884,300 23.20 1,084,428 25,776,567 23.77 (31,072) (107,733) June 1,421,500 28,645,300 20.15 - - - -

------------------ ------------------ ------------- ------------------ ------------------ ------------- ------------------ ------------------Total 13,906,600 315,308,500 22.67 12,671,744 290,660,206 22.94 186,644 3,997,006 Subtotals ytd 12,485,100 286,663,200 22.96 12,671,744 290,660,206 22.94 186,644 3,997,006 Achievement of Budget 101.5% 101.4%

* Does Not Include Revenues and Usage from the City of Flint as they were not Included in the FY 2017 Budget.

TOTAL - ALL CUSTOMERS



July 1,747,300 38,198,300 21.86 2,162,456 43,095,108 19.93 415,156 4,896,808 August 1,737,800 37,939,800 21.83 1,936,658 41,019,630 21.18 198,858 3,079,830 September 1,558,600 36,051,800 23.13 1,618,249 36,954,050 22.84 59,649 902,250 October 1,342,300 33,857,600 25.22 1,277,914 33,081,474 25.89 (64,386) (776,126) November 1,167,600 31,912,500 27.33 1,117,719 31,557,514 28.23 (49,881) (354,986) December 1,259,900 33,131,400 26.30 1,228,109 32,684,394 26.61 (31,791) (447,006) January 1,298,800 33,661,200 25.92 1,204,780 32,390,841 26.89 (94,020) (1,270,359) February 1,203,900 32,552,600 27.04 1,061,076 30,980,491 29.20 (142,824) (1,572,109) March 1,315,400 33,663,400 25.59 1,217,698 32,675,323 26.83 (97,702) (988,077) April 1,215,300 32,555,800 26.79 1,161,163 31,967,531 27.53 (54,137) (588,269) May 1,381,500 34,337,100 24.85 1,331,629 34,068,438 25.58 (49,871) (268,662) June 1,712,200 37,592,000 21.96 - - - -

------------------ ------------------ ------------- ------------------ ------------------ ------------- ------------------ ------------------Total 16,940,600 415,453,500 24.52 15,317,451 380,474,795 24.84 89,051 2,613,295 Subtotals ytd 15,228,400 377,861,500 24.81 15,317,451 380,474,795 24.84 89,051 2,613,295 Achievement of Budget 100.6% 100.7%

* Figures are stated as "Service Months"; i.e. July figures represent bills issued in August, etc.

Variance

Variance

Variance




Page 12

DWSD Retail Billings: Table 2 shows the FY 2017 water billed usage and billed revenue which are provided by DWSD staff. As of May 30, 2017, the DWSD usage was at 96.4% of budget and billed revenue was at 98.5% of budget.

GLWA Wholesale Customer Billings: Table 2 shows the FY 2017 water billed usage and billed revenues. Starting FY 2016, wholesale water charges were re-structured to create a more stable revenue stream by using a historical two year rolling average to project customer volumes and allocating 60% of the customer revenue requirement to the monthly fixed charge. As of May 30, 2017, the billed usage was at 101.5% of budget and billed revenue at 101.4% of budget. As noted in Table 2, revenues and usage from the City of Flint are not included as they were not assumed in the FY 2017 Budget.

Total System Billings: Table 2 shows the FY 2017 combined DWSD and GLWA Wholesale water billed usage and billed revenue. Based on the combined Retail and Wholesale Water billings, the GLWA Water System had billed usage of 100.6% of budget and billed revenues of 100.7% of budget based upon the most current information available as of this report.

Page 13

3. City of Highland Park Billings and Collections

As of June 30, 2017, Highland Park had a delinquent balance of $35.9 million, including $29.5 million for wastewater treatment services, $1.5 million for industrial waste control services, and over $4.8 million for water supply services. Table 3 provides a summary of the billing and collection history for Highland Park from June 30, 2012 to June 30, 2017 in the table below. Please note the numbers below reflect the month the invoice was sent and not the month the service was provided.

There were no payments received from the City of Highland Park during the month of June 2017 however a payment was received on July 6, 2017 in the amount of $908,918.85 which will be reflected in the August 2017 report.

Table 3 - City of Highland Park Billings and Collections

CumulativeWater Sewer IWC Total

June 30, 2012 Balance -$ 10,207,956$ 852,987$ 11,060,943$ FY 2013 Billings 485,887 4,987,635 154,444 5,627,966 FY 2013 Payments (65,652) (2,206,211) - (2,271,863)

- June 30, 2013 Balance 420,235$ 12,989,380$ 1,007,431$ 14,417,046$

FY 2014 Billings 1,004,357 6,980,442 161,951 8,146,750 FY 2014 Payments - (1,612,633) - (1,612,633)

- June 30, 2014 Balance 1,424,592$ 18,357,189$ 1,169,382$ 20,951,163$


- June 30, 2015 Balance 2,432,625$ 22,465,689$ 1,335,121$ 26,233,435$


- June 30, 2016 Balance 3,589,803$ 26,055,521$ 1,441,551$ 31,086,875$

FY 2017 Billings (11 Months) 1,245,267 5,802,000 101,999 7,149,265 FY 2017 Payments (11 Months) - (2,309,186) - (2,309,186)

- Balance as of June 30, 2017 4,835,070$ 29,548,335$ 1,543,550$ 35,926,954$

Page 14

4. City of Flint Billings and Collections

On July 11, 2016, the City of Flint signed a Letter of Agreement with GLWA to extend water services until June 30, 2017. Per this agreement, two transfers are to be deposited into a prepayment fund. The first transfer of $5.9 million, net of a carryover prepayment of $501,964.92, was received on July 13, 2016. The next scheduled deposit of $3.9 million was received on October 11, 2016. In a subsequent Letter Agreement dated October 15, 2016, which was further amended on January 13, 2017, the final payment of $2,465,700 was received on February 13, 2017. Table 4 shows the balance of the prepayment fund through June 30, 2017.

On May 31, 2017, GLWA sent a letter agreement to the City of Flint to extend service on a short term basis through September 30, 2017. As part of the letter agreement, two additional deposits of $1,802,750 to the prepayment fund will be required. The first payment of $1,802,750.00 was received on June 30, 2017 with the next scheduled payment due on July 15, 2017.

Table 4 - City of Flint Billings and Collections

Commodity Prepayment PrepaymentInvoice Month Usage Charge Fixed Charge Total Invoice Fund Deposits Fund Balance

October 2015 Prepayment Deposit - -$ -$ -$ 10,000,000.00$ 10,000,000.00$ November 2015 26,875.0 8.93$ 341,729.00$ 581,722.75$ -$ 9,418,277.25$ December 2015 47,576.9 8.93$ 662,100.00$ 1,086,961.72$ -$ 8,331,315.53$ January 2016 48,067.4 8.93$ 662,100.00$ 1,091,341.88$ -$ 7,239,973.65$ February 2016 52,606.4 8.93$ 662,100.00$ 1,131,875.15$ -$ 6,108,098.50$ March 2016 51,787.4 8.93$ 662,100.00$ 1,124,561.84$ -$ 4,983,536.66$ April 2016 51,490.5 8.93$ 662,100.00$ 1,121,910.52$ -$ 3,861,626.14$ May 2016 48,496.8 8.93$ 662,100.00$ 1,095,176.07$ -$ 2,766,450.07$ June 2016 51,410.7 8.93$ 662,100.00$ 1,121,197.82$ -$ 1,645,252.25$ July 2016 Prepayment Deposit - -$ -$ -$ 5,900,000.00$ 7,545,252.25$ July 2016 53,884.4 8.93$ 662,100.00$ 1,143,287.33$ -$ 6,401,964.92$ August 2016 56,368.7 8.93$ 662,100.00$ 1,165,472.22$ -$ 5,236,492.69$ September 2016 57,283.3 8.93$ 662,100.00$ 1,173,640.05$ -$ 4,062,852.65$ October 2016 Prepayment Deposit - -$ -$ -$ 3,900,000.00$ 7,962,852.65$ October 2016 49,587.3 8.93$ 662,100.00$ 1,104,914.86$ -$ 6,857,937.79$ November 2016 52,665.3 8.93$ 662,100.00$ 1,132,401.31$ -$ 5,725,536.48$ December 2016 43,857.1 8.93$ 662,100.00$ 1,053,743.99$ -$ 4,671,792.49$ January 2017 47,101.3 8.93$ 662,100.00$ 1,082,714.34$ -$ 3,589,078.15$ February 2017 Prepayment Deposit - -$ -$ -$ 2,465,700.00$ 6,054,778.15$ February 2017 52,183.1 8.93$ 662,100.00$ 1,128,095.44$ -$ 4,926,682.71$ March 2017 45,690.3 8.93$ 662,100.00$ 1,070,114.11$ -$ 3,856,568.60$ April 2017 48,707.3 8.93$ 662,100.00$ 1,097,056.28$ -$ 2,759,512.32$ May 2017 45,658.1 8.93$ 662,100.00$ 1,069,826.48$ -$ 1,689,685.84$ June 2017 47,915.0 8.93$ 662,100.00$ 1,089,980.86$ -$ 599,704.98$ June 2017 Prepayment Deposit - -$ -$ -$ 1,802,750.00$ 2,402,454.98$

Total 21,665,995.02$ 24,068,450.00$

Page 15

5. Water & Sewer System Wholesale Accounts Receivable Aging Report

Table 5 is a summary of the total, current and non-current receivables by category as of June 30, 2017. Table 6 is the same summary without the past due balances for the City of Highland Park. The detailed accounts receivable aging is attached to this report. This report reflects the wholesale receivables only and do not include DWSD. (Note: percentages vary from 100% due to rounding.)

Table 5 - Wholesale Accounts Receivable Aging Report

Table 6 - Wholesale Accounts Receivable Aging Report, Net of Highland Park

Total Current 46-74 Days 75-104 Days >105 DaysWater 36,459,563.31$ 31,826,178.11$ 100,698.19$ 98,797.52$ 4,433,889.49$ Sewer 48,902,435.03$ 19,838,999.50$ 484,900.00$ 484,900.00$ 28,093,635.53$ IWC 2,516,078.90$ 888,025.63$ 108,899.53$ -$ 1,519,153.74$ Pollutant Surcharge 578,000.28$ 509,129.39$ 46,835.52$ 1,677.23$ 20,358.14$ Total 88,456,077.52$ 53,062,332.63$ 741,333.24$ 585,374.75$ 34,067,036.90$

100.00% 59.99% 0.84% 0.66% 38.51%

Total Current 46-74 Days 75-104 Days >105 DaysWater 31,624,493.40$ 31,624,493.40$ -$ -$ -$ Sewer 19,354,099.50$ 19,354,099.50$ -$ -$ -$ IWC 972,528.85$ 880,925.52$ 91,603.33$ -$ -$ Pollutant Surcharge 578,000.28$ 509,129.39$ 46,835.52$ 1,677.23$ 20,358.14$ Total 52,529,122.03$ 52,368,647.81$ 138,438.85$ 1,677.23$ 20,358.14$

100.00% 99.69% 0.26% 0.00% 0.04%

Page 18

Balances as of

1/4Water AccountsGLWA Aged Accounts Receivable-

>105 Days75 - 104 Days46 - 74 DaysCurrentTotal DueCustomer Name

6/30/2017 12:00:00 AM

$0.00$0.00$0.00$182,710.55$182,710.55ALLEN PARK

$0.00$0.00$0.00$63,513.20$63,513.20ASH TOWNSHIP

$0.00$0.00$0.00$23,556.34$23,556.34BELLEVILLE

$0.00$0.00$0.00$57,293.89$57,293.89BERLIN TOWNSHIP

$0.00$0.00$0.00$272,451.39$272,451.39BROWNSTOWN TOWNSHIP

$0.00$0.00$0.00$9,417.59$9,417.59BRUCE TOWNSHIP

$0.00$0.00$0.00$19,838.46$19,838.46BURTCHVILLE TOWNSHIP

$0.00$0.00$0.00$2,119,751.07$2,119,751.07CANTON TOWNSHIP

$0.00$0.00$0.00$37,752.35$37,752.35CENTER LINE

$0.00$0.00$0.00$309,359.48$309,359.48CHESTERFIELD TOWNSHIP

$0.00$0.00$0.00$621,321.65$621,321.65CLINTON TOWNSHIP

$0.00$0.00$0.00$413,716.47$413,716.47COMMERCE TOWNSHIP

$0.00$0.00$0.00$1,320,743.62$1,320,743.62DEARBORN

$0.00$0.00$0.00$300,427.28$300,427.28DEARBORN HEIGHTS

$0.00$0.00$0.00$252,117.16$252,117.16EASTPOINTE

$0.00$0.00$0.00$114,761.18$114,761.18ECORSE

$0.00$0.00$0.00$80,155.61$80,155.61FARMINGTON

$0.00$0.00$0.00$710,174.42$710,174.42FARMINGTON HILLS

$0.00$0.00$0.00$78,775.70$78,775.70FERNDALE

$0.00$0.00$0.00$101,253.18$101,253.18FLAT ROCK

$0.00$0.00$0.00$(2,402,454.98)$(2,402,454.98)FLINT

$0.00$0.00$0.00$103,876.69$103,876.69FRASER

$0.00$0.00$0.00$133,696.99$133,696.99GARDEN CITY

Page 19

Balances as of



6/30/2017 12:00:00 AM

$0.00$0.00$0.00$1,548,077.86$1,548,077.86GENESEE COUNTY DRAIN COMM

$0.00$0.00$0.00$39,210.16$39,210.16GIBRALTAR

$0.00$0.00$0.00$41,202.55$41,202.55GREENWOOD TOWNSHIP

$0.00$0.00$0.00$103,460.60$103,460.60GROSSE ILE TOWNSHIP

$0.00$0.00$0.00$111,151.27$111,151.27GROSSE POINTE PARK

$0.00$0.00$0.00$46,961.73$46,961.73GROSSE POINTE SHORES

$0.00$0.00$0.00$98,783.54$98,783.54GROSSE POINTE WOODS

$0.00$0.00$0.00$114,547.75$114,547.75HAMTRAMCK

$0.00$0.00$0.00$69,053.76$69,053.76HARPER WOODS

$0.00$0.00$0.00$130,532.48$130,532.48HARRISON TWP

$0.00$0.00$0.00$115,439.79$115,439.79HAZEL PARK

$4,433,889.49$98,797.52$100,698.19$201,684.71$4,835,069.91HIGHLAND PARK

$0.00$0.00$0.00$116,969.19$116,969.19HURON TOWNSHIP

$0.00$0.00$0.00$103,998.64$103,998.64IMLAY CITY

$0.00$0.00$0.00$403.12$403.12IMLAY TOWNSHIP

$0.00$0.00$0.00$138,403.81$138,403.81INKSTER

$0.00$0.00$0.00$24,612.47$24,612.47KEEGO HARBOR

$0.00$0.00$0.00$112,684.84$112,684.84LAPEER

$0.00$0.00$0.00$42,741.78$42,741.78LENOX TOWNSHIP

$0.00$0.00$0.00$182,826.60$182,826.60LINCOLN PARK

$0.00$0.00$0.00$1,101,254.56$1,101,254.56LIVONIA

$0.00$0.00$0.00$868,554.34$868,554.34MACOMB TWP

Page 20

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $154,907.16 $154,907.16 MADISON HEIGHTS

$0.00 $0.00 $0.00 $2,402.71 $2,402.71 MAYFIELD TOWNSHIP

$0.00 $0.00 $0.00 $101,787.40 $101,787.40 MELVINDALE

$0.00 $0.00 $0.00 $28,715.97 $28,715.97 NEW HAVEN

$0.00 $0.00 $0.00 $3,534,318.07 $3,534,318.07 NOCWA

$0.00 $0.00 $0.00 $59,456.50 $59,456.50 NORTHVILLE

$0.00 $0.00 $0.00 $977,642.57 $977,642.57 NORTHVILLE TOWNSHIP

$0.00 $0.00 $0.00 $1,404,140.18 $1,404,140.18 NOVI

$0.00 $0.00 $0.00 $102,832.61 $102,832.61 OAK PARK

$0.00 $0.00 $0.00 $0.00 $0.00 OAKLAND CO DR COM

$0.00 $0.00 $0.00 $82,707.72 $82,707.72 PLYMOUTH

$0.00 $0.00 $0.00 $326,726.95 $326,726.95 PLYMOUTH TOWNSHIP

$0.00 $0.00 $0.00 $277,278.63 $277,278.63 REDFORD TOWNSHIP

$0.00 $0.00 $0.00 $47,291.28 $47,291.28 RIVER ROUGE

$0.00 $0.00 $0.00 $68,768.15 $68,768.15 RIVERVIEW

$0.00 $0.00 $0.00 $24,047.75 $24,047.75 ROCKWOOD

$0.00 $0.00 $0.00 $20,083.25 $20,083.25 ROMEO

$0.00 $0.00 $0.00 $305,329.86 $305,329.86 ROMULUS

$0.00 $0.00 $0.00 $208,048.14 $208,048.14 ROSEVILLE

$0.00 $0.00 $0.00 $18,934.44 $18,934.44 ROYAL OAK TOWNSHIP

$0.00 $0.00 $0.00 $1,060,370.38 $1,060,370.38 SHELBY TOWNSHIP

$0.00 $0.00 $0.00 $3,482,226.59 $3,482,226.59 SOCWA

$0.00 $0.00 $0.00 $8,552.78 $8,552.78 SOUTH ROCKWOOD

Page 21

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $172,761.93 $172,761.93 SOUTHGATE

$0.00 $0.00 $0.00 $239,488.10 $239,488.10 ST. CLAIR SHORES

$0.00 $0.00 $0.00 $1,213,029.85 $1,213,029.85 STERLING HEIGHTS

$0.00 $0.00 $0.00 $52,514.29 $52,514.29 SUMPTER TOWNSHIP

$0.00 $0.00 $0.00 $0.00 $0.00 SYLVAN LAKE

$0.00 $0.00 $0.00 $394,322.31 $394,322.31 TAYLOR

$0.00 $0.00 $0.00 $163,313.26 $163,313.26 TRENTON

$0.00 $0.00 $0.00 $1,088,335.35 $1,088,335.35 TROY (SEOC)

$0.00 $0.00 $0.00 $41,796.93 $41,796.93 UTICA

$0.00 $0.00 $0.00 $230,646.29 $230,646.29 VAN BUREN TOWNSHIP

$0.00 $0.00 $0.00 $17,800.78 $17,800.78 VILLAGE OF ALMONT

$0.00 $0.00 $0.00 $76,892.92 $76,892.92 WALLED LAKE

$0.00 $0.00 $0.00 $799,235.32 $799,235.32 WARREN

$0.00 $0.00 $0.00 $244,885.51 $244,885.51 WASHINGTON TOWNSHIP

$0.00 $0.00 $0.00 $440,862.86 $440,862.86 WAYNE

$0.00 $0.00 $0.00 $1,554,155.27 $1,554,155.27 WEST BLOOMFIELD TWP (C-O)

$0.00 $0.00 $0.00 $490,362.55 $490,362.55 WESTLAND

$0.00 $0.00 $0.00 $202,276.58 $202,276.58 WIXOM

$0.00 $0.00 $0.00 $159,983.51 $159,983.51 WOODHAVEN

$0.00 $0.00 $0.00 $1,710,180.57 $1,710,180.57 YCUA

$4,433,889.49 $98,797.52 $100,698.19 $31,826,178.11 $36,459,563.31 TOTAL Water Accounts

Page 22

Balances as of

1/1Sewer AccountsGLWA Aged Accounts Receivable-


6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $56,000.00 $56,000.00 ALLEN PARK

$0.00 $0.00 $0.00 $77,199.50 $77,199.50 CENTER LINE

$0.00 $0.00 $0.00 $0.00 $0.00 DEARBORN

$0.00 $0.00 $0.00 $2,681,600.00 $2,681,600.00 EVERGREEN-FARMINGTON

$0.00 $0.00 $0.00 $0.00 $0.00 FARMINGTON

$0.00 $0.00 $0.00 $0.00 $0.00 GROSSE POINTE

$0.00 $0.00 $0.00 $0.00 $0.00 GROSSE POINTE FARMS

$0.00 $0.00 $0.00 $135,500.00 $135,500.00 GROSSE POINTE PARK

$0.00 $0.00 $0.00 $0.00 $0.00 HAMTRAMCK

$0.00 $0.00 $0.00 $20,000.00 $20,000.00 HARPER WOODS

$28,093,635.53 $484,900.00 $484,900.00 $484,900.00 $29,548,335.53 HIGHLAND PARK

$0.00 $0.00 $0.00 $115,100.00 $115,100.00 MELVINDALE

$0.00 $0.00 $0.00 $3,806,900.00 $3,806,900.00 OAKLAND COUNTY GWK DD

$0.00 $0.00 $0.00 $5,802,300.00 $5,802,300.00 OMID


$0.00 $0.00 $0.00 $4,623,900.00 $4,623,900.00 ROUGE VALLEY

$0.00 $0.00 $0.00 $2,010,000.00 $2,010,000.00 WAYNE COUNTY N.E.

$0.00 $0.00 $0.00 $3,900.00 $3,900.00 WAYNE COUNTY-AREA #3

$28,093,635.53 $484,900.00 $484,900.00 $19,838,999.50 $48,902,435.03 TOTAL Sewer Accounts

Page 23

Balances as of

1/4IWC AccountsGLWA Aged Accounts Receivable-


6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $2,562.43 $2,562.43 ALLEN PARK

$0.00 $0.00 $0.00 $29,356.78 $29,356.78 AUBURN HILLS (C-O)

$0.00 $0.00 $0.00 $567.95 $567.95 AUBURN HILLS (E-F)

$0.00 $0.00 $0.00 $4,609.21 $4,609.21 BERKLEY

$0.00 $0.00 $0.00 $1,587.92 $1,587.92 BEVERLY HILLS

$0.00 $0.00 $0.00 $1,695.07 $1,695.07 BINGHAM FARMS

$0.00 $0.00 $0.00 $3,802.94 $3,802.94 BIRMINGHAM (E-F)

$0.00 $0.00 $9,024.13 $8,848.96 $17,873.09 BIRMINGHAM (SEOC)

$0.00 $0.00 $0.00 $2,401.37 $2,401.37 BLOOMFIELD HILLS

$0.00 $0.00 $0.00 $11,129.21 $11,129.21 BLOOMFIELD TOWNSHIP

$0.00 $0.00 $0.00 $30,302.38 $30,302.38 CANTON TOWNSHIP

$0.00 $0.00 $0.00 $5,854.18 $5,854.18 CENTER LINE

$0.00 $0.00 $18,879.44 $18,899.22 $37,778.66 CHESTERFIELD TOWNSHIP

$0.00 $0.00 $0.00 $443.60 $443.60 CITY OF FARMINGTON (E-F)

$0.00 $0.00 $0.00 $5,919.69 $5,919.69 CITY OF ROCHESTER

$0.00 $0.00 $0.00 $488.89 $488.89 CLARKSTON

$0.00 $0.00 $0.00 $0.00 $0.00 CLAWSON

$0.00 $0.00 $39,867.71 $39,839.46 $79,707.17 CLINTON TOWNSHIP

$0.00 $0.00 $0.00 $58,098.97 $58,098.97 DEARBORN

$0.00 $0.00 $0.00 $15,000.92 $15,000.92 DEARBORN HEIGHTS

$0.00 $0.00 $0.00 $169.50 $169.50 DETROIT METRO WC AIRPORT

$0.00 $0.00 $0.00 $10,115.73 $10,115.73 EASTPOINTE

$0.00 $0.00 $0.00 $5,251.53 $5,251.53 FARMINGTON

Page 24

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $37,445.76 $37,445.76 FARMINGTON HILLS

$0.00 $0.00 $0.00 $0.00 $0.00 FERNDALE

$0.00 $0.00 $0.00 $7,883.66 $7,883.66 FRASER

$0.00 $0.00 $0.00 $0.00 $0.00 GARDEN CITY

$0.00 $0.00 $0.00 $0.00 $0.00 GROSSE POINTE

$0.00 $0.00 $0.00 $3,534.57 $3,534.57 GROSSE POINTE FARMS

$0.00 $0.00 $0.00 $1,878.80 $1,878.80 GROSSE POINTE PARK

$0.00 $0.00 $0.00 $0.00 $0.00 GROSSE POINTE SHORES

$0.00 $0.00 $0.00 $0.00 $0.00 GROSSE POINTE WOODS

$0.00 $0.00 $0.00 $7,069.93 $7,069.93 HAMTRAMCK

$0.00 $0.00 $0.00 $2,839.34 $2,839.34 HARPER WOODS

$0.00 $0.00 $0.00 $4,987.38 $4,987.38 HARRISON TWP

$0.00 $0.00 $5,204.33 $5,427.52 $10,631.85 HAZEL PARK

$1,519,153.74 $0.00 $17,296.20 $7,100.11 $1,543,550.05 HIGHLAND PARK

$0.00 $0.00 $0.00 $454.88 $454.88 HUNTINGTON WOODS

$0.00 $0.00 $0.00 $7,295.22 $7,295.22 INDEPENDENCE

$0.00 $0.00 $0.00 $8,837.55 $8,837.55 INKSTER

$0.00 $0.00 $0.00 $1,090.57 $1,090.57 KEEGO HARBOR

$0.00 $0.00 $0.00 $1,206.45 $1,206.45 LAKE ORION

$0.00 $0.00 $0.00 $2,235.33 $2,235.33 LATHRUP

$0.00 $0.00 $0.00 $282.50 $282.50 LENOX TOWNSHIP

$0.00 $0.00 $0.00 $63,075.16 $63,075.16 LIVONIA

Page 25

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $327.83 $327.83 MACOMB TWP

$0.00 $0.00 $0.00 $29,539.90 $29,539.90 MADISON HEIGHTS

$0.00 $0.00 $0.00 $5,769.33 $5,769.33 MELVINDALE

$0.00 $0.00 $0.00 $635.86 $635.86 NEW HAVEN

$0.00 $0.00 $0.00 $0.00 $0.00 NORTHVILLE

$0.00 $0.00 $0.00 $7,269.19 $7,269.19 NORTHVILLE TOWNSHIP

$0.00 $0.00 $0.00 $27,296.70 $27,296.70 NOVI

$0.00 $0.00 $0.00 $10,072.68 $10,072.68 OAK PARK

$0.00 $0.00 $0.00 $723.25 $723.25 OAKLAND TOWNSHIP

$0.00 $0.00 $0.00 $644.16 $644.16 ORCHARD LAKE VILLAGE

$0.00 $0.00 $0.00 $8,811.98 $8,811.98 ORION TOWNSHIP (C-O)

$0.00 $0.00 $0.00 $1,553.88 $1,553.88 OXFORD TOWNSHIP

$0.00 $0.00 $0.00 $2,000.70 $2,000.70 OXFORD VILLAGE

$0.00 $0.00 $0.00 $0.00 $0.00 PLEASANT RIDGE

$0.00 $0.00 $0.00 $0.00 $0.00 PLYMOUTH

$0.00 $0.00 $0.00 $0.00 $0.00 PLYMOUTH TOWNSHIP


$0.00 $0.00 $0.00 $28,594.73 $28,594.73 ROCHESTER HILLS

$0.00 $0.00 $0.00 $1,471.85 $1,471.85 ROMULUS

$0.00 $0.00 $0.00 $22,589.94 $22,589.94 ROSEVILLE

$0.00 $0.00 $0.00 $20,345.22 $20,345.22 ROYAL OAK

$0.00 $0.00 $0.00 $1,539.78 $1,539.78 ROYAL OAK TOWNSHIP

$0.00 $0.00 $18,399.88 $18,504.42 $36,904.30 SHELBY TOWNSHIP

Page 26

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $44,520.62 $44,520.62 SOUTHFIELD (E-F)

$0.00 $0.00 $0.00 $5,758.04 $5,758.04 SOUTHFIELD (SEOC)

$0.00 $0.00 $0.00 $19,289.83 $19,289.83 ST. CLAIR SHORES

$0.00 $0.00 $0.00 $49,304.21 $49,304.21 STERLING HEIGHTS

$0.00 $0.00 $0.00 $610.31 $610.31 TROY (E-F)

$0.00 $0.00 $0.00 $58,099.67 $58,099.67 TROY (SEOC)

$0.00 $0.00 $0.00 $4,670.13 $4,670.13 UTICA

$0.00 $0.00 $0.00 $548.13 $548.13 VAN BUREN TOWNSHIP

$0.00 $0.00 $0.00 $104.53 $104.53 VILLAGE OF FRANKLIN

$0.00 $0.00 $0.00 $2,226.35 $2,226.35 WASHINGTON TOWNSHIP

$0.00 $0.00 $0.00 $19,604.87 $19,604.87 WATERFORD TOWNSHIP

$0.00 $0.00 $0.00 $7,975.55 $7,975.55 WAYNE

$0.00 $0.00 $0.00 $1,486.13 $1,486.13 WEST BLOOMFIELD TWP (C-O)

$0.00 $0.00 $0.00 $10,004.59 $10,004.59 WEST BLOOMFIELD TWP (E-F)

$0.00 $0.00 $0.00 $36,965.78 $36,965.78 WESTLAND

$1,519,153.74 $0.00 $108,899.53 $888,025.63 $2,516,078.90 TOTAL IWC Accounts

Page 27

Balances as of

1/8Pollutant Surcharge AccountsGLWA Aged Accounts Receivable-


6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $3,924.29 $3,924.29 A & R PACKING CO., LLC

$0.00 $0.00 $0.00 $813.69 $813.69 AACTRON

$0.00 $0.00 $0.00 $0.00 $0.00 ACADEMY PACKING CO.

$0.00 $0.00 $0.00 $37.29 $37.29 ACME RUSTPROOF

$0.00 $0.00 $0.00 $551.51 $551.51 ADVANCED RESOURCE RECOVERY

$0.00 $0.00 $1,199.65 $22,350.06 $23,549.71 AEVITAS SPECIALITY SERVICES

$0.00 $0.00 $0.00 $0.00 $0.00 ALEXANDER & HORNUNG



$0.00 $0.00 $395.93 $678.44 $1,074.37 ALGAL SCIENTIFIC CORPORATION

$0.00 $0.00 $0.00 $71.00 $71.00 ALL CHEM CORP, LLC.

$0.00 $0.00 $0.00 $0.00 $0.00 ALPHA STAMPING COMPANY

$0.00 $0.00 $0.00 $0.00 $0.00 AMERICAN WASTE TECH INC.

$0.00 $0.00 $0.00 $473.05 $473.05 ATWATER BREWERY

$0.00 $0.00 $0.00 $3,045.29 $3,045.29 ATWATER BREWERY

$0.00 $0.00 $0.00 $0.00 $0.00 AUTOMOTIVE FINISH

$0.00 $0.00 $0.00 $0.00 $0.00 AXLE BREWING COMPANY, LLC

$0.00 $0.00 $0.00 $388.58 $388.58 BAFFIN BREWING COMPANY

$0.00 $0.00 $0.00 $1,140.39 $1,140.39 BARABOO BREWING COMPANY

$0.00 $0.00 $0.00 $995.86 $995.86 BARON INDUSTRIES

$0.00 $0.00 $0.00 $0.00 $0.00 BARTZ BAKERY

$0.00 $0.00 $0.00 $198.88 $198.88 BASTONE BREWERY

$0.00 $0.00 $0.00 $257.65 $257.65 BATCH BREWING COMPANY

Page 28

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $230.02 $230.02 BAYS MICHIGAN CORPORATION

$240.77 $64.34 $0.00 $67.56 $372.67 BEIRUT BAKERY, INC.

$0.00 $0.00 $0.00 $16,054.53 $16,054.53 BETTER MADE SNACK FOOD

$0.00 $0.00 $0.00 $0.00 $0.00 BLACK LOTUS BREWING CO.

$0.00 $0.00 $0.00 $79.62 $79.62 BOZEK'S MARKET

$0.00 $0.00 $0.00 $3,594.37 $3,594.37 BREW DETROIT

$0.00 $0.00 $0.00 $127.96 $127.96 BROADWAY MKT CORNED BEEF

$0.00 $0.00 $0.00 $10.99 $10.99 BROOKS BREWING, LLC.

$0.00 $0.00 $0.00 $0.00 $0.00 CANTON BREW WORKS

$0.00 $0.00 $0.00 $1.38 $1.38 CAPITAL REPRODUCTIONS

$0.00 $0.00 $0.00 $14,900.72 $14,900.72 CF BURGER CREAMERY

$1,885.87 $0.00 $0.00 $0.00 $1,885.87 CHILANGO'S BAKERY

$0.00 $0.00 $48,287.53 $0.00 $48,287.53 CINTAS CORP. - MACOMB TWP.

$0.00 $0.00 $0.00 $0.00 $0.00 CINTAS CORPORATION

$0.00 $0.00 $0.00 $0.00 $0.00 CINTAS CORPORATION

$0.00 $0.00 $0.00 $14.76 $14.76 CITY LAUNDRY, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 CLASSIC CONTAINER CORP.

$0.00 $0.00 $2,653.65 $5,217.35 $7,871.00 COCA-COLA REFRESHMENTS USA, INC.

$0.00 $0.00 $0.00 $2,209.58 $2,209.58 COTSCO WHOLESALE STORE

$0.00 $0.00 $0.00 $741.72 $741.72 COTSCO WHOLESALE STORE

$0.00 $0.00 $0.00 $2,678.88 $2,678.88 COTSCO WHOLESALE STORE

$0.00 $0.00 $0.00 $269.40 $269.40 COTSCO WHOLESALE STORE

Page 29

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $10,934.17 $10,934.17 COUNTRY FRESH DAIRY CO.

$737.75 $0.00 $0.00 $1,600.70 $2,338.45 CROSS CHEMICAL COMPANY, INC.

$0.00 $0.00 $0.00 $7,502.68 $7,502.68 DARLING INGREDIENTS, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 DAVE'S SAUSAGE FACTORY 2

$0.00 $0.00 $0.00 $42.04 $42.04 DEARBORN BREWING

$0.00 $0.00 $0.00 $0.00 $0.00 DEARBORN SAUSAGE

$0.00 $0.00 $0.00 $0.00 $0.00 DEARBORN SAUSAGE CO., INC.

$0.00 $0.00 $0.00 $129.02 $129.02 DETROIT BEER

$0.00 $0.00 $0.00 $0.00 $0.00 DETROIT LINEN SERVICE

$(0.06)$0.00 $0.00 $0.00 $(0.06)DETROIT METRO WC AIRPORT

$0.00 $0.00 $0.00 $17.07 $17.07 DETROIT SAUSAGES CO INC

$0.00 $0.00 $0.00 $0.00 $0.00 DETRONIC INDUSTRIES, INC.

$0.00 $0.00 $0.00 $28,007.59 $28,007.59 DIFCO LABORATORIES, INC.

$0.00 $0.00 $0.00 $163.65 $163.65 DIVERSIFIED CHEM TECH. INC.

$0.00 $0.00 $0.00 $2,191.82 $2,191.82 DOMESTIC UNIFORM RENTAL

$0.00 $0.00 $0.00 $3,356.21 $3,356.21 DOMESTIC UNIFORM RENTAL

$0.00 $0.00 $0.00 $3,085.44 $3,085.44 E.W. GROBBEL'S SONS, INC.

$0.00 $0.00 $0.00 $5,592.75 $5,592.75 EAGLE OTTAWA ROCHESTER HILLS

$0.00 $0.00 $0.00 $0.00 $0.00 ENVIROSOLIDS, L.L.C.

$0.00 $0.00 $0.00 $5,340.06 $5,340.06 EQ DETROIT, INC.

$0.00 $0.00 $0.00 $10,787.62 $10,787.62 EQ DETROIT, INC.

$0.00 $0.00 $0.00 $(2,834.49)$(2,834.49)EQ DETROIT, INC.

$0.00 $0.00 $0.00 $756.85 $756.85 EQ DETROIT, INC.

Page 30

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $4,223.12 $4,223.12 EQ RESOURCES RECOVERY, INC.

$0.00 $(1,558.33)$0.00 $0.00 $(1,558.33)ETON ST BREWERY- GRIFFIN CLAW

$0.00 $0.00 $0.00 $208.04 $208.04 EXTRUDE HONE CORPORATION

$0.00 $0.00 $0.00 $0.00 $0.00 EXTRUDEHODE

$0.00 $0.00 $0.00 $94.44 $94.44 FARMINGTON BREWING COMPANY

$0.00 $0.00 $0.00 $46,242.98 $46,242.98 FAYGO BEVERAGES, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 FITZGERALD FINISHING LLC

$0.00 $0.00 $0.00 $201.14 $201.14 FORD NEW MODEL PROGRAM

$0.00 $0.00 $0.00 $1,086.52 $1,086.52 FRESH-PAK

$0.00 $0.00 $0.00 $3,947.47 $3,947.47 FRESH-PAK

$0.00 $0.00 $769.87 $7,654.66 $8,424.53 GENERAL LINEN SUPPLY CO.

$0.00 $0.00 $0.00 $19.69 $19.69 GLOBAL TITANIUM, INC.

$0.00 $0.00 $0.00 $185.85 $185.85 GLOBAL TITANIUM, INC.

$0.00 $0.00 $(4,633.93)$0.00 $(4,633.93)GRANITE CITY FOOD & BREWERY

$0.00 $0.00 $0.00 $76.81 $76.81 GRANITE CITY FOOD & BREWERY

$0.00 $0.00 $0.00 $97.63 $97.63 GRANITE CITY FOOD & BREWERY

$3,031.38 $612.36 $623.70 $1,261.57 $5,529.01 HACIENDA MEXICAN FOODS

$85.02 $0.00 $0.00 $98.43 $183.45 HENKEL CORPORATION

$0.00 $0.00 $0.00 $2,217.35 $2,217.35 HOME STYLE FOOD INC.

$114.25 $9.84 $11.81 $19.69 $155.59 HOOD CLEANERS

$0.00 $0.00 $0.00 $2,230.08 $2,230.08 HOUGHTON INTERNATIONAL INC.

$0.00 $0.00 $0.00 $2,139.05 $2,139.05 HOUGHTON INTERNATIONAL INC.

Page 31

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $940.58 $940.58 HOUGHTON INTERNATIONAL INC.

$0.00 $0.00 $0.00 $0.00 $0.00 HUNTINGTON CLEANERS

$0.00 $0.00 $0.00 $0.00 $0.00 INDUSTRIAL METAL COATING

$0.00 $0.00 $0.00 $619.26 $619.26 ISLAMIC SLAUGHTER HOUSE

$0.00 $0.00 $0.00 $6.43 $6.43 ITALIAN BUTTER BREAD STICKS

$0.00 $0.00 $0.00 $125.13 $125.13 J & G FOOD PRODUCTS, INC.

$2,261.50 $0.00 $0.00 $2,680.94 $4,942.44 KAR NUT PRODUCTS

$0.00 $0.00 $0.00 $1,311.97 $1,311.97 KOWALSKI SAUSAGES, CO.

$0.00 $0.00 $0.00 $628.74 $628.74 LA MICHOACANA FLOUR TORTILLA

$0.00 $0.00 $0.00 $44.20 $44.20 LA MICHOACANA FLOUR TORTILLA

$0.00 $0.00 $0.00 $0.00 $0.00 LIBERTY STREET PROD. BREWERY

$0.00 $0.00 $0.00 $0.00 $0.00 LILY'S SEAFOOD GRILL & BREWERY

$0.00 $0.00 $0.00 $2,067.37 $2,067.37 MACDERMID, INC.

$141.18 $22.00 $0.00 $18.34 $181.52 MCNICHOLS POLISHING & ANODIZING

$0.00 $0.00 $0.00 $113.75 $113.75 MELLO MEATS INC, - KUBISCH SAUSAGE

$0.00 $0.00 $0.00 $416.61 $416.61 METROPOLITAN BAKERY

$0.00 $0.00 $0.00 $0.00 $0.00 MIBA HYDRAMECHANICA CORP.

$0.00 $0.00 $0.00 $87,545.45 $87,545.45 MICHIGAN DAIRY

$0.00 $0.00 $0.00 $0.00 $0.00 MICHIGAN PROD. MACHINING

$0.00 $0.00 $0.00 $0.00 $0.00 MICHIGAN SOY PRODUCTS CO.

$0.00 $0.00 $0.00 $2.94 $2.94 MIDWEST WIRE PRODUCTS, INC.

$0.00 $0.00 $0.00 $1,033.82 $1,033.82 MILANO BAKERY

$0.00 $0.00 $0.00 $45.36 $45.36 MILTON CHILI CO.

Page 32

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $1,118.07 $1,118.07 MINNIE MARIE BAKERS, INC

$0.00 $38.31 $37.62 $66.53 $142.46 MISTER UNIFORM & MAT RENTALS

$0.00 $(213.00)$0.00 $0.00 $(213.00)MOTOR CITY BREWING WORKS

$0.00 $0.00 $0.00 $399.82 $399.82 NATIONAL CHILI COMPANY

$0.00 $0.00 $0.00 $103.18 $103.18 NATIONAL CHILI COMPANY

$0.00 $0.00 $0.00 $0.00 $0.00 NORTH CENTER BREWING COMPANY

$0.00 $0.00 $0.00 $54.65 $54.65 NORTHERN LAKES SEAFOOD & MEATS

$0.00 $0.00 $0.00 $394.48 $394.48 OAKWOOD BAKERY

$0.00 $0.00 $0.00 $599.30 $599.30 PELLERITO FOODS INC.

$0.00 $0.00 $0.00 $33,384.57 $33,384.57 PEPSI COLA, INC.

$0.00 $0.00 $0.00 $47.64 $47.64 PERSONAL UNIFORM SERVICE, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 PETRO ENVIRON TECH, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 PINE TREE ACRES, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 PLATING SPEC

$0.00 $0.00 $0.00 $240.83 $240.83 POWER VAC OF MICHIGAN, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 PRODUCTION SPRING, LLC.

$0.00 $0.00 $0.00 $262.91 $262.91 QUALA SERVICES, LLC

$0.00 $0.00 $0.00 $0.00 $0.00 RAY'S ICE CREAM CO.

$0.00 $0.00 $0.00 $0.00 $0.00 RED SPOT PAINT #409139

$0.00 $0.00 $0.00 $0.00 $0.00 RIVER ROUGE BREWING COMPANY LLC

$0.00 $0.00 $(1,367.56)$0.00 $(1,367.56)ROAK BREWING CO. LLC

$0.00 $0.00 $0.00 $0.00 $0.00 ROCHESTER MILLS BEER COMPANY

Page 33

Balances as of



6/30/2017 12:00:00 AM

$963.00 $684.23 $878.53 $1,727.49 $4,253.25 ROCHESTER MILLS BREWERY

$9,516.26 $1,332.19 $0.00 $3,737.79 $14,586.24 RTT

$0.00 $0.00 $0.00 $59.54 $59.54 SEAFARE FOODS, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 SHERWOOD BREWING COMPANY

$1,381.22 $685.29 $376.64 $1,285.44 $3,728.59 SPRAYTEK, INC.

$0.00 $0.00 $0.00 $133.61 $133.61 SWEETHEART BAKERY, INC.

$0.00 $0.00 $0.00 $0.00 $0.00 THE CROWN GROUP-LIVONIA PLANT

$0.00 $0.00 $(2,397.92)$0.00 $(2,397.92)THE ROYAL OAK BREWERY

$0.00 $0.00 $0.00 $0.00 $0.00 TOM LAUNDRY CLEANERS

$0.00 $0.00 $0.00 $0.00 $0.00 TRAFFIC JAM & SNUG

$0.00 $0.00 $0.00 $17,511.38 $17,511.38 TURRI'S ITALIAN FOODS

$0.00 $0.00 $0.00 $0.00 $0.00 TURRI'S ITALIAN FOODS

$0.00 $0.00 $0.00 $1,468.74 $1,468.74 U-METCO, INC.

$0.00 $0.00 $0.00 $67,967.09 $67,967.09 UNCLE RAYS SNACKS, LLC

$0.00 $0.00 $0.00 $2,819.32 $2,819.32 UNCLE RAYS SNACKS, LLC

$0.00 $0.00 $0.00 $0.00 $0.00 UNIQUE LINEN SERVICES, INC.

$0.00 $0.00 $0.00 $11.95 $11.95 UNITED FISH DISTRIBUTORS

$0.00 $0.00 $0.00 $277.79 $277.79 UNITED LINEN SERVICE, LLC.

$0.00 $0.00 $0.00 $170.62 $170.62 UNITED MEAT & DELI

$0.00 $0.00 $0.00 $6,720.56 $6,720.56 US ECOLOGY MICHIGAN

$0.00 $0.00 $0.00 $8,178.82 $8,178.82 USHER OIL SERVICES

$0.00 $0.00 $0.00 $4,798.04 $4,798.04 VERN DALE PRODUCTS, INC.

$0.00 $0.00 $0.00 $15,533.96 $15,533.96 VERNE DALE PRODUCTS

Page 34

Balances as of



6/30/2017 12:00:00 AM

$0.00 $0.00 $0.00 $76.56 $76.56 VERNOR FOOD PRODUCTS

$0.00 $0.00 $0.00 $381.06 $381.06 WIGLEY'S MEAT PROCESS

$0.00 $0.00 $0.00 $1,066.39 $1,066.39 WINTER SAUSAGE MFG. CO.

$0.00 $0.00 $0.00 $193.38 $193.38 WINTER SAUSAGE MFG. CO.

$0.00 $0.00 $0.00 $8,295.50 $8,295.50 WOLVERINE PACKING CO

$0.00 $0.00 $0.00 $2,638.97 $2,638.97 WOLVERINE PACKING CO.

$0.00 $0.00 $0.00 $0.00 $0.00 WOODWARD AVENUE BREWERS

$20,358.14 $1,677.23 $46,835.52 $509,129.39 $578,000.28 TOTAL Pollutant SurchargeAccounts

Page 35

Date: July 28, 2017


From: Deirdre Henry, Treasury Manager

Re: Investment Portfolio Update (Unaudited)

Background: Since GLWA’s inception in January 2016, a high percentage of the cash on hand has been held in depository accounts and money markets while GLWA staff has been working diligently to establish cash flows for the newly created organization. The treasury staff has been working in conjunction with PFM to develop an investment strategy that will maximize investment returns, within the guidelines of the GLWA investment policy, while timing maturities to meet cash flow requirements for operational and capital expenditures.

Analysis: Since March 2017, more investments have been shifted into higher earning money market and local government investment pools to increase earnings while still maintaining liquidity. There has also been a shift to more managed funds. Both of these changes have resulted in a higher yield to market of .87% at June 30, 2017 compared to .56% at March 31, 2017.

As the FY 2016 audit work has been completed, we have more information on operational and capital expenditures, which provides clarity about liquidity requirements. Within the last month, the treasury staff and PFM have met to review cash flow projections by each fund. We have established objectives and developed an overall strategy for the investment portfolio. As of June 30, 2017 13% of the portfolio was in managed investment funds. Implementing the new investment strategy will result in over 40% of the portfolio in managed investment funds by December 31, 2017.

PFM has prepared the attached report which summarizes the portfolio strategy.


Page 36

AGENDA ITEM #8C

UNAUDITED Investment Portfolio Update – June 2017

Prepared by PFM Asset Management LLC

Great Lakes Water AuthorityAvailable Funds

Type Financial Institution

$ Amount (as of 3/31/17)

$ Amount(as of 4/30/17)



Deposit Account Comerica $16,568,276 $17,977,954 $16,850,505 $1,387,917

Deposit Account First Independence $17,263,076 $17,124,982 $15,740,496 $15,919,427

Deposit Account JP Morgan $308,924,516 $274,922,517 $257,010,633 $26,637,426

Bank Deposit Account Subtotal $342,755,868 $310,025,453 $289,601,634 $43,944,770

LGIP GovMIC $136,868,270 $171,748,892 $161,838,020 $162,032,300

MMF JP Morgan $0 $0 $0 $231,644,200

MMF U.S. Bank $388,583,332 $437,227,966 $423,878,202 $479,370,139

Money Market and LGIP Subtotal $525,451,602 $608,976,858 $585,716,222 $873,046,639

Managed Funds JP Morgan $16,974,800 $16,970,380 $16,979,630 $16,981,850

Managed Funds PFM $223,018,560 $251,239,727 $281,059,140 $119,841,522

Investments Subtotal $239,993,360 $268,210,107 $298,038,770 $136,823,372

MONTH-END TOTALS $1,108,200,828 $1,187,212,418 $1,173,356,627 $1,053,814,781

The accounts at Comerica Bank get an earnings credit to offset bank fees. The earnings in the accounts at First Independence Bank is credited to the contractors and not the Authority. In addition to the totals listed above, there also exists surety bonds as well. “LGIP” stands for Local Government Investment Pool and “MMF” stands for Money Market Fund.

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Great Lakes Water AuthorityYield to Maturity

Type Financial Institution


YTM @ Market (as of 3/31/17)


YTM @ Market (as of 6/30/17)

Deposit Account Comerica $16,568,276 0.25% $1,387,917 0.25%

Deposit Account First Independence $17,263,076 0.05% $15,919,427 0.05%

Deposit Account JP Morgan $308,924,516 0.31% $26,637,426 0.31%

Bank Deposit Account Subtotal $342,755,868 0.29% $43,944,770 0.21%

LGIP GovMIC $136,868,270 0.83% $162,032,300 1.01%

MMF JP Morgan $0 0.00% $231,644,200 0.88%

MMF U.S. Bank $388,583,332 0.42% $479,370,139 0.76%

Money Market and LGIP Subtotal $525,451,602 0.53% $873,046,639 0.84%

Managed Funds JP Morgan $16,974,800 1.08% $16,981,850 1.11%

Managed Funds PFM $223,018,560 1.04% $119,841,522 1.20%

Investments Subtotal $239,993,360 1.04% $136,823,372 1.19%

TOTAL $1,108,200,828 0.56% $1,053,814,781 0.87%


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Great Lakes Water AuthorityInvestment Progress

Negotiate Bank ECR and Interest Rate

‐ Increase ECR to .35%

‐ Increase Int Rate .31%

Invest Debt Service and Reserve Funds

‐ Debt Service invested to specific payment dates

‐ Debt Reserve invested to maximize return while sensitive to valuation date

‐ Avg. $227 million

Transition Bank Balances to Money Market Funds

‐ $300 million moved to higher yielding, more diversified and higher credit rated Government money market and Local Government Investment Pool

Invest longer‐term funds based upon cash flows

‐ Identified at least $320 million to be invested in the next 6 months

‐ $125 million invested in July for construction funds

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Great Lakes Water AuthorityInvestment Progress Update

The information below summarizes steps taken since the last Audit Committee Meeting:I. Discussion of overall investment plan and steps needed to increase percentage of funds invested

II. Review of all bank, money market and investment accounts to identify cash flow parameters‐ Definition of liquidity requirements‐ Identification of monthly high disbursement levels and average balances‐ Determination of investable amounts and maximum maturity date

IV. Segmentation of all funds into 3 categories:

V. Initial identification of $320 million available for investment within the next 6 months. ‐ Additional accounts will be considered for investment once audit is closed and funds finalized

VI. Implementation:‐Transfer of +$300 million from bank accounts to money market accounts (diversify and increase yield)‐Invested +$100 million in Water and Sewer Construction funds based on above analysis in July

VII. Review of potential benchmarks by account based upon expected duration (ex. 1‐3 Year US Treasury Index)

Immediate Required Liquidity Investable

Bank Deposits Money Market Separate Account

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Great Lakes Water AuthorityLooking Forward


Type Financial Institution $ Amount (as of 6/30/17)

% as of 6/30/2017


% as of 12/31/2017

Deposit Account Comerica $1,387,917 0.1% $1,640,212 0.2%

Deposit Account First Independence $15,919,427 1.5% $15,919,427 1.5%

Deposit Account JP Morgan $26,637,426 2.5% $1,085,168 0.1%

Bank Deposit Account Subtotal $43,944,770 4.2% $18,644,807 1.8%

LGIP GovMIC $162,032,300 15.4% $79,377,386 7.7%

MMF JP Morgan $231,644,200 22.0% $50,000,001 4.8%

MMF U.S. Bank $479,370,139 45.5% $426,039,715 41.3%

Money Market and LGIP Subtotal $873,046,639 82.8% $555,417,102 53.9%

Managed Funds JP Morgan $16,981,850 1.6% $16,981,850 1.6%

Managed Funds PFM $119,841,522 11.4% $440,367,956 42.7%

Investments Subtotal $136,823,372 13.0% $457,349,806 44.3%

TOTAL $1,053,814,781 100.0% $1,031,411,715 100.0%

Page 41

Date: July 28, 2017


From: Nicolette N. Bateson, CPA, Chief Financial Officer/Treasurer

Re: Presentation: Discussion Draft – Draft Great Lakes Water Authority Financial Report as of June 30, 2016

Background: The inaugural financial report and audit for the Great Lakes Water Authority (GLWA) is near completion. Given the uniqueness of the GLWA’s first year, including the establishment of an opening Statement of Net Position as of January 1, 2016 and reporting a “partial year” (six months of operations from the effective date of January 1, 2016 through June 30,2016), the management for GLWA is presenting a discussion draft report to the GLWA Audit Committee.

Analysis: The Management Discussion and Analysis section of the draft financial report, beginning on Page 9, provides the talking points for the discussion. Please note that this is a discussion draft and additional levels of review and revisions are in process.

This document (Great Lakes Water Authority Financial Report as of June 30, 2016) is in draft form and is subject to further review and approval by GLWA management, the GLWA Audit Committee and Rehman Robson, and accordingly no assurances can be given with respect to the contents of the document until it is released in final form. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed in this draft.


GREAT LAKES WATER AUTHORITY

Table of Contents

PageINTRODUCTORY SECTION

The Chief Executive Officer’s Transmittal Letter 1

Structure and Organizational Chart 5

Mission Statement and Board Members 6

FINANCIAL SECTION

Independent Auditors’ Report 8

Management’s Discussion and Analysis 12

Basic Financial StatementsStatement of Net Position – Enterprise Funds 22Statement of Revenues, Expenses and Changes in Fund Net Position - Enterprise Funds 25Statement of Cash Flows - Enterprise Funds 26Notes to Financial Statements 30

Supplementary InformationCombining and Individual Fund Schedules:

Combining Schedule of Net Position - Water Fund 66Combining Schedule of Revenues, Expenses and Changes in Fund Net Position -

Water Fund 69Combining Schedule of Net Position - Sewage Disposal Fund 70Combining Schedule of Revenues, Expenses and Changes in Fund Net Position -

Sewage Disposal Fund 72

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This document is in draft form and is subject to further review and approval by GLWA management, the GLWA Audit Committee and Rehman Robson, and accordingly no assurances can be given with respect to the contents of the document until it is released in final form. No representation or warranty, express or implied, is provided in relation to the fairness, accuracy, correctness, completeness or reliability of the information, opinions or conclusions expressed in this draft.

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PageSTATISTICAL SECTION

Financial TrendsNet Position by Component 74Changes in Net Position 75

Revenue CapacityOperating Revenues and Charge Increases 76

Debt CapacityDebt by Lien 79Schedule of Debt Service Requirements 82Current Debt Ratings 86Water and Sewer Senior Lien - Debt Ratings History 87

Demographic and Economic InformationService Area Demographics 89Ten Largest Wholesale Customers / Total Billed Revenue 90Schedule of Wholesale Water Charges 92Schedule of Wholesale Sewer Monthly Charges 93

Operating InformationProduced and Billed Water Volumes 94Treated and Billed Wastewater Volumes 95Pledges of Revenue 96

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CHIEF EXECUTIVE OFFICER’S TRANSMITTAL LETTER

July 31, 2017 Board of Directors Great Lakes Water Authority Dear Members of the Board, I am pleased to present the inaugural Comprehensive Annual Financial Report (CAFR) of the Great Lakes Water Authority (“GLWA” or “Authority”) for the fiscal year ended June 30, 2016. These financial statements were prepared in accordance with U.S. generally accepted accounting principles and audited by a firm of independent certified public accountants. This report is unique in many ways. First, it represents the capstone on a number of technical legal, financial, and operational conversations that began over four years ago to explore the feasibility of a regional water authority. Second, it presents a roadmap for collaborators in other regions who may wish to optimize their infrastructure and operations. Third, it demonstrates a business case – not only for a regional authority, but for funding local system infrastructure and establishing a meaningful assistance program. Fourth, and most importantly, it shows what can be achieved when leaders are willing to talk to each other and work through complex issues. Formation of GLWA GLWA was incorporated by the City of Detroit (the “City’) and the Counties of Macomb, Oakland and Wayne on November 26, 2014 pursuant to Act 233, Public Acts of Michigan, 1955, as amended. At the time of GLWA’s incorporation, the City, through its Detroit Water and Sewerage Department (“DWSD”), was providing water supply services within and outside of the City through a water supply system (the “Water System”) and drainage and sewage disposal services within and outside of the City through a sewage disposal system (the “Sewer System”). GLWA was incorporated for the purpose of acquiring, owning, leasing, improving, enlarging, extending, financing, refinancing and operating the portion of the Water System (the “Regional Water System”) that provides service to the wholesale customers and the retail water customers of the City up the point of connection to the local Water System facilities of the City and the portion of the Sewer System (the “Regional Sewer System”) that provides service to the wholesale customers and the retail sewer customers of the City up to the point of connection to the local Sewer System facilities of the City.

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On June 12, 2015, the City and GLWA executed a Regional Water System Lease (the “Water Lease”) for City facilities to GLWA for an initial term of 40 years and a Regional Sewage Disposal System Lease (the “Sewer Lease” and together with the Water Lease, the “Leases”) for the City facilities constituting the Regional Sewer System (the “Leased Sewer Facilities” and together with the Leased Water Facilities, the “Leased Facilities”) to GLWA for an initial term of 40 years, and a Water and Sewer Services Agreement, pursuant to which GLWA provides water and sewer services to retail customers of the City. The above agreements required the satisfaction of a number of conditions before becoming effective. By January 1, 2016 (the “Effective Date”) those conditions were met and GLWA, under the terms of the Leases, became responsible for and assumed:

(i) the debt obligations of the City relating to the Water System, including the payment of all bonds issued by the City to finance improvements to the Water System and outstanding on the Effective Date (the “DWSD Water Bonds”), through the substitution of GLWA for the City as the sole obligor on the DWSD Water Bonds, the assignment to GLWA of all of the revenues of the Water System, and the assumption by GLWA of the DWSD Water Bonds, and

(ii) the debt obligations of the City relating to the Sewer System, including the payment of all bonds issued by the City to finance improvements to the Sewer System and outstanding on the Effective Date (the “DWSD Sewer Bonds”), through the substitution of GLWA for the City as the sole obligor on the DWSD Sewer Bonds, the assignment to GLWA of all of the revenues of the Sewer System, and the assumption by GLWA of the DWSD Sewer Bonds.

With the effective date of operations, GLWA, as a regional water authority, provides drinking water to nearly 40% of the State of Michigan’s population and sewer service to nearly 30% of the population. Objectives Set…Objectives Met There were seven key objectives in forming the regional authority that have been achieved.

1) Customer Focus - A key policy consideration in the formation of GLWA was a focus on customer engagement. During its formation, GLWA embarked on a robust customer outreach program to gauge customer needs and to ensure that they were properly informed regarding the new authority. Not only did customers unanimously consent to the transfer of their service contracts to GLWA, but in its first year of operations, multiple customers entered into new long-term service arrangements. And, for the first time in many years, potential new customers expressed interest in obtaining service from GLWA.

2) Credit Positive - By formation of an independent legal authority, the Water

System and the Sewer System are insulated by the effect of fiscal challenges of

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any one entity. The Leases and related master bond ordinances also provide for the funding of a budget stabilization fund as a bridge in the event that collections from City retail customers do not meet budgeted target levels.

3) Bondholder Protections - In acquiring the Leased Facilities, GLWA also

acquired, and the City absolutely and irrevocably assigned, transferred and conveyed to GLWA, and GLWA purchased and acquired from the City, all of the City’s right, title and interest in the regional and local retail revenues of each of the Water System and the Sewer System in existence on the Effective Date and through the end of the term of the Leases. The Leases and related master bond ordinances provide clear bondholder protections in the deposit and disbursement of the revenues. This is important because the entire outstanding liabilities for the DWSD Water Bonds and the DWSD Sewer Bonds transferred to GLWA on the Effective Date. The revenues of both GLWA and DWSD are deposited into a trust established by the related GLWA master bond ordinance. The trustee distributes revenues deposited in the trust in accordance with a flow of funds providing clear direction and transparency and security for GLWA bondholders.

4) Operational Effectiveness As a new entity, GLWA is in an enviable position to

adopt responsible and responsive policies to effectively manage operational and capital programs. This includes a modernized employee benefit plan designed to attract and retain a talented multi-generational workforce with no risk of unfunded liabilities. GLWA has also developed a best-practices procurement policy with expanded implementation of just-in-time delivery, qualifications-based selection, and expanded management approval levels balanced with appropriate internal controls.

5) Closed Loop Lease Payment The total lease payment of $50 million per year

($22.5 million water and $27.5 million sewer) is paid to DWSD for the benefit of the local water and sewer systems only and cannot be redirected to City General Fund or other uses. The lease payment may only be used to fund: i) debt service on bonds issued to finance the cost of local water and sewer system improvements, (ii) DWSD’s share of debt service on bonds issued to finance the cost of common-to-all improvements to the Regional Water System and Regional Sewer System; and/or (iii) cost of improvements to the Detroit local water and sewer systems. The allocation of the lease payment between the local water and sewer systems is subject to review and adjustment by GLWA every three to five years.

6) Annual 4% Revenue Requirement Budget Ceiling The former DWSD began

an optimization process in 2012 to reduce expenses. In addition, DWSD also began the process to stabilize revenues. The objective of both efforts was to vastly improve the long‐term sustainability of the Water System and the Sewer System. That optimization effort revealed opportunities to significantly control costs. This resulted in a commitment to preserve the “revenue requirement” for each of the Regional Water System and Regional Sewer System to increase, on

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an annual basis, by no more than 4%, subject to certain exceptions to satisfy GLWA’s rate covenant to bondholders or to pay the cost of improvements required by law. The revenue requirement reflects those items which can be controlled by board policy and good management: controlled expenses, managing debt burden, and increasing cash reserves. This commitment to limit the increase in the revenue requirement was originally memorialized in the memorandum of understanding (MOU) that formed the basis for establishing GLWA and is set forth in each of the Leases. .

7) Water Residential Assistance Program The Water Residential Assistance

Program (WRAP) was established as a result of the historic agreement that stood up the Great Lakes Water Authority in 2015. WRAP was officially launched on March 1, 2016 and its day-to-day operations are coordinated for GLWA by its contractual partner, Wayne Metropolitan Community Action Agency. The program is the first of its kind in Michigan and one of only a few models of sustainable assistance plans in the country. It represents a hallmark of regional collaboration to provide assistance to people in need in the communities that GLWA serves throughout southeast Michigan. WRAP not only provides direct assistance with bill payment and arrearages, it also provides funds for home audits and fixture repairs and replacements that will conserve system resources and further reduce the amount of homeowners’ bills moving forward.

Overview of the Financial Report This report consists of management’s representations concerning the finances of the Authority. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, GLWA management has established a comprehensive internal control framework that is designed both to protect the entity’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the Authority’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the Authority’s comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. The Authority’s financial statements have been audited by Rehmann Robson, a firm of licensed certified public accountants. The goal of the independent audit was to provide reasonable assurance that the financial statements of the Authority for the fiscal year ended June 30, 2016 are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates

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made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that GLWA’s financial statements for the fiscal year ended June 30, 2016 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The Authority’s MD&A can be found immediately following the report of the independent auditors. Acknowledgements Thank you to the chief executives and legislative bodies of each of the incorporating municipalities for your support of GLWA and its mission. Thank you to the Board of Directors of GLWA for maintaining the highest standards of professionalism and patience as we faced competing priorities on a daily basis. Thank you to the 150+ volunteers who supported the concept and worked alongside us in standing up a modern and effective water utility. Thank you to our customer communities, our partners in delivering water of the highest quality to this region. Thank you to the talented and hard-working staff of the Great Lakes Water Authority whose effort and dedication provides us with many good things to report. Sue F. McCormick Chief Executive Officer

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Great Lakes Water Authority Board of Directors

Robert J. Daddow .................... GLWA Board Chairman; Representative for Oakland County

Freman Hendrix .................. GLWA Board Vice Chair; Representative for the City of Detroit

Brian Baker ............................ GLWA Board Secretary; Representative for Macomb County

Gary A. Brown ....................................... GLWA Board Representative for City of Detroit

Craig Hupy .................................. GLWA Board Representative for the State of Michigan

Abe Munfakh, PE .................................... GLWA Board Representative for Wayne County

Great Lakes Water Authority Executive Leadership Team

Sue F. McCormick ............................................................... Chief Executive Officer

William M. Wolfson .............. Chief Administrative and Compliance Officer/General Counsel

Nicolette N. Bateson, CPA .................. Chief Financial Officer/Treasurer, Financial Services

Cheryl D. Porter ................................... Chief Operating Officer – Water & Field Services

Terri Tabor Conerway ................................... Chief Organizational Development Officer

Suzanne R. Coffey, PE ... Chief Planning Officer/Interim Chief Operating Officer – Wastewater

Michelle A. Zdrodowski ..................................................... Chief Public Affairs Officer

Jeffrey E. Small ............................................................... Chief Information Officer

W. Barnett Jones .................................................. Chief Security and Integrity Officer

Mission Statement

To exceed our customers’ expectations by utilizing best practices in the treatment andtransmission of water and wastewater, while promoting healthy communities and economicgrowth.

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MANAGEMENT’S DISCUSSION AND ANALYSIS

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Management’s Discussion and Analysis (unaudited)

June 30, 2016

The management of the Great Lakes Water Authority (GLWA or Authority) presents this discussion and analysis of GLWA’s financial position and changes in financial position as of and for the fiscal year ended June 30, 2016 which includes financial activity from the effective date of operations of January 1, 2016 through June 30, 2016. The Management’s Discussion and Analysis (MD&A) should be read in conjunction with GLWA’s basic financial statements and the related notes to the financial statements. Capitalized terms not otherwise defined in the MD&A shall have the meaning given such terms in the transmittal letter from the CEO of GLWA that accompanies the financial statements and the MD&A.

Introduction to the Great Lakes Water Authority

Our regional water system is one of the largest in the United States, both in terms of water produced and population served. The Water System currently serves an area of 850 square miles located in eight Michigan counties and an estimated population of nearly 3.9 million or approximately 38% of Michigan’s population. Suburban wholesale customers comprise approximately 80% of the population served by the Authority while the retail water customers served by the City of Detroit Water and Sewerage Department (DWSD) comprise the remaining 20%.

Our regional sewer system is one of the largest in the United States, both in terms of treatment capacity and population served. The Sewer System currently serves an area of 850 square miles located in three Michigan counties and an estimated population of nearly 2.8 million or approximately 28% of Michigan’s population. Suburban wholesale customers comprise approximately 75% of the population served by the Authority, while retail sewer customers served by the City of Detroit Water and Sewerage Department comprise the remaining 25%.

Inaugural Audited Financial Report

This is the inaugural audited financial report for the Great Lakes Water Authority. The fiscal year ended June 30, 2016 accounting, budgeting, and implementation of financial policies reflect decisions made from September 2014 through December 31, 2015 leading to an operational effective date of January 1, 2016. During that time, the GLWA Board, supported by a number of professionals and engaged customers worked through significant foundational agreements, events, and staffing matters leading up to the operational effective date of January 1, 2016.

The Road to Launching a Regional Water Authority

To better understand the context of the financial references in this report, we begin with milestone activities surrounding the launch of GLWA.

September 9, 2014 - GLWA is established via a “Memorandum of Understanding Regarding the Formation of the Great Lakes Water Authority” (MOU) signed on September 9, 2014 by the Mayor of the City of Detroit, the Chief Executives of Wayne, Oakland, and Macomb counties, and the Governor of the State of Michigan. The MOU establishes a framework for a regional water and sewer authority to be established pursuant to Act 233, Public Acts of Michigan, 1955, as amended. The purpose of GLWA is to operate, control, and improve the regional assets of both the Water System and Sewer System owned by the City and which were operated by DWSD. DWSD remains in place to be the service provider for the retail system which is largely the City of Detroit customer base. DWSD is GLWA’s agent for retail billing and collections.

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September 30, 2014 – An Accounting & Finance work group is formed to address many technical (accounting and work flow) and transactional (indebtedness, revenues, and terms and conditions) matters. An early decision is determining that the appropriate accounting guidance was found in Governmental Accounting Standards Board Statement No. 69 (GASB 69), Government Combinations and Disposals of Government Operations issued January 2013. November 26, 2014 - After receiving approval by the legislative bodies of the City of Detroit and counties of Wayne, Oakland, and Macomb, GLWA’s Articles of Incorporation are filed with the State of Michigan on November 26, 2014. December 10, 2014 - The City of Detroit’s Chapter 9 Bankruptcy began with the filing on July 18, 2013. On November 12, 2014, the Eighth Amended Plan for the Adjustment of Debts of the City of Detroit Plan of Adjustment (POA) was confirmed by the United States Bankruptcy Court. Less than 30 days later, the City exits bankruptcy on December 10, 2014. This is important to understanding GLWA’s finances in two ways: 1) discussions that resulted in the creation of GLWA occurred within the umbrella of the City of Detroit’s Chapter 9 Municipal Bankruptcy and 2) certain obligations assumed by GLWA relate to commitments and terms assigned to DWSD prior to the formation of the regional authority which are largely related to legacy pension obligations. December 12, 2014 – The GLWA Board holds its first meeting. The Board is comprised of six voting members: two members appointed by the Mayor of the City of Detroit, one member appointed by the chief executive officers of each of the counties of Wayne, Oakland, and Macomb, and one member resident of a service area outside the City of Detroit and the counties of Wayne, Oakland and Macomb appointed by the Governor of the State of Michigan. February 6, 2015 – The GLWA Board Audit Committee consisting of three board members conducts its first regularly scheduled monthly meeting. June 3, 2015 – The GLWA Board receives an independent financial forecast presentation and report dated May 29, 2015 confirming the financial feasibility of the five-year forecast for GLWA including the ability of GLWA to pay a total annual lease payment of $50 million per year to DWSD for the benefit of the City’s local water and sewer systems. June 12, 2015 – Key agreements identified in the MOU are presented and approved by the GLWA Board of Directors and Mayor of the City of Detroit: Water Lease, Sewer Lease, and the Water and Sewer Services Agreement. June 30, 2015 – GLWA reaches its first fiscal year end during the stand-up phase. Up to this point, and continuing through to the targeted operational effective date of January 1, 2016, there was no operational or financial activity. The GLWA Board’s activity during that time centered on financial, legal, and operational planning activities to achieve the operational effective date. Expenses for those activities were attributable to the incorporating municipalities as a regional collaboration initiative. Many of the stand-up activities were paid for by a State of Michigan Competitive Assistance Grant of $3.8 million administered by Oakland County with the local match and other expenses funded by the DWSD. For this reason, there was no audited financial report for the year ended June 30, 2015. Accordingly, on October 15, 2015, the GLWA Board reviewed and waived the audit requirement for fiscal year 2015. July 29, 2015 – The GLWA Board adopts By-laws for the operation of the Authority. September 14, 2015 – The GLWA Board adopts employment terms for its future employees. As a new employer, GLWA implemented a modern benefit design to attract and retain employees at all phases in their career with no risk of unfunded long-term liabilities. The pension and retiree health benefits both utilize a defined contribution formula. With this milestone achieved, efforts began to develop

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GLWA offer letters, benefits enrollment, and a communications plan to approximately 850 DWSD employees. October 7, 2015 – The GLWA Board adopts a Master Bond Ordinance (MBO) for both the Water System and the Sewer System. October 19, 2015 – The GLWA Board appoints its first Chief Executive Officer, Sue F. McCormick. October 21, 2015 – The GLWA Board adopts a procurement policy and investment policy. November 19, 2015 – The GLWA Board approves a budget for the six months from January 1, 2016 through June 30, 2016. November 19, 2015 – The GLWA Board approves the acquisition of a financial system. Launch of the financial system occurred in late December 2015 with baseline functions in place by mid-March 2016. Concurrently, an implementation of a new human resource and payroll system is in implementation phase to meet the first pay date for the new entity on January 8, 2016. December 1, 2015 – An agreement is reached among the City of Detroit, City of Detroit General Retirement System (GRS) and GLWA related to the pension obligation assigned to DWSD (or its successor entities) in the City’s POA. The POA requires that the DWSD (or its success entities) fund its share of the unfunded accrued actuarial liability (UAAL) attributable to the frozen defined benefit pension over a nine-year period through fiscal year 2023 and acknowledges that there will be a variance between the UAAL and payments made in year ten. Section 4.3 of each of the Leases requires the Authority to pay an allocable portion of that pension obligation. The pension agreement among the City, GRS and GLWA outlines terms surrounding the payments, administrative fees, accounting, actuarial, and reporting requirements of GRS and its auditors and actuaries. December 9, 2015 – After conducting a public hearing, the GLWA Board unanimously adopts a budget for a six-month period from January 1, 2016 (effective date of operations) through June 30, 2016 (end of annual fiscal year). On this date, the Board also adopts a debt management policy. December 17, 2015 – The GLWA Board determines that all conditions precedent have been satisfied to accept an operational effective date of January 1, 2016. This included execution of the Leases, Water and Sewer Services Agreement, a Shared Services Agreement, and the GRS pension agreement; adoption of a master bond ordinance for both the Water System and the Sewer System; confirmation from the Michigan Department of Environmental Quality that all permits were secured for the Leased Facilities; certification from the bond trustee that no less than 51% of bondholders of the outstanding DWSD Water Bonds and DWSD Sewer Bonds, respectively, consented to the adoption by GLWA of the Master Bond Ordinances for the Water System and the Sewer System and to the assumption by GLWA of the outstanding DWSD Water Bonds and DWSD Sewer Bonds on the Effective Date; certification from the feasibility consultant that GLWA had the ability to issue at least one dollar of additional indebtedness at each level of lien priority pursuant to the Additional Bonds Test set forth in the Master Bond Ordinance for each system; legal opinions that each Lease is valid, binding, and enforceable and that the rates adopted by DWSD for fiscal year 2016 for the wholesale and City customers are binding and effective; and all necessary consents to the assignment of the wholesale customer contracts. January 1, 2016 – The operational effective date established is achieved with the completion of the conditions precedent noted above. On this date, the lease transaction is recorded based upon the guidance provided by GASB 69. Equally important to the accounting treatment is the requirement of the flow of funds in the related Master Bond Ordinance. The chart below depicts new customer relationship definitions and the importance of the flow of funds. The effective date of the Leases also establishes defined terms for accounting and financial reporting purposes. This will be addressed throughout the MD&A.

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Opening Net Position Highlights GLWA assumed operations on January 1, 2016 and established its opening balances through the bifurcation of DWSD’s statement of net position as of December 31, 2015 and the application of the guidance provided in GASB 69 for the acquisition of government operations. There are several categories where existing assets and liabilities were assumed by GLWA; in other instances, new assets and liabilities were created. Key beginning balance considerations included the following: Assets and Liabilities Assumed by GLWA

Capital assets subject to the Leases are recorded at “acquisition value” based upon an inventory valuation performed by a certified appraisal firm. The result was a net write-up from the predecessor entity’s net book value resulting in a total of capital assets at acquisition (excluding construction work in process) of $2.5 billion (write up of $1.27 billion) for the water system capital assets and $3.2 billion (write up of $1.05 billion) for the sewer system capital assets. To some extent, that increase in value assuages concerns about the value of assets assumed pursuant to the Leases. A new factor for GLWA’s financial planning is an increased asset base that results in higher annual depreciation. In addition, the depreciable lives were reviewed and, in several cases shortened, which also increases annual depreciation expense.

The outstanding bonded indebtedness of the predecessor entity was assumed in its entirety by GLWA. GASB 69 also requires adjustment to acquisition value. The result was a value of $2.6 billion (write up of $150.5 million) for the Water System bonded indebtedness and a value of $3.5 billion (write up of $61.5 million) for the Sewer System bonded indebtedness.

ThroughDecember 31, 2015

The Detroit Water & Sewerage Department(DWSD) is a provider of

water and sewer services to regional wholesale and

City of Detroit retail customers. The Master

Bond Ordinance defines a flow of funds that is unique to DWSD as it

functioned prior to the implementation of the

Lease.

The Great Lakes Water Authority (GLWA)had no

financial activity or commitments.

Effective January 1, 2016

On the operational effective date, the Water Lease and the Sewer Lease define new customer relationships. Each GLWA Master Bond

Ordinance defines a new flow of funds for pledged revenues collected.

Great Lakes Water Authority provides water and sewer service to a) wholesale customers by a model contract and b) to the City of

Detroit for retail customers pursuant to a water and sewer services agreement. Revenues from all customers are deposited with a trustee and are pledged for outstanding bonded indebtedness, contractual obligations arising from the Leases, operations and

maintenance of the regional and local DWSD systems, and reserves.

Detroit Water and Sewerage Department provides retail services to prmarily City of Detroit customers. DWSD, as agent for GLWA, also

provides billing and collection services for City of Detroit retail customers for system pledged revenues.

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The net pension liability represents the Regional Systems’ share of the frozen, defined benefit GRS pension assigned to DWSD in the City of Detroit’s Chapter 9 Bankruptcy Plan of Adjustment. On January 24, 2017, after a historical cost allocation, the parties agreed that 70.3% of the liability was allocable to the GLWA regional operations and 29.7% to DWSD. That allocation is further subdivided between the Water System and the Sewer System. This resulted in an opening balance of $170.2 million in total with $61.0 million allocated to the Water System and $109.2 million allocated to the Sewer System.

The obligation payable represents the Regional Systems’ share of the BC Note Obligation assigned to DWSD in the City of Detroit’s Chapter 9 Bankruptcy Plan of Adjustment. The BC Note Obligation refers to the debt service on City of Detroit Financial Recovery Bonds dated December 10, 2014. Those bonds were issued to satisfy claims relating to the City’s pension obligation certificates and postemployment healthcare benefits. GLWA’s portion of the liability was estimated at 70.3% of the total liability consistent with the allocation applied to the net pension liability. That obligation payable allocation is further subdivided and resulted in an opening balance of $57.6 million in total with $17.7 million to the Water System and $39.9 million allocated to the Sewer System.

The acquisition value of assets acquired exceeded the liabilities assumed by $736.5 million in total with $457.9 million attributable to the Water System and $278.6 million attributable to the Sewer System. In accordance with GASB 69, the opening capital assets were adjusted by that amount to establish a beginning net position of zero.

The remaining assets acquired include all cash, investments, accounts receivable and other assets. Also assumed were all accounts payable, accrued liabilities, and other liabilities.

New Assets and Liabilities to Record Lease Activities A new asset is the contractual obligation receivable with an acquisition value of $850 million in

total with $475 million for the Water System and $375 million for the Sewer System. The interest rate is 5.15% for the Water System and 4.71% for the Sewer System. This represents DWSD’s allocable portion of the long-term bonded indebtedness acquired by GLWA on January 1, 2016. This is one area where DWSD and GLWA continue to discuss implementation matters which will eventually be finalized in a memorandum of understanding. GLWA recorded the amount based upon the most recent discussions in June 2017. To the extent that the final agreed-upon amount changes, it will be considered a change in estimate.

The lease payable is the net present value of the lease payment of $50 million per year for 40 years payable to the DWSD with $22.5 million paid to the DWSD local water system and $27.5 million paid to the DWSD local sewer system based on a 4.17% borrowing rate for both systems. The net present value of the lease payable resulted in an opening balance of $975.6 million in total with $439.0 million allocated to the Water System and $536.6 million allocated to the Sewer System.

Financial Highlights Total business-type current assets of $810.2 million exceed current liabilities of $323.8 million by $486.4 million in total or 2.5 times. For the Water System, current assets of $365.4 million exceed current liabilities of $151.1 million by $214.3 million in total or 2.4 times. For the Sewer System, current assets of $444.7 million exceed current liabilities of $172.7 million by $272.0 million in total or 2.6 times. The liabilities and deferred inflows of resources of the business-type activities exceeded the assets and deferred outflows of resources as of June 30, 2016 by $14.6 million (a net deficit). The net deficit for the water fund was $4 million and $10.6 million for the sewage disposal fund. This is equal to the

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decrease in GLWA’s net position for the six months ended by $14.6 million since the Authority and each fund began the fiscal year with a net position of zero. The largest category of expense is depreciation at $157.3 million in total with $71.3 million for water and $86.0 million for sewer. As noted earlier, this proportionally higher level of depreciation is due to the increase in the value of capital assets as well as a decrease in the estimated useful lives for some asset categories. The second largest category of expense is interest expense at $148.4 million in total with $66.0 million for water and $82.4 million for sewer. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the Authority’s basic financial statements. The basic financial statements are comprised of the following. The statement of net position presents information on all the Authority’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, with the residual reported as net position. The statement of revenues, expenses and changes in net position presents information showing how the Authority’s net position changed during for the first six months of operation. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported for some items that will only result in cash flows in future fiscal periods. The statement of cash flows presents the change in the Authority’s cash and investments related to activity in the fiscal year. The notes to financial statements provide additional information that is essential to a full understanding of the data provided in the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. These schedules provide additional financial, budgetary, statistical, trend, and economic information that may be helpful to the readers of these financial statements. The Authority presents its supplementary financial information classified into three components that align with the Authority’s strategic and budgetary focus of managing capital investment for both the Regional Water System and Regional Sewer System: 1) operation and maintenance (low capital investment), 2) improvement and extension (moderate capital investment and financial mechanism to lower the cost of capital over the long term), and 3) construction projects (high capital investment). The water and sewage disposal funds together comprise the activity of these three components of the Authority in total. The separate water and sewage disposal funds are required by the related Master Bond Ordinance, a separate credit rating is established for each fund, and the customers and services provided of each system are separate and distinct. Financial Analysis Summaries of the basic financial statements and related commentaries are presented below. Net Position Net position is defined by the accounting standards as the residual of all other elements presented in a statement of financial position. It is the difference between (a) assets and deferred outflows of resources and (b) liabilities and deferred inflows of resources. A net deficit occurs when the liabilities and deferred inflows exceed assets and deferred outflows. Deferred inflows and deferred outflows generally relate to financing activity and GLWA’s share of the GRS pension obligation. In total, GLWA ended June 30,2016

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with a $14.6 million net deficit. The net deficit for the water fund was $4.0 million and $10.6 million for the sewage disposal fund. There are three general components of a net position or deficit: 1) net investment in capital assets (in its simplest form, capital assets acquired less debt incurred to acquire those assets); 2) restricted (such as legally required bond reserves or net proceeds from bonds restricted for capital spending); and 3) unrestricted. Investments in capital assets is the largest component of the net position with a total balance of $851.7 million ($400.2 million the water fund and $451.5 for the sewage disposal fund). Increases during the year were attributable to the acquisition of assets and repayment of debt which were both largely offset by depreciation expense. Net position restricted for debt service represents amounts that are required by the related Master Bond Ordinance or other third party agreements to be used for the repayment of debt. The total amount restricted at year end was $135.6 million with $26.8 million in the water fund and $108.8 million for the sewage disposal fund. Net position restricted for capital acquisition represents unspent bond proceeds of $164.3 million in total (all of which is in the sewage disposal fund). The balance of $0 in the Water System construction bond account was replenished in October 2016 with the issuance of the Authority’s inaugural water system revenue bonds issue which netted $225.9 million of net bond proceeds. The remaining unrestricted deficit is significant: a total of $1.17 billion with $432.1 million for the water fund and $735.2 for the sewage disposal fund. Unrestricted net position (deficit) is generally defined as the net result of the other components of net position. This unrestricted deficit is representative of numerous cumulative historical financial activities over many years (through the predecessor entity). Addressing this deficit is a top priority for the GLWA Board and management. The GLWA continues to optimize its operations, adopted a biennial budget for fiscal years 2018 and 2019, and recently released the inaugural five-year financial plan document which will be updated every year during the annual budget process. With the completion of GLWA’s inaugural audit, a baseline measure has been defined to further align budget and accounting basis forecasts with financial strategies, operational plans, and capital investment objectives.

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Change in Net Position Water Fund Wholesale water customer charges of $160.7 million account for 96.0% of Water System revenues from 85 customers. Significant collaboration among stakeholders resulted in wholesale water revenue stability based on two fundamental changes to the wholesale water charge structure beginning with charges in effect as of July 1, 2015. The outcome was 1) replacing the annual sales volumes in the wholesale customer service contracts with amounts that reflect the average annual sales for each customer from the 24 prior months ending September 2014 and 2) recovering fixed monthly charges based on 60% versus approximately 40% in the prior charges. Fiscal year 2016 revenue billed was 101% of budget meeting the goal of revenue stability. Local system revenues of $6.8 million account for 4.0% of the total revenue. The local (DWSD) system benefits from a $20.7 million credit adjustment in the charge methodology that represented a previous ownership benefit that was set at a fixed amount in the water and sewer services agreement. Operating income after operating expenses (including depreciation) equals $46.8 million or 27.9% of revenue. Depreciation is the largest operating expense at $71.3 million or 59.0% of operating expense. The remaining 41% of operating expenses include centralized services ($18.5 million or 15.0% of total expenses including field services, meter operations, systems control, information technology, and fleet services), utilities ($12.4 million or 10.2% of total expenses), and personnel ($8.3 million or 6.9% of total expenses).

Net Position

Water Fund

Sewage Disposal

Fund Total

Current and other assets 799,576,714$ 757,584,430$ 1,557,161,144$

Restricted assets 101,341,561 298,908,586 400,250,147

Capital assets 2,143,612,500 2,995,767,403 5,139,379,903

Total assets 3,044,530,775 4,052,260,419 7,096,791,194

Deferred outflows of resources 130,132,511 236,523,989 366,656,500

Long-term liabilities outstanding 2,524,474,799 3,448,193,379 5,972,668,178

Net pension liability 61,021,079 109,208,359 170,229,438

Other liabilities 573,587,274 713,930,000 1,287,517,274

Total liabilities 3,159,083,152 4,271,331,738 7,430,414,890

Deferred inflows of resources 19,671,729 28,044,955 47,716,684

Net position

Investment in capital assets 400,187,482 451,547,037 851,734,519

Restricted for debt service 26,836,201 108,742,193 135,578,394

Restricted for capital acquisition - 164,326,618 164,326,618

Restricted for payment assistance program 977,278 - 977,278

Unrestricted (deficit) (432,092,556) (735,208,133) (1,167,300,689)

Total net position (4,091,595)$ (10,592,285)$ (14,683,880)$

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The largest category of nonoperating activities is interest expense of $66.0 million which is net of capitalized interest on construction work in progress. Interest expense is largely attributable to debt service ($59.1 million) with the remainder related to the Water Lease and obligation payable. Sewer Fund Wholesale customer charges of $121.1 million account for 52.5% of Sewer System revenues from 21 customers. Significant collaboration among stakeholders resulted in the second year of rate simplification whereby whole customer charges are based on a “share” percentage of the annual budget billed on one-twelfth each month resulting in no revenue shortfall or overestimation. Local system revenues of $95.8 million account for 41.6%. The local (DWSD) system benefits from a $5.516 million credit adjustment in the rate methodology that represented a previous ownership benefit that was set at a fixed amount in the water and sewer services agreement. The remaining 5.9% of revenue is due to other charges. Operating income after operating expenses (including depreciation) equals $60.0 million or 26.0% of revenue. Depreciation is the largest operating expense at $86.0 million or 50.1% of operating expense. The remaining 49.9% of operating expenses include centralized services ($16.7 million or 9.8% of total expenses including field services, meter operations, systems control, information technology, and fleet services), supplies and other expenses (representing maintenance activities of $16.4 million or 9.7% of total expenses), and contractual services (representing contracted operations of the bio-solids dryer facility and other operating activities at $13.9 million or 6.9% of total expenses). The largest category of nonoperating activities is interest expense of $82.5 million which is net of capitalized interest on construction work in progress. Interest expense is largely attributable to debt service ($73.3 million) with the remainder related to the Sewer Lease obligation payable.

Change in Net Position

Water Fund

Sewage Disposal

Fund Total

Operating revenues 167,665,532$ 230,464,969$ 398,130,501$

Operating expenses 120,841,204 170,401,050 291,242,254

Operating income 46,824,328 60,063,919 106,888,247

Nonoperating expenses (50,915,923) (72,656,204) (123,572,127)

Loss before contributions (4,091,595) (12,592,285) (16,683,880)

Capital contributions from debt forgiveness - 2,000,000 2,000,000

Change in net position (4,091,595) (10,592,285) (14,683,880)

Net position, beginning - - -

Net position, end of year (4,091,595)$ (10,592,285)$ (14,683,880)$

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Capital Assets and Debt Administration Capital assets. GLWA’s investment in capital assets as of June 30, 2016 is $5.1 billion (net of accumulated depreciation) with $2.1 billion assigned to the Water System and $3.0 billion assigned to the Sewer System. This investment in capital assets includes land, buildings, plants, transmission lines, vehicles and other equipment. Total net capital assets decreased by $123.9 million or 2.4%. The net decrease is primarily attributable to depreciation in excess of current year additions. Water System additions for the six months of operating activity were largely due to construction work-in-progress of $20.2 million.

Approximately one-half of that amount, $10.9 million, is due to the 1958 Filter Rehabilitation at the Springwells Water Treatment Plant (CIP Project #114001; CS-1425/SP-563). Life to date costs through June 30, 2016 are $71.4 million with a total estimated cost of $77.4 million and a completion date in fiscal year 2018.

The remaining $9.3 million is attributable to 31 projects that are either near closeout in FY 2017, are small projects, or are design and study for larger projects because of the GLWA Water Master Plan dated August 14, 2015 and accepted by the GLWA during fiscal year 2016.

Sewer System additions for the six months of operating activity were also largely due to construction work-in-progress of $16.5 million. Of that amount, $8.1 million is due to the three projects below.

Sewage Incinerator Improvements costs of $4.9 million (CIP Project #213003; PC-791). Life to date costs through June 30, 2016 are $34.5 million with a total estimated cost of $36 million and a completion date in fiscal year 2018.

Test Biosolids Dryer (post project closeout costs) of $1.4 million (CIP Project #213004; PC-792). Life to date costs through June 30, 2016 are $1.4 million with a total estimated cost of $1.8 million and a completion date in fiscal year 2019.

Pump Station 1 Rack & Grit and Main Plant Influent (MPI) Sampling Station 1 Improvements (rehabilitate aging rack and grit system for efficient removal of grit to reduce loading on downstream process areas) of $1.7 million (CIP Project #211004; PC-789). Life to date costs through June 30, 2016 are $18.3 million with a total estimated cost of $21.5 million and a completion date in fiscal year 2019.

The remaining $8.4 million is attributable to 32 projects that are either near closeout in fiscal year 2017, are small projects, or are design and study for larger projects. It should be noted that GLWA launched a Sewer Master Plan process during fiscal year 2017.

GLWA's Capital Assets, Net

Water Fund

Sewage Disposal

Fund Total

Land 34,244,101$ 28,733,333$ 62,977,434$

Easements 258,632,397 96,211,323 354,843,720

Construction in progress 122,681,592 170,931,602 293,613,194

Site improvements 53,116,787 32,882,321 85,999,108

Buildings and structures 537,554,575 1,032,764,475 1,570,319,050

Infrastructure 567,236,217 589,953,131 1,157,189,348

Machinery and equipment 568,857,114 1,043,136,100 1,611,993,214

Vehicles 1,289,717 1,155,118 2,444,835 Total 2,143,612,500$ 2,995,767,403$ 5,139,379,903$

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Additional information on the Authority’s capital assets can be found in Note 6. Long-term Debt At year-end, the Authority had $5.5 billion of long-term debt. All the outstanding bonds are revenue bonds, including capital appreciation bonds and state revolving fund loans. Approximately 9.4% of the total indebtedness is issued through the State of Michigan revolving fund loan program primarily for the benefit of the Sewer System. The Water System did not incur any new borrowings during the six months ended June 30, 2016. During that same time, the Sewer System received $22.8 million in new state revolving fund loans and received a $2 million in loan forgiveness.

GLWA received positive ratings action from all three rating agencies in its first nine months of operations. Presently, Fitch Ratings has rated senior lien debt at A and second lien at A-; Standard & Poor’s has rated senior lien debt at A- and second lien at BBB+; and Moody’s at has rated senior lien debt at A3 and second lien at Baa1. Additional information on the Authority’s long-term debt can be found in Note 7. Economic Factors Affecting Next Year's Operations and Rates On May 25, 2016, the GLWA Board adopted the inaugural biennial budget for the Great Lakes Water Authority for fiscal 2017 and 2018. That two-year financial plan remains true to a foundational commitment to control the budget within a 4% cap. Due to Water System volume fluctuations, as well an anticipation that the Genesee County Drain Commission comes offline in 2017 resulting in an $18.2 million in revenue loss, Water System charges to customers reflect a 4.5% system-wide revenue increase. The impact to suburban wholesale customers is 4.3%. Suburban wholesale sewer customers experienced a 4.9% increase due to a 1.5% adjustment for City of Highland Park bad debt. For fiscal year 2017, it is anticipated that there is no collection of Highland Park sewer charges. In addition, the sewer charges include year one of five for recovering 20% of Highland Park’s outstanding bad debt. The GLWA continues to pursue collection efforts with Highland Park. To the extent that those collection efforts are successful, the Highland Park bad debt charge to suburban wholesale customers will be reduced in the subsequent year.

GLWA's Outstanding Debt

Water Fund

Sewage Disposal

Fund Total

Revenue bonds 2,260,675,000$ 2,739,665,000$ 5,000,340,000$

Capital appreciation bonds 24,165,000 24,165,000

State revolving loans 17,383,761 506,435,742 523,819,503

Total 2,278,058,761$ 3,270,265,742$ 5,548,324,503$

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Requests for Information This financial report is designed to provide a general overview of GLWA’s finances for all those with an interest in the Authority’s finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to Great Lakes Water Authority, Office of the Chief Financial Officer, 735 Randolph, Detroit, Michigan 48226.

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BASIC FINANCIAL STATEMENTS

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Statement of Net PositionEnterprise FundsJune 30, 2016

Enterprise Funds

Sewage TotalWater Disposal Business-typeFund Fund Activities

AssetsCurrent assets:

Cash and cash equivalents 155,712,891$ 156,022,295$ 311,735,186$ Restricted cash and cash equivalents 53,028,844 81,181,424 134,210,268 Restricted cash on deposit with trustee 10,430 51,648 62,078 Investments 11,579,681 32,041,080 43,620,761 Restricted investments 27,818,000 28,843,000 56,661,000 Receivables:

Billed 37,629,170 48,046,934 85,676,104 Unbilled 32,307,945 23,037,391 55,345,336 Other 21,899,046 92,748,989 114,648,035 Allowance for doubtful accounts (25,040,612) (98,968,630) (124,009,242)

Due from other governments 41,486,157 66,202,143 107,688,300 Contractual obligation receivable 6,851,584 5,077,675 11,929,259 Due from other funds - 65,971 65,971 Prepaid items 2,183,690 407,359 2,591,049 Inventories - 9,984,063 9,984,063

Total current assets 365,466,826 444,741,342 810,208,168

Noncurrent assets:Restricted cash and cash equivalents 5,460,942 155,488,780 160,949,722 Restricted investments 42,841,345 62,186,734 105,028,079 Contractual obligation receivable 466,317,666 366,254,075 832,571,741 Assets not subject to depreciation 415,558,090 295,876,258 711,434,348 Capital assets being depreciated, net 1,728,054,410 2,699,891,145 4,427,945,555 Prepaid insurance on debt 20,831,496 27,822,085 48,653,581

Total noncurrent assets 2,679,063,949 3,607,519,077 6,286,583,026

Total assets 3,044,530,775 4,052,260,419 7,096,791,194

Deferred outflows of resourcesDeferred loss on refunding 116,511,949 212,147,508 328,659,457 Deferred pension amounts 13,620,562 24,376,481 37,997,043

Total deferred outflows of resources 130,132,511 236,523,989 366,656,500

continued…

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Statement of Net PositionEnterprise FundsJune 30, 2016

Enterprise Funds


LiabilitiesCurrent liabilities:

Accounts and contracts payable 49,474,527$ 36,152,087$ 85,626,614$ Accrued salaries, wages and benefits 2,887,280 - 2,887,280 Other accrued liabilities 875,796 674,458 1,550,254 Due to other governments 13,668,890 24,225,013 37,893,903 Due to other funds 65,971 - 65,971 Interest payable 37,226,125 43,912,888 81,139,013 Current portion of:

Long-term debt 35,650,167 60,902,189 96,552,356 Obligation payable 152,193 342,331 494,524 Lease payable 4,429,876 5,414,293 9,844,169 Accrued compensated absences 1,784,746 454,630 2,239,376 Accrued workers' compensation 395,788 390,165 785,953 Claims and judgments 4,494,694 269,250 4,763,944

Total current liabilities 151,106,053 172,737,304 323,843,357

Noncurrent liabilities:Other noncurrent liabilities 2,710,092 5,912,693 8,622,785 Long-term debt 2,488,824,632 3,387,291,190 5,876,115,822 Obligation payable 17,425,306 39,195,045 56,620,351 Long-term lease payable 430,921,520 526,681,859 957,603,379 Accrued compensated absences 3,511,934 - 3,511,934 Accrued workers' compensation 3,562,536 4,390,938 7,953,474 Claims and judgments - 25,914,350 25,914,350 Net pension liability 61,021,079 109,208,359 170,229,438

Total noncurrent liabilities 3,007,977,099 4,098,594,434 7,106,571,533

Total liabilities 3,159,083,152 4,271,331,738 7,430,414,890

Deferred inflows of resourcesDeferred amounts swap termination 4,134,908 238,978 4,373,886 Deferred pension amounts 15,536,821 27,805,977 43,342,798

Total deferred inflows of resources 19,671,729 28,044,955 47,716,684

Net positionInvestment in capital assets 400,187,482 451,547,037 851,734,519 Restricted for debt service 26,836,201 108,742,193 135,578,394 Restricted for capital acquisition - 164,326,618 164,326,618 Restricted for payment assistance program 977,278 - 977,278 Unrestricted (deficit) (432,092,556) (735,208,133) (1,167,300,689)

Total net position (4,091,595)$ (10,592,285)$ (14,683,880)$

concluded.

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

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Statement of Revenues, Expenses and Changes in Fund Net PositionEnterprise FundsFor the Year Ended June 30, 2016

Enterprise Funds


Operating revenuesWholesale customer charges 160,777,169$ 121,106,353$ 281,883,522$ Industrial waste charges - 6,910,192 6,910,192 Pollutant surcharges - 2,423,910 2,423,910 Local system charges 6,833,500 95,826,900 102,660,400 Other revenues 54,863 4,197,614 4,252,477

Total operating revenues 167,665,532 230,464,969 398,130,501

Operating expensesPersonnel 8,301,022 13,289,741 21,590,763 Contractual services 3,304,113 13,875,756 17,179,869 Utilities 12,368,557 12,668,942 25,037,499 Chemicals 2,444,543 4,006,941 6,451,484 Centralized services 18,494,851 16,733,431 35,228,282 Administrative services 3,191,929 7,342,499 10,534,428 Supplies and other expenses 1,440,644 16,462,711 17,903,355 Depreciation 71,295,545 86,021,029 157,316,574

Total operating expenses 120,841,204 170,401,050 291,242,254

Operating income 46,824,328 60,063,919 106,888,247

Nonoperating revenues (expenses)Earnings on investments 392,031 1,089,367 1,481,398 Interest income 12,231,250 8,831,250 21,062,500 Interest expense, net of capitalized interest (65,958,095) (82,489,347) (148,447,442) Amortization of debt related items 2,418,891 (363,167) 2,055,724 Gain on disposal of capital assets - 275,693 275,693

Total nonoperating expenses (50,915,923) (72,656,204) (123,572,127)

Loss before contributions (4,091,595) (12,592,285) (16,683,880)

Capital contributions from debt forgiveness - 2,000,000 2,000,000

Change in net position (4,091,595) (10,592,285) (14,683,880)

Net position, beginning of year - - -

Net position, end of year (4,091,595)$ (10,592,285)$ (14,683,880)$


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Statement of Cash FlowsEnterprise FundsFor the Year Ended June 30, 2016

Enterprise Funds


Cash flows from operating activitiesCash received from customers 138,281,186$ 245,040,774$ 383,321,960$ Cash received from interfund services provided (60,947,431) 60,947,431 - Cash payments to suppliers for goods and services (29,532,223) (40,260,702) (69,792,925) Cash payments to employees for services (40,750,509) (60,695,572) (101,446,081)

Net cash provided by (used in) operating activities 7,051,023 205,031,931 212,082,954

Cash flows from noncapital financing activitiesProceeds from issuance of long-term debt - 22,838,692 22,838,692 Proceeds from capital contribution - 2,000,000 2,000,000 Proceeds from fire remediation - 5,108,902 5,108,902 Principal payments (35,625,000) (43,855,000) (79,480,000) Interest payments (85,305,680) (69,665,190) (154,970,870) Purchase of capital assets (20,666,587) (18,179,016) (38,845,603) Receipt of cash associated with transfer of operations 421,010,047 471,794,999 892,805,046

Net cash used in noncapital financing activities 279,412,780 370,043,387 649,456,167

Cash flows from investing activitiesPurchase of investments (2,634,951) (69,180,974) (71,815,925) Interest received 12,623,281 9,920,617 22,543,898

Net cash provided by (used in) investing activities 9,988,330 (59,260,357) (49,272,027)

Net change in cash and cash equivalents 296,452,133 515,814,961 812,267,094

Cash and cash equivalents, beginning of year - - -

Cash and cash equivalents, end of year 296,452,133$ 515,814,961$ 812,267,094$

Statement of net position classification of cash and investments

Cash and cash equivalents 155,712,891$ 156,022,295$ 311,735,186$ Restricted cash and cash equivalents 53,028,844 81,181,424 134,210,268 Restricted cash on deposit with trustee 10,430 51,648 62,078 Investments 11,579,681 32,041,080 43,620,761 Restricted investments 27,818,000 28,843,000 56,661,000 Noncurrent restricted cash and cash equivalents 5,460,942 155,488,780 160,949,722 Noncurrent restricted investments 42,841,345 62,186,734 105,028,079

296,452,133$ 515,814,961$ 812,267,094$

continued…

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Statement of Cash FlowsEnterprise FundsFor the Year Ended June 30, 2016

Enterprise Funds


Reconciliation of operating income to net cash provided by (used in) operating activities:

Operating income 46,824,328$ 60,063,919$ 106,888,247$ Adjustments to reconcile operating income

to net cash provided by (used in) operatingactivities:

Depreciation 71,295,545 86,021,029 157,316,574 Amortization of debt related items 2,881,288 32,925,419 35,806,707 Changes in:

Receivables:Billed (7,529,168) 257,151 (7,272,017) Unbilled (2,212,465) 14,781,073 12,568,608 Other 20,844,567 45,579,646 66,424,213 Allowance for doubtful accounts (6,869,666) (10,346,176) (17,215,842)

Due from other governments (35,448,364) (39,364,139) (74,812,503) Contractual obligation receivable 1,830,750 3,668,250 5,499,000 Due from other funds 67,222,554 84,104,326 151,326,880 Prepaid items (1,594,435) (136,931) (1,731,366) Inventories - 1,610,748 1,610,748 Accounts and contracts payable 19,434,793 8,462,001 27,896,794 Accrued salaries, wages and benefits 1,113,931 (751,142) 362,789 Other accrued liabilities (32,989,422) (33,441,162) (66,430,584) Due to other governments 5,527,357 (8,804,848) (3,277,491) Due to other funds (128,169,985) (23,156,892) (151,326,877) Other noncurrent liabilities 1,339,344 2,946,391 4,285,735 Obligation payable (144,946) (326,030) (470,976) Lease payable (3,667,045) (4,481,943) (8,148,988) Accrued compensated absences (1,417,069) (3,230,859) (4,647,928) Accrued workers' compensation 351,231 - 351,231 Claims and judgments (761,300) 8,000,000 7,238,700 Deferred Outflows - Pension (10,810,800) (19,347,900) (30,158,700) Net pension liability - - - Deferred inflows - - -

Net cash provided by (used in) operating activities 7,051,023$ 205,031,931$ 212,082,954$

concluded.


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NOTES TO FINANCIAL STATEMENTS

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Notes To Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Great Lakes Water Authority ("GLWA" or the “Authority” ) is the regional wholesale provider of water and sewerservices in southeast Michigan. The Authority was incorporated by the counties of Macomb, Oakland, Wayne and theCity of Detroit (the “City”) on November 26, 2014 pursuant to Act 233, Public Acts of Michigan, 1955, as amended(“Act 233”). Pursuant to Leases that became effective on January 1, 2016, the Authority assumed possession andcontrol of the regional assets of both the water supply and sewage disposal systems owned by the City, which werepreviously operated by the Detroit Water and Sewerage Department (“DWSD” or the “Department”). The City,acting through DWSD, will continue to manage and operate its own local retail water and sewer systeminfrastructure. The leases assigned all revenues of both systems to the Authority for an initial term of 40 years andsubstituted GLWA for the City as the obligor on all outstanding debt obligations of the City related to the systems.

Reporting Entity

The GLWA Board is composed of six voting members. Two members are residents of the City of Detroit and areappointed by the Mayor of the City of Detroit. The counties of Macomb, Oakland and Wayne each appoint onemember who is a resident of the county from which appointed and the Governor of the State of Michigan appointsone member who is a resident of an area served by the Authority outside of the counties. All members of the GLWABoard must have at least seven years of experience in a regulated industry, such as a utility, engineering, finance,accounting or law firm. After the initial term specified in its Articles of Incorporation, each GLWA Board member isappointed for a four-year term and serves at the pleasure of the appointing government.

The GLWA Board has adopted a committee structure. Four committees have been established: Audit, CapitalImprovement Planning, Operations and Resources, and Legal.

The financial statements of the Authority have been prepared in conformity with generally accepted accountingprinciples (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is theaccepted standard setting body for establishing governmental accounting and financial reporting principles. Themore significant of the Authority’s accounting policies are described below.

The Authority’s Water System is one of the largest in the United States, both in terms of water produced andpopulation served. The water system currently serves an area of 981 square miles located in eight Michigan countiesand an estimated population of nearly 3.9 million or approximately 38% of Michigan’s population. Suburbanwholesale customers comprise approximately 82% of the population served by the Authority, and the retail watercustomers comprise the remainder served by the Authority.

The Authority’s sewer system is one of the largest in the United States, both in terms of treatment capacity andpopulation served. The sewer system currently serves an area of 988 square miles located in three Michigancounties and an estimated population of nearly 2.8 million or approximately 28% of Michigan’s population. Suburbancustomers comprise approximately 75% of the population served by the Authority, and the retail sewer customerscomprise the remainder served by the Authority.

The Authority is authorized to establish rates, fees and charges for its water supply and sewage disposal services.Under the Water and Sewer Services Agreement, the City is appointed as agent of the Authority for setting retailrates and for billing, collecting and enforcing the collection of charges from retail water and sewer customers. Asan agent of the Authority, the City, through the Board of Water Commissioners and without further approval by theCity Council, is required to set retail rates to meet the revenue requirements for the City retail portion of the waterand sewer systems. Under certain conditions, the Authority may terminate the City’s appointment.

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Basis of Accounting

Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity

Cash Deposits and Investments

Restricted Cash and Cash Equivalents

Unbilled Revenue

Contractual Obligation Receivable

The accounting policies of the Authority conform to GAAP as applicable to governmental entities. The accounts ofthe Authority are used to account for it's activities, which are financed and operated in a manner similar to a privatebusiness enterprise. Accordingly, the Authority maintains its records on the accrual basis of accounting. Revenuesfrom operations, investments and other sources are recorded when earned. Expenses (including depreciation) ofproviding services to the public are accrued when incurred.

Nonexchange transactions, in which the Authority receives value without directly giving equal value in return,include contributions and grants. On an accrual basis, revenue from contributions and grants is recognized in thefiscal year in which all eligibility requirements have been satisfied, including timing and expense requirements.Timing requirements specify the year when the resources are required to be used or the fiscal year when use is firstpermitted. Expense requirements specify the year in which the resources are provided to the Authority on areimbursement basis.

The Authority’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-terminvestments with original maturities of three months or less from the date of acquisition.

Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair value.Securities traded on a national or international exchange are valued at the last reported sales price at currentexchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted atprevailing interest rates for similar instruments. Investments that do not have established market values arereported at estimated fair value. Cash deposits are reported at carrying amounts, which reasonably approximatesfair value.

State statutes authorize the Authority to deposit in the accounts of federally insured banks, credit unions andsavings and loan associations and to invest in obligations of the U.S. Treasury, certain commercial paper, repurchaseagreements, bankers’ acceptances and mutual funds composed of otherwise legal investments.

Restricted assets are those assets set aside as required by the Authority's master bond ordinance. See note 4 forfurther details.

Pursuant to the Water and Sewer Services Agreement between the City and Authority, the City is responsible forpaying the portion of debt service on the bonds assumed by the Authority that were issued to finance the cost ofimprovements to the Detroit local facilities. Hence, the "receivable" recorded by the Authority on the "contractualobligation" of the City to the Authority. As further described in Note 12, the final terms of the Agreement are stillbeing negotiated.

The Authority records unbilled revenues for services provided prior to year‑end by accruing actual revenues billed inthe subsequent month.

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Other Assets

Capital Assets

Useful Lives(in years)

Site improvements 15Buildings and structures 20-50Infrastructure 80Machinery and equipment 3-20Vehicles 5-7

Deferred Outflows of Resources

Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid itemsin the financial statements.

Inventories consist of operating, maintenance, and repair parts for sewage assets and are valued at the lower of costor market, with cost being determined on an average cost method. Inventory is recorded as expense when consumedrather than when purchased. The water fund does not report inventory because the amounts are insignificant andfor efficiency are recorded in the sewage disposal fund. Any inventory usage by the water fund is charged throughan interfund payable to the sewage disposal fund.

In addition to assets, the statement of net position reports a separate section for deferred outflows of resources.This separate financial statement element represents a consumption of net position that applies to future periodsand so will not be recognized as an outflow of resources (or expense) until then. The Authority reports deferredoutflows of resources for two items: deferred charges on refunding and pension amounts. Deferred charges onrefunding results from the difference in the carrying value of refunded debt and its reacquisition price; theseamounts are deferred and amortized over the shorter of the life of the refunded or refunding debt. Deferredoutflows of resources from pension amounts relate to the net pension liability. A portion of these costs representcontributions to the plan subsequent to the plan measurement date. More detailed information on pension amountscan be found in Note 11.

The Authority implemented GASB 68, Accounting and Financial Reporting for Pensions, electing an implementationdate of June 30, 2015. This reporting category also includes pension contributions made during the fiscal yearended June 30, 2016 in accordance with GASB 71, Pension Transition for Contributions Made Subsequent to theMeasurement Date.

Capital assets are recorded at historical cost, together with interest capitalized during construction. All acquisitionsof land and land improvements are capitalized regardless of cost.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend assets’lives are not capitalized.

Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurredduring the construction phase of capital assets of business-type activities is included as part of the capitalized valueof the assets constructed.

Capital assets are depreciated on the straight line basis over the useful life of the assets as follows:

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Long-term Obligations

Obligation Payable

Lease Payable

Compensated Absences

Bond Premiums, Discounts, and Deferred Amounts on Refunding

Deferred Inflows of Resources

In the financial statements, long-term debt and other long-term obligations are reported as liabilities in thestatement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds usingthe effective interest method. Bonds payable are reported net of the applicable bond premium or discount.

In addition to liabilities, the statement of net position includes a separate section for deferred inflows of resources.This separate financial statement element represents an acquisition of net position that applies to future periodsand so will not be recognized as an inflow of resources (or revenues) until that time. The Authority has included thedeferred amounts on swap terminations and pension inflows in this reporting category. The deferred amounts onswap terminations were assumed as part of the lease agreements with the City. The amounts will be fully amortizedfor both funds by fiscal 2035. Deferred pension inflows result when there is a change in total pension liability due tobenefit changes, differences between expected and actual experience, changes in actuarial assumptions, ordifferences between expected and actual investment returns. The amount for the changes in actuarial assumptionsis deferred and amortized over the estimated remaining service life. The amount for the difference between actualand projected assumptions in investment earnings is deferred and amortized over five years.

The Authority also has an accrued compensated absence liability assumed on January 1, 2016 relating to theaccumulated unpaid vacation and sick leave balances for those employees who retired from the City or resignedfrom the City and accepted employment with the Authority on January 1, 2016. The June 30, 2016 balance of theaccrued compensated absences for the liability assumed on January 1, 2016 is approximately $4,552,000. Thisliability is recorded in the water fund as the disbursements for payment will be processed from the water fund withreimbursement from the sewer fund. The accrued compensated absences includes the employers’ share of SocialSecurity and Medicare taxes.

Under the terms of the lease agreements with the City, the Authority is required to pay a portion of the City’s Bnotes and C notes allocated to the regional water and sewer systems. See “Obligation Payable-City of Detroit 2014Financial Recovery Bonds” in Note 7.

The effective date of the leases by the City to the Authority for the leased water and sewer facilities becameeffective January 1, 2016. See Note 8 for the detail of the leases.

The Authority has a paid time off (PTO) policy which has an annual accrual period ending September 30 each year.Employees are allowed to carry over a maximum bank of 80 hours to the next accrual period. Balances greater than80 hours up to a maximum of 80 hours shall be converted to the retiree health saving program at 50% of the value ofthe PTO time. Hours in excess of 160 hours are forfeited if unused by September 30 of each accrual period. Theaccrued compensated absences for PTO accrual are approximately $744,000 for the water fund and $455,000 for thesewage disposal fund on June 30, 2016.

Bond premiums, discounts, and deferred amounts on refunding are deferred and amortized over the life of thebonds. Bond premiums and discounts are amortized using the effective interest method, and deferred amounts onrefunding are amortized using the straight‑line method. Bonds payable are reported net of the applicable bondpremium and discounts. Deferred amounts on refunding are reported as deferred outflows and deferred inflows ofresources.

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Net Position

Classification of Revenues and Expenses

The Authority classifies its revenues and expenses as either operating or nonoperating.

Taxes

Interest income

Interest Expense

Capital contributions

Net position, which represents the difference between assets, deferred outflows of resources, liabilities anddeferred inflows of resources, is reported in three components as follows:

Net Investment in Capital Assets - consists of capital assets, net of accumulated depreciation, and related debt.

Restricted – consists of amounts that are legally restricted by outside parties or by law through constitutionalprovisions or enabling legislation.

Unrestricted – is the residual balance of net position after net investment in capital assets and restricted.

The Authority pays no direct federal, state, or local taxes, except local taxes on excess property and federal SocialSecurity taxes.

Interest expense in the statement of revenues, expenses and changes in fund net position includes amounts relatedto the accretion of capital appreciation bonds. Interest expense is reported net of capitalized interest.

Operating revenues are those revenues generated from providing services in connection with the Authority’sprincipal ongoing operations. The principal operating revenues of the Authority are wholesale charges for providingwater and wastewater treatment. The local system charges are the wholesale charges to the City of Detroit underthe Water and Sewer Services Agreement. Wholesale customer charges are shown including the recovery of baddebt of $2,838,281 for the water fund and net of bad debt expense of $5,955,647 for the sewage disposal fund. Therecovery of bad debt for the water fund relates to the change in the allowance for the retail accounts receivableassumed by the Authority on January 1, 2016.

Operating expenses include the costs of operating the water and sewer utility, administrative expenses anddepreciation on capital assets. Costs related to shared facilities and personnel are allocated to the water and sewerfunds on a basis that relates costs incurred to the system benefited. By agreement, the Authority provides sharedservices to DWSD; accordingly operating expenses for personnel and contractual services have been reported net ofthe charges for shared services to DWSD.

Contributed capital represents revolving loan draws that are based on the Authority's capital expenditures and havebeen forgiven. The Authority is not required to repay the State for these amounts.

Interest income is the interest earned on the contractual obligation receivable.

When both restricted and unrestricted resources are available for use, generally it is the Authority’s policy to userestricted resources first and then unrestricted resources when they are needed.

All revenue and expenses not meeting these definitions are reported as nonoperating revenue and expenses.

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Central Services and Administrative Services

Common CostsWater %

Allocation Water AllocationSewer %

AllocationSewer

AllocationTotal Common

Costs

Centralized services 52.5% 18,494,851$ 47.5% 16,733,431$ 35,228,282$ Administrative services 30.3% 3,191,929 69.7% 7,342,499 10,534,428

Use of Estimates

2. BUDGETARY INFORMATION

Adoption of Budget and Customer Charges

Fiscal Year 2016 Transition

Prior to the effective date, the Board of Water Commissioners (BOWC) for DWSD as the predecessor entity adopted afiscal year 2016 budget and schedule of customer charges on March 11, 2015. That budget established theparameters for a bifurcated budget between the regional systems and the local DWSD systems effective January 1,2016 and for the six months ending June 30, 2016. The GLWA board adopted a partial year budget on November 19,2015 for that six-month period. On December 19, 2015, the GLWA board received a legal opinion that provided forthe schedule of customer charges approved by the BOWC to be carried forward for the GLWA fiscal year endingJune 30, 2016.

The preparation of basic financial statements in conformity with GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets andliabilities at the date of the basic financial statements and the reported amounts of revenues and expenses duringthe reporting period. Actual results could differ from those estimates.

The process for adoption of the budget and customer charges for fiscal year 2016 was unique as it represented atransition year caused by the operational effective date occurring midway through the fiscal year on January 1,2016. Commencing with FY 2017, the adoption of budget and charges is guided by the terms of the water and sewersystem leases, customer contracts, and other documents.

The financial activity of the authority is presented in two enterprise funds, which are not required under Statestatutes to have an adoption of an appropriated budget. A budget to actual schedule for revenues and expenses ispresented in the other information section of this report. This schedule is not required by GAAP or subject to auditprocedures. It is presented strictly for internal use only.

Various common costs incurred by the Authority are allocated proratably between the water and sewer funds. Theallocations are based on management’s best estimate and may change from year to year depending on the activitiesincurred by each fund and the information available. The following table shows the allocation of these commoncosts for the year ended June 30, 2016:

Centralized services include security, systems operations control, field engineering and service operations,information technology, planning, energy management and system analytics service costs.

Administrative services includes executive, public affairs, general counsel, organizational development, riskmanagement, finance, procurement and transition service costs.

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Budget Process - Fiscal Year 2017 and After

Schedule of Charges Process - Fiscal Year 2017 and After

3. CASH DEPOSITS AND INVESTMENTS

SewageWater DisposalFund Fund Total

Statement of Net PositionCash and cash equivalents 155,712,891$ 156,022,295$ 311,735,186$ Restricted cash and cash equivalents 53,028,844 81,181,424 134,210,268 Restricted cash on deposit with trustee 10,430 51,648 62,078 Investments 11,579,681 32,041,080 43,620,761 Restricted investments 27,818,000 28,843,000 56,661,000 Noncurrent restricted cash and cash equivalents 5,460,942 155,488,780 160,949,722 Noncurrent restricted investments 42,841,345 62,186,734 105,028,079

Total 296,452,133$ 515,814,961$ 812,267,094$

The deposits and investments of the Authority at June 30, 2016 are reported in the basic financial statements asfollows:

In the leases, the City acknowledges that all local water and sewer system revenues received from customers in theCity are the property of the GLWA and will be deposited as received in the Receiving Fund as defined in the MasterBond Ordinance and applied as provided in the Bond Ordinance. As a result, the City agrees to provide the Authoritywith a budget for the local water and sewer system as provided in the Water and Sewer Services Agreement.

Commencing with the fiscal year beginning July 1, 2016, the GLWA is required to adopt a two-year budget for theregional water and sewer systems. The budgeted expenses shall equal the sum of the revenue requirement,including the following for both the regional water and sewer systems: a) operation and maintenance expenses; b)amounts necessary to pay the principal of and interest on all bonds and to restore any reserves therefor establishedin the Master Bond Ordinance; c) the lease payment, which shall be a common-to-all charge; d) the GLWA portionsof the net pension liability and the B&C obligation payable; e) the amount necessary to be deposited to the WaterResidential Assistance Program (WRAP) Fund, which shall be a common-to-all charge equal to 0.5% of the basebudgeted operating revenues for the regional water and sewer systems for each fiscal year; f) the amounts neededto make the required deposits to the regional Extraordinary Repair and Replacement Reserve Fund and the regionalImprovement and Extension Fund as defined in the Master Bond Ordinance; and g) the amount necessary to satisfythe coverage ratios required by the rate covenant in the Master Bond Ordinance.

As provided in the leases, through the Fiscal Year ending June 30, 2025, the water and sewer systems are assumedto experience annual increases in the regional revenue requirement of not more than 4%. This limitation shall notbe applicable, however, if the regional revenue requirement must increase beyond the 4% assumption in order tosatisfy the rate covenant or to pay the cost of improvements to the leased water and/or sewer Facilities that arerequired to be made by applicable laws.

The GLWA Wholesale Customer Model Water Contract requires that the GLWA provide wholesale customers withwritten notice of a proposed charge, meet to review the proposed charges, and the underlying data used tocalculate the charge not less than 30 calendar days prior to a public hearing. Further, the contract requires that apublic hearing be held no less than 120 days prior to the date that a proposed charge increase is to take effect.

The Water and Sewer Services agreement between GLWA and DWSD requires that GLWA provides the City withwritten notice of the proposed charges and the underlying data used to calculate the charge not less than 120calendar days prior to the effective date of any new charges.

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Cash Deposits and investmentsBank deposits -

Checking/savings accounts 96,571,676$ 12,346,073$ 108,917,749$ Investments in securities 82,239,026 123,070,814 205,309,840 Money market accounts 117,631,001 380,346,426 497,977,427 Cash on deposit with trustee 10,430 51,648 62,078

Total 296,452,133$ 515,814,961$ 812,267,094$


U.S. Treasury notes 12,463,725$ 22,321,444$ 34,785,169$ U.S. government agencies 36,260,960 57,993,180 94,254,140 Commercial paper 33,514,341 42,756,190 76,270,531

Total 82,239,026$ 123,070,814$ 205,309,840$

Restricted cash of the Authority primarily consists of amounts held in reserve for construction retainage and forfuture debt service payments.

Custodial Credit Risk - Deposits. Deposits are exposed to custodial credit risk if they are not covered by depositoryinsurance. At year-end, the carrying amount of the Authority’s deposits was $96,571,676 for the water fund and$12,346,073 for the sewer fund. The bank balance of the water fund deposits was $95,647,862 of which $94,970,810was uninsured and uncollateralized. The bank balance of the sewage disposal fund deposits was $12,346,073 ofwhich $12,167,380 was uninsured and uncollateralized.

Custodial Credit Risk - Investments. Following is a summary of the Authority’s investments as of June 30, 2016:

Investments are exposed to custodial credit risk if the securities are uninsured, unregistered or held by acounterparty or its agent but not in the government’s name. In accordance with the Authority’s investment policy,all investments are held in the name of the Authority and are evidenced by a safekeeping receipt confirmation, andthus not exposed to custodial credit risk.

In accordance with the Authority’s investment policy and State law, all deposits are uncollateralized, held in theAuthority’s name, and evidenced by a safekeeping receipt. Also, due to the dollar amounts of cash deposits and thelimits of FDIC insurance, the Authority believes it is impractical to insure all bank deposits. As a result, the Authorityevaluates each financial institution and assesses the level of risk of each institution; only those institutions with anacceptable estimated risk level are used as depositories.

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Water fundU.S. government agenciesU.S. government agencies

U.S. government agenciesCommercial paper Bank of Tokyo MitsubishiCommercial paper BNP ParibasCommercial paper Credit AgricoleCommercial paper Prudential Commercial paper

Sewage disposal fundU.S. government agenciesU.S. government agencies

U.S. government agenciesU.S. government agencies

Commercial paper Bank of Tokyo MitsubishiCommercial paper BNP ParibasCommercial paper Credit AgricoleCommercial paper Prudential Commercial paper

Federal Home Loan Mortgage Company

8.10%

Federal National Mortgage Association

12.16%

Federal Farms Credit Bank 9.73%

Federal National Mortgage Association

8.10%

Federal Farms Credit Bank 9.70%

% of PortfolioInvestment Type

6.54%5.69%5.69%

As of June 30, 2016, all of the Authority’s investments in securities of U.S. agencies were rated AA+ by Standard &Poor’s and Aaa by Moody's. The Authority’s investments in commercial paper were rated A1 by Standard & Poor’sand P1 by Moody's. United States treasury securities are explicitly guaranteed by the U.S. government and notconsidered to have credit risk. The Authority's money market accounts were not rated.

US Bank

Federal Home Loan Bank 21.10%

Interest Rate Risk. Interest rate risk is the risk that changes in market interest rates will adversely affect the fairvalue of investments. The Authority’s investment policy does not limit investment maturities as a means ofmanaging its exposure to fair value losses arising from increasing interest rates.

Federal Home Loan Bank

At June 30, 2016, the Authority had greater than 5% of its total investment portfolio concentrated as follows:

22.20%

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. The Authority’s investment policy and State law require that commercial paper be rated in the top tworatings by at least two nationally recognized statistical rating organizations.

Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of agovernment’s investment in a single issuer. The Authority’s investment policy requires diversification by securitytype and institution, but does not place a fixed percentage limit for any one issuer.

Issuer

8.33%

7.05%6.90%7.05%8.33%

US Bank

6.54%6.64%

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< 1 year 1 - 5 years 6 - 10 years TotalWater fund

U.S. Treasury notes 12,463,725$ -$ -$ 12,463,725$ U.S. government agencies 26,258,160 10,002,800 - 36,260,960 Commercial paper 33,514,341 - - 33,514,341

72,236,226 10,002,800 - 82,239,026

Sewage disposal fundU.S. Treasury notes 22,321,444 - - 22,321,444 U.S. government agencies 31,018,100 26,975,080 - 57,993,180 Commercial paper 42,756,190 - - 42,756,190

96,095,734 26,975,080 - 123,070,814

Total 168,331,960$ 36,977,880$ -$ 205,309,840$

Level 1 Level 2 Level 3 TotalWater fund

Investments by fair value level:U.S. treasuries 12,463,725$ -$ -$ 12,463,725$ U.S. government agencies - 36,260,960 - 36,260,960 Commercial paper - 33,514,341 - 33,514,341

12,463,725 69,775,301 - 82,239,026 Sewage disposal fund

Investments by fair value level:U.S. treasuries 22,321,444 - - 22,321,444 U.S. government agencies - 57,993,180 - 57,993,180 Commercial paper - 42,756,190 - 42,756,190

22,321,444 100,749,370 - 123,070,814

Total 34,785,169$ 170,524,671$ -$ 205,309,840$

4. RESTRICTED ASSETS

Fair Value Measurements - The Authority categorizes investments measured at fair value within the fair valuehierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputsused to measure the fair value of the assets. Level 1 inputs are quoted at prices in active markets for identicalassets; Level 2 inputs are quoted prices for similar assets or liabilities in active markets; and Level 3 inputs areunobservable in the market and are the least reliable. The Authority had the following fair value measurements asof June 30, 2016:

Restricted assets, comprised of cash and investments, are available for debt service on revenue bonds and toprovide funds for improvements, enlargements, extensions and construction. In accordance with the provisions ofthe Master Bond Ordinance and Board guidance, the Authority follows a detailed and sequential flow of fundsconcept and set of procedures that establishes various physically segregated accounts through which monies flowand are maintained at certain levels in satisfaction of all borrowing and other legal requirements.

As of June 30, 2016, the Authority’s debt securities had the following maturities:

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Funded fromFunded from Revenue Debt Issuance

Unrestricted Restricted Restricted TotalWater fund

Operations and maintenance 78,222,948$ -$ -$ 78,222,948$ Senior lien debt service - 34,722,532 - 34,722,532 Senior lien bond reserve - - 138,640,291 138,640,291 Second & junior lien debt service - 23,260,022 - 23,260,022 Second & junior lien debt reserve - - 60,776,500 60,776,500 Pension obligation - 1,716,400 - 1,716,400 Water residential assistance program - 2,006,433 - 2,006,433 Budget stabilization - 2,356,941 - 2,356,941 Extraordinary repair and replacement 21,821,325 - - 21,821,325 Improvement and extension (regional system) 67,248,299 - - 67,248,299 Subtotal - reserves defined by ordinance 167,292,572 64,062,328 199,416,791 430,771,691 Less: funded by surety (non-cash) - - (156,455,156) (156,455,156) Total - reserves defined by

ordinance (net of surety coverage) 167,292,572 64,062,328 42,961,635 274,316,535 Unspent construction bond proceeds - - 21,158,320 21,158,320 Other restricted proceeds-donations - 977,278 - 977,278

Total cash, cash equivalentsand investments 167,292,572 65,039,606 64,119,955 296,452,133

Funded fromFunded from Revenue Debt Issuance

Unrestricted Restricted Restricted TotalSewage disposal fund

Operations and maintenance 41,955,545$ -$ -$ 41,955,545$ Senior lien debt service - 44,380,665 - 44,380,665 Senior lien bond reserve - - 137,741,771 137,741,771 Second & junior lien debt service - 45,774,955 - 45,774,955 Second & junior lien debt reserve - - 82,055,050 82,055,050 Pension obligation - 2,310,600 - 2,310,600 Water residential assistance program - 2,594,643 - 2,594,643 Budget stabilization - 5,813,000 - 5,813,000 Extraordinary repair and replacement 32,609,160 - - 32,609,160 Improvement and extension (regional system) 113,498,670 - - 113,498,670 Subtotal - reserves defined by ordinance 188,063,375 100,873,863 219,796,821 508,734,059 Less: funded by surety (non-cash) - - (157,245,716) (157,245,716) Total - reserves defined by

ordinance (net of surety coverage) 188,063,375 100,873,863 62,551,105 351,488,343 Unspent construction bond proceeds - - 164,326,618 164,326,618

Total cash, cash equivalentsand investments 188,063,375 100,873,863 226,877,723 515,814,961

Total cash, cash equivalents and investments - business-type activities 355,355,947$ 165,913,469$ 290,997,678$ 812,267,094$

The following schedules provide, in the order of the flow of funds per the Master Bond Ordinance, the distribution ofwater and sewage disposal fund cash and investments between restricted and unrestricted assets based on thesource of the monies:

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UnrestrictedRestricted Current

Restricted Noncurrent Total

WaterCash and cash equivalents 155,712,891$ 53,028,844$ 5,460,942$ 214,202,677$ On deposit with trustee - 10,430 - 10,430 Investments 11,579,681 27,818,000 42,841,345 82,239,026

167,292,572 80,857,274 48,302,287 296,452,133 Sewage disposal

Cash and cash equivalents 156,022,295$ 81,181,424$ 155,488,780$ 392,692,499 On deposit with trustee - 51,648 - 51,648 Investments 32,041,080 28,843,000 62,186,734 123,070,814

188,063,375 110,076,072 217,675,514 515,814,961

Total 355,355,947$ 190,933,346$ 265,977,801$ 812,267,094$

5. CAPITAL ASSETS

Beginning EndingBalance [1] Additions Disposals Balance

Water fundNondepreciable capital assets:

Land 34,244,101$ -$ -$ 34,244,101$ Easements 258,632,397 - - 258,632,397 Construction in progress 102,483,144 20,198,448 - 122,681,592

Total nondepreciable assets 395,359,642 20,198,448 - 415,558,090

Depreciated capital assets:Site improvements 57,687,528 - - 57,687,528 Buildings and structures 555,224,787 40,975 - 555,265,762 Infrastructure 586,102,646 - - 586,102,646 Machinery and equipment 598,328,827 427,164 - 598,755,991 Vehicles 1,538,031 - - 1,538,031

Total depreciable assets 1,798,881,819 468,139 - 1,799,349,958

Less accumulated depreciation:Site improvements - (4,570,741) - (4,570,741) Buildings and structures - (17,711,187) - (17,711,187) Infrastructure - (18,866,429) - (18,866,429) Machinery and equipment - (29,898,877) - (29,898,877) Vehicles - (248,314) - (248,314)

Total accumulated depreciation - (71,295,548) - (71,295,548)

Total capital assets being depreciated, net 1,798,881,819 (70,827,409) - 1,728,054,410

Water fund net capital assets 2,194,241,461 (50,628,961) - 2,143,612,500

The following summary reconciles the above cash and investment balances with the balances per the Statement ofNet Position. The allocation of restricted balances to current and noncurrent categories is not intended to directlyalign with the funding source allocation included in the schedule.

Surety coverage includes series specific policies; therefore, this represents the lesser of the maximum amount ofthe policy, or amount of reserve requirement allocated to the specific series covered by such policy.

Capital assets activity for the year ended June 30, 2016 was as follows:

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Beginning EndingBalance [1] Additions Disposals Balance

Sewage disposal fundNondepreciable capital assets:

Land 28,733,333$ -$ -$ 28,733,333$ Easements 96,211,323 - - 96,211,323 Construction in progress 154,381,672 16,549,930 - 170,931,602

Total nondepreciable assets 279,326,328 16,549,930 - 295,876,258

Depreciated capital assets:Site improvements 36,280,397 - - 36,280,397 Buildings and structures 1,059,172,720 714,371 (568,269) 1,059,318,822 Infrastructure 596,856,313 - - 596,856,313 Machinery and equipment 1,095,931,991 914,715 (5,135,490) 1,091,711,216 Vehicles 1,426,261 - - 1,426,261

Total depreciable assets 2,789,667,682 1,629,086 (5,703,759) 2,785,593,009

Less accumulated depreciation:Site improvements - (3,398,076) - (3,398,076) Buildings and structures - (26,564,049) 9,702 (26,554,347) Infrastructure - (6,903,182) - (6,903,182) Machinery and equipment - (48,884,578) 309,462 (48,575,116) Vehicles - (271,143) - (271,143)

Total accumulated depreciation - (86,021,028) 319,164 (85,701,864)

Total capital assets being depreciated, net 2,789,667,682 (84,391,942) (5,384,595) 2,699,891,145

Sewage disposal fund net capital assets 3,068,994,010 (67,842,012) (5,384,595) 2,995,767,403

Business-type activities capital assets, net 5,263,235,471$ (118,470,973)$ (5,384,595)$ 5,139,379,903$

[1] See note 12 for valuation of the beginning balances at the date of bifurcation.

Capital assets were evaluated during the year to determine if any asset impairments exist, defined as a significant,unexpected decline in the service utility of a capital asset. The Authority had a fire at its wastewater treatmentfacility in March 2016. Machinery, equipment and buildings were damaged. The amounts are recorded as disposalsin the sewage disposal fund above, and insurance proceeds were netted with those amounts for a gain of $275,693.

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6. INTERFUND RECEIVABLES AND PAYABLES

Due to Due from

Water 65,971$ -$ Sewage disposal - 65,971

65,971$ 65,971$

7. LONG-TERM DEBT

Changes in long-term debt and accrued compensated absences for the year ended June 30, 2016 were as follows:

Beginning Ending Amount dueBalance [1] Increase Decrease Balance within one year

Water fundRevenue bonds 2,296,300,000$ - (35,625,000) 2,260,675,000$ 18,770,000$ State revolving loans 17,383,761 - - 17,383,761 1,400,000 Deferred amounts for:

Add unamortized premiums 274,582,072 - (8,973,838) 265,608,234 17,778,940 Less unamortized discounts (20,774,642) - 1,582,446 (19,192,196) (2,298,773)

Total revenue bonds, net 2,567,491,191 - (43,016,392) 2,524,474,799 35,650,167 Compensated absences 5,391,978 744,281 (839,579) 5,296,680 1,784,746

Total water fund 2,572,883,169 744,281 (43,855,971) 2,529,771,479 37,434,913

Sewage disposal fundRevenue bonds 2,777,630,000 - (37,965,000) 2,739,665,000 12,285,000 Capital appreciation bonds 24,165,000 - - 24,165,000 1,350,000 Discount on capital

appreciation bonds (5,081,829) - 584,867 (4,496,962) (1,183,699) State revolving loans 489,487,050 22,838,692 (5,890,000) 506,435,742 43,385,000 Deferred amounts for:

Add unamortized premiums 318,190,761 - (10,332,919) 307,857,842 19,414,293 Less unamortized discounts (130,183,682) - 4,750,439 (125,433,243) (14,348,405)

Total revenue bonds, net 3,474,207,300 22,838,692 (48,852,613) 3,448,193,379 60,902,189 Compensated absences 5,017,011 454,630 (5,017,011) 454,630 454,630

Total sewage disposal fund 3,479,224,311 23,293,322 (53,869,624) 3,448,648,009 61,356,819

Total business-type activities 6,052,107,480$ 24,037,603$ (97,725,595)$ 5,978,419,488$ 98,791,732$

[1]

The water fund accumulates centralized service and administrative costs, prepaids, accrued salaries andcompensated absences from operations. A certain portion of these items relate to the sewage disposal fund. Aninterfund has been set up in the sewage disposal fund for its portion of the previously mentioned items.

See note 12 for valuation of the beginning balances at the date of bifurcation.

During the course of operations, numerous transactions occur between the water and sewer funds for goodsprovided or services rendered and for the reimbursement of expenses. Related interfund receivables and payablesare classified as “due from other funds” or “due to other funds,” respectively, on the statement of net position andwill be settled within one year. Interfund receivables and payables at June 30, 2016 are as follows:

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Year Ended June 30, Principal Interest Total

Water fund2017 20,170,000$ 93,392,419$ 113,562,419$ 2018 61,660,000 113,971,707 175,631,707 2019 63,310,000 110,896,157 174,206,157 2020 68,185,000 107,691,131 175,876,131 2021 71,430,000 104,231,409 175,661,409

2022–2026 415,545,000 460,885,442 876,430,442 2027-2031 514,263,761 343,235,698 857,499,459 2032-2036 622,980,000 199,978,359 822,958,359 2037-2041 372,180,000 60,713,894 432,893,894

2042 68,335,000 1,782,125 70,117,125

2,278,058,761$ 1,596,778,341$ 3,874,837,102$

Sewage disposal fund2017 57,020,000$ 116,408,078$ 173,428,078$ 2018 98,485,000 140,495,483 238,980,483 2019 102,005,000 136,870,492 238,875,492 2020 105,395,000 133,047,236 238,442,236 2021 109,940,000 129,080,570 239,020,570

2022–2026 585,305,300 576,627,001 1,161,932,301 2027-2031 731,961,423 439,348,353 1,171,309,776 2032-2036 830,960,000 274,495,292 1,105,455,292 2037-2041 543,680,000 86,352,244 630,032,244 2042-2045 105,514,019 12,680,624 118,194,643

$ 3,270,265,742 $ 2,045,405,373 $ 5,315,671,115

For bonds issued through the Michigan Finance Authority (MFA) in 2014 and 2015, the Authority is required to makepayment on these obligations to the MFA depository account five business days prior to the actual due date of thebond principal and interest payments. Therefore, the payments for principal and interest due on July 1, 2016 arenot included in the debt service requirements amounts above as they were paid on June 24, 2016.

Annual debt service requirements to maturity for business-type activities revenue bonds payable and state revolvingloans payable are as follows:

As of June 30, 2016, aggregate debt service requirements of the Authority's debt (fixed and variable-rate)instruments were as follows. These amounts assume that current interest rates on variable-rate bonds will remainthe same for their respective terms. As these rates vary, interest payments on variable-rate bonds will vary.

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Original Range of Outstanding Bond Issue Interest Maturity EndingDate Amount Rates Date Balance Callable

Water fundSeries 2001-C 5/14/08 4,055,000$ 4.25% 7/01/16–18 1,035,000$ Series 2001-C 5/14/08 186,350,000 4.50-5.75% 7/01/19–29 178,735,000 cSeries 2003-A 1/30/03 234,805,000 5.00% 7/01/34 100,000 cSeries 2003-B 1/30/03 172,945,000 5.00% 7/01/34 100,000 cSeries 2003-D 9/01/06 6,720,000 4.20% 7/01/16 235,000 Series 2003-D 9/01/06 144,650,000 4.25-5.00% 7/01/17–33 116,645,000 cSeries 2004-A 8/16/06 17,600,000 5.25% 7/01/16 4,710,000 Series 2004-A 8/16/06 55,165,000 4.50-5.25% 7/01/17–25 30,335,000 cSeries 2004-B 8/16/06 52,840,000 4.25-5.00% 7/01/2016 5,105,000 Series 2004-B 8/16/06 100,990,000 4.25-5.00% 7/01/17–23 15,725,000 cSeries 2005-B 5/14/08 19,070,000 4.00-5.50% 7/01/16–18 4,255,000 Series 2005-B 5/14/08 175,830,000 4.75-5.50% 7/01/19–35 148,085,000 cSeries 2006-A 8/16/06 42,795,000 5.00% 7/01/2016 1,610,000 Series 2006-A 8/16/06 237,205,000 5.00% 7/01/17–34 119,445,000 cSeries 2006-B 4/01/09 900,000 4.25-5.00% 7/01/16–19 300,000 Series 2006-B 4/01/09 119,100,000 5.50-7.00% 7/01/23–36 85,350,000 cSeries 2006-C 8/16/06 12,585,000 5.00% 7/01/16 3,205,000 Series 2006-C 8/16/06 208,060,000 5.00% 7/01/17–33 198,700,000 cSeries 2006-D 8/16/06 4,430,000 4.00-4.20% 7/01/2016 15,000 Series 2006-D 8/16/06 142,160,000 4.25-5.00% 7/01/17–32 59,815,000 cSeries 2011-A 12/22/11 37,880,000 5.00% 7/01/16-20 10,405,000 Series 2011-A 12/22/11 341,710,000 5.00-5.75% 7/01/27–41 289,605,000 cSeries 2011-B 12/22/11 7,455,000 3.607-5.00% 7/01/16–21 2,875,000 Series 2011-B 12/22/11 9,740,000 6.00% 7/01/33 2,295,000 cSeries 2011-C 12/22/11 3,925,000 5.00% 7/01/21 1,020,000 Series 2011-C 12/22/11 99,965,000 4.50-5.25% 7/01/23–41 74,125,000 cSeries 2014-A (D-1) 9/04/14 162,350,000 5.00% 7/01/16–23 158,425,000 Series 2014-A (D-1) 9/04/14 44,190,000 5.00% 7/01/35–37 41,790,000 cSeries 2014-B (D-2) 9/04/14 51,530,000 5.00% 7/01/23-24 51,530,000 Series 2014-B (D-2) 9/04/14 136,925,000 5.00% 7/01/25–28 136,925,000 cSeries 2014-C (D-3) 9/04/14 62,700,000 5.00% 7/01/18–20 62,700,000 Series 2014-D (D-4) 9/04/14 98,285,000 5.00% 7/01/16–17 66,325,000 Series 2014-D (D-4) 9/04/14 209,360,000 5.00% 7/01/29–34 176,860,000 cSeries 2014-E (D-5) 9/04/14 9,270,000 2.85% 7/01/19 9,270,000 Series 2014-F (D-6) 9/04/14 21,735,000 5.00% 7/01/19–24 21,735,000 Series 2014-F (D-6) 9/04/14 43,690,000 5.00% 7/01/25–36 43,690,000 cSeries 2014-G (D-7) 9/04/14 14,815,000 5.00% 7/01/16–18 10,930,000 Series 2015-A (D-1) 12/15/15 20,155,000 3.00-5.00% 7/01/17-22 20,155,000 Series 2015-A (D-1) 12/15/15 69,275,000 5.00% 7/01/27-35 69,275,000 cSeries 2015 (D-2) 12/15/15 37,235,000 5.00% 7/01/34 37,235,000 c

Total water fund revenue bonds payable 2,260,675,000

Net revenues of the Authority are pledged to repayment of bonds. The following is a schedule of the revenue bonds payable atJune 30, 2016:

Issue

Revenue Bonds Payable

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Original Range of Outstanding Bond Issue Interest Maturity EndingDate Amount Rates Date Balance Callable

Sewage disposal fundSeries 1998-A 12/14/06 18,540,000$ 5.50% 7/01/16–17 2,515,000$ Series 1998-A 12/14/06 49,075,000 5.25% 7/01/18–23 18,485,000 cSeries 1998-B 12/14/06 18,750,000 5.50% 7/01/16–17 4,535,000 Series 1998-B 12/14/06 48,770,000 5.25% 7/01/18–23 18,260,000 cSeries 1999-A ** 12/01/99 33,510,118 — 7/01/15–21 19,668,038 Series 2001-B 9/15/01 110,550,000 5.50% 7/01/23–29 78,895,000 Series 2001-C-1 6/17/09 6,360,000 5.25% 7/01/16–19 1,660,000 Series 2001-C-1 6/17/09 148,510,000 6.50–7.00% 7/01/20–27 40,705,000 cSeries 2001-C-2 5/08/08 3,275,000 4.00% 7/01/16–18 875,000 Series 2001-C-2 5/08/08 119,630,000 4.00–5.25% 7/01/19–29 107,045,000 cSeries 2001-E 5/07/08 136,150,000 5.75% 7/01/24–31 134,745,000 cSeries 2003-A 5/15/03 213,395,000 5.50% 7/01/17–18 3,150,000 Series 2003-B 6/17/09 150,000,000 7.50% 7/01/32–33 25,650,000 cSeries 2004-A 2/12/04 101,435,000 5.25% 7/01/19–24 35,010,000 Series 2005-A 3/17/05 269,590,000 3.75-5.125% 7/01/34-35 31,885,000 cSeries 2005-B 3/17/05 40,215,000 5.50% 7/01/21-22 17,115,000 Series 2005-C 4/05/05 41,095,000 5.00% 7/1/25 100,000 cSeries 2006-A 5/07/08 123,655,000 5.50% 7/01/34–36 123,185,000 cSeries 2006-B 8/10/06 11,850,000 5.00% 7/1/16 1,030,000 Series 2006-B 8/10/06 238,150,000 4.25–5.00% 7/01/17-36 229,665,000 cSeries 2006-C 8/10/06 8,495,000 5.25% 7/1/16 1,475,000 Series 2006-C 8/10/06 18,065,000 5.00% 7/01/17-18 9,740,000 cSeries 2006-D 12/14/06 370,000,000 Variable (*) 7/01/26-32 239,475,000 cSeries 2012-A 6/26/12 95,445,000 5.00% 7/01/16–22 72,195,000 Series 2012-A 6/26/12 564,335,000 5.00 – 5.50 7/01/23–39 475,165,000 cSeries 2014-A (C-1) 9/04/14 20,000 5.00% 7/01/19-22 20,000 Series 2014-A (C-1) 9/04/14 123,200,000 5.00% 7/01/23-44 123,200,000 cSeries 2014-B (C-2) 9/04/14 20,000 5.00% 7/01/19-22 20,000 Series 2014-B (C-2) 9/04/14 27,450,000 5.00% 7/01/23-44 27,450,000 cSeries 2014-C (C-3) 9/04/14 142,600,000 5.00% 7/01/21–24 142,600,000 Series 2014-C (C-3) 9/04/14 303,570,000 5.00% 7/01/25–33 303,570,000 cSeries 2014-D (C-5) 9/04/14 95,165,000 5.00% 7/01/17–20 95,165,000 Series 2014-E (C-6) 9/04/14 88,900,000 5.00% 7/01/32–33 88,900,000 cSeries 2014-F (C-7) 9/04/14 32,650,000 5.00% 7/01/19–24 32,650,000 Series 2014-F (C-7) 9/04/14 44,065,000 5.00% 7/01/25–36 44,065,000 cSeries 2014-G (C-8) 9/04/14 23,240,000 2.00 – 5.00% 7/01/16–18 11,805,000 Series 2015 (C-1) 12/15/15 500,000 3.00% 7/01/17 500,000 Series 2015 (C-1) 12/15/15 197,160,000 5.00% 7/01/26-35 197,160,000

Total sewage disposal fund revenue bonds payable 2,759,333,038

Total business-type activities 5,020,008,038$

* Interest rates are reset periodically at the stated current market interest rate.** Bonds are capital appreciation bonds. The outstanding balance represents the discounted present value.c Indicates bonds are callable under terms specified in the indenture; all other bonds are noncallable.

Issue

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Range of Outstanding Bond Amount Interest Maturity EndingDate Issued Rates Date Balance

Water FundSeries 2005 SRF-1 9/22/05 13,805,164$ 2.125% 10/01/15–26 8,045,164$ Series 2005 SRF-2 9/22/05 8,891,730 2.125% 10/01/15–26 5,051,730 Series 2006 SRF-1 9/21/06 5,180,926 2.125% 10/01/15–26 2,995,926 Series 2008 SRF-1 9/29/08 2,590,941 2.50% 10/01/15–28 1,290,941

Total water fund state revolving loans payable 17,383,761

Sewage Disposal FundSeries 1997-B-SRF 9/30/97 5,430,174 2.25% 10/01/15–18 965,000 Series 1999-SRF-1 6/24/99 21,475,000 2.50% 4/01/16–20 5,180,000 Series 1999-SRF-2 9/30/99 46,000,000 2.50% 10/01/15–22 18,765,000 Series 1999-SRF-3 9/30/99 31,030,000 2.50% 10/01/15–20 9,265,000 Series 1999-SRF-4 9/30/99 40,655,000 2.50% 10/01/15–20 12,140,000 Series 2000-SRF-1 3/30/00 44,197,995 2.50% 10/01/15–22 15,947,995 Series 2000-SRF-2 9/28/00 64,401,066 2.50% 10/01/15–22 26,156,066 Series 2001-SRF-1 6/28/01 82,200,000 2.50% 10/01/15–24 42,090,000 Series 2001-SRF-2 12/20/01 59,850,000 2.50% 10/01/15–24 30,650,000 Series 2002 SRF-1 6/27/02 18,985,000 2.50% 4/01/16–23 7,735,000 Series 2002-SRF-2 6/27/02 1,545,369 2.50% 4/01/16–23 630,369 Series 2002-SRF-3 12/19/02 31,549,466 2.50% 10/01/15–24 14,899,466 Series 2003-SRF-1 6/26/03 48,520,000 2.50% 10/01/15–25 27,275,000 Series 2003-SRF-2 9/25/03 25,055,370 2.50% 4/01/16–25 12,740,370 Series 2004 SRF-1 6/24/04 2,910,000 2.125% 10/01/15–24 1,460,000 Series 2004 SRF-2 6/24/04 18,353,459 2.125% 4/01/16–25 9,193,459 Series 2004 SRF-3 6/24/04 12,722,575 2.125% 4/01/16–25 6,357,575 Series 2007 SRF-1 9/20/07 167,540,598 1.625% 10/01/15–29 122,835,598 Series 2009 SRF-1 4/17/09 13,970,062 2.50% 4/01/16–30 10,160,062 Series 2010 SRF-1 1/22/10 4,214,763 2.50% 4/01/16–31 3,300,763 Series 2012 SRF-1 8/30/12 14,950,000 2.50% 10/01/15–34 13,835,170 Series 2015 SRF-1 3/20/15 79,500,000 2.50% 4/01/17–36 79,500,000 Series 2015 SRF-2 3/20/15 33,030,000 2.50% 10/01/16–35 20,883,315 Series 2015 SRF-3 12/11/15 19,485,000 2.50% 10/01/16–35 14,470,534

Total sewage disposal fund state revolving loans payable 506,435,742

Total business-type activities 523,819,503$

Issue

The state revolving loans are issued as part of the State of Michigan's Revolving Fund Loan Program. As GLWA draws additionalamounts from time to time hereafter, the outstanding principal amounts of such bonds will correspondingly increase. All loans arecallable under terms specified in the loan agreements.

State Revolving Loans Payable

Net revenues of the Authority are pledged to repayment of bonds. The following is a schedule of the state revolving loans payableat June 30, 2016:

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Issuance of State Revolving Loans

Debt Ratings

Bondholder Consent

As one of the conditions precedent for the regional lease to become effective, DWSD was required to obtain the consent of not lessthan 51% of water and sewer bond holders to the change the obligor for all outstanding revenue bonds from DWSD to GLWA as ofthe effective date. On November 12, 2015, the DWSD issued a solicitation of consents to changes to certain bond financingdocuments. As of November 25, 2015, DWSD obtained the voluntary consent of more than 67% of its outstanding bond holders.Subsequently, bonds sold in December 2015 bore the same consent to provide for the change in obligor from DWSD to GLWA.

As of January 2016, Standard & Poor's Ratings Services ratings on the senior and second lien debt as A-/A-; Moody's rating wasBaa3/Baa3 and Fitch's rating was BBB.

The Authority's sewage disposal fund received loans from the State of Michigan Revolving Loan Fund totaling $22,838,692 duringthe year ended June 30, 2016. The proceeds of the loans were used to pay costs of acquiring, constructing extensions, and makingcertain repairs and improvements to the System. At June 30, 2016, $17,690,981 in bonds were authorized and unissued. Noamounts were drawn or unissued in the water fund as of June 30, 2016.

Obligation Payable - City of Detroit 2014 Financial Recovery Bonds

The Financial Recovery Bonds, Series 2014-B are federally taxable. The bonds’ interest rate is 4.0 percent per annum fromDecember 10, 2014 to and including March 31, 2034 and 6.0 percent per annum thereafter until the maturity date of April 1, 2044.The bonds were delivered to classes of creditors in satisfaction of: (1) Class 12 OPEB claims the bonds were distributed to the newVoluntary Employee Beneficiary Associations (VEBA) for the general retirees and police and fire retirees; (2) Class 9 PensionObligation Certificate (POC) claims; and (3) other unsecured bankruptcy claims. GLWA has a contractual obligation to pay aportion of the bonds based on an agreed-upon allocation percentage.

Contractual Obligation Receivable - Debt Allocation for DWSD Retail Operations

As part of the lease transaction in which GLWA leased the regional water and sewer system from the City of Detroit, all DWSDrevenue bonds outstanding as of December 31, 2015, including those purchased by the Michigan Finance Authority under its staterevolving loan program, were assumed by GLWA with the consent of bondholders. Total bonds assumed by GLWA totaled$2,313,683,761 for the water fund and $3,291,282,050 for the sewage disposal fund.

Per the Water and Sewer Services Agreement between the DWSD and GLWA dated June 12, 2015 and the Master Bond Ordinancedated October 7, 2015, as amended, the Detroit retail class continues to pay its common-to-all share of debt service revenuerequirements and its allocated share of debt service revenue requirements associated with improvements to the local water andsewer systems. Payments on the debt service incurred by GLWA on the outstanding revenue bonds assumed as of December 31,2015 are to be allocated using an agreed-upon percentage of total debt service associated with bond-financed local improvementsover the life of such bonds, though the bonds themselves continue to be secured by the net revenue of GLWA, and the revenues ofthe Detroit retail class. As of June 30, 2016, the parties were still working to resolve the allocation percentage. GLWAmanagement estimates the percentage to approximate 20.51 percent for water and 11.26 percent for sewage disposal. Theresulting estimated debt liability allocation of $473,169,250 for the water fund and $371,331,750 for the sewage disposal fund hasbeen recognized as a receivable at year-end.

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The following is a schedule of the Financial Recovery Bonds payable at June 30, 2016:

Original Range of Outstanding Bond Issue Interest Maturity EndingIssue Amount Rates Date Balance

Water fundSeries 2014-B 26,540,080$ 4.00 to 6.00% 4/1/2044 15,556,025$ Series 2014-C 3,829,794 5.00% 4/1/2026 2,021,474

30,369,874 17,577,499 Sewage disposal fund

Series 2014-B 44,233,463 4.00 to 6.00% 4/1/2044 34,990,438 Series 2014-C 6,382,990 7.35% 4/1/2017 4,546,938

50,616,453 39,537,376

Total business-type activities 80,986,327$ 57,114,875$


Water fund2017 152,193$ 723,315$ 875,508$ 2018 159,803 715,705 875,508 2019 167,793 707,715 875,508 2020 176,183 699,325 875,508 2021 184,992 690,516 875,508

2022–2026 2,628,910 3,355,343 5,984,253 2027-2031 3,996,209 2,491,346 6,487,555 2032-2036 3,889,006 2,006,727 5,895,733 2037-2041 3,889,006 1,400,042 5,289,048 2042-2044 2,333,404 280,009 2,613,413

17,577,499 13,070,043 30,647,542

The Financial Recovery Bonds, Series 2014-C bear interest at 5.0 percent per annum. The bonds mature on December 10, 2026. Ifthe parking garage revenues are insufficient then the City’s general fund will provide the necessary debt service funds. The 2014-Cbonds were issued as part of the Syncora Settlement and FGIC/POC Settlement in the bankruptcy plan. GLWA has a contractualobligation to pay a portion of the bonds based on an agreed upon allocation percentage.

As of June 30, 2016, debt service requirements of the Financial Recovery Bonds were as follows:

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Sewage disposal fund2017 342,331 1,626,965 1,969,296 2018 359,448 1,609,848 1,969,296 2019 377,420 1,591,876 1,969,296 2020 396,291 1,573,005 1,969,296 2021 416,106 1,553,190 1,969,296

2022–2026 5,913,253 7,362,290 13,275,543 2027-2031 8,988,742 5,603,828 14,592,570 2032-2036 8,747,610 4,513,767 13,261,377 2037-2041 8,747,610 3,149,139 11,896,749 2042-2044 5,248,565 629,828 5,878,393

39,537,376 29,213,736 68,751,112

Total business-type activities 57,114,875$ 42,283,779$ 99,398,654$

The following represents the amounts recorded as interest expense for the year ended June 30, 2016:


Bonded debt 59,125,884$ 73,332,356$ 132,458,240$ Obligation payable 365,281 821,633 1,186,914 Lease payable 9,095,902 11,117,091 20,212,993 Less: amounts capitalized (2,628,972) (2,781,733) (5,410,705)

65,958,095$ 82,489,347$ 148,447,442$

Interest expense

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8. LONG-TERM LEASE PAYABLE

Amount DueBeginning Ending Within One

Balance [1] Increase Decrease Balance Year *

Water fund $ 439,018,441 $ - $ (3,667,044) $ 435,351,397 $ 4,429,876 Sewage disposal fund 536,578,095 - (4,481,943) 532,096,152 5,414,293 Total business-type

activities 975,596,536$ -$ (8,148,987)$ 967,447,549$ 9,844,169$

[1]

*

Principal and interest portions of the lease payable for the year ended June 30, 2016 were as follows:

Sewage Water Disposal Total

Gross future payments $ 888,750,000 $1,086,250,000 $1,975,000,000 Less: interest (453,398,604) (554,153,848) (1,007,552,452)

Total principal remaining 435,351,396$ 532,096,152$ 967,447,548$

On January 1, 2016, the Great Lakes Water Authority effectuated a lease agreement with the City ofDetroit, Michigan for the regional water and sewer systems for a term of 40 years, to be extendedautomatically to coincide with the final maturity of any bonds issued to finance improvements to theregional or local sewer systems. The agreement and a corresponding lease of the regional water systemcollectively provide for an annual lease payment of $50 million (of which $27,500,000 is currently allocatedto the sewer fund and $22,500,000 to the water fund), in exchange for a leasehold interest in the System’swastewater treatment plant, certain public sewers, wastewater interceptors, and certain other assetsincluding cash and investments held by DWSD as of December 31, 2015, assignment of all revenue of theregional and local water and sewer systems and the assumption of all DWSD bonded debt and certainliabilities. The long-term lease is recorded as the present value of all future debt payments.

The current portion of the long-term lease payable represents the 12 monthly payments required fromJuly 1, 2016 through June 30, 2017. Future revenues are intended to cover these payments.

See note 12 for valuation of the beginning balances at the date of bifurcation.

Amounts reported as a liability at year-end represent the net present value of all future lease payments.Changes in long-term lease payable for the year ended June 30, 2016 were as follows:

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9. RISK MANAGEMENT / SELF-INSURANCE PROGRAMS

Public officials

Pollution legal liability

The Authority purchases a variety of insurance policies including: public official's and employment practicesliability insurance, property insurance, pollution legal liability insurance and casualty insurance for workers'compensation, general liability, and automobile liability. The Authority purchases excess liability insurancefor its casualty program which provides per occurrence and aggregate protection for up to $8 million. TheAuthority's retention is $1,250,000 for workers' compensation and $250,000 for general liability andautomobile. The Authority also has coverage under a pollution legal liability policy with limits of $50million, a property insurance policy with limits of $750 million and a public officials policy with limits of$25 million.

A liability for claims is reported when it is probable that a loss has occurred and the amount of the loss canbe reasonably estimated. Liabilities include an amount for claims that have been incurred but not reported.Claim liabilities are calculated considering the effects of recent claim settlement trends includingfrequency and amount of payouts and other economic and social factors. The claim liabilities also includeestimated costs for claim administration fees and outside legal and medical assistance costs. The liabilitiesfor workers’ compensation current year claims is based on estimates and payments are based on actuals.

Under most circumstances, the Authority’s maximum loss retention per occurrence was as follows:

Motor vehicle physical damage Authority assumes all risk

Occurrence

Workers' compensation $1,250,000 per occurrence

General and automobile liability $250,000 per occurrence

Property damage $1,000,000 per occurrence

$250,000 per occurrence

$500,000 per occurrence

The Authority estimates the liability for medical and worker's compensation claims that have been incurredthrough the end of the fiscal year, including claims that have been reported as well as those that have notyet been reported, which includes estimates of both future payments of losses and related claimadjustments expense. The liability is based on individual claims and management's evaluation ofexperience with respect to the probable number and nature of claims. Any adjustments resulting fromsettlement of losses will be reflected in earnings at the time the adjustments are determined.

Maximum Retention Per Type of Risk

The Authority is exposed to various types of risk of loss including torts; theft of, damage to, or destructionof assets; errors or omissions; job related illnesses or injuries to employees; natural disasters; andenvironmental occurrences. Also included are risk of loss associated with providing medical benefits toemployees.

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2016

Unpaid claims, beginning of year -$ Incurred claims (including change in IBNR provisions) 4,565,983 Claims payments (3,632,416)

Unpaid claims, end of year 933,567$

2016

Unpaid claims, beginning of year -$ Incurred claims 533,897 Claims payments (182,666)

Unpaid claims, end of year 351,231$

10.

Defined Contribution Plans

GLWA is also responsible for workers' compensation claims transferred from DWSD at bifurcation. Thisliability is $684,722 at June 30, 2016.

Changes in the balances of claims liabilities during the past two years are as follows:

DEFINED CONTRIBUTION PENSION PLAN

The Great Lakes Water Authority Defined Contribution Retirement Plan is a 401(a) governmental moneypurchase plan administered by ICMA Retirement Corporation (the “Administrator”) to provide benefits atretirement to all full-time employees of the Authority. The Authority contributes 6.0% of earnings to theplan. The Authority will make an additional contribution to the 401(a) plan to match employee pre-taxcontributions under the Great Lakes Water Authority 457 Plan up to 3% of compensation. Employees are100% vested after three years of service (cliff vesting). Employees who transferred to the Authority on oraround January 1, 2016 from the City of Detroit Water and Sewerage Department retain their years ofservice for vesting purposes. The employer contributions totaled $1.87 million for the year ended June 30,2016. At June 30, 2016, there were 757 plan members.

Workers’ compensation. The Authority maintains a self insurance program for workers’ compensationcoverage up to the amount of its retention. The program is administered by a third-party who providesclaim review and medical bill review services.

Medical insurance. The Authority provides medical benefits to a significant number of employees througha self-insured health plan that is administered by third party administrators. The Authority purchased stoploss insurance for its self insured health plan with terms of $300,000 per contract to reduce risk exposurefor the group. The self-insured program is administered by a third-party administrator who provides claimsreview and processing services as well as illustrated premium rates, which are anticipated, over time, toapproximate the actual cost of benefits.

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Retirement Health Savings Plan

11. NET PENSION LIABILITY (SPECIAL FUNDING SITUATION)

The Authority also provides a Retirement Health Savings Program for full-time employees. Employees arerequired to contribute $10 per pay period and the Authority contributes $80 per pay period. Employees are100% vested after three years of service (cliff vesting). Employees who transferred to the Authority on oraround January 1, 2016 from the City of Detroit Water and Sewerage Department retain their years ofservice for vesting purposes. The employer contributions were approximately $717,000 and employeecontributions were approximately $90,000 for the year ended June 30, 2016.

As part of the City of Detroit bankruptcy plan of adjustment (POA) and the bifurcation agreement betweenthe City and GLWA (see Note 12 ), the Authority has assumed responsibility for a substantial portion ofDWSD's net pension liability for the legacy pension plan (also referred to as "Component II") and theemployer contributions payable for the hybrid pension plan (also referred to as "Component I"). Thisconstitutes a special funding situation pursuant to the provisions of GASB 68, Accounting and FinancialReporting for Pensions. As such, while no Authority employees earn service credit in the legacy or hybridplans, GLWA is legally responsible for making substantial contributions to a pension plan of another entityand, accordingly, must record a net pension liability for its proportion and make such following disclosuresregarding the plan as required by the standard.

Plan Administration. The Authority contributes to (and DWSD participates in) the City of Detroit GeneralEmployees’ Retirement System (GRS or the "System"). The System is a single employer plan composed of adefined benefit plan component and a defined contribution annuity plan component. The plan providesretirement, disability, and survivor benefits to plan members and beneficiaries. The plan is administeredby its own board of trustees. Plan members include active employees, retirees and beneficiaries fromvarious departments within the City. Benefit terms have been established by contractual agreementsbetween the City and the employees’ collective bargaining units; amendments are subject to the sameprocess.

The System issues publicly available financial reports that include financial statements and the requiredsupplementary information. The reports can be obtained from City of Detroit Retirement Systems, OneDetroit Center, 500 Woodward Ave., Suite 3000, Detroit, MI 48226 or obtained from Systems’ website(www.rscd.org). Detailed information about the pension plan’s fiduciary net position is available in theseparately issued financial report.

The Great Lakes Water Authority Defined Contribution Plan Make-Up Benefit Plan is a 401(a) governmentalmoney purchase plan administered by ICMA Retirement Corporation (the “Administrator”) to providebenefits at retirement to all employees who terminated employment with the City of Detroit Water andSewerage Department on or around January 1, 2016 and were not vested in the City of Detroit GeneralRetirement System (GRS). Eligible employees are required to roll over to the Authority’s Section 457Deferred Compensation Plan their refunded employee mandatory contribution from GRS. The amount ofthe make-up benefit will be determined by an actuary based on the present value of the lost GRS benefit.Employees are 100% vested after one year of service.

The Authority has also adopted a Section 457 Deferred Compensation Plan which employees can make pre-tax contributions which are immediately 100% vested.

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Employer Contributions. Following are the employer contributions, including the Authority's nonemployercontribution, for the respective components:

Component II - Employer contributions to the GRS were determined by the provisions of the POA. Includedwithin contributions in Component II are amounts sourced from the sale of City-owned artwork withproceeds from the Foundation for Detroit's Future in the amount of $32,886,827 along with $4,005,830 from unlimited tax general obligation bonds and $67,900,000 of contributions from the City and related entities.Employer contributions were also made into the income stabilization fund for $1,689,857 from the bondproceeds.

The POA obligates DWSD to pay $2,500,000 per year towards administrative costs and annual plancontributions of $42,900,000 million per year in total for both water and sewer employees, until 2023.Pursuant to the leases, the Authority is obligated to pay its allocable share of such liability. The portionallocated to the Authority is $31,912,200 for the fiscal year 2016. Subsequent to 2023, DWSD and theAuthority will be responsible for paying their allocable share of any additional amounts that are actuarially

Component I - Per the combined plan, commencing July 1, 2014 and ending June 23, 2023, the City isrequired to contribute 5% compensation. During the fiscal year 2016 the City and related entitiescontributed $9,048,831. The Authority paid $484,432 from the water fund and $957,330 from the sewagedisposal fund in June of 2016 to exhaust its obligation for this liability.

Component I - Component I is considered a "hybrid" plan because it includes a defined benefit and definedcontribution components. Component I applies to benefits accrued by GRS members on and after July 1,2014. The Component I plans provide retirement, disability, and survivor benefits to plan members andbeneficiaries.

Component II - Component II is the legacy plan, the original defined benefit plan, which includes a definedbenefit component and a defined contribution component. Component II generally applies to benefitsaccrued by members prior to July 1, 2014. The plan provides retirement, disability, and survivor benefits toplan members and beneficiaries. Except as specifically provided in combined plan, benefits provided underComponent II are frozen effective June 30, 2014. Component II also includes the income stabilization fund.The fund, a part of Component II and established as a provision of the POA, was established for the solepurpose of paying the income stabilization benefits to eligible pensioners. Complete details regarding theComponent II benefits and changes in those benefits by virtue of the POA are presented in the Systemfinancial statements.

Benefits Provided. Plan members may retire at age 55 or 60 with 5, 8, 10 or 25 years of credited servicedepending on which group the employee is in. Members are vested after completing 5, 8 or 10 years ofcredited service. Retirement options that provide for survivor benefits are available to members. The Planalso provides death and disability benefits. If a member leaves employment or dies before vesting,accumulated member contributions plus interest are refunded to the member or designated beneficiary.

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Inflation NASalary increases NAInvestment rate of return 7.61%, net of investment expense and

including inflation

Employee Contributions. Contribution requirements of plan members are established and may beamended by the board of trustees in accordance with the City Charter, union contracts, and planprovisions. For the year ended June 30, 2016, there were minimal employee contributions into ComponentII, only related to military service credit, as the plan was frozen as of June 30, 2014; contributions intoComponent I began thereafter. With respect to Component I employees who are members of Component IIare now required to make mandatory contributions of 4 percent of pay toward their defined benefit.Additionally, employees can make voluntary contributions of 3, 5, or 7 percent of annual pay. During fiscalyear 2016, the plan received voluntary employee contributions of $12,559,259.

Net Pension Liability. The net pension liability was measured as of June 30, 2015, and the total pensionliability used to calculate the net pension liability was determined by an actuarial valuation as of that date.

Actuarial Assumptions. The total pension liability in the June 30, 2015 actuarial valuation was determinedusing the following actuarial assumptions.

The actuarial assumptions were based on an experience study from 2008-2013 issue in February 2015; themortality table assumption was based on RP-2014 Blue Collar Annuitant Table for males and females. Thetables are projected to be fully generational, based on two-dimensional sex distinct mortality scale MP-2014.

The long-term expected rate of return on pension plan investments was determined using a building-blockmethod in which best-estimates of expected future real rates of return (expected returns, net of pensionplan investment expense and inflation) are developed for each asset class. These real ranges are combinedto produce the long-term expected rate of return by weighting the expected future real rates of return bythe target asset allocation percentage and by adding expected inflation. For each asset class that isincluded in the pension plan's target asset allocation as of June 30, 2015, these best estimates aresummarized in the following table:

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Expected Long-term Money-

Target Expected Real Weighted RateAsset Class Allocation Rate of Return of Return

Global multi-sector fixed 6.0% 2.7% 0.16%Global equity 43.0% 6.2% 2.67%Long duration fixed 2.0% 2.0% 0.04%Absolute return fixed 4.0% 2.3% 0.09%Private equity 8.0% 7.4% 0.59%Cash 1.0% 1.0% 0.01%Real estate 10.0% 4.4% 0.44%Global asset allocation/risk parity/real assets 21.0% 5.2% 1.09%Hedge funds 5.0% 4.7% 0.24%

100% 5.33%

Inflation 0.00%Risk adjustments 2.28%

Investment rate of return 7.61%

Discount Rate. The discount rate used to measure the total pension liability was 7.61%. The projection ofcash flows used to determine the discount rate assumed that plan member contributions will be made atthe current contribution rate and that Authority contributions will be made at rates equal to the differencebetween actuarially determined contribution rates and the member rate. Based on those assumptions, thepension plan’s fiduciary net position was projected to be available to make all projected future benefitpayments of current active and inactive employees. Therefore, the long-term expected rate of return onpension plan investments was applied to all periods of projected benefit payments to determine the totalpension liability.

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SewageWater Disposal Total

Total pension liability 202,696,454$ 362,762,305$ 565,458,759$ Plan fiduciary net position (141,675,375) (253,553,946) (395,229,321) Authority's net pension liability 61,021,079$ 109,208,359$ 170,229,438$

Total Pension Liability

(a)

Plan Fiduciary Net Position

(b)

Net Pension Liability (a) - (b)

WaterBalances at June 30, 2015 265,601,617$ 134,145,578$ 131,456,039$

Changes for the year:Service cost - - - Interest 18,422,673 - 18,422,673 Differences between expected and

actual experience (153,112) - (153,112) Changes in assumptions (7,093,982) - (7,093,982) Benefit changes (54,618,440) - (54,618,440) Employer contributions - 10,808,000 (10,808,000) Employee contributions - 46,941 (46,941) Net investment income - 6,194,355 (6,194,355) Benefit payments, including refunds of

employee contributions (19,462,302) (19,462,302) - Administrative expense - (7,633) 7,633 Other changes - 9,950,436 (9,950,436)

Net changes (62,905,163) 7,529,797 (70,434,960)

Balances at June 30, 2016 202,696,454$ 141,675,375$ 61,021,079$

Changes in the Net Pension Liability. The components of the change in the Authority's share of the netpension liability are summarized as follows:

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Total Pension Liability

(a)

Plan Fiduciary Net Position

(b)

Net Pension Liability (a) - (b)

SewerBalances at June 30, 2015 475,342,576$ 240,077,999$ 235,264,577$

Changes for the year:Service cost - - - Interest 32,970,738 - 32,970,738 Differences between expected and

actual experience (274,022) - (274,022) Changes in assumptions (12,695,976) - (12,695,976) Benefit changes (97,749,668) - (97,749,668) Employer contributions - 19,342,889 (19,342,889) Employee contributions - 84,010 (84,010) Net investment income - 11,085,930 (11,085,930) Benefit payments, including refunds of

employee contributions (34,931,342) (34,931,342) - Administrative expense - (13,661) 13,661 Other changes - 17,808,122 (17,808,122)

Net changes (112,680,270) 13,375,948 (126,056,218)

Balances at June 30, 2016 362,662,306$ 253,453,947$ 109,208,359$

Current1% Decrease Discount Rate 1% Increase

(6.61%) (7.61%) (8.61%)

Water 80,243,511$ 61,021,079$ 44,688,415$ Sewage disposal 143,610,411 109,208,359 79,978,077

Authority's net pension liability 223,853,922$ 170,229,438$ 124,666,492$

Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the netpension liability of the Authority, calculated using the discount rate of 7.61%, as well as what theAuthority’s net pension liability would be if it were calculated using a discount rate that is 1% lower (6.61%)or 1% higher (8.61%) than the current rate:

Pension Plan Fiduciary Net Position. Detailed information about the pension plan's fiduciary net positionis available in the separately issued Plan financial statements.

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Deferred Outflows of Resources

Deferred Inflows of Resources

Net Deferred Outflows

(Inflows) of Resources

WaterNet difference between projected and actual

earnings on pension plan investments 2,809,762$ 9,848,513$ (7,038,751)$ Differences in assumptions - 5,688,308 (5,688,308) Employer contributions to the plan subsequent

to the measurement date 10,810,800 - 10,810,800 13,620,562 15,536,821 (1,916,259)

Sewage disposalNet difference between projected and actual

earnings on pension plan investments 5,028,581 17,625,980 (12,597,399) Differences in assumptions - 10,179,997 (10,179,997) Employer contributions to the plan subsequent

to the measurement date 19,347,900 - 19,347,900 24,376,481 27,805,977 (3,429,496)

Total business-type activities 37,997,043$ 43,342,798$ (5,345,755)$

Year Ended Sewage June 30, Water Disposal Total

2016 (8,268,554)$ (14,798,088)$ (23,066,642)$ 2017 (2,580,398) (4,618,093) (7,198,491) 2018 (2,580,398) (4,618,092) (7,198,490) 2019 702,291 1,256,877 1,959,168

Total (12,727,059)$ (22,777,396)$ (35,504,455)$

As noted above, the net pension liability is a contractual obligation to the City of Detroit, and as such,presenting RSI schedules for the plan is not necessary or applicable.

Payable to the pension plan. At June 30, 2016, the Authority did not have any outstanding contributionspayable to the pension plan for the year then ended.

Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related toPensions. For the year ended June 30, 2016, the water fund and sewage disposal fund recognized pensionexpense of $(78,840,440) and $(141,099,359), respectively. At June 30, 2016, the Authority reporteddeferred outflows of resources and deferred inflows of resources related to pensions from the followingsources:

The amount reported as deferred outflows of resources resulting from contributions subsequent to themeasurement date will be recognized as a reduction in the net pension liability for the year ending June30, 2017. Other amounts reported as deferred outflows of resources and deferred inflows of resourcesrelated to pension will be recognized in pension expense as follows:

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12.

Total DWSD GASB 69 Acquisition

Net Book Value Adjustment Value

Water fundCash, cash equivalents and investments 421,010,047$ -$ 421,010,047$ Receivables, net 77,066,610 - 77,066,610 Contractual obligation receivable 475,000,000 - 475,000,000 Capital assets 1,383,554,363 810,687,098 2,194,241,461 Other assets 211,981,134 - 211,981,134 Bonds (2,415,866,614) (150,565,373) (2,566,431,987) Other liabilities (812,867,265) - (812,867,265)

Total business-type activities $ (660,121,725) $ 660,121,725 $ -

Total DWSD GASB 69 Acquisition

Net Book Value Adjustment Value

Sewage disposal fundCash, cash equivalents and investments 471,794,999$ -$ 471,794,999 Receivables, net 141,974,382 - 141,974,382 Contractual obligation receivable 375,000,000 - 375,000,000 Capital assets 2,293,474,839 775,519,175 3,068,994,014 Other assets 346,709,598 - 346,709,598 Bonds (3,413,803,925) (61,463,913) (3,475,267,838) Other liabilities (929,205,155) - (929,205,155)

Total business-type activities $ (714,055,262) $ 714,055,262 $ -

BEGINNING BALANCES FROM BIFURCATION

As described in Note 8, the Authority leased the regional water and sewage disposal system from DWSD. Aspart of the transaction, the Authority assumed various assets and liabilities from the City, determined byagreement through a bifurcation of DWSD's balance sheet accounts. Through this process, the assets andliabilities attributed to the Authority were first determined at net book value (or cost) and then adjusted toacquisition value in accordance with the provisions of GASB 69, as illustrated in the schedules below.Initially, related to this process, the acquisition value of capital assets as calculated through a valuation bya third party specialist were greater than values shown below; however, because this resulted in the totalassets exceeding the total liabilities, this difference was applied against the capital assets as provided forin GASB 69. Following is a summary of the beginning balances recorded by the Authority at acquisitionvalue:

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13.

The Authority is engaged in a variety of projects that are a part of its five year Capital ImprovementProgram (the Program). The total cost of this Program is anticipated to be approximately $752.0 million forthe water fund and $586.8 million for the sewage disposal fund through fiscal year 2021. The Program isbeing financed primarily from revenues of the Authority and proceeds from the issuance of revenue bonds.

COMMITMENTS AND CONTINGENCIES

Capital improvement program

The total amount of construction contract commitments outstanding at June 30, 2016 was approximately$45.6 million for the water fund and $112.7 million for the sewage disposal fund.

The Authority holds various commercial insurance policies to cover other potential loss exposures.

Contingencies

The Authority is subject to various government environmental laws and regulations. GASB Statement No.49, Accounting and Financial Reporting for Pollution Remediation Obligations, established accounting andfinancial reporting standards for pollution (including contamination) remediation obligations, which areobligations to address the current or potential detrimental effects of existing pollution by participating inpollution remedial activities such as site assessments and cleanups. The standard excludes pollutionprevention or control obligations with respect to current operations, and future pollution remediationactivities that are required upon retirement of an asset, such as landfill closure and post closure care. TheAuthority determined that there were no estimated pollution remediation obligations to be recorded atJune 30, 2016.

The operation of the sewage disposal fund’s operations are subject to regulation pursuant to the FederalWater Pollution Control Act, as amended by the Clean Water Act of 1977 and the Water Quality Act of 1987(collectively, the Clean Water Act). Included in the regulatory framework established by the Clean WaterAct is the National Pollutant Discharge Elimination System (NPDES) permit program, which requiresoperation of wastewater system facilities according to discharge limitations and other requirements as setforth in permits issued to each facility. The Environmental Protection Agency (EPA) has authorized theMichigan Department of Environmental Quality (MDEQ) to implement and enforce the federal NPDES permitprogram. The sewage disposal fund operates pursuant to an NPDES permit that is in effect throughOctober 1, 2017.

The Authority is also a defendant in numerous alleged claims, lawsuits, billing disputes, and other statedand pending demands. The Authority's Legal Department has estimated a reserve of $4,494,694 for thewater fund and $26,183,600 for the sewage disposal fund, which is included in the accompanying financialstatements, for the potential outcome of such claims or the amount of potential damages in the event of anunfavorable outcome for each of the above contingencies. The Authority’s management believes that anydifferences in reserved amounts and final settlement, after consideration of claims covered by insurance,resulting from such litigation will not materially impact the Authority’s financial position or results ofoperations.

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Bifurcation Estimates

14.

The Authority and DWSD have been meeting regularly since the date of the operational effective date,January 1, 2016, to clarify certain matters related to implementation of the water and sewer systemleases. While significant progress has been made as it relates to the allocation of capital assets as a basisfor allocation of bonded indebtedness, the exact methodology and dollar amount has not been determined.As of the date of this report, July 31, 2017, Management has used estimates to record the ContractualObligation Receivable (current and noncurrent) and the Obligation Payable - City of Detroit 2014 FinancialRecovery Bonds.

Pending Litigation

On July 8 and August 16, 2016, extraordinary rain events occurred in the City of Detroit which impacted theGLWA and DWSD systems. On October 3, 2016, a class action complaint related to these events was filed inWayne Circuit Court, entitled Gail Beasley v City of Detroit and Great Lakes Water Authority, case number16-012602NZ. DWSD filed a cross-complaint against GLWA which was subsequently dismissed with prejudice.In June 2017, both DWSD’s Board of Water Commissioners and GLWA’s Board of Directors passed resolutionsauthorizing their respective counsel to enter into agreements related to the coordinated defense of theBeasley litigation as well as allocation and mitigation of risk for either party related to the settlement ofclaims and final disposition of the case.

On September 30, 2016 Fitch assigned ratings to the Authority’s 2016 senior lien and second lien bonds ofA/A-. Fitch also increased the ratings from BBB/BBB- to A/A- for bonds previously issued by the City andthe Michigan Finance Authority on behalf of the Detroit Water and Sewage Department which were assumedby GLWA.

SUBSEQUENT EVENTS

On October 14, 2016, the Authority issued its inaugural bond refunding and new money water transaction.The Authority issued $917,805,000 of Water Supply System Revenue Bonds ($251,830,000 in new money and$665,975,000 in refunding bonds) and $421,295,000 of Sewage Disposal System Revenue Refunding Bonds.The net present value savings from the refunding transactions was a total of $191.94 million with $120.78million for the water fund and $71.16 million for the sewage disposal fund.

On September 30, 2016 Moody’s assigned ratings to the Authority’s 2016 senior lien and second lien bondsof A3/Baa1. Moody’s also increased the senior and second lien debt ratings from Baa1/Baa2 to A3/Baa1.

New Debt Issues and Bond Refundings

On September 30, 2016 Standard & Poor’s Global Rating Services assigned ratings to the Authority’s 2016senior lien and second lien bonds of A- positive/BBB+ positive. Existing bonds were rated in November 2015with an A- stable/BBB+ stable rating. The rating on existing bonds was revised to A- positive/BBB+ positiveon September 30, 2016.

Debt Ratings

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COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES

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bateson

Text Box


GREAT LAKES WATER AUTHORITY UNAUDITED

Combining Schedule of Net Position Water FundJune 30, 2016

Business-type Activities - Enterprise Funds

Water WaterWater Improvement Construction

Operations and Extension Projects Adjustments TotalAssets

Current assets:Cash and cash equivalents 155,712,891$ -$ -$ -$ 155,712,891$ Restricted cash and cash equivalents 30,187,073 14,647,263 8,194,508 - 53,028,844 Restricted cash on deposit with trustee 10,430 - - - 10,430 Investments 11,579,681 - - - 11,579,681 Restricted investments 27,818,000 - - - 27,818,000 Receivables:

Billed 37,629,170 - - - 37,629,170 Unbilled 32,307,945 - - - 32,307,945 Other 21,899,046 - - - 21,899,046 Allowance for doubtful accounts (25,040,612) - - - (25,040,612)

Due from other governments 41,486,157 - - - 41,486,157 Contractual obligation receivable 6,851,584 - - - 6,851,584 Due from other funds 13,996,230 - 91,437 (14,087,667) - Prepaid items 2,183,690 - - - 2,183,690

Total current assets 356,621,285 14,647,263 8,285,945 (14,087,667) 365,466,826

Noncurrent assets:Restricted cash and cash equivalents - - 5,460,942 - 5,460,942 Restricted investments 42,841,345 - - - 42,841,345 Contractual obligation receivable 466,317,666 - - - 466,317,666 Assets not subject to depreciation 415,558,090 - - - 415,558,090 Capital assets being depreciated, net 1,728,054,410 - - - 1,728,054,410 Prepaid insurance on debt 20,831,496 - - - 20,831,496

Total noncurrent assets 2,673,603,007 - 5,460,942 - 2,679,063,949

Total assets 3,030,224,292 14,647,263 13,746,887 (14,087,667) 3,044,530,775

Deferred outflows of resourcesDeferred loss on refunding 116,511,949 - - - 116,511,949 Deferred pension amounts 13,620,562 - - - 13,620,562

Total deferred outflows of resources 130,132,511 - - - 130,132,511


Accounts and contracts payable 29,175,579 217,505 20,081,443 - 49,474,527 Accrued salaries, wages and benefits 2,887,280 - - - 2,887,280 Other accrued liabilities 865,271 - 10,525 - 875,796 Due to other governments 13,668,890 - - - 13,668,890 Due to other funds - 882,220 13,271,418 (14,087,667) 65,971 Interest payable 37,226,125 - - - 37,226,125 Current portion of:

Long-term debt 35,650,167 - - - 35,650,167 Obligation payable 152,193 - - - 152,193 Lease payable 4,429,876 - - - 4,429,876 Accrued compensated absences 1,784,746 - - - 1,784,746 Accrued workers' compensation 395,788 - - - 395,788 Claims and judgments 4,494,694 - - - 4,494,694

Total current liabilities 130,730,609 1,099,725 33,363,386 (14,087,667) 151,106,053

continued…

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Combining Schedule of Net Position Water FundJune 30, 2016



Operations and Extension Projects Adjustments TotalNoncurrent liabilities:

Other noncurrent liabilities 2,710,092$ -$ -$ -$ 2,710,092$ Long-term debt 2,488,824,632 - - - 2,488,824,632 Long-term lease payable 430,921,520 - - - 430,921,520 Obligation payable 17,425,306 - - - 17,425,306 Accrued compensated absences 3,511,934 - - - 3,511,934 Accrued workers' compensation 3,562,536 - - - 3,562,536 Net pension liability 61,021,079 - - - 61,021,079

Total noncurrent liabilities 3,007,977,099 - - - 3,007,977,099

Total liabilities 3,138,707,708 1,099,725 33,363,386 (14,087,667) 3,159,083,152

Deferred inflows of resourcesDeferred interest rate swap terminations 4,134,908 - - - 4,134,908 Deferred pension amounts 15,536,821 - - - 15,536,821

Total deferred inflows of resources 19,671,729 - - - 19,671,729

Net positionInvestment in capital assets 400,187,482 - - - 400,187,482 Restricted for debt service 26,836,201 - - - 26,836,201 Restricted for capital acquisition - - - - - Restricted for payment assistance program 977,278 - - - 977,278 Unrestricted (deficit) (426,023,595) 13,547,538 (19,616,499) - (432,092,556)

Total net position 1,977,366$ 13,547,538$ (19,616,499)$ -$ (4,091,595)$

concluded.

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Combining Schedule of Revenues, Expenses and Changes in Fund Net PositionWater FundFor the Year Ended June 30, 2016



Operations and Extension Projects TotalOperating revenues

Wholesale customer charges 160,777,169$ -$ -$ 160,777,169$ Local system charges 6,833,500 - - 6,833,500 Other revenues 54,863 - - 54,863

Total operating revenues 167,665,532 - - 167,665,532

Operating expensesPersonnel 8,301,022 - - 8,301,022 Contractual services 3,304,113 - - 3,304,113 Utilities 12,368,557 - - 12,368,557 Chemicals 2,444,543 - - 2,444,543 Centralized services 18,494,851 - - 18,494,851 Administrative services 3,191,929 - - 3,191,929 Supplies and other expenses 1,440,644 - - 1,440,644 Depreciation 71,295,545 - - 71,295,545

Total operating expenses 120,841,204 - - 120,841,204

Operating income (loss) 46,824,328 - - 46,824,328

Nonoperating revenues (expenses)Earnings on investments 520,891 - (128,860) 392,031 Interest income 12,231,250 - - 12,231,250 Interest expense, net of capitalized interest (65,958,095) - - (65,958,095) Amortization of debt related items 2,418,891 - - 2,418,891 Capital outlay 20,679,387 (589,681) (20,089,706) -

Total nonoperating revenues (expenses) (30,107,676) (589,681) (20,218,566) (50,915,923)

Loss before contributions and transfers 16,716,652 (589,681) (20,218,566) (4,091,595)

Transfers, opening balances (14,739,286) 14,137,219 602,067 -

Change in net position 1,977,366 13,547,538 (19,616,499) (4,091,595)

Net position, beginning of year - - - -

Net position, end of year 1,977,366$ 13,547,538$ (19,616,499)$ (4,091,595)$

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Combining Schedule of Net Position Sewage Disposal Fund June 30, 2016

Sewer SewerSewer Improvement Construction

Operations and Extension Projects Adjustments TotalAssets

Current assets:Cash and cash equivalents 147,773,252$ 8,249,043$ -$ -$ 156,022,295$ Restricted cash and cash equivalents 59,303,356 - 21,878,068 - 81,181,424 Restricted cash on deposit with trustee 51,648 - - - 51,648 Investments 32,041,080 - - - 32,041,080 Restricted investments 28,843,000 - - - 28,843,000 Receivables:

Billed 48,046,934 - - - 48,046,934 Unbilled 23,037,391 - - - 23,037,391 Other 92,748,989 - - - 92,748,989 Allowance for doubtful accounts (98,968,630) - - - (98,968,630)

Due from other governments 66,202,143 - - - 66,202,143 Contractual obligation receivable 5,077,675 - - - 5,077,675 Due from other funds 19,479,093 30,177 562,150 (20,005,449) 65,971 Prepaid items 381,122 - 26,237 - 407,359 Inventories 9,984,063 - - - 9,984,063

Total current assets 434,001,116 8,279,220 22,466,455 (20,005,449) 444,741,342

Noncurrent assets:Restricted cash and cash equivalents 10,008,165 - 145,480,615 - 155,488,780 Restricted investments 45,213,354 - 16,973,380 - 62,186,734

Contractual obligation receivable 366,254,075 - - - 366,254,075 Assets not subject to depreciation 295,876,258 - - - 295,876,258 Capital assets being depreciated, net 2,699,891,145 - - - 2,699,891,145 Prepaid insurance on debt 27,822,085 - - - 27,822,085

Total noncurrent assets 3,445,065,082 - 162,453,995 - 3,607,519,077

Total assets 3,879,066,198 8,279,220 184,920,450 (20,005,449) 4,052,260,419

Deferred outflows of resourcesDeferred interest rate swap terminations 212,147,508 - - - 212,147,508 Deferred pension amounts 24,376,481 - - - 24,376,481

Total deferred outflows of resources 236,523,989 - - - 236,523,989


Accounts and contracts payable 18,379,106 133,655 17,639,326 - 36,152,087 Other accrued liabilities 587,323 5,399 81,736 - 674,458 Due to other governments 24,177,474 - 47,539 - 24,225,013 Due to other funds (1,771,242) 1,650,500 20,126,191 (20,005,449) - Interest payable 43,912,888 - - - 43,912,888 Current portion of:

Long-term debt 60,902,189 - - - 60,902,189 Obligation payable 342,331 - - - 342,331 Lease payable 5,414,293 - - - 5,414,293 Accrued compensated absences 454,630 - - - 454,630 Accrued workers' compensation 390,165 - - - 390,165 Claims and judgments 269,250 - - - 269,250

Total current liabilities 153,058,407 1,789,554 37,894,792 (20,005,449) 172,737,304

continued…

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70


Combining Schedule of Net Position Sewage Disposal Fund June 30, 2016


Operations and Extension Projects Adjustments TotalNoncurrent liabilities:

Other noncurrent liabilities 5,912,693$ -$ -$ -$ 5,912,693$ Long-term debt 3,387,291,190 - - - 3,387,291,190 Long-term lease payable 526,681,859 - - - 526,681,859 Obligation payable 39,195,045 - - - 39,195,045 Accrued workers' compensation 4,390,938 - - - 4,390,938 Claims and judgments 25,914,350 - - - 25,914,350 Net pension liability 109,208,359 - - - 109,208,359

Total noncurrent liabilities 4,098,594,434 - - - 4,098,594,434

Total liabilities 4,251,652,841 1,789,554 37,894,792 (20,005,449) 4,271,331,738

Deferred inflows of resourcesDeferred interest rate swap terminations 238,978 - - - 238,978 Deferred pension amounts 27,805,977 - - - 27,805,977

Total deferred inflows of resources 28,044,955 - - - 28,044,955

Net positionInvestment in capital assets 451,547,037 - - - 451,547,037 Restricted for debt service 108,742,193 - - - 108,742,193 Restricted for capital acquisition 164,326,618 - - - 164,326,618 Restricted for payment assistance program - - - - - Unrestricted (deficit) (888,723,457) 6,489,666 147,025,658 - (735,208,133)

Total net position (164,107,609)$ 6,489,666$ 147,025,658$ -$ (10,592,285)$

concluded.

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Combining Schedule of Revenues, Expenses and Changes in Fund Net PositionSewage Disposal Fund For the Year Ended June 30, 2016


Operations and Extension Projects TotalOperating revenues

Wholesale customer charges 121,106,353$ -$ -$ 121,106,353$ Industrial waste charges 6,910,192 - - 6,910,192 Pollutant surcharges 2,423,910 - - 2,423,910 Local system charges 95,826,900 - - 95,826,900 Other revenues 4,197,614 - - 4,197,614

Total operating revenues 230,464,969 - - 230,464,969

Operating expensesPersonnel 13,289,741 - - 13,289,741 Contractual services 13,875,756 - - 13,875,756 Utilities 12,668,942 - - 12,668,942 Chemicals 4,006,941 - - 4,006,941 Centralized services 16,733,431 - - 16,733,431 Administrative services 7,342,499 - - 7,342,499 Supplies and other expenses 16,462,711 - - 16,462,711 Depreciation 86,021,029 - - 86,021,029

Total operating expenses 170,401,050 - - 170,401,050

Operating income (loss) 60,063,919 - - 60,063,919

Nonoperating revenues (expenses)Earnings on investments 586,072 - 503,295 1,089,367 Interest income 8,831,250 - - 8,831,250 Interest expense, net of capitalized interest (82,489,347) - - (82,489,347) Amortization of debt related items (363,167) - - (363,167) Capital outlay 18,179,011 (1,694,729) (16,484,282) - Gain on disposal of capital assets 275,693 - - 275,693

Total nonoperating revenues (expenses) (54,980,488) (1,694,729) (15,980,987) (72,656,204)

Loss before contributions and transfers 5,083,431 (1,694,729) (15,980,987) (12,592,285)

Capital contributions from debt forgiveness - - 2,000,000 2,000,000

Transfers, opening balances (169,191,040) 8,184,395 161,006,645 -

Change in net position (164,107,609) 6,489,666 147,025,658 (10,592,285)

Net position, beginning of year - - - -

Net position, end of year (164,107,609)$ 6,489,666$ 147,025,658$ (10,592,285)$

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Schedule of Days Cash - LiquidityJune 30, 2016


Cash and cash equivalentsRestricted 129,159,561$ 327,751,586$ 456,911,147$ Unrestricted 167,292,572 188,063,375 355,355,947

Total 296,452,133 515,814,961 812,267,094

Operating Expense Operating Expense 120,841,204 170,401,050 291,242,254 Less: Depreciation (71,295,545) (86,021,029) (157,316,574)

Net Operating Expense 49,545,659$ 84,380,021$ 133,925,680$

Operating Expense Per Day (181 days) 273,733$ 466,188$ 739,921$

Days CashNo. of Days Cash 1,083 1,106 2,189

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STATISTICAL SECTION

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bateson

Text Box


GREAT LAKES WATER AUTHORITY Schedule 1

UNAUDITED

Net Position by Component(accrual basis of accounting)

2016*Business-type activities

Investment in capital assets 851,734,519$ Restricted for debt service 135,578,394 Restricted for capital acquisition 164,326,618 Restricted for payment assistance program 977,278 Unrestricted (deficit) (1,167,300,689)

Total business-type activities net position (14,683,880)$

Source: Great Lakes Water Authority Financial Services Area

*GLWA began operations on January 1, 2016. The data for FY 2016 relates to six months of activity through June 30,2016. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.

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UNAUDITEDChanges in Net Position(accrual basis of accounting)

2016*Operating revenues

Wholesale customer charges 281,883,522$ Industrial waste charges 6,910,192 Pollutant surcharges 2,423,910 Local system charges 102,660,400 Other revenues 4,252,477

Total operating revenues 398,130,501

Operating expensesPersonnel 21,590,763 Contractual services 17,179,869 Utilities 25,037,499 Chemicals 6,451,484 Centralized services 35,228,282 Administrative services 10,534,428 Supplies and other expenses 17,903,355 Depreciation 157,316,574

Total operating expenses 291,242,254

Operating income 106,888,247

Nonoperating revenues (expenses)Earnings on investments 1,481,398 Interest income 21,062,500 Interest expense, net of capitalized interest (148,447,442) Amortization of debt related items 2,055,724 Gain on disposal of capital assets 275,693

Total nonoperating expenses (123,572,127)

Loss before contributions (16,683,880)

Capital contributions from debt forgiveness 2,000,000

Change in net position (14,683,880)

Net position, beginning of year -

Net position, end of year (14,683,880)$


*GLWA began operations on January 1, 2016. The data for FY 2016 relates to six months of activity through June30, 2016. This schedule is being built prospectively. Ultimately, 10 years of data will be presented.

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Operating Revenues and Charge IncreasesLast Ten Years

2007 [1] 2008 [1] 2009 [1] 2010 [1]Water fund

Operating RevenuesDetroit Local System 57,934,749$ 74,442,186$ 65,360,449$ 65,580,546$ Wholesale Customers 208,028,964 216,867,005 206,282,285 210,662,057 Other revenues 2,322,380 1,674,029 2,452,729 9,227,823

Total Operating Revenues 268,286,093$ 292,983,220$ 274,095,463$ 285,470,426$

Detroit Retail Rate Increase 0.5% 6.8% 6.3% 5.2%Wholesale Charge Increases 5.9% 5.1% 8.9% 6.4%Number of Wholesale Customers (2) 86 86 86 85

Sewage disposal fundOperating Revenues

Detroit Local System 150,400,544$ 135,966,630$ 162,813,091$ 167,986,001$ Wholesale Customers 189,853,211 201,722,312 219,638,029 187,874,924 Sewage Surcharges 581,756 1,435,519 2,957,031 3,730,043 Other 6,071,103 7,784,370 4,718,247 5,946,422

Total Operating Revenues 346,906,614$ 346,908,831$ 390,126,398$ 365,537,390$

Detroit Retail Rate Increase 7.8% 7.6% 10.1% 15.8%Wholesale Charge Increases 5.0% 0.0% 2.5% 8.2%Number of Wholesale Customers [2] 24 24 24 24

[2] Does not include the City of Detroit.

[3] Amounts presented include 6 months of operations under DWSD and 6 months of operations under GLWA.

Source: Charge Increases p.90 of the 2015D Water Official Statement and 2015C Sewer Official StatementSource: Great Lakes Water Authority Financial Services Area

[1] Amounts presented are from operations under the City of Detroit Water and Sewerage Department (DWSD). GLWA assumedoperations on January 1, 2016. DWSD information is being included for comparative purposes.

Source: FY 2007 - 2016 Audited Financial Statements City of Detroit Water Fund and Sewage Disposal Fund -Statement of Revenues,Expenses and Changes in Fund Net Position

[4] Detroit Local System revenues reflect only the wholesale portion once GLWA assumed operations. Operations under DWSDwould include higher revenues to cover the expenditures related to operating the local system. When GLWA assumed operationson January 1, 2016, DWSD continued to operate the local system under a Services Agreement with GLWA.

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Schedule 3

UNAUDITED

2011 [1] 2012 [1] 2013 [1] 2014 [1] 2015 [1] 2016 [3]

74,810,362$ 71,540,060$ 75,653,761$ 72,420,199$ 93,221,433$ 59,145,143$ [4] 237,099,865 258,587,439 275,185,243 272,458,933 264,930,716 319,682,064

4,091,974 6,002,446 4,688,757 4,490,230 6,125,905 6,597,597 316,002,201$ 336,129,945$ 355,527,761$ 349,369,362$ 364,278,054$ 385,424,804$

9.3% 9.0% 10.3% 4.4% 13.8% 5.3%5.5% 9.1% 7.9% 3.9% 3.9% 11.3%85 85 86 87 87 85

188,929,588$ 186,551,894$ 193,098,413$ 207,522,787$ 237,164,889$ 239,976,793$ [4] 213,888,870 242,759,761 238,301,009 257,264,293 257,677,591 260,342,766

3,424,043 2,601,809 5,204,732 5,830,344 5,608,521 4,262,636 4,476,574 5,741,427 4,259,106 5,153,420 5,220,613 8,298,340

410,719,075$ 437,654,891$ 440,863,260$ 475,770,844$ 505,671,614$ 512,880,535$

8.4% 11.0% 9.9% 4.2% 9.1% 8.6%3.7% 11.0% 6.7% 3.7% 2.8% -1.1%22 22 22 22 21 21

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UNAUDITEDDebt by LienAs of June 30, 2016

Original Principal Outstanding as ofAmount July 1, 2016

Water Supply System Revenue BondsSenior Lien Bonds

Water Supply System Revenue Senior Lien Bonds, Series 2003A 234,805,000$ 100,000$ Water Supply System Revenue Refunding Senior Lien Bonds, Series 2003D 142,755,000 116,880,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2004B 153,830,000 20,830,000 Water Supply System Revenue Senior Lien Bonds, Series 2005B 194,900,000 152,340,000 Water Supply System Revenue Senior Lien Bonds, Series 2006A 280,000,000 121,055,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2006D 146,590,000 59,830,000 Water Supply System Revenue Senior Lien Bonds, Series 2011A 379,590,000 300,010,000 Water Supply System Revenue Senior Lien Bonds, Series 2011B 17,195,000 5,170,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2011C 103,890,000 75,145,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2014A 206,540,000 200,215,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2014B 188,455,000 188,455,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2014C 62,700,000 62,700,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2014D 307,645,000 243,185,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2014E 9,270,000 9,270,000 Water Supply System Revenue Refunding Senior Lien Bonds, Series 2015A 89,430,000 89,430,000

2,517,595,000 1,644,615,000 Second Lien Bonds

Water Supply System Revenue Refunding Second Lien Bonds, Series 2001C 190,405,000 179,770,000 Water Supply System Revenue Second Lien Bonds, Series 2003B 172,945,000 100,000 Water Supply System Revenue Refunding Second Lien Bonds, Series 2004A 72,765,000 35,045,000 Water Supply System Revenue Second Lien Bonds, Series 2006B 120,000,000 85,650,000 Water Supply System Revenue Refunding Second Lien Bonds, Series 2006C 220,645,000 201,905,000 Water Supply System Revenue Refunding Second Lien Bonds, Series 2014F 65,425,000 65,425,000 Water Supply System Revenue Refunding Second Lien Bonds, Series 2014G 14,815,000 10,930,000 Water Supply System Revenue Refunding Second Lien Bonds, Series 2015B 37,235,000 37,235,000

894,235,000 616,060,000 SRF Junior Lien Bonds

Water Supply System Revenue Bonds, Series 2005-SRF-1 13,805,164 8,045,164 Water Supply System Revenue Bonds, Series 2005-SRF-2 8,891,730 5,051,730 Water Supply System Revenue Bonds, Series 2006-SRF 5,180,926 2,995,926 Water Supply System Revenue Bonds, Series 2008-SRF 2,590,941 1,290,941

30,468,761 17,383,761

Total Water Supply System Revenue Bonds 3,442,298,761$ 2,278,058,761$

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Sewage Disposal System Revenue Bonds

Senior Lien Bonds

Sewage Disposal System Revenue Bonds (Senior), Series 1997-B-SRF 5,430,174$ 965,000$ Sewage Disposal System Revenue Refunding Bonds, Series 1998A 67,615,000 21,000,000 Sewage Disposal System Revenue Refunding Bonds, Series 1998B 67,520,000 22,795,000 Sewage Disposal System Revenue Bonds (Senior), Series 1999-SRF1 21,475,000 5,180,000 Sewage Disposal System Revenue Bonds (Senior), Series 1999-SRF2 46,000,000 18,765,000 Sewage Disposal System Revenue Bonds (Senior), Series 1999-SRF3 31,030,000 9,265,000 Sewage Disposal System Revenue Bonds (Senior), Series 1999-SRF4 40,655,000 12,140,000 Sewage Disposal System Revenue Bonds, Series 1999A 33,510,118 24,165,000 Sewage Disposal System Senior Lien Revenue Refunding Bonds, Series 2001C1 154,870,000 42,365,000 Sewage Disposal System Senior Lien Revenue Refunding Bonds, Series 2001C2 122,905,000 107,920,000 Sewage Disposal System Senior Lien Revenue & Revenue Refunding Bonds, Series 2003A 599,380,000 3,150,000 Sewage Disposal System Senior Lien Revenue Bonds, Series 2003B 150,000,000 25,650,000 Sewage Disposal System Senior Lien Revenue Refunding Bonds, Series 2004A 101,435,000 35,010,000 Sewage Disposal System Revenue Refunding Senior Lien Bonds, Series 2006C 26,560,000 11,215,000 Sewage Disposal System Revenue Refunding Senior Lien Bonds, Series 2006D 370,000,000 239,475,000 Sewage Disposal System Revenue & Revenue Refunding Senior Lien Bonds, Series 2012A 659,780,000 547,360,000 Sewage Disposal System Revenue Senior Lien Bonds, Series 2014A 123,220,000 123,220,000 Sewage Disposal System Revenue Senior Lien Bonds, Series 2014B 27,470,000 27,470,000 Sewage Disposal System Revenue Refunding Senior Lien Bonds, Series 2014C 446,170,000 446,170,000 Sewage Disposal System Revenue Refunding Senior Lien Bonds, Series 2014D 95,165,000 95,165,000 Sewage Disposal System Revenue Refunding Senior Lien Bonds, Series 2014E 143,880,000 88,900,000

3,334,070,292 1,907,345,000 Second Lien Bonds

Sewage Disposal System Second Lien Revenue Bonds, Series 2001B 110,550,000 78,895,000 Sewage Disposal System Second Lien Revenue Bonds, Series 2001E 136,150,000 134,745,000 Sewage Disposal System Revenue Second Lien Bonds, Series 2005A 273,355,000 31,885,000 Sewage Disposal System Revenue Refunding Second Lien Bonds, Series 2005B 40,215,000 17,115,000 Sewage Disposal System Revenue Refunding Second Lien Bonds, Series 2005C 63,160,000 100,000 Sewage Disposal System Revenue Second Lien Bonds, Series 2006A 123,655,000 123,185,000 Sewage Disposal System Revenue Second Lien Bonds, Series 2006B 250,000,000 230,695,000 Sewage Disposal System Revenue Refunding Second Lien Bonds, Series 2014F 76,715,000 76,715,000 Sewage Disposal System Revenue Refunding Second Lien Bonds, Series 2014G 23,240,000 11,805,000 Sewage Disposal System Revenue Refunding Second Lien Bonds, Series 2015C 197,660,000 197,660,000

1,294,700,000 902,800,000 SRF Junior Lien Bonds

Sewage Disposal System Revenue Bonds, Series 2000-SRF1 44,197,995 15,947,995 Sewage Disposal System Revenue Bonds, Series 2000-SRF2 64,401,066 26,156,066 Sewage Disposal System Revenue Bonds, Series 2001-SRF1 82,200,000 42,090,000 Sewage Disposal System Revenue Bonds, Series 2001-SRF2 59,850,000 30,650,000 Sewage Disposal System Revenue Bonds, Series 2002-SRF1 18,985,000 7,735,000 Sewage Disposal System Revenue Bonds, Series 2002-SRF2 1,545,369 630,369 Sewage Disposal System Revenue Bonds, Series 2002-SRF3 31,549,466 14,899,466 Sewage Disposal System Revenue Bonds, Series 2003-SRF1 48,520,000 27,275,000

continued…

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Sewage Disposal System Revenue Bonds (concluded)Sewage Disposal System Revenue Bonds, Series 2003-SRF2 25,055,370$ 12,740,370$ Sewage Disposal System Revenue Bonds, Series 2004-SRF1 2,910,000 1,460,000 Sewage Disposal System Revenue Bonds, Series 2004-SRF2 18,353,459 9,193,459 Sewage Disposal System Revenue Bonds, Series 2004-SRF3 12,722,575 6,357,575 Sewage Disposal System Revenue Bonds, Series 2007-SRF 167,540,598 122,835,598 Sewage Disposal System Revenue Bonds, Series 2009-SRF 13,970,062 10,160,062 Sewage Disposal System Revenue Bonds, Series 2010-SRF 4,214,763 3,300,763 Sewage Disposal System Revenue Bonds, Series 2012-SRF 14,950,000 13,835,170 Sewage Disposal System Revenue Bonds, Series 2015A-SRF 79,500,000 79,500,000 Sewage Disposal System Revenue Bonds, Series 2015B-SRF 33,030,000 20,883,315 Sewage Disposal System Revenue Bonds, Series 2015D-SRF 21,485,000 14,470,534

744,980,723 460,120,742

Total Sewerage Disposal System Revenue Bonds 5,373,751,015$ 3,270,265,742$

concluded.(1) Amount shown is the maturity value of Capital Appreciation Bonds.


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Schedule of Debt Service RequirementsAs of June 30, 2016

Fiscal Year Ending Principal Interest Total Debt Service Principal Interest Total Debt Service

Water fund2017 50,585$ 82,736$ 133,321$ 9,495$ 32,547$ 42,042$ 2018 51,465 79,937 131,402 10,530 32,066 42,596 2019 47,200 77,508 124,708 19,495 31,541 51,036 2020 49,345 75,336 124,681 20,560 30,465 51,025 2021 52,280 72,860 125,140 21,725 29,334 51,059 2022 55,025 70,232 125,257 22,935 28,143 51,078 2023 57,480 67,467 124,947 24,230 26,873 51,103 2024 59,600 64,571 124,171 25,585 25,541 51,126 2025 61,560 61,548 123,108 27,000 24,174 51,174 2026 63,115 58,427 121,542 28,480 22,736 51,216 2027 67,790 55,253 123,043 30,165 21,177 51,342 2028 71,410 51,843 123,253 31,915 19,532 51,447 2029 74,730 48,254 122,984 32,940 17,965 50,905 2030 77,745 44,526 122,271 34,025 16,402 50,427 2032 85,560 36,630 122,190 37,500 12,912 50,412 2033 90,115 32,387 122,502 39,365 11,036 50,401 2034 93,150 27,892 121,042 38,620 9,067 47,687 2035 121,355 23,247 144,602 70 7,135 7,205 2036 13,250 16,868 30,118 117,410 7,130 124,540 2037 52,685 16,205 68,890 - - - 2038 59,770 13,415 73,185 - - - 2039 62,890 10,297 73,187 - - - 2040 66,175 7,016 73,191 - - - 2041 68,335 3,564 71,899 - - -

Total 1,634,140 1,138,667 2,772,807 607,765 420,475 1,028,240

Second Lien Bonds (in $1,000s)Senior Lien Bonds (in $1,000s)

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Schedule 5

UNAUDITED

Total

Principal Interest Total Debt Service Total Debt Service

1,400$ 359$ 1,759$ 177,122$ 1,435 329 1,764 175,762 1,460 298 1,758 177,502 1,490 266 1,756 177,462 1,525 234 1,759 177,958 1,555 200 1,755 178,090 1,595 167 1,762 177,812 1,625 132 1,757 177,054 1,660 97 1,757 176,039 1,690 61 1,751 174,509 1,718 24 1,742 176,127

115 4 119 174,819 116 1 117 174,006

- - - 172,698 - - - 172,602 - - - 172,903 - - - 168,729 - - - 151,807 - - - 154,658 - - - 68,890 - - - 73,185 - - - 73,187 - - - 73,191 - - - 71,899

17,384 2,172 19,556 3,820,603

Junior Lien Bonds (in $1,000s)

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Schedule of Debt Service RequirementsAs of June 30, 2016

Fiscal Year Ending Principal Interest Total Debt Service Principal Interest Total Debt Service

Second Lien Bonds (in $1,000s)Senior Lien Bonds (in $1,000s)

Sewage disposal fund2017 52,177$ 91,333$ 143,510$ 6,480$ 46,976$ 53,456$ 2018 56,486 87,046 143,532 6,760 46,662 53,422 2019 58,345 84,951 143,296 6,975 46,324 53,299 2020 59,059 84,165 143,224 9,250 45,980 55,230 2021 50,671 78,129 128,800 18,725 45,522 64,247 2022 65,370 75,140 140,510 12,945 44,540 57,485 2023 77,840 69,694 147,534 4,550 43,864 48,414 2024 75,215 68,028 143,243 19,545 43,637 63,182 2025 73,500 64,064 137,564 21,230 42,603 63,833 2026 92,515 60,121 152,636 24,715 41,486 66,201 2027 96,660 56,187 152,847 29,670 40,174 69,844 2028 100,895 52,206 153,101 30,300 38,611 68,911 2029 105,475 47,796 153,271 23,580 37,019 60,599 2030 82,180 43,380 125,560 64,700 35,760 100,460 2031 96,860 40,861 137,721 67,585 32,062 99,647 2032 118,565 37,628 156,193 24,375 28,207 52,582 2033 123,935 32,122 156,057 25,330 26,988 52,318 2034 1,480 25,389 26,869 160,215 25,721 185,936 2035 1,450 25,311 26,761 168,165 17,820 185,985 2036 1,410 25,235 26,645 176,675 9,373 186,048 2037 107,095 25,161 132,256 - - - 2038 112,675 19,578 132,253 - - - 2039 118,550 13,704 132,254 - - - 2040 27,275 7,524 34,799 - - - 2041 28,635 6,160 34,795 - - - 2042 30,065 4,729 34,794 - - - 2043 31,570 3,225 34,795 - - - 2044 32,935 1,647 34,582 - - -

Total 1,711,880 967,184 2,679,064 881,555 599,367 1,480,922


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Schedule 5

UNAUDITED

Total

Principal Interest Total Debt Service Total Debt Service

Junior Lien Bonds (in $1,000s)

35,265$ 10,260$ 45,525$ 242,491$ 36,025 9,453 45,478 242,432 36,890 9,105 45,995 242,590 38,190 8,248 46,438 244,892 39,155 7,363 46,518 239,565 40,285 6,454 46,739 244,734 41,169 5,521 46,690 242,638 33,965 4,652 38,617 245,042 34,731 3,881 38,612 240,009 20,815 3,232 24,047 242,884 18,140 2,827 20,967 243,658 18,495 2,452 20,947 242,959 18,880 2,070 20,950 234,820 19,266 1,679 20,945 246,965 8,936 1,360 10,296 247,664 8,885 1,135 10,020 218,795 9,110 912 10,022 218,397 9,340 683 10,023 222,828 9,580 448 10,028 222,774 8,855 219 9,074 221,767

595 38 633 132,889 610 23 633 132,886 630 8 638 132,892

- - - 34,799 - - - 34,795 - - - 34,794 - - - 34,795 - - - 34,582

379,632 53,205 432,837 4,592,823

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Current Debt RatingsAs of June 30, 2016

Debt Type Standard & Poor's Moody's Fitch

Water Supply System RevenueSenior Lien A- Baa1 BBBSecond Lien BBB+ Baa2 BBB-Junior Lien N/A N/A N/A

Sewage Disposal System RevenueSenior Lien A- Baa1 BBBSecond Lien BBB+ Baa2 BBB-Junior Lien N/A N/A N/A


Schedule 6

UNAUDITED

Rating Agency

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UNAUDITED

Water and Sewer Senior Lien - Debt Ratings History2010 to Present


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UNAUDITEDService Area DemographicsLast Ten Years

YearTotal Population

(2)Unemployment

(3)Per Capita Income (3)

Total Debt Service (4)

Debt Per Capita

Debt Service as a Percentage of Income

Water fund2016 3,800,000 5.2% Not Available 178,673,500$ 47.02$ Not Available2015 * 3,800,000 6.2% 46,894 178,923,900 47.09 0.10%2014 * 3,800,000 8.5% 44,718 182,464,900 48.02 0.11%2013 * 3,800,000 9.4% 42,555 172,458,800 45.38 0.11%2012 * 3,800,000 10.3% 42,168 153,524,200 40.40 0.10%2011 * 3,800,000 11.6% 40,607 164,435,900 43.27 0.11%2010 * 3,800,000 13.5% 37,837 157,590,500 41.47 0.11%2009 * 3,976,100 14.9% 36,874 156,775,100 39.43 0.11%2008 * 3,976,100 8.7% 38,998 135,156,500 33.99 0.09%2007 * 3,976,100 7.5% 38,598 115,449,700 29.04 0.08%

Sewage disposal fund2016 2,807,000 5.2% Not Available 235,250,700$ 83.81$ Not Available2015 * 2,807,000 6.2% 46,894 232,612,800 82.87 0.18%2014 * 2,807,000 8.5% 44,718 229,611,100 81.80 0.18%2013 * 2,807,000 9.4% 42,555 225,222,900 80.24 0.19%2012 * 2,807,000 10.3% 42,168 203,092,300 72.35 0.17%2011 * 2,807,000 11.6% 40,607 209,063,900 74.48 0.18%2010 * 2,807,000 13.5% 37,837 200,985,100 71.60 0.19%2009 * 2,998,200 14.9% 36,874 195,544,837 65.22 0.18%2008 * 2,998,200 8.7% 38,998 175,248,600 58.45 0.15%2007 * 2,998,200 7.5% 38,598 156,615,637 52.24 0.14%

(2) Source: The Authority, estimated.(3) Source: U.S. Department of Commerce, Bureau of Census


(1) The Detroit MSA is comprised of six counties: Wayne, Oakland, Macomb, Livingston, Lapeer and St. Clair. This represents the majority of the service area customers.

*GLWA assumed operations on January 1, 2016. The information in this table from 2007-2015 is based on operations underthe City of Detroit Water and Sewerage Department (DWSD). Data for 2016 includes six months of operation under DWSDand six months of operation under GLWA.

(4) Debt service is based on set aside debt service requirements for the fiscal year which includes the subsequent year

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Ten Largest Wholesale Water Customers / Total Billed RevenueLast Ten Years

2007 [1] 2008 [1] 2009 [1] 2010 [1]Operating Revenues

Flint/Genesee County (a) 16,075,816$ 16,297,870$ 17,421,571$ 17,421,663$ Southeast Oakland County Water Authority 10,469,683 10,165,018 9,285,621 9,285,621 Troy 9,156,027 8,606,895 7,445,795 7,550,028 Sterling Heights 8,993,479 9,424,067 8,578,659 8,696,601 Farmington Hills 7,767,606 7,611,583 7,547,579 7,547,585 Warren 7,510,193 7,775,671 - - Livonia 6,840,847 7,530,863 7,033,848 7,033,853 YCUA 6,288,197 - - - Dearborn 5,409,324 - - - Clinton Township 4,233,932 - - - Shelby Township - 7,537,377 7,403,055 7,403,056 Novi - - 6,913,500 6,782,362 Macomb Township - - - - Rochester Hills - 8,823,580 8,644,531 8,553,457 West Bloomfield Township - - - - Canton Township - 7,803,358 6,876,444 7,142,729

Total 82,745,104$ 91,576,282$ 87,150,603$ 87,416,955$

% of Total Operating Revenues 30.84% 31.26% 31.80% 30.62%


[1] GLWA assumed operations on January 1, 2016. The information in this table from 2007-2015 is based on operations under theCity of Detroit Water and Sewerage Department (DWSD). Data for 2016 includes six months of operation under DWSD and 6 monthsof operation under GLWA.

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Schedule 9

UNAUDITED

2011 [1] 2012 [1] 2013 [1] 2014 [1] 2015 [1] 2016 [1]

17,103,752$ 20,919,987$ 23,308,800$ 23,871,366$ 15,804,309$ 17,231,935$ 10,293,814 12,111,306 19,541,038 19,467,746 19,779,978 22,846,983 7,295,491 - 9,311,146 9,715,613 9,761,438 12,365,922 8,113,053 9,882,899 12,089,582 12,015,093 12,650,819 14,678,915 7,775,635 8,503,722 10,575,173 9,769,372 9,797,153 - 7,532,208 9,121,108 9,945,794 9,060,112 9,297,285 - 7,804,684 8,806,767 10,338,724 9,728,576 10,325,750 12,809,124

- - - - - - - - - - - - - - - - - -

8,175,322 9,966,936 10,824,461 10,770,614 11,035,002 12,689,582 7,063,698 8,340,815 - - - 11,869,865

- - - - - 10,103,536 9,047,860 10,324,388 9,529,341 9,600,373 9,432,554 22,585,698

- 7,973,620 9,655,154 - - - - - - 9,400,322 9,692,530 12,319,875

90,205,517$ 105,951,548$ 125,119,213$ 123,399,187$ 117,576,818$ 149,501,435$

28.55% 31.52% 35.19% 35.32% 32.28% 37.55%

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UNAUDITED

FY 2015-16 Wholesale Water Schedule of Charges*and Total Revenue Requirement for the Detroit Retail Class

Fixed FixedMonthly Commodity Monthly Commodity

Community Name $/mo $/Mcf Community Name $/mo $/Mcf

Allen Park 106,500 6.22$ Melvindale 30,600 5.33 Almont, Village of 10,600 7.75 New Haven, Village of 16,000 9.16$ Ash Township 34,000 6.98 NOCWA 1,129,400 9.58 Belleville 14,700 6.94 Northville, City 34,400 8.60 Berlin Township 33,000 9.11 Northville Township 297,500 17.90 Brownstown Township 153,100 8.75 Novi 560,600 16.99 Bruce Township 2,200 20.82 Oak Park 62,500 4.59 Canton Township 594,300 14.90 Oakland County Dr. Comm. 3,200 2.52 Centerline 22,000 5.03 Plymouth, City 47,100 8.77 Chesterfield Township 180,800 8.76 Plymouth Township 194,300 9.42 Clinton Township 356,100 7.12 Redford Township 156,600 7.08 Commerce Township 227,800 19.60 River Rouge 32,600 4.42 Dearborn 451,200 5.55 Riverview 50,100 8.52 Dearborn Heights 174,400 6.52 Rockwood 13,700 9.95 East Pointe 73,800 5.37 Romeo 12,100 13.87 Ecorse 66,000 3.52 Romulus 169,500 6.85 Farmington, City 45,200 7.38 Roseville 123,200 4.65 Farmington Hills 409,600 8.76 Royal Oak 10,300 6.85 Ferndale 44,400 5.47 Shelby Township 621,800 12.56 Flat Rock 54,200 7.35 SOCWA 1,139,500 6.97 Flint 662,100 8.93 South Rockwood 4,700 7.56 Fraser 59,800 7.14 Southgate 99,300 6.46 Garden City 76,000 6.61 St. Clair County-Burtchville Township 13,400 13.43 Genesee County DC 900,000 11.86 St. Clair County-Greenwood varies 5.58 Gibraltar 21,400 10.09 St. Clair Shores 142,100 5.24 Greater Lapeer C.U.A. 131,500 10.11 Sterling Heights 725,000 9.45 Grosse Ile Township 58,400 10.87 Sumpter Township 29,800 7.94 Grosse Pointe Park 64,700 8.49 Sylvan Lake 10,900 12.47 Grosse Pointe Shores 27,800 13.10 Taylor 222,200 6.17 Grosse Pointe Woods 66,500 6.65 Trenton 97,600 8.30 Hamtramck 32,500 4.27 Troy 602,700 10.76 Harper Woods 40,000 5.42 Utica 27,000 9.39 Harrison Township 65,800 5.42 Van Buren Township 133,300 8.02 Hazel Park 32,100 5.13 Walled Lake 42,500 10.63 Highland Park 58,400 4.25 Warren 517,600 5.71 Huron Township 64,600 8.61 Washington Township 139,700 17.46 Inkster 84,100 6.73 Wayne 126,000 9.79 Keego Harbor 14,300 10.38 West Bloomfield Township 465,400 13.69 Lenox Township 13,800 5.82 Westland 277,000 7.01 Lincoln Park 107,500 5.97 Wixom 110,200 13.16 Livonia 620,800 10.35 Woodhaven 93,300 12.03 Macomb Township 484,000 12.78 Ypsilanti Community Utilities Authority 499,400 7.93 Madison Heights 94,400 5.10

Annual Detroit Revenue Requirement - effective July 1, 2015 is $94,641,200

*Wholesale charges were effective July 9, 2015


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UNAUDITEDSchedule of Wholesale Sewer Monthly Charges*and Total Revenue Requirement for the Detroit Retail Class

FY 2015-16Budget 5-Year LBA Total

Billing Meter CustomersOMID 5,501,800$ 255,100$ 5,756,900$ Rouge Valley 4,408,500 (91,600) 4,316,900 Oakland GWK 3,627,600 (59,200) 3,568,400 Evergreen Farmington 2,556,900 (41,200) 2,515,700 NE Wayne Co. 1,915,000 1,900 1,916,900 Allen Park 53,300 1,500 54,800 Center Line 73,700 200 73,900 Dearborn East & West 1,363,600 (22,100) 1,341,500 Farmington 88,200 (500) 87,700 Grosse Pointe Park 129,300 (4,900) 124,400 Melvindale 109,800 (200) 109,600 Grosse Pointe Farms 211,800 (4,500) 207,300

System Metered CustomersDearborn E. (Storm Only) 81,000$ (8,100)$ 72,900$ Dearborn N.E. 112,100 4,800 116,900 Grosse Pointe 74,700 (4,000) 70,700 Hamtramck 323,800 4,000 327,800 Harper Woods 19,200 1,900 21,100 Highland Park 462,400 5,700 468,100 Redford Township 9,900 (200) 9,700 Wayne County #3 3,700 1,100 4,800 Wayne County #6 11,000 - 11,000

Allocated Detroit Revenue Requirement-effective July 1, 2015 234,643,600$ 20,000,000$ 254,643,600$

*Wholesale charges were effective July 9, 2015


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Produced and Billed Water VolumesLast Ten Years

TotalFiscal Water Water Non-Revenue Non-RevenueYear Produced (Mcf) Billed (Mcf) Water (Mcf) % of Production

2007 * 28,063,000 18,417,900 9,645,100 34.4%2008 * 29,360,700 18,405,500 10,955,200 37.3%2009 * 27,180,700 16,682,100 10,498,600 38.6%2010 * 25,142,700 15,676,300 9,466,400 37.7%2011 * 26,513,000 16,094,700 10,418,300 39.3%2012 * 27,219,500 16,280,300 10,939,200 40.2%2013 * 26,832,800 15,687,900 11,144,900 41.5%2014 * 26,088,800 14,778,500 11,310,300 43.4%2015 * 23,238,000 13,547,000 9,691,000 41.7%2016 23,580,700 14,730,400 8,850,300 37.5%


Schedule 12

UNAUDITED

*GLWA assumed operations on January 1, 2016. The information in this table from 2007-2015 is basedon operations under the City of Detroit Water and Sewerage Department (DWSD). Data from 2016includes six months of operation under DWSD and 6 months of operation under GLWA.

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Treated and Billed Wastewater VolumesLast Ten Years

Total Wholesale Detroit TotalFiscal Wastewater Wastewater Wastewater WastewaterYear Treated (Mg) Billed (Mg) Billed (Mg) Billed (Mg)

2007 * 240,400 117,500 32,400 149,900 2008 * 244,200 114,200 27,800 142,000 2009 * 260,800 123,200 29,600 152,800 2010 * 221,400 100,600 27,100 127,700 2011 * 253,500 112,700 28,000 140,700 2012 * 255,500 112,600 24,900 137,500 2013 * 220,600 99,400 23,100 122,500 2014 * 233,200 107,200 22,100 129,300 2015 * 222,700 103,700 20,100 123,800 2016 209,200 96,800 20,600 117,400


Schedule 13

UNAUDITED

*GLWA assumed operations on January 1, 2016. The information in this table from 2007-2015 is basedon operations under the City of Detroit Water and Sewerage Department (DWSD). Data from 2016includes six months of operation under DWSD and 6 months of operation under GLWA.

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GREAT LAKES WATER AUTHORITY Schedule 14UNAUDITED

Pledges of Revenue and Debt Service CoverageAs of June 30, 2016

SewageWater DisposalFund Fund

Type of Debt

Type of revenue pledged

General purpose for debt

Term of pledged commitment Thru 2042 Thru 2045

Remaining principal and interest requirement $3,874,837,102 $5,315,671,115

Principal and interest funding requirement for the year ending June 30, 2016:Senior Lien Bonds $128,177,999 $140,191,016Second Lien Bonds 41,178,843 48,944,924

Total Senior and Second Lien Bonds 169,356,842 189,135,940 Junior Lien Bonds 1,781,683 39,434,631

Total All Bonds $171,138,525 228,570,571$

Pledged revenue for the year ending June 30, 2016 $ 270,117,396 326,048,837$

Pledged revenue collected as a percentageof funding requirement 157.8% 142.6%

Rate Covenant Debt Service Coverage (1)Senior Lien Bonds 2.11 2.33Senior and Second Lien Bonds 1.59 1.72

All Bonds, Including SRF Junior Lien 1.58 1.43

Approximate amount in restricted cash and investments 122,000,000$ 317,000,000$ related to various bond indentures at June 30, 2016

(1)


Computed consistent with Rate Covenant basis for rate determination purposes. Not applicable for purposes of additional bonds testcalculations.

The Authority has pledged specific revenue streams to secure the repayment of the revenue bonds and State of Michigan revolving fundloans. The bonds and loans are paid solely from the net revenues of the Water and Sewer System including the Retail Revenues from theRetail Customers who are serviced under the Water and Sewer Services Agreement with the City of Detroit. The pledged revenues for thefiscal year ending June 30, 2016 were reported by two entities due to the lease agreement between the City of Detroit and Great LakesWater Authority which became effective on January 1, 2016. The first six months of the fiscal year from July 1, 2015 to December 31, 2015was reported under the City of Detroit Water and Sewage Department financial statements. The six month period ending June 30, 2016 isreported in this audit report for Great Lakes Water Authority. Each entity had it's own Master Bond Ordinance under which the revenues ofthe system are pledged for payment of the bonded debt. In computing the pledged revenue for the fiscal year 2016, the pledged revenue forthe period July 1, 2015 through December 31, 2015 was based on the audited financial statements for the City of Detroit Water and SewageDepartment and computed based on the definition of pledged revenue in the Master Bond Ordinance in effect for that time period. This wascombined with the pledged revenue calculation for the six month period ending June 30, 2016 based on the Master Bond Ordinance for GreatLakes Water Authority. The A summary of the pledged revenue and the applicable debt as of June 30, 2016 is as follows:

Funding for various water treatment and transmission

capital improvements, refund certain water revenue bonds, pay termination amounts for interest

rate swap agreements, and funding reserve requirements

Funding for various waste water treatment and collection capital

improvements, refund certain sewage disposal revenue bonds,

pay termination amounts for interest rate swap agreements,

and funding reserve requirements

Revenue Bonds and State of Michigan Revolving Fund Loans

Revenue Bonds and State of Michigan Revolving Fund Loans

All Water Fund revenues except for those transferred to the

Operation and Maintenance Fund

All Sewer Fund revenues except for those transferred to the

Operation and Maintenance Fund

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Documents

5th Floor Board Room, Water Board Building 735 Randolph ... · 3. APPROVAL OF AGENDA 4. APPROVAL OF MINUTES A. June 16, 2017 (Page 1) 5. PUBLIC PARTICIPATION 6. OLD BUSINESS A. Presentation: